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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 1996 Commission file number 0-14702
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INFINITY BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2766282
(State of incorporation) (I.R.S. Employer
Identification No.)
600 Madison Avenue
New York, NY 10022
(Address of principal executive offices)
(212)750-6400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of November 12, 1996,
78,297,250 shares of Class A Common Stock, excluding 4,370,517 treasury shares,
and 8,310,465 shares of Class B Common Stock.
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INFINITY BROADCASTING CORPORATION
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets . . . . . . . . . . . 1
Condensed Consolidated Statements of Income . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows . . . . . . 4
Notes to Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 10
i
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
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<CAPTION>
Sept. 30, Dec. 31,
1996 1995
---------- --------
(Unaudited)
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ASSETS
Current assets:
Cash and cash equivalents $ 17,524 $ 20,340
Receivables, net 168,854 86,720
Prepaid expenses and other current assets 17,619 1,305
---------- ---------
Total Current Assets 203,997 108,365
Property and equipment, net 40,744 20,561
Intangible assets, net 1,441,374 451,220
Other assets 20,759 14,310
---------- ---------
$1,706,874 $ 594,456
========== =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
1
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
(DOLLARS IN THOUSANDS)
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<CAPTION>
Sept. 30, Dec. 31,
1996 1995
--------- --------
(Unaudited)
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued expenses $ 33,856 $ 18,392
Transit franchise fees payable 15,977
Accrued compensation 11,528 6,799
Accrued interest 2,563 7,131
Income taxes 3,854 4,866
Other current liabilities 51,721 15,892
---------- ----------
Total current liabilities 119,499 53,080
---------- ----------
Long-term debt 1,113,294 267,384
Deferred taxes 81,228
Stockholders' equity:
Preferred stock, $0.01 par value:
1,000,000 shares authorized, none issued
Class A Common Stock, $.002 par value:
200,000,000 shares authorized; 81,511,257 shares issued
in 1996 and 78,142,278 shares issued in 1995. 163 156
Class B Common Stock, $.002 par value:
17,500,000 shares authorized; issued and outstanding
8,310,465 shares in 1996 and 8,325,047 shares in 1995. 17 17
Class C Common Stock, $.002 par value:
30,000,000 shares authorized; issued and outstanding
1,116,257 shares in 1996 and 1995. 2 2
Additional paid-in capital 597,915 529,837
Retained earnings (deficit) (140,741) (196,338)
---------- ----------
457,356 333,674
Less treasury stock at cost, 4,370,517 shares in 1996 and
4,191,218 shares in 1995 (64,503) (59,682)
---------- ----------
Total stockholders' equity 392,853 273,992
---------- ----------
$1,706,874 $ 594,456
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
2
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
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Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
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Total revenues $ 229,410 $ 95,785 $ 526,282 $ 264,947
Less agency commissions 28,330 11,687 64,038 33,958
--------- --------- --------- ---------
Net revenues 201,080 84,098 462,244 230,989
Operating expenses
excluding depreciation
and amortization 129,715 41,008 294,869 119,124
Depreciation and amortization 23,321 13,342 58,853 37,342
Corporate general and
administrative expenses 1,733 1,487 5,781 4,154
--------- --------- --------- ---------
Total operating expenses 154,769 55,837 359,503 160,620
--------- --------- --------- ---------
Operating income 46,311 28,261 102,741 70,369
Other income (expense)
Interest expense (20,575) (12,046) (45,464) (35,929)
Interest income 342 107 722 268
Other, net 1,047 -- 1,047 --
--------- --------- ---------- --------
Earnings before income taxes 27,125 16,322 59,046 34,708
Income taxes 2,104 401 3,449 1,087
--------- --------- --------- --------
Net income $ 25,021 $ 15,921 $ 55,597 $ 33,621
========= ========= ========= ========
Net income per share $ .21 $ .16 $ .48 .33
========= ========= ========= ========
Average weighted common shares
and equivalents 116,389,563 100,663,248 115,454,506 100,829,464
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
3
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(IN THOUSANDS)
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Sept. 30, Sept. 30,
1996 1995
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Net cash flow from operating activities:
Net income $ 55,597 $ 33,621
Depreciation and amortization 58,853 37,342
Equity in income of investment (1,077) --
Amortization of deferred financing costs 1,510 1,528
---------- ----------
114,883 72,491
Increase in receivables (34,152) (3,147)
Increase in other current assets (8,761) (4,826)
Decrease in accounts payable
and accrued expenses (4,633) (1,201)
Decrease in accrued interest (4,568) (6,065)
Other, net (313) (3,901)
---------- ----------
Net cash flow from operating activities 62,456 53,351
---------- ----------
Investing Activities:
Capital expenditures 3,686 1,757
Acquisitions:
Intangibles 961,124 52,837
Property and Equipment 21,750 200
Other assets 56,507
Less Class A Common Stock issued (67,189) --
Less liabilities (77,354) (2,415)
---------- ----------
Net cash used for investing activities 898,524 52,379
---------- ----------
Cash provided (required) before financing activities (836,068) 972
========== ==========
Financing Activities:
Borrowings under debt agreements 928,896 50,000
Repayment of debt (54,454) (29,150)
Redemption of 10 3/8% subordinated debentures (30,265) --
Proceeds from issuance of Class A Common Stock 896 602
Financing costs (7,000) (792)
Repurchase of Class A Common Stock (4,821) (20,138)
---------- ----------
Net financing activities 833,252 522
(Increase) decrease in cash and cash equivalents 2,816 (1,494)
---------- ----------
Total financing activities $ 836,068 $ (972)
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
4
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INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
In the opinion of management the unaudited interim financial
statements contain all adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position, results of operations and
cash flows for the periods presented.
Interim periods are not necessarily indicative of results to be
expected for the year. It is suggested that these financial statements be read
in conjunction with the consolidated financial statements and the notes thereto
of the Company for the year ended December 31, 1995.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. The Company's investment in
Westwood One, Inc. is accounted for on the equity method. All significant
intercompany balances and transactions have been eliminated in consolidation.
Earnings per common share are based on the weighted average number of
common shares and common equivalent shares outstanding during the period.
Effective May 12, 1995, the Company declared a three-for-two stock
split in the form of a stock dividend payable on May 19, 1995 to shareholders of
record at the close of business on May 12, 1995. On March 19, 1996, the Company
declared a three-for-two stock split in the form of a stock dividend payable on
April 11, 1996 to shareholders of record at the close of business on March 28,
1996. The accompanying financial statements reflect the effect of the above
stock dividends.
2. ACQUISITIONS AND DISPOSITIONS
In April 1995, the Company acquired Dallas/Ft. Worth radio station
KLUV-FM from TK Communications, Inc. for approximately $51 million, plus costs.
On January 16, 1996 the Company acquired radio stations KYNG-FM and
KEWS-FM (formerly known as KSNN-FM) in Dallas, KFRC-FM, KFRC-AM and KYCY-FM
in San Francisco, WYCD-FM in Detroit and KYCW-FM in Seattle (the "Alliance
Stations") from various entities affiliated with Alliance Broadcasting, Inc.
for approximately $275 million, plus costs. On May 22, 1996, the Company
completed the sale of its Seattle radio station KYCW-FM to EZ Communications
for $26 million.
In March 1996, the Company acquired all of the outstanding stock of
TDI Worldwide, Inc. ("TDI"), a leading seller of advertising space on buses
and transit systems, for approximately $300 million.
5
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On June 27, 1996, the Company completed the acquisition of twelve
radio stations from Granum Holdings L.P. for approximately $425 million
including working capital. The radio stations are KRBV-FM, KHVN-AM and KOAI-FM
in Dallas/Ft. Worth, WBOS-FM and WOAZ-FM in Boston, WCAO-AM and WXYV-FM in
Baltimore, WAOK-AM and WVEE-FM in Atlanta and WHTQ-FM, WMMO-FM and WHOO-AM in
Orlando (the "Granum Stations").
The purchase price of the above acquisitions were funded by borrowings
under the Company's bank credit agreement (the "Credit Agreement") and issuance
of approximately 2.4 million shares of the Company's Class A Common Stock.
In September 1996, the Company entered into an agreement to sell its
Dallas radio station KEWS-FM for $32 million to Salem Communications Corp.
("Salem") and as part of the consideration, the Company will receive Salem's
Dallas station KDFX-AM.
The following unaudited pro forma summary presents the consolidated
results of operations as if the above transactions had occurred as of the
beginning of 1996 and 1995, after giving effect to certain adjustments,
including amortization of intangible assets and interest expense on the
acquisition debt. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of what would have occurred
had the above transactions been made as of those dates or of results which may
occur in the future.
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Nine Months Ended September 30,
1996 1995
---- ----
(Unaudited)
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Net revenues $537,258 $475,323
Net income 48,145 18,201
Net income per common share .42 .18
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In May 1996, the Company entered into an agreement with Cox
Broadcasting, Inc. ("Cox") to swap radio stations in Orlando for Cox's radio
stations in Chicago. The Cox stations in Chicago are WCKG-FM and WYSY-FM. The
Infinity stations are WHTQ-FM, WMMO-FM and WHOO-AM in Orlando, which Infinity
acquired from Granum Holdings L.P. In addition, the Company has agreed to pay
Cox $20 million. The transaction has been structured as a tax-free like-kind
exchange. The acquisition is pending regulatory approval. In August 1996, the
Company entered in an agreement to sell WYSY-FM to Spanish Broadcasting System,
Inc. for $33 million upon completion of the Company's acquisition of the station
from Cox as well as the approval of the Merger, as described below.
In October 1996, the Company entered into an agreement to sell its Dallas
station KDMM-AM for $675,000 to Marcos Rodriguez, Inc.
6
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3. PROPOSED BUSINESS COMBINATION WITH WESTINGHOUSE ELECTRIC CORPORATION
On June 20, 1996, Westinghouse Electric Corporation, a Pennsylvania
corporation ("Westinghouse"), R Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Westinghouse ("Sub"), and the Company entered into
an Agreement and Plan of Merger dated as of such date (the "Merger Agreement").
The Merger Agreement provides for the merger (the "Merger") of Sub with and
into the Company, with the Company as the surviving corporation following the
Merger. The Merger Agreement provides, subject to the terms and conditions set
forth therein, for the Company's stockholders to receive, at the effective time
of the Merger, the right to receive 1.71 shares of the Common Stock, par value
$1.00 per share, of Westinghouse in exchange for each share of Common Stock of
the Company. Following the Merger, the Company will be a wholly owned
subsidiary of Westinghouse.
Consummation of the Merger is conditioned on, among other things, the
entry of the Stipulation and Order setting forth the terms of the settlement
reached by the Company and Westinghouse with the Department of Justice
regarding certain antitrust issues, the approval of the Federal Communications
Commission, the approval of the stockholders of Westinghouse and the approval
of the stockholders of the Company.
In addition, on June 20, 1996, Westinghouse and the holders of the
Company's Class B Common Stock entered into a Stockholder Agreement, dated as
of such date (the "Stockholder Agreement"). The Stockholder Agreement
provides, subject to the terms and conditions thereof, that the stockholders
signatory thereto will vote their shares of Common Stock of the Company in
favor of the approval and adoption of the Merger Agreement and the transactions
contemplated thereby. Together, such signatory stockholders hold a majority of
the combined voting power of the outstanding Common Stock of the Company, and,
subject to certain limitations set forth in the Company's Restated Certificate
of Incorporation, are therefore able to control the vote on all matters
submitted to a vote of the Company's stockholders, including the approval and
adoption of the Merger Agreement and the transactions contemplated thereby.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRD QUARTER OF 1996 COMPARED TO THIRD QUARTER OF 1995
Net revenues for the third quarter of 1996 were $201,080,000 as
compared to $84,098,000 for the third quarter of 1995, an increase of
approximately $116,982,000 or 139%. The increase was due principally to higher
advertising revenues at most of the Company's stations, the acquisitions of the
Alliance Stations effective January 16, 1996, the acquisition of TDI, effective
March 26, 1996 and the acquisition of the Granum Stations effective June 27,
1996. On a pro forma basis, assuming all of the above acquisitions had
occurred as of the beginning of 1995, net revenues for the third quarter of
1996 would have increased by approximately 15%.
7
<PAGE> 10
Operating expenses excluding depreciation and amortization for the
third quarter of 1996 were $129,715,000 as compared to $41,008,000 for the
third quarter of 1995, an increase of approximately $88,707,000 or 216%. The
increase was principally due to the above acquisitions, expenses associated
with higher revenues and higher programming expenses. On a pro forma basis,
assuming the above acquisitions had occurred as of the beginning of 1995,
operating expenses for the third quarter of 1996 would have increased by
approximately 19%.
Depreciation and amortization expense for the third quarter of 1996
was $23,321,000 as compared to $13,342,000 for the third quarter of 1995, an
increase of approximately $9,979,000 or 75%. The increase was principally due
to the depreciation and amortization expense associated with the above
acquisitions.
Operating income for the third quarter of 1996 was $46,311,000 as
compared to $28,261,000 for the third quarter of 1995, an increase of
approximately $18,050,000 or 64%. The increase was due principally to improved
results at the Company's radio stations and the effect of the above
acquisitions.
Net financing expense (defined as interest expense less interest
income) for the third quarter of 1996 was $20,233,000 as compared to
$11,939,000 for the third quarter of 1995, an increase of approximately
$8,294,000 or 69%. The increase was due principally to additional borrowings
in connection with the above acquisitions.
Net income for the third quarter of 1996 was $25,021,000 as compared
to $15,921,000 for the third quarter of 1995, an increase of approximately
$9,100,000 or 57%.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1995
Net revenues for the nine months ended September 30, 1996 were
$462,244,000 as compared to $230,989,000 for the first nine months of 1995, an
increase of approximately 100%. The increase was due principally to higher
advertising revenues at most of the Company's stations, and the acquisitions of
the Alliance Stations, TDI and the Granum stations. On a pro forma basis,
assuming the above acquisitions and the acquisition of KLUV-FM had occurred as
of the beginning of 1995, net revenues for the first nine months of 1996 would
have increased by approximately 13%.
Operating expenses excluding depreciation and amortization for the
nine months ended September 30, 1996 were $294,869,000 as compared to
$119,124,000 for the first nine months of 1995, an increase of approximately
148%. The increase was principally due to the above acquisitions, expenses
associated with higher revenues and higher programming expenses. On a pro
forma basis, assuming the above acquisitions had occurred as of the beginning
of 1995, operating expenses for the first nine months of 1996 would have
increased by approximately 14%.
Depreciation and amortization expense for the first nine months of
1996 was $58,853,000 as compared to $37,342,000 for the first nine months of
1995, an increase of approximately 58%. The increase was due to the
depreciation and amortization expense associated with the above acquisitions.
8
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Operating income for the first nine months of 1996 was $102,741,000 as
compared to $70,369,000 for the first nine months of 1995, an increase of
approximately 46%. The increase was due principally to improved results at the
Company's radio stations and the effect of the above acquisitions.
Net financing expense (defined as interest expense less interest
income) for the first nine months of 1996 was $44,742,000 as compared to
$35,661,000 for the first nine months of 1995, an increase of approximately
25%. The increase was due principally to borrowings in connection with
the above acquisitions.
Net income for the first nine months of 1996 was $55,597,000 ($0.48
per share) as compared to $33,621,000 ($0.33 per share) for the first nine
months of 1995, an increase of approximately 65%.
LIQUIDITY AND CAPITAL RESOURCES
For the first nine months of 1996, net cash flow from operating
activities before working capital requirements was approximately $114,883,000,
as compared to $72,491,000 for the first nine months of 1995, an increase of
approximately $42,392,000. The increase was principally due to improved
earnings in 1996 and was used principally to fund working capital requirements.
During the nine months ended September 30, 1996, the Company purchased
approximately $5 million of treasury stock and paid down approximately $85
million of long-term debt.
In January 1996, the Company completed the acquisition of the Alliance
Stations for approximately $275 million. In March 1996, the Company completed
the acquisition of TDI for approximately $300 million. In June 1996, the
Company completed the acquisition of the Granum Stations for approximately
$425 million including working capital. The purchase price of the above
acquisitions were funded by borrowings of approximately $930 million and
through the issuance of approximately 2.4 million newly issued shares of Class
A Common Stock.
9
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
2(a) -- Asset Purchase Agreement, dated as of September 12, 1994, by
and between TK Communications, Inc. and Infinity Broadcasting
Corporation of Dallas. (This exhibit can be found as Exhibit
2(f) to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994 (File No. 0-14702) and is
incorporated herein by reference.)
2(b) -- Purchase Agreement, dated September 22, 1995, among each of
the entities identified in Schedule 1.0(a) thereto, Alliance
Broadcasting, L.P., each of the entities identified in
Schedule 1.0(b) thereto, Infinity Broadcasting Corporation of
Los Angeles and the Company. (This exhibit can be found as
Exhibit 2(a) to the Company's Report on Form 8-K dated
September 27, 1995 (File No. 0-14702) as is incorporated
herein by reference.)
2(c) -- Stock Purchase Agreement, dated as of February 22, 1996, by
and among the Company, William M. Apfelbaum, and each of the
other stockholders of TDI Worldwide, Inc. identified on
Schedule 4.2 thereto. (This exhibit can be found as Exhibit
2(i) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 (File No. 0-14702) as is incorporated
herein by reference.)
2(d) -- Stock Purchase Agreement, dated as of March 3, 1996, between
the Company and Granum Holdings L.P. (This exhibit can be
found as Exhibit 2(j) to the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (File No. 0-14702)
as is incorporated herein by reference.)
2(e) -- Agreement and Plan of Merger, dated as of June 20, 1996, among
Westinghouse Electric Corporation, R Acquisition Corp. and the
Company. (This exhibit can be found as Exhibit 2 to the
Company's Current Report on Form 8-K dated July 1, 1996 (File
No. 0- 14702) and is incorporated herein by reference.)
2(f) -- Asset Exchange Agreement, dated as of June 26, 1996, by and
among WCKG, Inc., Cox Broadcasting, Inc., GCI Orlando
Holdings, Inc. and the Company, including a list of omitted
schedules and an undertaking by the Company to furnish
supplementally a copy of any such omitted schedule to the
Securities and Exchange Commission upon request.
2(g) -- Asset Purchase Agreement, dated August 22, 1996, between
Infinity Holdings Corp. of Orlando and Spanish Broadcasting
System, Inc., including a list of omitted schedules and an
undertaking by the Company to furnish supplementally a copy of
any such omitted schedule to the Securities and Exchange
Commission upon request.
10
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2(h) -- Asset Purchase Agreement, dated as of September 30, 1996,
between Infinity Broadcasting Corporation of Dallas and
Inspiration Media of Texas, Inc., including a list of omitted
schedules and an undertaking by the Company to furnish
supplementally a copy of any such omitted schedule to the
Securities and Exchange Commission upon request.
2(i) -- Asset Purchase Agreement, dated as of October 10, 1996,
between Infinity Broadcasting Corporation of Texas and Marcos
Rodriguez, Inc., including a list of omitted schedules and an
undertaking by the Company to furnish supplementally a copy of
any such omitted schedule to the Securities and Exchange
Commission upon request.
27 -- Financial Data Schedule.
99(a) -- Stockholder Agreement, dated as of June 20, 1996, among
Westinghouse Electric Corporation and the other signatories
thereto. (This exhibit can be found as Exhibit 99.1 to the
Company's Current Report on Form 8-K dated July 1, 1996 (File
No. 0-14702) and is incorporated herein by reference.)
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K dated July 1, 1996, with the
Securities and Exchange Commission (the "SEC") and the New York Stock Exchange
(the "NYSE") in response to Items 1 and 7 of the Form 8-K. It reported, under
Item 1, that Westinghouse Electric Corporation ("Westinghouse"), R Acquisition
Corp., a wholly owned subsidiary of Westinghouse ("Sub"), and the Company
entered into an Agreement and Plan of Merger (the "Merger Agreement") which
provides, subject to the terms and conditions set forth therein, for the merger
of Sub with and into the Company.
The Company filed a Report on Form 8-K dated July 10, 1996, with the
SEC and the NYSE in response to Item 2 of the Form 8-K. It reported the
completion of the acquisition of twelve radio stations located in Dallas-Fort
Worth, Boston, Baltimore, Atlanta and Orlando (the "Stations") from various
subsidiaries of Granum Holdings L.P. for a total purchase price of $410 million
plus working capital. On September 5, 1996, the Company filed a Report on Form
8-K/A, with the SEC and the NYSE, reporting in response to Item 7 of the Form
8-K. Item 7 contained the financial statements of the operating subsidiaries
of Granum Holdings L.P. at December 31, 1995 and 1994 and for each of the three
years in the period ended December 31, 1995 and unaudited pro forma combined
statements of operations data for the year ended December 31, 1995 and the six
months ended June 30, 1996, reflecting the acquisition of the Stations.
11
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SIGNATURES
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.
INFINITY BROADCASTING CORPORATION
(Registrant)
/s/ FARID SULEMAN
-------------------------------
Farid Suleman,
Vice President-Finance/
Chief Financial Officer
Dated: November 14, 1996
12
<PAGE> 1
Exhibit 2(f)
EXECUTION
===============================================================================
ASSET EXCHANGE AGREEMENT
by and among
WCKG, INC.,
COX BROADCASTING, INC.,
GCI ORLANDO HOLDINGS, INC.,
and
INFINITY BROADCASTING CORPORATION
Dated as of June 26, 1996
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
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Page
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1. Exchange of Personal Property; Exchange of Real Property; Exchange of Contracts and
Licenses.................................................................................................2
1.1 Exchange of Tangible Personal Property..........................................................2
1.2 Exchange of Real Property.......................................................................2
1.3 Exchange of Contracts...........................................................................3
1.4 Exchange of Licenses............................................................................3
1.5 Exchange of Intangible Assets...................................................................3
1.6 Value of Exchanged Assets.......................................................................4
1.7 Excluded Assets.................................................................................4
1.8 Assumption of Liabilities.......................................................................4
1.9 Section 1031....................................................................................5
2. Cash Payment.............................................................................................5
3. Intentionally Omitted....................................................................................5
4. Closing..................................................................................................5
4.1 Closing Deliveries..............................................................................6
4.2 Prorations......................................................................................7
4.3 Further Assurances..............................................................................8
5. Representations and Warranties of Cox....................................................................9
5.1 Organization; Good Standing.....................................................................9
5.2 Authority.......................................................................................9
5.3 No Breach or Violation..........................................................................9
5.4 Approvals......................................................................................10
5.5 No Litigation..................................................................................10
5.6 Brokerage......................................................................................10
5.7 Title to and Condition of Tangible Personal Property...........................................10
5.8 Title to and Condition of Real Property........................................................10
5.9 Cox Contracts..................................................................................11
5.10 Licenses.......................................................................................11
5.11 Intangible Assets..............................................................................11
5.12 FCC Compliance.................................................................................12
5.13 Compliance with Laws...........................................................................12
5.14 Environmental Matters..........................................................................12
5.15 Insurance......................................................................................13
5.16 Bulk Sales.....................................................................................13
5.17 Accuracy of Information Furnished..............................................................13
5.18 Conduct of Business in Ordinary Course.........................................................13
5.19 Taxes..........................................................................................13
5.20 Personnel......................................................................................14
5.21 Labor Relations................................................................................15
</TABLE>
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<TABLE>
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5.22 Financial Statements...........................................................................15
5.23 Definition of Knowledge........................................................................16
5.24 CBI Representation and Warranty................................................................16
6. Representations and Warranties of GCI...................................................................16
6.1 Organization; Good Standing....................................................................16
6.2 Authority......................................................................................16
6.3 No Breach or Violation.........................................................................16
6.4 Approvals......................................................................................17
6.5 No Litigation..................................................................................17
6.6 Brokerage......................................................................................17
6.7 Title to and Condition of Tangible Personal Property...........................................17
6.8 Title to and Condition of Real Property........................................................18
6.9 Conflict with GCI Contracts....................................................................18
6.10 Licenses.......................................................................................19
6.11 Intangible Assets..............................................................................19
6.12 FCC Compliance. ..............................................................................19
6.13 Compliance with Laws...........................................................................19
6.14 Environmental Matters..........................................................................20
6.15 Insurance......................................................................................20
6.16 Bulk Sales.....................................................................................20
6.17 Accuracy of Information Furnished..............................................................20
6.18 Conduct of Business in Ordinary Course.........................................................20
6.19 Taxes..........................................................................................21
6.20 Personnel......................................................................................21
6.21 Labor Relations................................................................................22
6.22 Financial Statements...........................................................................23
6.23 Definition of Knowledge........................................................................23
6.24 Infinity Representation and Warranty...........................................................23
7. Covenants of the Parties................................................................................23
7.1 FCC Applications...............................................................................23
7.2 Conduct of Business............................................................................24
7.3 No Solicitation Of Third Parties or Employees..................................................25
7.4 Access.........................................................................................26
7.5 Inconsistent Actions...........................................................................26
7.6 Cooperation....................................................................................26
7.7 Control of the Stations........................................................................26
7.8 Risk of Loss...................................................................................26
7.9 Third Party Consents...........................................................................26
7.10 Intentionally Omitted..........................................................................27
7.11 Employee Matters...............................................................................27
7.12 Compliance With HSR Act........................................................................28
8. Conditions to GCI's Obligations.........................................................................28
8.1 Representations, Warranties and Covenants. ...................................................28
8.2 Opinion of Counsel to Cox......................................................................29
8.3 Approvals of Governmental Authorities..........................................................29
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
8.4 No Adverse Proceedings. ......................................................................29
8.5 Consents.......................................................................................29
8.6 Closing Documents. ...........................................................................29
8.7 No Material Adverse Change.....................................................................29
8.8 FCC Consent....................................................................................29
8.9 Resolutions....................................................................................29
8.10 Time Brokerage Agreements......................................................................30
8.11 HSR Act........................................................................................30
9. Conditions to Cox's Obligations.........................................................................30
9.1 Representations, Warranties and Covenants......................................................30
9.2 Cash Payment...................................................................................30
9.3 Opinion of Counsel to GCI......................................................................30
9.4 Approvals of Governmental Authorities. .......................................................30
9.5 No Adverse Proceedings. ......................................................................30
9.6 Consents.......................................................................................31
9.7 Closing Documents..............................................................................31
9.8 No Material Adverse Change.....................................................................31
9.9 FCC Consent....................................................................................31
9.10 Resolutions....................................................................................31
9.11 Time Brokerage Agreements......................................................................31
9.12 HSR Act........................................................................................31
10. Termination.............................................................................................31
11. Survival of Representations and Warranties and Indemnification..........................................32
11.1 Survival.......................................................................................32
11.2 Indemnification by Cox.........................................................................32
11.3 lndemnification by GCI.........................................................................33
11.4 Procedure for Indemnification..................................................................33
11.5 Intentionally Omitted..........................................................................34
11.6 Specific Performance...........................................................................35
11.7 Opportunity to Cure............................................................................35
12. Expenses................................................................................................35
13. Benefit of Agreement; Assignment........................................................................35
14. Notices.................................................................................................35
15. Severability............................................................................................36
16. Entire Agreement........................................................................................36
17. Governing Law...........................................................................................36
18. Exhibits................................................................................................36
19. Counterparts............................................................................................36
20. Sales Taxes.............................................................................................36
21. Amendment; Waiver.......................................................................................36
22. Attorney's Fees.........................................................................................37
23. Guaranty of CBI.........................................................................................37
24. Guaranty of Infinity....................................................................................38
</TABLE>
<PAGE> 5
EXHIBITS
Exhibit I - Form of Opinion of Dow, Lohnes & Albertson
Exhibit II - Form of Opinions of GCI's Corporate Counsel and
Leventhal, Senter & Lerman
SCHEDULES
SCHEDULES TO BE DELIVERED BY COX
Schedule 1.1A - Cox Tangible Personal Property
Schedule 1.2A - Cox Real Property
Schedule 1.3A - Cox Contracts
Schedule 1.4A - Cox Licenses
Schedule 1.5A - Cox Intangible Assets
Schedule 1.7A - Excluded Assets
Schedule 5.3 - Consents
Schedule 5.4 - Governmental Approvals
Schedule 5.5 - Litigation
Schedule 5.7 - Title to and Condition of Cox Tangible Personal Property
Schedule 5.8 - Title to and Condition of Cox Real Property
Schedule 5.9 - Conflict with Cox Contracts
Schedule 5.12 - FCC Compliance
Schedule 5.14 - Environmental Matters
Schedule 5.20 - Personnel
Schedule 5.22 - Financial Statements
Schedule 7.3 - Employees
SCHEDULES TO BE DELIVERED BY GCI
Schedule 1.1B - GCI Tangible Personal Property
Schedule 1.2B - GCI Real Property
Schedule 1.3B - GCI Contracts
Schedule 1.4B - GCI Licenses
Schedule 1.5B - GCI Intangible Assets
Schedule 1.7B - Excluded Assets
Schedule 6.3 - Consents
Schedule 6.4 - Governmental Approvals
Schedule 6.5 - Litigation
Schedule 6.7 - Title to and Condition of GCI Tangible Personal Property
Schedule 6.8 - Title to and Condition of GCI Real Property
Schedule 6.9 - Conflict with GCI Contracts
<PAGE> 6
Schedule 6.12 - FCC Compliance
Schedule 6.14 - Environmental Matters
Schedule 6.20 - Personnel
Schedule 6.22 - Financial Statements
Schedule 7.3 - Employees
<PAGE> 7
ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into
as of this 26th day of June, 1996, by and among WCKG, INC., a Delaware
corporation ("Cox"), COX BROADCASTING, INC., a Delaware corporation ("CBI"),
GCI ORLANDO HOLDINGS, INC., a Delaware corporation ("GCI"), and INFINITY
BROADCASTING CORPORATION, a Delaware corporation ("Infinity").
WHEREAS, GCI is the owner, operator and licensee of Radio Stations
WHOO(AM), WHTQ(FM), and WMMO(FM), Orlando, Florida (the "GCI Stations"),
pursuant to certain licenses and authorizations issued by the Federal
Communications Commission (the "FCC"); and
WHEREAS, Cox is the owner, operator and licensee of Radio Stations
WCKG(FM), Elmwood Park, Illinois, and WYSY-FM, Aurora, Illinois (the "Cox
Stations"), pursuant to certain licenses and authorizations issued by the FCC;
and
WHEREAS, on the date hereof, GCI and Cox have entered into a Time
Brokerage Agreement relating to the Cox Stations (the "Cox Time Brokerage
Agreement"), and, on the date hereof, GCI and Cox have entered into a Time
Brokerage Agreement relating to the GCI Stations (the "GCI Time Brokerage
Agreement" and collectively with the Cox Time Brokerage Agreement, the "Time
Brokerage Agreements"); and
WHEREAS, Cox and GCI desire to contemporaneously exchange certain
property and assets used and useful in the operations of the Cox Stations and
the GCI Stations (collectively, sometimes referred to herein as the
"Stations"); and
WHEREAS, Cox and GCI intend to transfer the Stations in a transaction
that will qualify as a "like-kind exchange" for nonrecognition of taxable
income under Section 1031 of the Internal Revenue Code of 1986, as amended (the
"Code"), and Cox and GCI are willing to take such steps as are necessary on
their respective parts to enable the transactions contemplated hereby to so
qualify, including, but not limited to, the assignment of this Agreement by Cox
to a qualified intermediary in order that the acquisition of additional
replacement property for the Cox Assets (as defined herein) may be accomplished
as a deferred exchange pursuant to applicable Treasury Regulations; and
WHEREAS, the prior consent of the FCC to the transfer of the licenses
and authorizations issued by the FCC for the Stations is required, and it is
intended that if such consent is obtained, the transactions contemplated by
this Agreement will be consummated subject to all of the other terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein set
forth and subject to the terms and conditions hereof, the parties agree as
follows:
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<PAGE> 8
1. EXCHANGE OF PERSONAL PROPERTY; EXCHANGE OF REAL PROPERTY;
EXCHANGE OF CONTRACTS AND LICENSES.
1.1 EXCHANGE OF TANGIBLE PERSONAL PROPERTY. At the Closing
(as defined in SECTION 4), Cox shall transfer, assign, convey and deliver to
GCI, and GCI shall accept and acquire from Cox (i) all of the tangible personal
property listed on Schedule 1.1A, together with any replacements thereof or
additions thereto made between the date of this Agreement and the Closing Date
(the "Cox Tangible Personal Property"), and (ii) all files (excluding personnel
files for employees not party to written employment agreements, confidential
correspondence files of station management, copies of all books and records
that Cox is required by law to retain, and books and records related solely to
internal corporate matters), records, logs, program materials, programs, lists,
music libraries, public inspection files that relate to the Cox Stations and
all proprietary information and data, maps, plans, diagrams, blueprints,
schematics and technical drawings, engineering records, and FCC applications
and filings maintained with respect to the Cox Stations pursuant to the rules
and regulations of the FCC (the "Cox Records"), free and clear of all liens,
mortgages, pledges, covenants, security interests, charges, claims or
encumbrances of any kind whatsoever ("Liens") (except for (x) Liens for current
taxes not yet due and payable or the validity of which are being contested in
good faith by appropriate proceedings, (y) Liens which constitute valid leases
or subleases to third parties with respect to property not used in the
operations of the Stations, and (z) Liens and defects in title that are not
material to the lessee (collectively, "Permitted Liens")). At the Closing, GCI
shall transfer, assign, convey and deliver to Cox, and Cox shall accept and
acquire from GCI (i) all of the tangible personal property listed on Schedule
1.1B, together with any replacements thereof or additions thereto made between
the date of this Agreement and the Closing Date (the "GCI Tangible Personal
Property"), and (ii) all technical records (excluding personnel files for
employees not party to written agreements, confidential correspondence files of
station management, copies of all books and records that GCI is required by law
to retain, and books and records related solely to internal corporate matters),
records, logs, program materials, lists, music libraries, public inspection
files that relate to the GCI Stations and all proprietary information and data,
maps, plans, diagrams, blueprints, schematics and technical drawings,
engineering records, and FCC applications and filings maintained with respect
to the GCI Stations pursuant to the rules and regulations of the FCC (the "GCI
Records"), free and clear of all Liens (except for Permitted Liens).
1.2 EXCHANGE OF REAL PROPERTY. At the Closing, (i) Cox shall
transfer, assign, convey and deliver to GCI, and GCI shall accept and acquire
from Cox, all real property and 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, and other real property interests which are used or useful in the
business or operations of the Cox Stations listed on Schedule 1.2A, together
with any replacements thereof and any additions thereto made between the date
of this Agreement and the Closing Date (the "Cox Real Property"), and (ii) GCI
shall transfer, assign, convey and deliver to Cox, and Cox shall accept and
acquire from GCI, all real property and 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, and other real property
2
<PAGE> 9
interests which are used or useful in the business or operations of the GCI
Stations listed on Schedule 1.2B, together with any replacements thereof and
any additions thereto made between the date of this Agreement and the Closing
Date (the "GCI Real Property"). The Cox Real Property and the GCI Real Property
shall be conveyed free and clear of all Liens (except for Permitted Liens).
1.3 EXCHANGE OF CONTRACTS. At the Closing, Cox shall assign
to GCI all of its rights and privileges under the contracts, leases, employment
contracts and other agreements that relate to the Cox Assets, as defined below,
or the operation of the Cox Stations, including those listed on Schedule 1.3A
(the "Cox Contracts"), and which have not been assigned to GCI under the Cox
Time Brokerage Agreement, and GCI shall assume all of Cox's obligations under
the Cox Contracts insofar as they relate to the time on and after the Closing
Date and arise out of events which occur after the Closing Date. At the
Closing, GCI shall assign to Cox all of its rights and privileges under the
contracts, leases, employment contracts and other agreements that relate to the
GCI Assets, as defined below, or the operation of the GCI Stations, including
those listed on Schedule 1.3B (the "GCI Contracts"), and which have not been
assigned to Cox under the GCI Time Brokerage Agreement, and Cox shall assume
all of GCI's obligations under the GCI Contracts insofar as they relate to the
time on and after the Closing Date and arise out of events which occur after
the Closing Date. Copies of the Cox Contracts have been delivered by Cox to
GCI, and copies of the GCI Contracts have been delivered by GCI to Cox. The Cox
Contracts and the GCI Contracts shall be assigned free and clear of all Liens
(except for Permitted Liens).
1.4 EXCHANGE OF LICENSES. At the Closing, Cox shall assign to
GCI and GCI shall accept from Cox, all of Cox's right, title and interest in
and to the licenses, permits, authorizations and call letters, qualifications,
orders, franchises, certificates, consents and approvals issued to Cox by any
governmental or regulatory agency or authority, whether Federal, state or
local, and used in connection with the operation of the Cox Stations, including
the licenses and authorizations issued by the FCC for the Cox Stations (the
"Cox FCC Licenses"), and all applications for such licenses and authorizations
to the extent assignable, all of which are set forth on Schedule 1.4A (the "Cox
Licenses"). At the Closing, GCI shall assign to Cox and Cox shall accept from
GCI, all of GCI's right, title and interest in and to the licenses, permits,
authorizations and call letters, qualifications, orders, franchises,
certificates, consents and approvals issued to GCI by any governmental or
regulatory agency or authority, whether Federal, state or local, and used in
connection with the operation of the GCI Stations, including the licenses and
authorizations issued by the FCC for the GCI Stations (the "GCI FCC Licenses"),
and all applications for such licenses and authorizations to the extent
assignable, all of which are set forth on Schedule 1.4B (the "GCI Licenses").
The Cox Licenses and the GCI Licenses shall be assigned free and clear of all
Liens (except for Permitted Liens).
1.5 EXCHANGE OF INTANGIBLE ASSETS. At the Closing, Cox shall
assign, or shall cause Cox Holdings, Inc., a Delaware corporation, to assign to
GCI, free and clear of all Liens (except for Permitted Liens), and GCI shall
accept from Cox or Cox Holdings, Inc., all of Cox's and Cox Holdings, Inc.'s
right, title and interest in and to the patents, patent applications,
3
<PAGE> 10
trademarks, trade names, service marks, and copyright registrations or
copyright applications and any other intangible assets used in connection with
the Cox Stations, including but not limited to those set forth on Schedule 1.5A
(the "Cox Intangible Assets", and together with the Cox Tangible Personal
Property, the Cox Records, the Cox Real Property, the Cox Contracts, and the
Cox Licenses: the "Cox Assets"). At the Closing, GCI shall assign to Cox, free
and clear of all Permitted Liens, and Cox shall accept from GCI, all of GCI's
right, title and interest in and to the patents, patent applications,
trademarks, trade names, service marks, and copyright registrations or
copyright applications and any other intangible assets used in connection with
the GCI Stations, including but not limited to those set forth on Schedule 1.5B
(the "GCI Intangible Assets", and together with the GCI Tangible Personal
Property, the GCI Records, the GCI Real Property, the GCI Contracts, and the
GCI Licenses: the "GCI Assets").
1.6 VALUE OF EXCHANGED ASSETS. As permitted by Section 1031
of the Code and regulations promulgated thereunder, (i) the GCI Tangible
Personal Property shall be exchanged for the Cox Tangible Personal Property,
(ii) the GCI Real Property shall be exchanged for the Cox Real Property and
(iii) the GCI Contracts, Licenses and Intangible Assets shall be exchanged for
the Cox Contracts, Licenses and Intangible Assets. The parties shall use their
best efforts to determine by an independent, qualified appraisal the value of
the GCI Assets and the Cox Assets (including appropriate valuations of the
categories of assets included in the preceding sentence) not later than 90 days
after the Closing Date. GCI and Cox shall not take any position inconsistent
with such valuations, will file all returns and reports with respect to the
transaction contemplated by this Agreement, including all federal, state and
local returns on a basis consistent with such valuations, and each promptly
shall give to the other notice of any disallowance of or challenge to such
reporting by any taxing authority.
1.7 EXCLUDED ASSETS. The Cox Assets shall include all assets
used or held for use in the operation of the Cox Stations by Cox or any
affiliated entity, and the GCI Assets shall include all assets used or held for
use in the operation of the GCI Stations by GCI or any affiliated entity,
except the parties agree and acknowledge that (i) the Cox Assets shall not
include the assets set forth on Schedule 1.7A, and (ii) the GCI Assets shall
not include the assets set forth on Schedule 1.7B.
1.8 ASSUMPTION OF LIABILITIES. Except as provided in SECTION
4.1(C), GCI shall not assume or become obligated to perform any debt, liability
or obligation of Cox whatsoever, and Cox shall not assume or become obligated
to perform any debt, liability or obligation of GCI whatsoever, including (i)
any obligations or liabilities under any contract, lease or agreement other
than the Cox Contracts or the GCI Contracts, (ii) any obligations or
liabilities under the Cox Contracts or the GCI Contracts relating to the period
prior to the Closing; (iii) any claims or pending litigation or proceedings
relating to the operation of the Stations prior to the Closing, (iv) any
insurance policies of GCI or Cox, (v) any obligations or liabilities arising
under capitalized leases or other financing agreements, (vi) any obligations or
liabilities of Cox or GCI under any employee pension, retirement, health and
welfare or other benefit plans or collective bargaining agreements, except as
provided in SECTION 7.11, (vii) any obligation to any employee of the Stations
for severance benefits, vacation time, or sick leave,
4
<PAGE> 11
except as provided in SECTION 7.11, (viii) any liability for any taxes
attributable to the Cox Assets or the GCI Assets or the operations of the
Stations on or prior to the Closing, or (ix) any obligations or liabilities
caused by, arising out of, or resulting from any action or omission of Cox or
GCI prior to the Closing. All such obligations and liabilities shall remain and
be the obligations and liabilities solely of Cox or GCI, as the case may be.
1.9 SECTION 1031. Notwithstanding any provision to the
contrary in this Agreement, GCI and Cox agree that the exchange of the Stations
contemplated hereby shall be accomplished in a manner enabling the transfer of
the Cox Assets and GCI Assets to qualify as a like-kind exchange of property
within the meaning of Section 1031 of the Code, including but not limited to,
the assignment of this Agreement by Cox to a qualified intermediary in order
that the acquisition of additional replacement property for the Cox Assets may
be accomplished as a deferred exchange pursuant to applicable Treasury
Regulations. Cox covenants with and warrants to GCI, and GCI covenants with and
warrants to Cox, that (a) in no tax return hereafter filed by Cox or any
affiliate of Cox, or by GCI or any affiliate of GCI, or any of their respective
representatives, successors or assigns, will Cox or GCI or any of their
respective representatives, successors or assigns, treat any such exchange
inconsistently with or differently than a "like-kind" exchange within the
meaning of Section 1031 of the Code, and (b) in no tax audit, tax examination,
tax review or tax litigation will Cox or any affiliate of Cox, or GCI or any
affiliate of GCI, or any of their respective representatives, successors or
assigns, treat any such exchange inconsistently with or differently than a
"like-kind" exchange within the meaning of Section 1031 of the Code. Each party
agrees to cooperate with the other party in order that Cox, GCI and the
qualified intermediary may effectuate a tax-deferred exchange of like-kind
property pursuant to Section 1031 of the Code. The parties agree to execute
such agreements and other documents as may be necessary to complete and
otherwise effectuate the tax-deferred exchange.
2. CASH PAYMENT. At the Closing, GCI shall pay or cause to be paid to
the qualified intermediary the sum of Twenty Million Dollars ($20,000,000),
subject to adjustment pursuant to SECTION 4.2, by federal wire transfer of
immediately available funds pursuant to wire transfer instructions to be
delivered by Cox to GCI at least two (2) days prior to the Closing.
3. INTENTIONALLY OMITTED.
4. CLOSING. The closing of the transactions contemplated hereby (the
"Closing") will take place at 10:00 a.m., local time, at the offices of Dow,
Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Washington, D.C. 20036, on
a date to be agreed upon by the parties that is not later than the fifteenth
(15th) business day following the later of: (i) the date upon which the consent
of the FCC to the assignment of the Cox and GCI FCC Licenses has become a Final
Order (as defined herein); or (ii) the date upon which the consent of the FCC
to the renewal of the Cox FCC Licenses has become a Final Order (as defined
herein), or at such other time (in any event, the "Closing Date") as shall be
agreed upon in writing by Cox and GCI. On the Closing Date, Cox and GCI shall
be prepared to effectuate the transfer of the Stations in a manner which
enables the transfer to qualify as a like-kind exchange of property within the
meaning of Section 1031 of the Code.
5
<PAGE> 12
4.1 CLOSING DELIVERIES. At the Closing:
(a) Cox shall execute and deliver to GCI a Bill of Sale in form
and substance reasonably acceptable to GCI, pursuant to which Cox shall convey
to GCI good and marketable title to the Cox Tangible Personal Property, and GCI
shall execute and deliver to Cox a Bill of Sale in form and substance
reasonably acceptable to Cox, pursuant to which GCI shall convey to Cox good
and marketable title to the GCI Tangible Personal Property;
(b) Cox shall execute and deliver to GCI a deed and such other
transfer documents in form and substance reasonably acceptable to GCI pursuant
to which Cox shall convey to GCI good and marketable title to the Cox Real
Property, and GCI shall execute and deliver to Cox a deed and such other
transfer documents in form and substance reasonably acceptable to Cox pursuant
to which GCI shall convey to Cox good and marketable title to the GCI Real
Property;
(c) The parties shall execute and deliver to each other (i) an
Assignment and Assumption of Contracts in form and substance reasonably
acceptable to the parties, pursuant to which Cox shall assign to GCI, and GCI
shall accept assignment of, all of Cox's rights and privileges and assume all
obligations of Cox under the Cox Contracts, insofar as they relate to the time
on and after the Closing Date and arise out of events that occur after the
Closing Date, and (ii) an Assignment and Assumption of Contracts in form and
substance reasonably acceptable to the parties pursuant to which GCI shall
assign to Cox, and Cox shall accept assignment of, all of GCI's rights and
privileges and assume all obligations of GCI under the GCI Contracts, insofar
as they relate to the time on and after the Closing Date and arise out of
events that occur after the Closing Date;
(d) The parties shall execute and deliver to each other (i) an
Assignment of Licenses and Permits in form and substance reasonably acceptable
to the parties pursuant to which Cox shall assign to GCI, and GCI shall accept
assignment of, all of Cox's right, title and interest in and to the Cox
Licenses, and (ii) an Assignment of Licenses and Permits in form and substance
reasonably acceptable to the parties pursuant to which GCI shall assign to Cox,
and Cox shall accept assignment of, all of GCI's right, title and interest in
and to the GCI Licenses;
(e) The parties shall execute and deliver to the other (i) an
Assignment of Intangibles in form and substance reasonably acceptable to the
parties, pursuant to which Cox shall assign to GCI all of Cox's and Cox
Holdings, Inc.'s right, title and interest in and to the Cox Intangible Assets,
and (ii) an Assignment of Intangibles in form and substance reasonably
acceptable to the parties, pursuant to which GCI shall assign to Cox all of
GCI's right, title and interest in and to the GCI Intangible Assets;
(f) Cox shall deliver to GCI Uniform Commercial Code ("UCC")
lien searches from Kane, Cook and DuPage Counties, Illinois, and the Illinois
Secretary of State dated as of a date not more than fifteen (15) days prior to
the Closing Date and showing no UCC,
6
<PAGE> 13
judgment, tax or other lien filings against the Cox Assets, other than security
interests or other filings which will be released at Closing, and (ii) GCI
shall deliver to Cox UCC lien searches from Orange County, Florida, and the
Florida Secretary of State dated as of a date not more than fifteen (15) days
prior to the Closing Date and showing no UCC, judgment, tax or other lien
filings against the GCI Assets, other than security interests or other filings
which will be released at Closing; and
4.2 PRORATIONS.
(a) Except as otherwise provided herein or in the Time Brokerage
Agreements, all income and expenses arising from the conduct of the business
and operations of the Cox Stations and the GCI Stations and shall be prorated
between Cox and GCI in accordance with generally accepted accounting principles
as of 12:01 a.m., on the Closing Date. Such prorations shall include, without
limitation, all ad valorem and applicable property taxes (but excluding sales
taxes covered by SECTION 20 of this Agreement), business and license fees,
annual FCC regulatory fees, power and utility expenses, rents (excluding
amounts paid as capital expenditures in connection with real property, whether
leased or owned), and similar prepaid and deferred items attributable to the
ownership and operation of the Stations. The parties shall provide each other a
list of all known proratable items and payables for the Stations at least five
(5) days before the Closing Date;
(b) The prorations and adjustments contemplated by this Section,
to the extent practicable, shall be made on and as of the Closing Date. As to
those prorations and adjustments not reasonably capable of being ascertained on
the Closing Date, adjustments and prorations shall be made in accordance with
the procedures set forth in SECTIONS 4.2(C) and 4.2(D);
(c) Within ninety (90) days of the Closing Date, Cox shall
deliver to GCI a schedule of its proposed prorations (which shall set forth in
reasonable detail the basis for those determinations) (the "Orlando Proration
Schedule"). The Orlando Proration Schedule shall be conclusive and binding upon
GCI unless GCI provides Cox with written notice of objection (the "Notice of
Disagreement") within thirty (30) days after GCI's receipt of the Orlando
Proration Schedule, which notice shall state the prorations of expenses
proposed by GCI ("GCI's Proration Amount"). Cox shall have fifteen (15) days
from receipt of a Notice of Disagreement to accept or reject GCI's Proration
Amount. If Cox rejects GCI's Proration Amount, and the amount in dispute
exceeds Five Thousand Dollars ($5,000), the dispute shall be submitted within
ten (10) days to the office of Arthur Andersen (the "Referee") for resolution,
such resolution to be made within thirty (30) days after submission to the
Referee and to be final, conclusive and binding on Cox and GCI. GCI and Cox
agree to share equally the cost and expenses of the Referee, but each party
shall bear its own legal and other expenses, if any. If the amount in dispute
is equal to or less than Five Thousand Dollars ($5,000), such amount shall be
divided equally between GCI and Cox. Payment by GCI or Cox, as the case may be,
of the proration amounts determined pursuant to this SECTION 4.2(C) shall be
due fifteen (15) days after the last to occur of (i) GCI's acceptance of the
Orlando Proration Schedule or failure to give Cox a timely
7
<PAGE> 14
Notice of Disagreement; (ii) Cox's acceptance of GCI's Proration Amount or
failure to reject GCI's Proration Amount within fifteen (15) days of receipt of
a Notice of Disagreement; (iii) Cox's rejection of GCI's Proration Amount in
the event the amount in dispute equals or is less than Five Thousand Dollars
($5,000); and (iv) notice to Cox and GCI of the resolution of the disputed
amount by the Referee in the event that the amount in dispute exceeds Five
Thousand Dollars ($5,000);
(d) Within ninety (90) days of the Closing Date, GCI shall
deliver to Cox a schedule of its proposed prorations (which shall set forth in
reasonable detail the basis for those determinations) ("the Chicago Proration
Schedule"). The Chicago Proration Schedule shall be conclusive and binding upon
Cox unless Cox provides GCI with a Notice of Disagreement within thirty (30)
days after Cox's receipt of the Chicago Proration Schedule, which notice shall
state the prorations of expenses proposed by Cox ("Cox's Proration Amount").
GCI shall have fifteen (15) days from receipt of a Notice of Disagreement to
accept or reject Cox's Proration Amount. If GCI rejects Cox's Proration Amount,
and the amount in dispute exceeds Five Thousand Dollars ($5,000), the dispute
shall be submitted within ten (10) days to the office of Arthur Andersen (the
"Referee") for resolution, such resolution to be made within thirty (30) days
after submission to the Referee and to be final, conclusive and binding on GCI
and Cox. Cox and GCI agree to share equally the cost and expenses of the
Referee, but each party shall bear its own legal and other expenses, if any. If
the amount in dispute is equal to or less than Five Thousand Dollars ($5,000),
such amount shall be divided equally between Cox and GCI. Payment by Cox or
GCI, as the case may be, of the proration amounts determined pursuant to this
SECTION 4.2(D) shall be due fifteen (15) days after the last to occur of (i)
Cox's acceptance of the Chicago Proration Schedule or failure to give GCI a
timely Notice of Disagreement; (ii) GCI's acceptance of Cox's Proration Amount
or failure to reject Cox's Proration Amount within fifteen (15) days of receipt
of a Notice of Disagreement; (iii) GCI's rejection of Cox's Proration Amount in
the event the amount in dispute equals or is less than Five Thousand Dollars
($5,000); and (iv) notice to GCI and Cox of the resolution of the disputed
amount by the Referee in the event that the amount in dispute exceeds Five
Thousand Dollars ($5,000); and
(e) Any payment required by Cox to GCI or by GCI to Cox, as the
case may be, under SECTION 4.2(C) or 4.2(D) shall be paid by wire transfer of
immediately available funds to the account of the payee with a financial
institution in the United States as designated by such party in the Chicago or
Orlando Proration Schedule, as the case may be, or the Notice of Disagreement
(or by separate notice in the event a Notice of Disagreement is not sent). If
either Cox or GCI fails to pay when due any amount under SECTION 4.2(C) or
4.2(D), interest on such amount will accrue from the date payment was due to
the date such payment is made at a per annum rate equal to the Prime Rate plus
two percent (2%), and such interest shall be payable upon demand.
4.3 FURTHER ASSURANCES. At the Closing, and from time to time after
the Closing, Cox will execute and deliver such other instruments of conveyance,
assignment, transfer and delivery and will take such other actions as GCI
reasonably may request in order to
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more effectively transfer, convey, assign, and deliver to GCI, and to place GCI
in possession and control of, any of the Cox Assets, and GCI will execute and
deliver such other instruments of conveyance, assignment, transfer and delivery
and will take such other actions as Cox reasonably may request in order to more
effectively transfer, convey, assign, and deliver to Cox, and to place Cox in
possession and control of, any of the GCI Assets.
5. REPRESENTATIONS AND WARRANTIES OF COX. Cox hereby represents and
warrants to GCI as follows.
5.1 ORGANIZATION; GOOD STANDING. Cox (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware; (ii) is qualified to do business as a foreign corporation and is
in good standing under the laws of the State of Illinois; (iii) on or prior to
the Closing Date will be qualified to do business as a foreign corporation
under the laws of the State of Florida; and (iv) has all requisite corporate
power and authority to own and operate the Cox Assets, to carry on its business
as now being conducted, to enter into this Agreement and to perform its
obligations hereunder.
5.2 AUTHORITY. Cox has the full right and authority to execute and
deliver this Agreement, to perform its obligations hereunder, and to consummate
the transactions provided for herein. All required corporate action with
respect to Cox has been taken to approve this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by Cox
and constitutes the valid and binding obligation of Cox, enforceable against
Cox in accordance with its terms, except as such enforceability may be limited
by bankruptcy and similar laws affecting the rights of creditors generally and
general principles of equity. Except as expressly provided in this Agreement or
any Schedule hereto, the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance by Cox
of this Agreement in accordance with its terms will not require the approval or
consent of or notice to any foreign, federal, state, county, local or other
governmental or regulatory body.
5.3 NO BREACH OR VIOLATION. Except as set forth on Schedule 5.3, the
execution and delivery by Cox of this Agreement, the consummation by Cox of the
transactions contemplated hereby, and compliance by Cox with the terms hereof,
do not and will not:
(i) violate or result in the breach of or contravene any of the
terms, conditions or provisions of, or constitute a default under, Cox's
Certificate of Incorporation or Bylaws, or any law, regulation, order, writ,
injunction, decree, determination or award of any court, governmental
department, board, agency or instrumentality, domestic or foreign, or any
arbitrator, applicable to Cox or its assets and properties; or
(ii) except for those consents listed in Schedule 5.3, result in
prohibited action under any term or provision of, the material breach of any
term or provision of, the termination of, or the acceleration or permitting the
acceleration of the performance required by the terms of, or constitute a
default under or require the consent of any party to, any loan
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agreement, indenture, mortgage, deed of trust or other contract, agreement or
instrument, to which Cox is a party or by which it is bound; or
(iii) cause the suspension or revocation of any of the Cox
Licenses.
5.4 APPROVALS. Except as set forth on Schedule 5.4 and except for the
consent of the FCC, no authorizations, approvals or consents from any
governmental or regulatory authorities or agencies are necessary to permit Cox
to execute and deliver this Agreement and to perform its obligations hereunder.
5.5 NO LITIGATION. Except as set forth on Schedule 5.5, there are no
actions, suits, investigations or proceedings pending or, to the best of Cox's
knowledge, threatened against or affecting the Cox Assets, in any court or
before any arbitrator, or before or by any governmental department, commission,
bureau, board, agency or instrumentality, domestic or foreign, which, if
adversely determined, would impair the ability of Cox to perform its
obligations hereunder or would impair or hinder the ability or right of GCI to
operate the Cox Stations after the Closing in the manner heretofore operated by
Cox.
5.6 BROKERAGE. Cox has not dealt with any broker or finder in
connection with any of the transactions contemplated by this Agreement, and to
the best of Cox's knowledge, no other person is entitled to any commission or
finder's fee in connection with any of these transactions.
5.7 TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY. Except as
specified on Schedule 5.7, and except for Permitted Liens, Cox has good title
to the Cox Tangible Personal Property free and clear of all Liens. All of the
Cox Tangible Personal Property is in a good state of repair and operating
condition subject to normal repair, maintenance and replacement. All of the
technical equipment included in the Cox Tangible Personal Property is in a good
state of repair and operating condition (ordinary wear and tear excepted) and
complies in all material respects with all applicable FCC rules and
regulations, the Communications Act of 1934, as amended (the "Act"), and all
other applicable laws, rules, regulations, and ordinances. Except as set forth
on Schedule 5.7, Cox owns, directly or indirectly, all assets, properties,
rights, franchises, claims and agreements of every kind and description used to
conduct the business and operations of the Cox Stations as they are presently
conducted.
5.8 TITLE TO AND CONDITION OF REAL PROPERTY. Schedule 1.2A lists all
of the Cox Real Property used in the operation of the Cox Stations, and Cox has
good and marketable title, or valid and subsisting leasehold interests, in and
to the Cox Real Property. All of the Cox Real Property is owned free and clear
of all Liens except for Permitted Liens. Except as disclosed on Schedule 5.8,
with respect to each leasehold or subleasehold interest included in the Cox
Real Property, so long as Cox fulfills its obligations under the lease
therefor, Cox has enforceable rights to nondisturbance and quiet enjoyment, and
no third party holds any interest in the leased premises with the right to
foreclose upon Cox's leasehold or subleasehold interest.
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All improvements on the Cox Real Property are in compliance with applicable
zoning and land use laws, ordinances and regulations in all respects necessary
to conduct the operation of the Cox Stations operating thereon as presently
conducted, except for any instances of noncompliance which do not and will not
in the aggregate have a material adverse effect on the owner or lessee, as the
case may be, of such Cox Real Property. All such improvements are in good
working condition and repair, are insurable at standard rates, and comply in
all material respects with FCC rules and regulations and all other applicable
Federal, state and local statutes, ordinances and regulations. All of the
transmitting towers, ground radials, guy anchors, transmitter buildings and
related improvements located on the Cox Real Property are located entirely on
the Cox Real Property. Cox has no knowledge of any pending, threatened or
contemplated action to take by eminent domain or otherwise to condemn any part
of the Cox Real Property.
5.9 COX CONTRACTS. Except for (a) contracts or commitments for the
sale of advertising time for cash at prevailing rates, and (b) contracts or
commitments involving less than Twenty-Five Thousand Dollars ($25,000)
individually per year or One Hundred Thousand Dollars ($100,000) in the
aggregate per year, Schedule 1.3A lists all of the Cox Contracts and all trade
and barter agreements currently in effect as they relate to the business or
operation of the Cox Stations as of the date of this Agreement. Except as set
forth on Schedule 5.9, each Cox Contract is valid and binding (except to the
extent that the invalidity or nonbinding nature of any Cox Contract would not
have a material adverse effect on Cox) and is in full force and effect in
accordance with its terms. Cox has not granted any material waivers of or
forebearances under the Cox Contracts, and, to the best of Cox's knowledge, no
third party is in material default in the performance of any of its obligations
under any such Cox Contract, and no event or circumstance has occurred, which,
with the giving of notice or the lapse of time or both, would constitute a
material default by Cox under any Cox Contract. Except for those consents
listed on Schedule 5.3, no consents of any third party are necessary to permit
the assignment by Cox of the Cox Contracts to GCI and such assignment will not
affect the validity or enforceability of any such Cox Contract or cause any
material change in the substantive terms thereof.
5.10 LICENSES. Schedule 1.4A accurately and completely lists all
material authorizations, licenses, permits and franchises of any private entity
or public or governmental body granted or assigned to Cox with respect to the
Cox Stations. All of the Cox Licenses are validly issued and in full force and
effect and Cox has full power and authority to operate the Cox Stations
thereunder. Cox holds all authorizations, licenses, permits and franchises
necessary to enable it to conduct its business of operating the Cox Stations in
all material respects as presently conducted. Except for the need to obtain a
waiver of the FCC's One-To-A- Market Rule (47 C.F.R. ss. 73.3555(c)), to the
best of its knowledge, Cox is qualified legally, financially and otherwise to
become the assignee of the GCI FCC Licenses, under the Act, and the rules and
regulations of the FCC as in effect on the date of this Agreement.
5.11 INTANGIBLE ASSETS. Other than as set forth on Schedule 1.5A,
there are no material patents, patent applications, trademarks, trade names,
service marks, copyright registrations or copyright applications licensed or
used by or registered in the name of Cox or Cox Holdings, Inc. which apply to
the Cox Stations. To the best of Cox's knowledge, Cox
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Holdings, Inc. owns all right and interest in, and right and authority to use
in connection with the conduct of the business of the Cox Stations as presently
conducted, free and clear of all Liens and without infringing on the rights of
any party, all of the Cox Intangible Assets. To the best of Cox's knowledge,
there are no outstanding or threatened judicial or adversary proceedings with
respect to the Cox Intangible Assets.
5.12 FCC COMPLIANCE. Except as shown on Schedule 5.12, the Cox
Stations have been operated at all times by Cox in material accordance with the
terms of the Cox FCC Licenses, the Communications Act of 1934, as amended (the
"Communications Act"), and all applicable rules, regulations and policies of
the FCC. Cox has timely filed or made all applications, reports, and other
disclosures required by the FCC to be filed or made with respect to the Cox
Stations. The Cox FCC Licenses are valid and in full force and effect. Except
as shown on Schedule 5.12, no application, action or proceeding is pending for
the renewal or modification of any of the Cox FCC Licenses and, to the best of
Cox's knowledge, there is not now issued or outstanding any investigation or
material complaint against Cox at the FCC as of the date of this Agreement
relating to the Cox Stations. Except as disclosed on Schedule 5.12, there is no
proceeding pending at the FCC, and there is no outstanding notice of violation
from the FCC as of the date of this Agreement relating to the Cox Stations. All
fees payable to governmental authorities pursuant to the Cox FCC Licenses,
including FCC annual regulatory fees, have been paid and no event has occurred
which, individually or in the aggregate, and with or without the giving of
notice or the lapse of time or both, would constitute grounds for revocation
thereof or would have a material adverse effect on the business or financial
condition of the Cox Stations.
5.13 COMPLIANCE WITH LAWS. Cox has all licenses, permits or other
authorizations of governmental, regulatory or administrative agencies required
to conduct its business with respect to the Cox Stations in all material
respects as currently conducted. No judgment, decree, order or notice of
violation has been issued by any agency or authority which permits, or would
permit, revocation, modification or termination of any governmental permit,
license or authorization or which results or could result in any material
impairment of any rights thereunder. With respect to the Cox Stations, Cox is
in material compliance with all applicable federal, state, local or foreign
laws, regulations, statutes, rules, ordinances, directives and orders and any
other requirements of any governmental, regulatory or administrative agency or
authority or court or other tribunal applicable to it.
5.14 ENVIRONMENTAL MATTERS. Without limiting the generality of
SECTION 5.13, except as disclosed on Schedule 5.14, to the best of Cox's
knowledge, all of the Cox Real Property is free of any substantial amounts of
(1) waste or debris; (2) "hazardous waste" as defined by the Resource
Conservation and Recovery Act as amended from time to time ("RCRA"), or any
"hazardous substance" as defined in the statutes of Illinois, as amended from
time to time, and regulations promulgated thereunder, or as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended from time to time ("CERCLA"), and regulations promulgated
thereunder; (3) any substance the presence of which on the Cox Real Property is
prohibited by any federal, state or local environmental law;
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and (4) any materials which, under federal, state, or local environmental law,
require special handling in collection, storage, treatment or disposal. Without
limiting the generality of the foregoing, except as disclosed on Schedule 5.14,
to the best of Cox's knowledge, there are no installations on the Cox Real
Property which contain PCBs or asbestos in quantities sufficient to mandate the
removal of such PCBs or asbestos in accordance with federal, state or local
government environmental standards or to warrant the imposition of any penalty,
civil or criminal, against Cox.
5.15 INSURANCE. The insurable properties relating to the business of
the Cox Stations and the conduct of the business of the Cox Stations are, and
will be until the Closing Date, in the reasonable judgment of Cox, adequately
insured.
5.16 BULK SALES. The provisions of the Bulk Sales laws of the State
of Illinois do not apply to the transfer of the Cox Assets in accordance with
the terms of this Agreement.
5.17 ACCURACY OF INFORMATION FURNISHED. No statement by Cox contained
in this Agreement or in any Schedule or Exhibit hereto contains any material
untrue statement of a material fact.
5.18 CONDUCT OF BUSINESS IN ORDINARY COURSE. Between December 31,
1995 and the date hereof, Cox has conducted the business and operations of the
Cox Stations only in the ordinary course and substantially consistent with past
practice and has not:
(a) suffered any material adverse change in the business,
assets, properties, financial condition or prospects of Cox pertaining to the
Cox Stations, including any damage, destruction or loss affecting the Cox
Assets; or
(b) made any sale, assignment, lease or other transfer of any of
Cox's properties used in connection with the Cox Stations other than in the
ordinary course of business and consistent with past practices except for the
sale to BIG Broadcasting of the FM radio transmission tower located in DuPage
County, Illinois.
5.19 TAXES. Cox has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and Cox has paid or caused to be paid all taxes
as shown on those returns or on any tax assessment received by Cox to the
extent that such taxes have become due, or has set aside on its books adequate
reserves (segregated to the extent required by generally accepted accounting
principles) with respect thereto. There are no governmental investigations or
other legal, administrative, or tax proceedings pending, or to the best of
Cox's knowledge, threatened pursuant to which Cox is or could be made liable
for any taxes, penalties, interest, or other charges, the liability for which
could extend to GCI as transferee of the business of the Cox Stations, and no
event has occurred that could impose on GCI any transferee liability for any
taxes, penalties, or interest due or to become due from Cox.
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5.20 PERSONNEL.
(a) All of Cox's Employee Plans and Compensation Arrangements
are listed in Schedule 5.20, and complete and accurate copies of any such
written Employee Plans and Compensation Arrangements (or related insurance
policies) have been furnished to GCI, along with copies of any employee
handbooks or similar documents describing such Employee Plans and Compensation
Arrangements. Schedule 5.20 also includes a description of any unwritten
Employee Plans or Compensation Arrangements. Schedule 5.20 also contains a true
and complete list of all employees of the Cox Stations, their job descriptions,
dates of hire and amounts and dates of last salary increase as of the date of
this Agreement.
(b) Each Employee Plan and Compensation Arrangement has been
administered in compliance with its own terms and in material compliance with
the provisions of ERISA, the Code, the Age Discrimination in Employment Act and
any other applicable Federal or state laws. Cox is not aware of any pending
governmental audit or examination of any Employee Plan or Compensation
Arrangement or of any facts which would lead it to believe that any such audit
or examination is threatened. There exists no action, suit or claim (other than
routine claims for benefits) with respect to any Employee Plan or Compensation
Arrangement pending or, to the best of Cox's knowledge, threatened against any
of such plans or arrangements, and Cox possesses no knowledge of any facts
which could give rise to any such action, suit or claim.
(c) Cox does not contribute to and is not required to contribute
to any Multi-employer Plan with respect to the employees of the Cox Stations,
and neither Cox nor any other trade or business under common control with Cox
(within the meaning of Sections 414(b), (c), (m) or (o) of the Code) has
incurred or reasonably expects to incur any "withdrawal liability," as defined
under Section 4201 et seq. of ERISA.
(d) Except as described in Schedule 5.20, neither Cox nor any
other trade or business under common control with Cox (within the meaning of
Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or
contributes to any Employee Plan or Compensation Arrangement that provides
retiree medical or retiree life insurance coverage to employees of Cox at the
Cox Stations upon their retirement.
(e) Except as described in Schedule 5.20, with respect to each
Employee Plan and, to the extent applicable, each Compensation Arrangement: (i)
each Employee Plan that is intended to be tax-qualified, and each amendment
thereto, is the subject of a favorable determination letter, and no plan
amendment that is not the subject of a favorable determination letter would
affect the validity of an Employee Plan's letter; (ii) no prohibited
transaction, within the definition of section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject Cox to any liability that could
become a liability of GCI; and (iii) all contributions, premiums or payments
accrued, in whole or in part, under each Employee Plan or Compensation
Arrangement or with respect thereto as of the Closing will be paid by the Cox
prior to the Closing.
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(f) For purposes of this Section, the following terms shall have
the meaning indicated: (i) "Employee Plan" shall mean any pension,
profit-sharing, deferred compensation, vacation, bonus, incentive, medical,
vision, dental, disability, life insurance or any other employee benefit plan
as defined in Section 3(3) of ERISA to which Cox or any entity related to Cox
(under the terms of Section 414(b), (c), (m) or (o) of the Code) contributes or
to which Cox or any entity related to Cox (under the terms of Section 414(b),
(c), (m) or (o) of the Code) sponsors, maintains or otherwise is bound which
provides benefits to persons employed or previously employed at the Cox
Stations; (ii) "Code" shall mean the Internal Revenue Code of 1986, as amended,
any successor thereto and any regulations promulgated thereunder; (iii)
"Compensation Arrangement" shall mean any plan or compensation arrangement
other than an Employee Plan, whether written or unwritten, which provides to
persons employed or previously employed at the Cox Stations any compensation or
other benefits, whether deferred or not, in excess of base salary or wages,
including, but not limited to, any bonus or incentive plan, stock rights plan,
deferred compensation arrangement, life insurance, stock purchase plan,
severance pay plan and any other employee fringe benefit plan; (iv) "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended, any
successor thereto and any regulations promulgated thereunder; and (v)
"Multi-employer Plan" means a plan, as defined in ERISA Section 3(37), to which
Cox or any entity related to Cox (under the terms of Section 414(b) or (c) of
the Code) contributes or is required to contribute.
5.21 LABOR RELATIONS. Cox is not a party to or subject to any
collective bargaining agreements with respect to the Cox Stations. Cox has no
written or oral contracts of employment with any employee of the Cox Stations,
other than those listed in Schedule 1.3A. Cox has 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, discrimination, and the payment of social security and
other payroll related taxes, and it has not received any written notice
alleging that it has failed to comply in any material respect with any such
laws, rules, or regulations. No controversies, disputes, or proceedings are
pending or, to the best of Cox's knowledge, threatened, between it and any
employee (singly or collectively) of the Cox Stations. No labor union or other
collective bargaining unit represents or claims to represent any of the
employees of the Cox Stations. There is no union campaign being conducted to
represent employees of the Cox Stations or to solicit cards from employees to
authorize a union to request a National Labor Relations Board certification
election with respect to any employees at the Cox Stations.
5.22 FINANCIAL STATEMENTS. Schedule 5.22 contains true and complete
copies of the unaudited balance sheet of the Cox Stations as at December 31,
1995, and an unaudited statement of income and expenses of the Cox Stations for
the one-year period ending December 31, 1995, as well as unaudited statements
of income and expenses of the Cox Stations for each of the calendar months in
1996 prior to May (the "Cox Financial Statements"). The Cox Financial
Statements were prepared in accordance with the books and records of Cox in
conformity with generally accepted accounting principles consistent with past
practices (except for normal year-end adjustments) and fairly present the
results of operations of the Cox Stations for the respective periods covered
thereby.
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5.23 DEFINITION OF KNOWLEDGE. For the purposes of this Agreement, "to
the best of Cox's knowledge" or any similar formulation thereof means to the
actual knowledge of Robert F. Neil, Michael Disney and John Valenta, after due
inquiry in the respective areas of their responsibility, and "to the best of
CBI's knowledge" or any similar formulation thereof means to the actual
knowledge of Nicholas D. Trigony, Robert F. Neil, John F. Swanson and Andrew A.
Merdek, after due inquiry in the respective areas of their responsibility.
5.24 CBI REPRESENTATION AND WARRANTY. CBI hereby represents and
warrants that, to the best of its knowledge, the representations and warranties
of Cox contained in this SECTION 5 are true and correct.
6. REPRESENTATIONS AND WARRANTIES OF GCI. GCI hereby represents and
warrants to Cox as follows.
6.1 ORGANIZATION; GOOD STANDING. GCI (i) is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware; (ii) is qualified to do business as a foreign corporation and is
in good standing under the laws of the State of Florida; (iii) on or prior to
the Closing will be qualified to do business as a foreign corporation and will
be in good standing under the laws of the State of Illinois; and (iv) has all
requisite corporate power and authority to own and operate the GCI Assets, to
carry on its business as now being conducted, to enter into this Agreement and
to perform its obligations hereunder.
6.2 AUTHORITY. GCI has the full right and authority to execute and
deliver this Agreement, to perform its obligations hereunder, and to consummate
the transactions provided for herein. All required corporate action with
respect to GCI has been taken to approve this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by GCI
and constitutes the valid and binding obligation of GCI, enforceable against
GCI in accordance with its terms, except as such enforceability may be limited
by bankruptcy and similar laws affecting the rights of creditors generally and
general principles of equity. Except as expressly provided in this Agreement,
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the performance by GCI of this Agreement
in accordance with its terms will not require the approval or consent of or
notice to any foreign, federal, state, county, local or other governmental or
regulatory body.
6.3 NO BREACH OR VIOLATION. Except as set forth on Schedule 6.3, the
execution and delivery by GCI of this Agreement, the consummation by GCI of the
transactions contemplated hereby, and compliance by GCI with the terms hereof,
do not and will not:
(i) violate or result in the breach of or contravene any of the
terms, conditions or provisions of, or constitute a default under, GCI's
Certificate of Incorporation or Bylaws, or any law, regulation, order, writ,
injunction, decree, determination or award of any court, governmental
department, board, agency or instrumentality, domestic or foreign, or any
arbitrator, applicable to GCI or its assets and properties; or
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(ii) except for those consents listed in Schedule 6.3, result in
prohibited action under any term or provision of, the material breach of any
term or provision of, the termination of, or the acceleration or permitting the
acceleration of the performance required by the terms of, or constitute a
default under or require the consent of any party to, any loan agreement,
indenture, mortgage, deed of trust or other contract, agreement or instrument,
to which GCI is a party or by which it is bound; or
(iii) cause the suspension or revocation of any of the GCI
Licenses.
6.4 APPROVALS. Except as set forth on Schedule 6.4 and except for the
consent of the FCC, no authorizations, approvals or consents from any
governmental or regulatory authorities or agencies are necessary to permit GCI
to execute and deliver this Agreement and to perform its obligations hereunder.
6.5 NO LITIGATION. Except as set forth on Schedule 6.5, there are no
actions, suits, investigations or proceedings pending or, to the best of GCI's
knowledge, threatened against or affecting the GCI Assets, in any court or
before any arbitrator, or before or by any governmental department, commission,
bureau, board, agency or instrumentality, domestic or foreign, which, if
adversely determined, would impair the ability of GCI to perform its
obligations hereunder or would impair or hinder the ability or right of Cox to
operate the GCI Stations after the Closing in the manner heretofore operated by
GCI.
6.6 BROKERAGE. GCI has not dealt with any broker or finder in
connection with any of the transactions contemplated by this Agreement, and, to
the best of GCI's knowledge, no other person is entitled to any commission or
finder's fee in connection with any of these transactions.
6.7 TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY. Except as
specified on Schedule 6.7:
(a) except for Permitted Liens, GCI has good title to the GCI
Tangible Personal Property free and clear of all Liens;
(b) all of the GCI Tangible Personal Property is in a good state
of repair and operating condition subject to normal repair, maintenance and
replacement;
(c) all of the technical equipment included in the GCI Tangible
Personal Property is in a good state of repair and operating condition
(ordinary wear and tear excepted) and complies in all material respects with
all applicable FCC rules and regulations, the Act and all other applicable
laws, rules, regulations, and ordinances; and
(d) GCI owns, directly or indirectly, all assets, properties,
rights, franchises, claims and agreements of every kind and description used to
conduct the business and operations of the GCI Stations as they are presently
conducted.
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6.8 TITLE TO AND CONDITION OF REAL PROPERTY. Schedule 1.2B lists all
of the GCI Real Property used in the operation of the GCI Stations, and GCI has
good and marketable title, or valid and subsisting leasehold interests, in and
to the GCI Real Property. Except as disclosed on Schedule 6.8, all of the GCI
Real Property is owned free and clear of all Liens except for Permitted Liens,
and with respect to each leasehold or subleasehold interest included in the GCI
Real Property, so long as GCI fulfills its obligations under the lease
therefor, GCI has enforceable rights to nondisturbance and quiet enjoyment, and
no third party holds any interest in the leased premises with the right to
foreclose upon GCI's leasehold or subleasehold interest. All improvements on
the GCI Real Property are in compliance with applicable zoning and land use
laws, ordinances and regulations in all respects necessary to conduct the
operation of the GCI Stations operating thereon as presently conducted, except
for any instances of noncompliance which do not and will not in the aggregate
have a material adverse effect on the owner or lessee, as the case may be, of
such GCI Real Property. All such improvements are in good working condition
and repair, are insurable at standard rates, and comply in all material
respects with FCC rules and regulations and all other applicable Federal, state
and local statutes, ordinances and regulations. Except as disclosed on Schedule
6.8, all of the transmitting towers, ground radials, guy anchors, transmitter
buildings and related improvements located on the GCI Real Property are located
entirely on the GCI Real Property. GCI has no knowledge of any pending,
threatened or contemplated action to take by eminent domain or otherwise to
condemn any part of the GCI Real Property. With respect to each parcel of GCI
Real Property that GCI owns, (i) GCI has obtained and delivered to Cox, at
Cox's expense, a commitment for an ALTA Owner's Policy of Title Insurance Form
B-1987, in an amount equal to the fair market value of the property and any
improvements thereon (as reasonably determined by GCI), insuring title to such
parcel, subject only to liens or encumbrances expressly permitted by this
Agreement, and (ii) GCI has procured and delivered to Cox, at Cox's expense, a
current survey of each parcel of GCI Real Property that GCI owns and for which
a title insurance policy has been procured, prepared by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for Land Title Surveys,
disclosing the location of all improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters customarily shown on such surveys,
and showing access affirmatively to public streets and roads.
6.9 CONFLICT WITH GCI CONTRACTS. Except for (a) contracts or
commitments for the sale of advertising time for cash at prevailing rates, and
(b) contracts or commitments involving less than Twenty-Five Thousand Dollars
($25,000) individually per year or One Hundred Thousand Dollars in the
aggregate per year, Schedule 1.3B lists all of the GCI Contracts and all trade
and barter agreements currently in effect as they relate to the business or
operation of the GCI Stations as of the date of this Agreement. Except as set
forth on Schedule 6.9, each GCI Contract is valid and binding (except to the
extent that the invalidity or nonbinding nature of any GCI Contract would not
have a material adverse effect on GCI) and is in full force and effect in
accordance with its terms. GCI has not granted any material waivers of or
forebearances under the GCI Contracts, and, to the best of GCI's knowledge, no
third party is in material default in the performance of any of its obligations
under any such GCI Contract, and no event or circumstance has occurred, which,
with the giving of notice or the lapse of time or both, would constitute a
material default by GCI under any GCI Contract. Except for those
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consents listed on Schedule 6.3, no consents of any third party are necessary
to permit the assignment by GCI of the GCI Contracts to Cox and such assignment
will not affect the validity or enforceability of any such GCI Contract or
cause any material change in the substantive terms thereof.
6.10 LICENSES. Schedule 1.4B accurately and completely lists all
material authorizations, licenses, permits and franchises of any private entity
or public or governmental body granted or assigned to GCI with respect to the
GCI Stations. All of the GCI Licenses are validly issued and in full force and
effect and GCI has full power and authority to operate the GCI Stations
thereunder. GCI holds all authorizations, licenses, permits and franchises
necessary to enable it to conduct its business of operating the GCI Stations in
all material respects as presently conducted. To the best of its knowledge, GCI
is qualified legally, financially and otherwise to become the assignee of the
Cox FCC Licenses, under the Act, and the rules and regulations of the FCC as in
effect on the date of this Agreement.
6.11 INTANGIBLE ASSETS. Other than as set forth on Schedule 1.5B,
there are no material patents, patent applications, trademarks, trade names,
service marks, copyright registrations or copyright applications licensed or
used by or registered in the name of GCI which apply to the GCI Stations. To
the best of GCI's knowledge, GCI owns all right and interest in, and right and
authority to use in connection with the conduct of the business of the GCI
Stations as presently conducted, free and clear of all Liens and without
infringing on the rights of any party, all of the GCI Intangible Assets. To the
best of GCI's knowledge, there are no outstanding or threatened judicial or
adversary proceedings with respect to the GCI Intangible Assets.
6.12 FCC COMPLIANCE. Except as shown on Schedule 6.12, the GCI
Stations have been operated at all times by GCI in material accordance with the
terms of the GCI FCC Licenses, the Communications Act, and all applicable
rules, regulations and policies of the FCC. GCI has timely filed or made all
applications, reports, and other disclosures required by the FCC to be filed or
made with respect to the GCI Stations. The GCI FCC Licenses are valid and in
full force and effect. Except as shown on Schedule 6.12, no application, action
or proceeding is pending for the renewal or modification of any of the GCI FCC
Licenses and, to the best of GCI's knowledge, there is not now issued or
outstanding any investigation or material complaint against GCI at the FCC as
of the date of this Agreement relating to the GCI Stations. There is no
proceeding pending at the FCC, and there is no outstanding notice of violation
from the FCC as of the date of this Agreement relating to the GCI Stations. All
fees payable to governmental authorities, including FCC annual regulatory fees,
pursuant to the GCI FCC Licenses have been paid and no event has occurred
which, individually or in the aggregate, and with or without the giving of
notice or the lapse of time or both, would constitute grounds for revocation
thereof or would have a material adverse effect on the business or financial
condition of the GCI Stations.
6.13 COMPLIANCE WITH LAWS. GCI has all licenses, permits or other
authorizations of governmental, regulatory or administrative agencies required
to conduct its business with respect to the GCI Stations in all material
respects as currently conducted. No
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judgment, decree, order or notice of violation has been issued by any such
agency or authority which permits, or would permit, revocation, modification or
termination of any such governmental permit, license or authorization or which
results or could result in any material impairment of any rights thereunder.
With respect to the GCI Stations, GCI is in material compliance with all
applicable federal, state, local or foreign laws, regulations, statutes, rules,
ordinances, directives and orders and any other requirements of any
governmental, regulatory or administrative agency or authority or court or
other tribunal applicable to it.
6.14 ENVIRONMENTAL MATTERS. Without limiting the generality of
SECTION 6.13, except as disclosed on Schedule 6.14, to the best of GCI's
knowledge, all of the GCI Real Property is free of any substantial amounts of
(1) waste or debris; (2) "hazardous waste" as defined by RCRA, or any
"hazardous substance" as defined in the statutes of Florida, as amended from
time to time, and regulations promulgated thereunder, or as defined by CERCLA,
and regulations promulgated thereunder; (3) any substance the presence of which
on the GCI Real Property is prohibited by any federal, state or local
environmental law; and (4) any materials which, under federal, state, or local
environmental law, require special handling in collection, storage, treatment
or disposal. Without limiting the generality of the foregoing, except as
disclosed on Schedule 6.14, to the best of GCI's knowledge, there are no
installations on the GCI Real Property which contain PCBs or asbestos in
quantities sufficient to mandate the removal of such PCBs or asbestos in
accordance with federal, state or local government environmental standards or
to warrant the imposition of any penalty, civil or criminal, against GCI. GCI
has delivered to Cox a Phase I environmental survey of the GCI Real Property
owned by GCI.
6.15 INSURANCE. The insurable properties relating to the business of
the GCI Stations and the conduct of the business of the GCI Stations are, and
will be until the Closing Date, in the reasonable judgment of GCI, adequately
insured.
6.16 BULK SALES. The provisions of the Bulk Sales laws of the State
of Florida do not apply to the transfer of the GCI Assets in accordance with
the terms of this Agreement.
6.17 ACCURACY OF INFORMATION FURNISHED. No statement by GCI contained
in this Agreement or in any Schedule or Exhibit hereto contains any material
untrue statement of a material fact.
6.18 CONDUCT OF BUSINESS IN ORDINARY COURSE. Between December 31,
1995 and the date hereof, GCI has conducted the business and operations of the
GCI Stations only in the ordinary course and substantially consistent with past
practice and has not:
(a) suffered any material adverse change in the business,
assets, properties, financial condition or prospects of GCI pertaining to the
GCI Stations, including any damage, destruction or loss affecting the GCI
Assets; or
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(b) made any sale, assignment, lease or other transfer of any of
GCI's properties used in connection with the GCI Stations other than in the
ordinary course of business and consistent with past practices, except for (i)
the sale by GCI's sole shareholder to Infinity of the capital stock of GCI, and
(ii) the merger of GCI Orange, Inc., GCI Orange II, Inc., GCI Orlando, Inc. and
GCI Orlando II, Inc. into GCI.
6.19 TAXES. GCI has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and GCI has paid or caused to be paid all taxes
as shown on those returns or on any tax assessment received by GCI to the
extent that such taxes have become due, or has set aside on its books adequate
reserves (segregated to the extent required by generally accepted accounting
principles) with respect thereto. There are no governmental investigations or
other legal, administrative, or tax proceedings pending, or to the best of
GCI's knowledge, threatened pursuant to which GCI is or could be made liable
for any taxes, penalties, interest, or other charges, the liability for which
could extend to Cox as transferee of the business of the GCI Stations, and no
event has occurred that could impose on Cox any transferee liability for any
taxes, penalties, or interest due or to become due from GCI.
6.20 PERSONNEL.
(a) All of GCI's Employee Plans and Compensation Arrangements
are listed in Schedule 6.20, and complete and accurate copies of any such
written Employee Plans and Compensation Arrangements (or related insurance
policies) have been furnished to Cox, along with copies of any employee
handbooks or similar documents describing such Employee Plans and Compensation
Arrangements. Schedule 6.20 also includes a description of any unwritten
Employee Plans or Compensation Arrangements. Schedule 6.20 also contains a true
and complete list of all employees of the GCI Stations, their job descriptions,
dates of hire and amounts and dates of last salary increase as of the date of
this Agreement.
(b) Each Employee Plan and Compensation Arrangement has been
administered in compliance with its own terms and in material compliance with
the provisions of ERISA, the Code, the Age Discrimination in Employment Act and
any other applicable Federal or state laws. GCI is not aware of any pending
governmental audit or examination of any Employee Plan or Compensation
Arrangement or of any facts which would lead it to believe that any such audit
or examination is threatened. There exists no action, suit or claim (other than
routine claims for benefits) with respect to any Employee Plan or Compensation
Arrangement pending or, to the best knowledge of GCI, threatened against any of
such plans or arrangements, and GCI possesses no knowledge of any facts which
could give rise to any such action, suit or claim.
(c) GCI does not contribute to and is not required to contribute
to any Multi-employer Plan with respect to the employees of the GCI Stations,
and neither GCI nor any other trade or business under common control with GCI
(within the meaning of Sections 414(b),
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(c), (m) or (o) of the Code) has incurred or reasonably expects to incur any
"withdrawal liability," as defined under Section 4201 et seq. of ERISA.
(d) Except as described in Schedule 6.20, neither GCI nor any
other trade or business under common control with GCI (within the meaning of
Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or
contributes to any Employee Plan or Compensation Arrangement that provides
retiree medical or retiree life insurance coverage to employees of GCI at the
GCI Stations upon their retirement.
(e) Except as described in Schedule 6.20, with respect to each
Employee Plan and, to the extent applicable, each Compensation Arrangement: (i)
each Employee Plan that is intended to be tax-qualified, and each amendment
thereto, is the subject of a favorable determination letter, and no plan
amendment that is not the subject of a favorable determination letter would
affect the validity of an Employee Plan's letter; (ii) no prohibited
transaction, within the definition of section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject GCI to any liability that could
become a liability of GCI; and (iii) all contributions, premiums or payments
accrued, in whole or in part, under each Employee Plan or Compensation
Arrangement or with respect thereto as of the Closing will be paid by the GCI
prior to the Closing.
(f) For purposes of this Section, the following terms shall have
the meaning indicated: (i) "Employee Plan" shall mean any pension,
profit-sharing, deferred compensation, vacation, bonus, incentive, medical,
vision, dental, disability, life insurance or any other employee benefit plan
as defined in Section 3(3) of ERISA to which GCI or any entity related to GCI
(under the terms of Section 414(b), (c), (m) or (o) of the Code) contributes or
to which GCI or any entity related to GCI (under the terms of Section 414(b),
(c), (m) or (o) of the Code) sponsors, maintains or otherwise is bound which
provides benefits to persons employed or previously employed at the GCI
Stations; (ii) "Code" shall mean the Internal Revenue Code of 1986, as amended,
any successor thereto and any regulations promulgated thereunder; (iii)
"Compensation Arrangement" shall mean any plan or compensation arrangement
other than an Employee Plan, whether written or unwritten, which provides to
persons employed or previously employed at the GCI Stations any compensation or
other benefits, whether deferred or not, in excess of base salary or wages,
including, but not limited to, any bonus or incentive plan, stock rights plan,
deferred compensation arrangement, life insurance, stock purchase plan,
severance pay plan and any other employee fringe benefit plan; (iv) "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended, any
successor thereto and any regulations promulgated thereunder; and (v)
"Multi-employer Plan" means a plan, as defined in ERISA Section 3(37), to which
GCI or any entity related to GCI (under the terms of Section 414(b) or (c) of
the Code) contributes or is required to contribute.
6.21 LABOR RELATIONS. GCI is not a party to or subject to any
collective bargaining agreements with respect to the GCI Stations. GCI has no
written or oral contracts of employment with any employee of the GCI Stations,
other than those listed in Schedule 1.3B. GCI has complied in all material
respects with all laws, rules, and regulations relating to the
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employment of labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination, and the payment of social
security and other payroll related taxes, and it has not received any written
notice alleging that it has failed to comply in any material respect with any
such laws, rules, or regulations. No controversies, disputes, or proceedings
are pending or, to the best of GCI's knowledge, threatened, between it and any
employee (singly or collectively) of the GCI Stations. No labor union or other
collective bargaining unit represents or claims to represent any of the
employees of the GCI Stations. There is no union campaign being conducted to
represent employees of the GCI Stations or to solicit cards from employees to
authorize a union to request a National Labor Relations Board certification
election with respect to any employees at the GCI Stations.
6.22 FINANCIAL STATEMENTS. Schedule 6.22 contains true and complete
copies of the unaudited balance sheet of the GCI Stations as at December 31,
1995, and an unaudited statement of income and expenses of the GCI Stations for
the one-year period ending December 31, 1995, as well as unaudited statements
of income and expenses of the GCI Stations for each of the calendar months in
1996 prior to May (the "GCI Financial Statements"). The GCI Financial
Statements were prepared in accordance with the books and records of GCI in
conformity with generally accepted accounting principles consistent with past
practices (except for normal year-end adjustments) and fairly present the
results of operations of the GCI Stations for the respective periods covered
thereby.
6.23 DEFINITION OF KNOWLEDGE. For the purposes of this Agreement, "to
the best of GCI's knowledge" or any similar formulation thereof means to the
actual knowledge of Mark Warlaymont and the GCI Stations' Chief Engineer, after
due inquiry in the respective areas of their responsibility, and "to the best
of Infinity's knowledge" or any similar formulation thereof means to the actual
knowledge of Mel Karmazin and Farid Suleman after due inquiry in the respective
areas of their responsibility.
6.24 INFINITY REPRESENTATION AND WARRANTY. Infinity hereby represents
and warrants that, to the best of its knowledge, the representations and
warranties of GCI contained in this SECTION 6 are true and correct.
7. COVENANTS OF THE PARTIES. The parties hereby covenant to each
other as follows.
7.1 FCC APPLICATIONS. Following the date of this Agreement, the
parties shall proceed as expeditiously as practicable to file or cause to be
filed an application with the FCC requesting consent to the assignment of the
Cox FCC Licenses to GCI (the "Cox FCC Application") and an application with the
FCC requesting consent to the assignment of the GCI FCC Licenses to Cox (the
"GCI FCC Application"), such applications to be duly filed with the FCC by the
parties contemporaneously as contingent applications. The parties agree that
the Cox FCC Application and the GCI FCC Application (together, the "FCC
Applications") shall be filed not later than ten (10) business days after the
date of this Agreement, and that the FCC Applications shall be prosecuted by
each party in good faith and with due diligence. Cox and GCI shall cooperate
with each other in the preparation, filing and prosecution of the FCC
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Applications. Should Cox or GCI become aware of facts which could reasonably be
expected to affect or delay in a material and adverse manner, the FCC's grant
of its consent to the FCC Applications, such party shall promptly notify the
other party in writing and in accordance with the notices provisions set forth
in SECTION 14. If the Closing shall not have occurred for any reason within the
original effective period of the consent of the FCC to the FCC Applications,
and neither party shall have terminated this Agreement under SECTION 10, the
parties shall jointly request extensions of the effective period of the FCC
consents. Each party shall bear its own FCC filings fees required to
consummate the transactions contemplated hereby.
7.2 CONDUCT OF BUSINESS. Prior to the Closing, each of the parties
shall conduct the business and operations of the Stations owned by it in the
ordinary course of business, consistent with current practice, and in
accordance with the provisions of the Time Brokerage Agreements. Without
limiting the generality of the foregoing, each of the parties agrees that,
except as required or contemplated by this Agreement or the Time Brokerage
Agreements or otherwise consented to or approved by the other party in writing,
during the period commencing on the date of this Agreement and ending on the
Closing Date, each party will, with respect to the Stations owned by it:
(a) maintain the records relating to the business of the
Stations owned by it in the usual, regular and ordinary manner, comply in all
material respects with all laws and contractual obligations applicable to such
Stations or to the conduct of the business of such Stations and perform all
material obligations relating to the business of such Stations;
(b) (i) operate the Stations owned by it in conformity with
their respective FCC Licenses and any special temporary authority or program
test authority issued thereunder, the Communications Act and the rules and
regulations of any other governmental body with jurisdiction over such Stations
and (ii) take all actions necessary to maintain the FCC Licenses for such
Stations;
(c) refrain from changing the frequency or format or making any
material changes in studios or other structures of the Stations owned by it,
except to the extent required by the rules and regulations of the FCC;
(d) not make any material changes in the broadcast hours or in
the percentage or types of programming broadcast by the Stations owned by it,
or make any other material changes in such Stations' programming policies,
except such changes as in the good faith judgment of such party are required by
the public interest;
(e) not (i) dispose of any of the Cox Assets or the GCI Assets,
as the case may be (other than for the disposition in the ordinary course of
business of immaterial assets that are of no further use to such Stations) or
(ii) modify or change in any material respect the Cox Contracts or the GCI
Contracts;
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(f) notify the other party promptly if a Station's normal
broadcast transmissions are interrupted or impaired for thirty (30) minutes or
more for a period of five (5) consecutive days or for seven (7) days within any
thirty (30) day period (except for normal maintenance) or for a period of six
(6) continuous hours or more;
(g) not create, assume or permit to exist any Lien upon the Cox
Assets or the GCI Assets, respectively, except for Permitted Liens;
(h) not waive any material right relating to the Stations owned
by it or any of the Cox Assets or GCI Assets, respectively;
(i) except to the extent responsibility for the maintenance and
use of the Cox Assets and GCI Assets has been delegated to the other party
pursuant to the Time Brokerage Agreements, maintain all of the Cox Assets and
GCI Assets, respectively, in good condition (ordinary wear and tear excepted),
and use, operate, and maintain all of the Cox Assets and GCI Assets,
respectively, in a reasonable manner and maintain inventories of spare parts
and expendable supplies at levels consistent with past practices. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Cox
Assets or GCI Assets occurs, Cox and GCI, respectively, shall repair, replace,
or restore such assets to their prior condition as represented in this
Agreement as soon thereafter as possible, and shall use the proceeds of any
claim under any insurance policy solely to repair, replace or restore any of
such assets that are lost, damaged, impaired or destroyed;
(j) maintain the existing insurance policies or comparable
insurance policies on the Stations owned by it and the Cox Assets and GCI
Assets, respectively; and
(k) comply in all material respects with all laws, rules, and
regulations applicable or relating to the ownership and operation of such
Stations.
7.3 NO SOLICITATION OF THIRD PARTIES OR EMPLOYEES.
(a) Neither party nor any of its subsidiaries, nor any of its
directors, officers, employees, representatives or agents shall, directly or
indirectly, solicit or initiate inquiries or proposals from, or enter into any
agreement with respect to, or provide any confidential information to or
participate in any discussions or negotiations with, any corporation,
partnership, person or other entity or group concerning any sale to such party
of all or substantially all of the assets of the Stations owned by it (whether
directly or through a merger or sale of stock of Cox or GCI). The parties will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any third parties conducted heretofore with
respect to any of the foregoing.
(b) For one (1) year from the Effective Date of the Time
Brokerage Agreements, and except for the individuals listed on Schedule 7.3,
neither party nor any of its subsidiaries, nor any of its directors, officers,
employees, representatives or agents, shall directly
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or indirectly solicit for hire or hire any employee of the Stations owned by it
prior to such Effective Date.
7.4 ACCESS. Prior to the Closing, each party shall give to the other
party and its representatives full and reasonable access during normal business
hours to all of the party's properties, books, contracts, reports and records
including financial information, in each case relating to such party's
Stations, in order that the parties may have full opportunity to make such
investigation as they desire of such Stations, and each party shall furnish the
other party with such information as such other party may reasonably request in
connection therewith. The rights of the parties under this Section shall not be
exercised in such a manner as to interfere unreasonably with the business of
either party's Stations.
7.5 INCONSISTENT ACTIONS. Prior to the Closing, neither Cox nor GCI
shall take any action which is materially inconsistent with its obligations
under this Agreement, or that could hinder or delay the consummation of the
transactions contemplated by this Agreement.
7.6 COOPERATION. Each party 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 obligations under this Agreement, and
each party will use its best efforts to consummate the transactions
contemplated hereby and to fulfill its obligations hereunder including without
limitation, each party's obligation to ensure that the transactions
contemplated hereby are accomplished in a manner enabling the transfer of the
Cox Assets and GCI Assets to qualify as part of a like-kind exchange within the
meaning of Section 1031 of the Code, including without limitation the manner in
which the cash payment defined in Section 2 is made and the assets are
transferred through a qualified intermediary under applicable Treasury
Regulations.
7.7 CONTROL OF THE STATIONS. Prior to Closing, neither party shall,
directly or indirectly, control, supervise, or direct, or attempt to control,
supervise or direct the operations of the other party's Stations; those
operations, including complete control and supervision of all Station programs,
employees, and policies, shall be the sole responsibility of the Station's
licensee.
7.8 RISK OF LOSS. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Cox Assets from any cause
whatsoever shall be borne by Cox at all times prior to the Closing. The risk of
any loss, damage, impairment, confiscation, or condemnation of any of the GCI
Assets from any cause whatsoever shall be borne by GCI at all times prior to
the Closing.
7.9 THIRD PARTY CONSENTS. Between the date of this Agreement and the
Closing, Cox and GCI shall use their respective reasonable efforts to obtain
the consent of any third party necessary for the assignment of any contract or
agreement to be assigned hereunder. In the event a consent or waiver required
with respect to the assignment of a contract has not been obtained before the
Closing, Cox or GCI (as the case may be) shall use its reasonable best
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efforts to provide the other party with the benefits of any such contract,
including without limitation, permitting such other party to enforce any rights
of Cox or GCI under such contract.
7.10 INTENTIONALLY OMITTED.
7.11 EMPLOYEE MATTERS.
(a) Except for those employees hired by GCI or Cox, as the case
may be, pursuant to the Time Brokerage Agreements, and except for those
employees listed on Schedule 7.11, at the Closing, Cox shall offer employment
to the employees of the GCI Stations, and GCI shall offer employment to the
employees of the Cox Stations (employees who continue employment with GCI or
Cox on or after the Closing Date are referred to herein as the "GCI Transferred
Employees" or the "Cox Transferred Employees", as the case may be). During the
period commencing on the Closing Date and ending on the one year anniversary of
the Closing Date, the terms and conditions of the employment of the GCI
Transferred Employees and the Cox Transferred Employees shall be at-will
employment in the same positions, for the same direct cash compensation, with
employee benefit plans which in the aggregate are substantially comparable to
those currently provided to such employees. With respect to any welfare benefit
plans (as defined in Section 3(1) of ERISA) for the benefit of Transferred
Employees on or after the Closing Date, GCI or Cox, as the case may be, shall
(a) cause there to be waived any pre-existing condition limitations, and (b)
give effect, in determining any deductible and maximum out-of-pocket
limitations, to claims incurred and paid by, and amounts reimbursed to such GCI
or Cox Transferred Employees, as the case may be, with respect to similar plans
currently provided to such employees.
(b) For purposes of determining the amount of any entitlement of
any GCI or Cox Transferred Employee under any vacation policy currently
maintained by Cox ("Cox Vacation Policy"), or any vacation policy currently
maintained by GCI ("GCI Vacation Policy"), respectively, GCI and Cox will take
into account and credit such employee's length of service with the Station's
current owner as well as with the party acquiring such Station hereunder. With
respect to any accrued but unused vacation to which any Cox Transferred
Employee is entitled under the GCI Vacation Policy applicable to such employee
prior to the Closing Date, and with respect to any accrued but unused vacation
to which any GCI Transferred Employee is entitled under the Cox Vacation Policy
applicable to such employee prior to the Closing Date, GCI or Cox, as the case
may be, shall allow such employee to use such accrued vacation; provided,
however, that if GCI or Cox, as the case may be, deems it necessary to disallow
such employee from taking such accrued vacation, then GCI or Cox shall be
liable for and pay in cash to each such employee an amount equal to such
vacation time in accordance with the applicable vacation policy; provided,
further, that GCI or Cox, as the case may be, shall be liable for and pay in
cash an amount equal to such accrued vacation time to any Cox or GCI
Transferred Employee whose employment terminates for any reason other than
Cause prior to the one year anniversary of the Closing Date. "Cause" shall be
limited to (i) willful action by a GCI or Cox Transferred Employee involving
malfeasance or misconduct in connection with his employment, (ii) continuing
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refusal by a GCI or Cox Transferred Employee to substantially perform his
duties under his employment agreement or pursuant to any lawful direction, as
applicable, (after such employee has been notified of the duties or direction
that he has failed to perform and been provided with an opportunity to perform
such duties or direction), (iii) any breach by a GCI or Cox Transferred
Employee of the provisions of his employment agreement, if any, or (iv) a GCI
or Cox Transferred Employee's commission of any felony or any misdemeanor
involving moral turpitude.
(c) Cox and GCI agree that during the period commencing on the
Effective Date of the Time Brokerage Agreements and ending on the one year
anniversary of such Effective Date, for those employees of the GCI Stations
that Cox has hired and those employees of the Cox Stations that GCI has hired
pursuant to the Time Brokerage Agreements, Cox or GCI, as the case may be, will
provide employee benefit plans which in the aggregate are substantially
comparable to those currently provided by the Stations' current owner and in
accordance with the terms and conditions of the Time Brokerage Agreements.
(d) No provisions of this Agreement shall create any third party
beneficiary rights of any employee or former employee (including any
beneficiary or dependent thereof) of GCI or Cox in respect of continued
employment (or resumed employment) with GCI or with Cox or in respect of any
other matter.
7.12 COMPLIANCE WITH HSR ACT. If the transactions contemplated by
this Agreement are subject to the filing requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or the approval
by the U.S. Federal Trade Commission (the "FTC") and the Antitrust Division of
the U.S. Department of Justice (the "DOJ"), Cox and GCI will (i) each make such
filings as are required under Title II of the HSR Act as soon as practicable
but in no event later than ten (10) days following the date hereof, (ii)
otherwise promptly comply with the applicable requirements under the HSR Act,
including furnishing all information and filing all documents required
thereunder, (iii) furnish to each other copies of those portions of the
documents filed which are not confidential, and (iv) cooperate fully and use
their best efforts to expedite compliance with the HSR Act. Cox and GCI shall
each pay one-half of any filing fees with respect to any HSR filings required
under this Section.
8. CONDITIONS TO GCI'S OBLIGATIONS. Unless waived by GCI in writing,
all obligations of GCI under this Agreement are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions.
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Cox contained in SECTION 5 of this Agreement shall be true at
and as of the Closing Date, as if made at and as of such date; Cox shall have
performed all obligations and complied with all covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing;
and GCI shall have received from Cox a certificate or certificates in such
reasonable detail as GCI may reasonably request, signed by an officer of Cox
and dated the Closing Date, to the foregoing effect.
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<PAGE> 35
8.2 OPINION OF COUNSEL TO COX. Cox shall have delivered to GCI an
opinion of its counsel, Dow, Lohnes & Albertson, dated the Closing Date, in the
form attached as Exhibit I.
8.3 APPROVALS OF GOVERNMENTAL AUTHORITIES. Any and all governmental
approvals necessary to consummate the transactions contemplated by this
Agreement shall have been received.
8.4 NO ADVERSE PROCEEDINGS. No order shall have been issued by, and
no suit, action or other proceeding against Cox shall be pending before, any
court or governmental agency of competent jurisdiction in which it is sought to
restrain or prohibit any of the transactions contemplated by this Agreement or
to obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby; provided, however, that if Cox reasonably
determines that any pending suit, action or proceeding seeking to restrain or
prohibit the transactions contemplated hereby is unlikely to succeed on the
merits, then the pendency of such proceeding shall not prevent the Closing.
8.5 CONSENTS. The consents designated as required consents on
Schedule 5.3 shall have been obtained.
8.6 CLOSING DOCUMENTS. Cox shall have executed and delivered to GCI
the documents required to be executed and delivered by it pursuant to
SECTION 4.
8.7 NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall
not have occurred (i) any failure of the Cox Stations for any reason whatsoever
to transmit in using their licensed facilities at full power for a consecutive
period of forty-eight (48) hours or more (unless any other station in the
Chicago, Illinois Arbitron metro survey area is not broadcasting for the same
reason); (ii) any material adverse change in the assets of the Cox Stations
(including, without limitation, damage, destruction or loss to or of any of the
Cox Assets, unless covered by insurance); (iii) the filing of a petition in
bankruptcy by or against Cox; or (iv) the termination, expiration, revocation
or imposition of a materially adverse condition on the consent of the FCC to
assignment of the Cox FCC Licenses or on any of the Cox FCC Licenses.
8.8 FCC CONSENT. The FCC shall have given its consent to the FCC
Applications and to the transactions contemplated hereby and such grant shall
not have been reversed, stayed, enjoined, set aside, annulled or suspended, and
there shall be no petition for stay, reconsideration or administrative or
judicial appeal or sua sponte action of the FCC with comparable effect pending,
and the time for filing any such petition or appeal (administrative or
judicial) or for the taking of any such sua sponte action of the FCC shall have
expired (a "Final Order").
8.9 RESOLUTIONS. Cox shall have delivered to GCI resolutions adopted
by the Board of Directors, and, if required, the stockholder of Cox,
authorizing and approving the execution and delivery of this Agreement and the
consummation of the transactions
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contemplated hereby, certified by the Secretary of Cox as being true and
complete as of the Closing Date.
8.10 TIME BROKERAGE AGREEMENTS. Cox shall have performed in all
material respects all of its covenants and agreements required to be performed
by it under the Time Brokerage Agreements.
8.11 HSR ACT. If legally required, all filings with the FTC and the
DOJ pursuant to the HSR Act shall have been made and all applicable waiting
periods with respect to such filings (including any extensions thereof) shall
have expired or been terminated and no actions shall have been instituted which
are pending on the Closing Date by the FTC or DOJ challenging or seeking to
enjoin the consummation of this transaction.
9. CONDITIONS TO COX'S OBLIGATIONS. Unless waived by Cox in writing
in its sole discretion, all obligations of Cox under this Agreement are subject
to the fulfillment, prior to or at the Closing, of each of the following
conditions.
9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of GCI contained in SECTION 6 of this Agreement shall be true at
and as of the Closing Date, as if made at and as of such date; GCI shall have
performed all obligations and complied with all covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing;
and Cox shall have received from GCI a certificate or certificates in such
reasonable detail as Cox may reasonably request, signed by an officer of GCI
and dated the Closing Date, to the foregoing effect.
9.2 CASH PAYMENT. GCI shall have delivered or caused to be delivered
to the qualified intermediary the Cash Payment described in SECTION 2.
9.3 OPINION OF COUNSEL TO GCI. GCI shall have delivered to Cox an
opinion of its corporate counsel, and its counsel, Leventhal, Senter & Lerman,
dated the Closing Date, substantially in the form attached as Exhibit II.
9.4 APPROVALS OF GOVERNMENTAL AUTHORITIES. Any and all governmental
approvals necessary to consummate the transactions contemplated by this
Agreement shall have been received.
9.5 NO ADVERSE PROCEEDINGS. No order shall have been issued, and no
suit, action or other proceeding against GCI shall be pending before, any court
or governmental agency of competent jurisdiction in which it is sought to
restrain or prohibit any of the transactions contemplated by this Agreement or
to obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby; provided, however, that if GCI reasonably
determines that any pending suit, action or proceeding seeking to restrain or
prohibit the transactions contemplated hereby is unlikely to succeed on the
merits, then the pendency of such proceeding shall not prevent the Closing.
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9.6 CONSENTS. The consents designated as required consents on
Schedule 6.3 shall have been obtained.
9.7 CLOSING DOCUMENTS. GCI shall have executed and delivered to Cox
the documents required to be executed and delivered by it pursuant to
SECTION 4.
9.8 NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall
not have occurred (i) any failure of the GCI Stations for any reason whatsoever
to transmit in using their licensed facilities at full power for a consecutive
period of forty-eight (48) hours or more (unless any other station in the
Orlando, Florida Arbitron metro survey area is not broadcasting for the same
reason); (ii) any material adverse change in the assets of the GCI Stations
(including, without limitation, damage, destruction or loss to or of any of the
GCI Assets, unless covered by insurance); (iii) the filing of a petition in
bankruptcy by or against GCI; or (iv) the termination, expiration, revocation
or imposition of a materially adverse condition on the consent of the FCC to
assignment of the GCI FCC Licenses or on any of the GCI FCC Licenses.
9.9 FCC CONSENT. The FCC shall have given its consent to the FCC
Applications and the transactions contemplated hereby and such consent shall
have become a Final Order.
9.10 RESOLUTIONS. GCI shall have delivered to Cox resolutions adopted
by the Board of Directors of GCI, and if required, the stockholder of GCI,
authorizing and approving the execution and delivery of the transactions
contemplated hereby, certified by the Secretary of GCI as being true and
complete as of the Closing Date.
9.11 TIME BROKERAGE AGREEMENTS. GCI shall have performed in all
material respects all covenants and agreements required to be performed by it
under the Time Brokerage Agreements.
9.12 HSR ACT. If legally required, all filings with the FTC and the
DOJ pursuant to the HSR Act shall have been made and all applicable waiting
periods with respect to such filings (including any extensions thereof) shall
have expired or been terminated and no actions shall have been instituted which
are pending on the Closing Date by the FTC or DOJ challenging or seeking to
enjoin the consummation of this transaction.
10. TERMINATION. This Agreement may be terminated by either Cox or
GCI, if the terminating party is not then in material default, upon written
notice to the other party, upon the occurrence of any of the following:
(a) Conditions. If on the Closing Date any of the conditions
precedent to the obligations of the terminating party set forth in this
Agreement have not been satisfied or waived in writing by the terminating
party.
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(b) Judgments. If there shall be in effect on the Closing Date
any final judgment, decree, or order that would prevent or make unlawful the
Closing of this Agreement.
(c) Upset Date. If the Closing shall not have occurred on or
before June 1, 1997.
(d) Breach. If the other party is in material breach of this
Agreement and the breach remains uncured notwithstanding the opportunity to
cure provisions of SECTION 11.7 hereof.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.
11.1 SURVIVAL. Except as otherwise specifically set forth herein, all
representations and warranties contained in this Agreement shall survive the
Closing for a period of six (6) months. The representations and warranties of
Cox contained in (a) SECTION 5.7 pertaining to the condition of the Cox
Tangible Personal Property; (b) SECTION 5.8 pertaining to the condition of the
Cox Real Property; (c) SECTION 5.9 with respect to those Cox Contracts that are
assigned to GCI pursuant to the terms of the Cox Time Brokerage Agreement; (d)
the first and third sentences of SECTION 5.11; (e) SECTION 5.15; (f) SECTION
5.18; and (g) SECTION 5.20 shall not survive the Closing. The representations
and warranties of GCI contained in (a) SECTION 6.7 pertaining to the condition
of the GCI Tangible Personal Property; (b) SECTION 6.8 pertaining to the
condition of the GCI Real Property; (c) SECTION 6.9 with respect to those GCI
Contracts that are assigned to Cox pursuant to the terms of the GCI Time
Brokerage Agreement; (d) the first and third sentences of SECTION 6.11; (e)
SECTION 6.15; (f) SECTION 6.18; and (g) SECTION 6.20 shall not survive the
Closing. Any investigations by or on behalf of any party hereto shall not
constitute 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
or warranty made by the party providing such notice or information 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 COX. Notwithstanding the Closing, Cox hereby
agrees, subject to SECTION 11.4(E), to indemnify and hold GCI harmless against
and with respect to, and shall reimburse GCI for:
(a) Breach. Any and all losses, liabilities, or damages
resulting from any untrue representation or breach of warranty, to the extent
such representation or warranty survives the Closing, or nonfulfillment of any
covenant by Cox contained herein or in any certificate, document, or instrument
delivered to GCI hereunder.
(b) Obligations. Any and all obligations of Cox not assumed by
GCI pursuant to the terms of this Agreement.
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(c) Ownership. Any and all losses, liabilities, or damages
resulting from (i) the operation or ownership of the Cox Stations prior to the
Closing Date, including any and all liabilities arising under the Cox Licenses
or the Cox Contracts which relate to events occurring prior to the Closing Date
or (ii) the operation or ownership of the GCI Stations on and after the Closing
Date, including any and all liabilities arising under the GCI Licenses or the
GCI Contracts which relate to events occurring after the Closing Date.
(d) Legal Matters. Any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs, and expenses, including
reasonable legal fees and expenses, incident to any of 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 LNDEMNIFICATION BY GCI. Notwithstanding the Closing, subject to
SECTION 11.4(E), GCI hereby agrees to indemnify and hold Cox harmless against
and with respect to, and shall reimburse Cox for:
(a) Breach. Any and all losses, liabilities, or damages
resulting from any untrue representation or breach of warranty, to the extent
such representation or warranty survives the Closing, or nonfulfillment of any
covenant by GCI contained herein or in any certificate, document, or instrument
delivered to Cox hereunder.
(b) Obligations. Any and all obligations of GCI not assumed by
Cox pursuant to the terms of this Agreement.
(c) Ownership. Any and all losses, liabilities, or damages
resulting from (i) the operation or ownership of the GCI Stations prior to the
Closing Date, including any and all liabilities arising under the GCI Licenses
or the GCI Contracts which relate to events occurring prior to the Closing
Date, or (ii) the operation or ownership of the Cox Stations on and after the
Closing Date, including any and all liabilities arising under the Cox Licenses
or the Cox Contracts which relate to events occurring after the Closing Date.
(d) Legal Matters. Any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses, including
reasonable legal fees and expenses, incident to any of 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) Notice. The party seeking indemnification (the "Claimant")
shall promptly give notice to the indemnifying party (the "Indemnitor") of any
claim, whether solely between the parties or brought by a third party,
specifying (i) the factual basis for the claim, and (ii) the amount of the
claim.
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(b) Investigation. With respect to claims between the parties,
following receipt of notice from the Claimant of a claim, the Indemnitor shall
have thirty (30) business days to make any investigation of the claim that the
Indemnitor deems necessary or desirable. For the purposes of this
investigation, the Claimant agrees to make available to the Indemnitor and/or
its authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnitor cannot agree as to
the validity and amount of the claim within said 30-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal remedy.
(c) Control. With respect to any claim by a third party as to
which the Claimant is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume control of
the defense of the Claim, and the Claimant shall cooperate fully with the
Indemnitor, subject to reimbursement for actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnitor. If the Indemnitor
elects to assume control of the defense of any third-party claim, the Claimant
shall have the right to participate in the defense of the claim at its own
expense. If the Indemnitor does not elect to assume control or otherwise
participate in the defense of any third party claim, it shall be bound by the
results obtained by the Claimant with respect to the claim.
(d) Immediate Action. 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) Limitations on Indemnification.
(i) Any indemnity payment hereunder shall be limited to the
extent of the actual loss or damage suffered by the Claimant and shall be
reduced by the amount of any recovery by the Claimant from any third party,
including any insurer, and by the amount of any tax benefits received.
(ii) No party shall be entitled to indemnification
hereunder unless and until the amount for which indemnification is owing
exceeds One Hundred Thousand Dollars ($100,000) in the aggregate for all such
matters; provided, however, that if such amount exceeds One Hundred Thousand
Dollars ($100,000), the Indemnitor shall be liable to the Claimant for the
entirety of the amount and not just that portion in excess of One Hundred
Thousand Dollars ($100,000). No party shall be entitled to indemnification
hereunder for any claim arising from the breach by the other party of its
representations and warranties which is not asserted against the Indemnitor
within six (6) months after the Closing Date.
(iii) The limitations in SECTION 11.4(E)(II) shall not
apply to any claim for indemnification for any liability of the Claimant to any
third party or to the adjustments and prorations to be made pursuant to
SECTION 4.2.
11.5 INTENTIONALLY OMITTED.
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11.6 SPECIFIC PERFORMANCE. The parties recognize that if either party
refuses to close as and when required under the provisions of this Agreement,
monetary damages will not be adequate to compensate the other party for its
injury. Each party shall therefore be entitled, in addition to a right to
collect money damages, to obtain specific performance of the terms of this
Agreement. If any action is brought by either GCI or Cox to enforce this
Agreement, Cox or GCI, as the case may be, shall waive the defense that there
is an adequate remedy at law. Either party shall have the right to obtain
specific performance of the terms of this Agreement without being required to
prove actual damages, post bond or furnish other security.
11.7 OPPORTUNITY TO CURE. Neither party shall have the right to
terminate this Agreement as a result of the other party's default unless the
terminating party shall have given the defaulting party written notice
specifying in reasonable detail the nature of the default and shall have
afforded the defaulting party ten (10) business days to cure the default.
12. EXPENSES. Except as otherwise expressly provided in this
Agreement, each party shall bear its own legal, accounting and other expenses
in connection with the negotiation, preparation and consummation of this
Agreement and the transactions contemplated hereby.
13. BENEFIT OF AGREEMENT; ASSIGNMENT. The terms of this Agreement
shall be enforceable and binding upon, and inure to the benefit of the parties
hereto, their heirs, successors and assigns. No party shall assign its interest
under this Agreement, by operation of law or otherwise, without the written
consent of the other party, such consent not to be unreasonably withheld.
14. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement, shall be in writing
and shall be deemed to have been duly given upon the hand delivery thereof
during business hours, or upon the earlier of receipt or three (3) days after
posting by registered mail or certified mail, return receipt requested, or on
the next business day following delivery to a reliable or recognized air
freight delivery service, in each case addressed as follows.
If to Cox or CBI: Robert F. Neil
Executive Vice President-Radio
Cox Broadcasting, Inc.
1400 Lake Hearn Drive, N.E.
Atlanta, Georgia 30319
with a copy to: Kevin F. Reed, Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
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If to GCI or Infinity: Mr. Farid Suleman
Infinity Broadcasting Corporation
600 Madison Avenue
Fourth Floor
New York, New York 10022
with a copy to: Steven A. Lerman, Esq.
Leventhal, Senter & Lerman
2000 K Street, N.W.
Suite 600
Washington, D.C. 20006-1809
Any party may, with written notice to the other, change the place for which all
further notices to such party shall be sent. All costs and expenses for the
delivery of notices hereunder shall be borne and paid for by the delivering
party.
15. SEVERABILITY. All agreements and covenants herein are severable.
In the event that any provision of this Agreement should be held to be
unenforceable, the validity and enforceability of the remaining provisions
hereof shall not be affected thereby.
16. ENTIRE AGREEMENT. Except as herein expressly provided, this
Agreement and the Time Brokerage Agreements embody the entire agreement and
understanding among GCI and Cox and supersede all prior agreements and
understandings, whether oral or in writing, with respect to the purchase and
sale of the Assets.
17. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without reference to the
conflict of law principles thereof.
18. EXHIBITS. All Exhibits, Schedules, collateral documents or
instruments attached to this Agreement or to be provided at the Closing in the
form of an exhibit attached to this Agreement, shall be deemed a part of this
Agreement and incorporated herein, where applicable, as if fully set forth
herein.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when taken together, shall have the same effect as
if the signature on each counterpart were upon the same instrument.
20. SALES TAXES. Cox shall pay any and all taxes that may be imposed
by any taxing authority in the nature of sales or use taxes as a result of the
transfer of the Cox Assets from Cox to GCI, and GCI shall pay any and all taxes
that may be imposed by any taxing authority in the nature of sales or use taxes
as a result of the transfer of the GCI Assets from GCI to Cox.
21. AMENDMENT; WAIVER. This Agreement (including the Schedules and
Exhibits hereto) may not be amended, supplemented or otherwise modified, nor
may any party hereto be
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relieved of any of its liabilities or obligations hereunder, except by a
written instrument duly executed by the parties hereto. Any such written
instrument entered into in accordance with the provisions of the preceding
sentence shall be valid and enforceable notwithstanding the lack of separate
legal consideration therefor. No waiver by any party of any of the provisions
hereof shall be effective unless explicitly set forth in writing and executed
by the party so waiving. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
22. ATTORNEY'S FEES. In the event of a dispute between or among the
parties hereto arising out of or related to this Agreement or the interpretation
or enforcement of this Agreement, the prevailing party shall be entitled to
recover reasonable attorney's fees, costs and expenses from the other party.
23. GUARANTY OF CBI.
(a) As an inducement for GCI and Infinity to enter into this
Agreement and in consideration of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, CBI agrees as
follows:
(1) CBI hereby guarantees the full, complete, and timely
performance by Cox of each and every obligation of Cox under this Agreement. If
any default shall be made by Cox in the performance of any such obligations,
then CBI will itself perform or cause to be performed such obligation upon
receipt of notice from GCI or Infinity specifying in summary form the default.
(2) CBI waives presentment, protest, demand, or action or
delinquency in respect of any of the obligations of Cox under this Agreement.
CBI waives all notices of nonperformance, notices of protest, notices of
dishonor, and notices of acceptance of this guaranty. Upon any default by Cox
in its obligations under this Agreement, GCI or Infinity may proceed directly
and at once against CBI without proceeding first against Cox.
(3) This guaranty shall be deemed a continuing guaranty,
and the above consents and waivers of CBI shall remain in full force and effect
until the satisfaction in full of all obligations of Cox under this Agreement.
(b) CBI hereby represents and warrants to GCI and Infinity as
follows:
(1) This Agreement has been duly and validly executed and
delivered by CBI and constitutes its legal, valid, and binding agreement,
enforceable 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.
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(2) The execution, delivery and performance by CBI of this
Agreement (A) do not require the consent of any third party; (B) will not
conflict with any provision of the Certificate of Incorporation or Bylaws of
CBI; (C) will not conflict with, result in a breach of, or constitute a default
under, any law, judgment, order, ordinance, injunction, decree, rule,
regulation or ruling of any 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 CBI is a party or by which CBI may be bound.
24. GUARANTY OF INFINITY.
(a) As an inducement for Cox and CBI to enter into this
Agreement and in consideration of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Infinity agrees as
follows:
(1) Infinity hereby guarantees the full, complete, and
timely performance by GCI of each and every obligation of GCI under this
Agreement. If any default shall be made by GCI in the performance of any such
obligations, then Infinity will itself perform or cause to be performed such
obligation upon receipt of notice from Cox or CBI specifying in summary form
the default.
(2) Infinity waives presentment, protest, demand, or action
or delinquency in respect of any of the obligations of GCI under this
Agreement. Infinity waives all notices of nonperformance, notices of protest,
notices of dishonor, and notices of acceptance of this guaranty. Upon any
default by GCI in its obligations under this Agreement, Cox or CBI may proceed
directly and at once against Infinity without proceeding first against GCI.
(3) This guaranty shall be deemed a continuing guaranty,
and the above consents and waivers of Infinity shall remain in full force and
effect until the satisfaction in full of all obligations of GCI under this
Agreement.
(b) Infinity hereby represents and warrants to Cox and CBI as
follows:
(1) This Agreement has been duly and validly executed and
delivered by Infinity and constitutes its legal, valid, and binding agreement,
enforceable 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.
(2) The execution, delivery and performance by Infinity of
this Agreement (A) do not require the consent of any third party; (B) will not
conflict with any provision of the Certificate of Incorporation or Bylaws of
Infinity; (C) will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, ordinance,
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<PAGE> 45
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 Infinity is a party
or by which Infinity may be bound.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
WCKG, INC.
By: /s/ JOHN J. ROUSE, JR.
---------------------------------------
Name: John J. Rouse, Jr.
Title: Treasurer
COX BROADCASTING, INC.
By: /s/ JOHN J. ROUSE, JR.
---------------------------------------
Name: John J. Rouse, Jr.
Title: Vice President
GCI ORLANDO HOLDINGS, INC.
By: /s/ FARIO SULEMAN
---------------------------------------
Name: Fario Suleman
Title: Vice President Finance/CFO
INFINITY BROADCASTING CORPORATION
By: /s/ FARIO SULEMAN
---------------------------------------
Name: Fario Suleman
Title: Vice President Finance/CFO
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COX/INFINITY ASSET EXCHANGE AGREEMENT
SCHEDULES TO BE DELIVERED BY COX
Schedule 1.1A - Cox Tangible Personal Property
Schedule 1.2A - Cox Real Property
Schedule 1.3A - Cox Contracts
Schedule 1.4A - Cox Licenses
Schedule 1.5A - Cox Intangible Assets
Schedule 1.7A - Excluded Assets
Schedule 5.3 - Consents
Schedule 5.4 - Governmental Approvals
Schedule 5.5 - Litigation
Schedule 5.7 - Title to and Condition of Cox Tangible Personal Property
Schedule 5.8 - Title to and Condition of Cox Real Property
Schedule 5.9 - Conflict with Cox Contracts
Schedule 5.12 - FCC Compliance
Schedule 5.14 - Environmental Matters
Schedule 5.20 - Personnel
Schedule 5.22 - Financial Statements
Schedule 7.3 - Employees
<PAGE> 1
Exhibit 2(g)
EXECUTION COPY
---------------------------------------------------------
ASSET PURCHASE AGREEMENT
for the sale of radio station
WYSY, Aurora, Illinois
from
Infinity Holdings Corp. of Orlando
to
Spanish Broadcasting System, Inc.
Dated as of August 22, 1996
---------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
ASSETS TO BE CONVEYED........................................................ 2
1.1. Closing............................................................. 2
1.2. Transfer of Assets.................................................. 2
1.3. Excluded Assets..................................................... 3
ARTICLE 2
PURCHASE PRICE............................................................... 3
2.1. Purchase Price...................................................... 3
2.2. Payment of Purchase Price........................................... 4
2.3. Allocation.......................................................... 4
ARTICLE 3
ASSUMPTION OF OBLIGATIONS.................................................... 4
3.1. Assumption of Obligations........................................... 4
3.2. Limitation.......................................................... 5
ARTICLE 4
PRORATIONS................................................................... 5
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER..................................... 5
5.1. Organization and Standing........................................... 5
5.2. Authorization and Binding Obligation................................ 5
5.3. Absence of Conflicting Agreements or Required Consents.............. 6
5.4. FCC Authorizations.................................................. 6
5.5. Title to and Condition of Personal Property......................... 6
5.6. Assumed Contracts................................................... 7
5.7. Litigation.......................................................... 7
5.8. Compliance With Laws................................................ 7
5.9. Broker's Fees....................................................... 8
5.10. Bankruptcy.......................................................... 8
5.11. Utilities........................................................... 8
5.12. Assets for Operations............................................... 8
5.13. FCC Processing...................................................... 9
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER................................. 9
6.1. Organization and Standing...................................... 9
6.2. Authorization and Binding Obligation........................... 9
6.3. FCC Qualifications............................................. 9
6.4. Absence of Conflicting Agreements or Required Consents......... 9
6.5. Broker's Fees.................................................. 10
6.6. Bankruptcy..................................................... 10
ARTICLE 7
GOVERNMENTAL CONSENTS................................................... 10
7.1. FCC Application. ............................................. 10
7.2 Compliance with HSRA........................................... 11
7.3 Other Governmental Consents.................................... 11
ARTICLE 8
COVENANTS............................................................... 12
8.1. Conduct of Business............................................ 12
8.2. Notification................................................... 12
8.3. Third-Party Consents........................................... 13
8.4. Pre-Closing Efforts............................................ 13
8.5. Risk of Loss................................................... 14
8.6. Confidentiality................................................ 14
8.7. Further Assurances............................................. 14
8.8. Access......................................................... 14
8.9. Employee Matters............................................... 15
ARTICLE 9
CONDITIONS PRECEDENT.................................................... 15
9.1. To Buyer's Obligations......................................... 15
9.2 To Seller's Obligations........................................ 16
ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING................................ 17
10.1. Documents to be Delivered by Seller............................ 17
10.2. Documents to be Delivered by Buyer............................. 17
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ARTICLE 11
INDEMNIFICATION, SURVIVAL............................................... 18
11.1. Seller's Indemnities........................................... 18
11.2. Buyer's Indemnities............................................ 18
11.3. Procedure for Indemnification.................................. 19
11.4. Limitations. ................................................ 20
11.5. Survival of Representations, Warranties and Covenants.......... 20
11.6. Sole Remedy.................................................... 20
ARTICLE 12
TERMINATION RIGHTS...................................................... 21
12.1. Termination.................................................... 21
12.2. Effect of Termination.......................................... 21
ARTICLE 13
REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE............................. 22
13.1. Default by Seller; Specific Performance. ......................... 22
13.2. Default by Buyer; Liquidated Damages.............................. 22
ARTICLE 14
OTHER PROVISIONS........................................................ 22
14.1. Transfer Taxes and Expenses.................................... 22
14.2. Benefit and Assignment......................................... 22
14.3. Entire Agreement; Schedules; Amendment; Waiver................. 23
14.4. Headings....................................................... 23
14.5. Computation of Time............................................ 23
14.6. Governing Law; Waiver of Jury Trial............................ 23
14.7. Attorneys' Fees................................................ 24
14.8. Severability................................................... 24
14.9. Notices........................................................ 24
14.10. Counterparts................................................... 25
14.11 Exclusive Dealings............................................. 25
ARTICLE 15
DEFINITIONS............................................................. 26
15.1. Defined Terms.................................................. 26
15.2. Miscellaneous Terms............................................ 29
</TABLE>
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EXHIBITS
Exhibit A Promissory Note
Exhibit B Unwind Agreement
SCHEDULES
Schedule 1.2(a) FCC Licenses
Schedule 1.2(e) Main Studio and Transmitter Site Leases
Schedule 1.2(f) Office Lease
Schedule 5.3 Seller's Required Consents
Schedule 5.4 Equipment Leases
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), made as of the 22nd
day of August 1996, is between Infinity Holdings Corp. of Orlando, a Delaware
corporation ("Seller"), and Spanish Broadcasting System, Inc., a Delaware
corporation ("Buyer").
Seller is a wholly-owned subsidiary of Infinity Broadcasting
Corporation, a Delaware corporation ("Infinity"). Seller is in the process of
acquiring radio station WYSY-FM, 107.9 mHz, Aurora, Illinois (the "Station"),
along with radio station WCKG(FM), Chicago, Illinois, from Cox Broadcasting,
Inc. and WCKG, Inc. pursuant to an Asset Exchange Agreement dated as of June
26, 1996 (the "Cox Agreement").
Infinity has entered into an Agreement and Plan of Merger dated as of
June 20, 1996 (the "Merger Agreement"), pursuant to which Infinity will become
a wholly owned subsidiary of Westinghouse Electric Corporation, a Pennsylvania
corporation ("Westinghouse"). Under the Communications Act of 1934, as amended
(the "Act"), Westinghouse may not own more than five FM radio stations in the
Chicago market. Infinity and Westinghouse, through subsidiaries, each is
currently the licensee of two FM radio stations in the Chicago market.
Infinity, through the Cox Agreement, is in the process of acquiring two more FM
stations. But for the divesture of one FM radio station, Westinghouse, after
the merger with Infinity (the "Merger"), and consummation of the asset exchange
under the Cox Agreement, would be directly or indirectly the licensee of six FM
radio stations in the Chicago market, one in excess of the maximum number
permitted by the Act.
To ensure compliance with the Act, Infinity and Westinghouse have
committed to the Federal Communications Commission (the "FCC") to divest one of
their FM radio stations in the Chicago market prior to consummation of the
Merger.
Buyer has expressed an interest in acquiring certain assets used in
the operation of the Station, including its FCC Licenses (as defined below),
and other assets currently held by Infinity Broadcasting Corporation of
Illinois, a Delaware corporation ("Infinity-Illinois") and a wholly owned
subsidiary of Infinity. Infinity has agreed to sell the Station Assets (as
defined below) to Buyer, subject to consummation of the asset exchange pursuant
to the Cox Agreement and the Merger pursuant to the Merger Agreement.
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Therefore, the parties agree as follows:
ARTICLE 1
ASSETS TO BE CONVEYED
1.1. CLOSING. Subject to SECTION 12.1 (Termination Rights), the
closing (the "Closing") of the sale and purchase of the Station Assets, as
defined below, shall take place in the offices of Leventhal, Senter & Lerman,
2000 K Street, N.W., Washington, D.C., at 10:00 a.m., local time, on the last
to occur of the following: (a) the day on which the Merger is being
consummated; (b) the day on which the asset exchange pursuant to the Cox
Agreement is being consummated; and (c) the fifth (5th) business day following
the FCC's grant of the FCC Application, or at such other place, time or date as
Buyer and Seller may agree in writing.
1.2. TRANSFER OF ASSETS. At the Closing, Seller shall sell, assign,
transfer and convey, or cause Infinity-Illinois to sell, assign, transfer and
convey, to Buyer, and Buyer shall purchase from Seller and Infinity-Illinois,
the following assets (the "Station Assets"):
(a) all of Seller's rights in and to the FCC licenses,
permits and other authorizations, including any temporary waiver or special
temporary authorization, issued to or held by Seller exclusively in connection
with the conduct of the business and operation of the Station, including any
pending applications therefor, as set forth in Schedule 1.2(a) (the "FCC
Licenses").
(b) all of Seller's right, title and interest in the
equipment, spare parts and other tangible personal property located at the
Station's transmitter and used or held for use exclusively in the operation of
the Station (the "Transmitter Site Equipment");
(c) all of Seller's right, title and interest in the
equipment, spare parts and other tangible personal property located at 620 Eola
Road, Aurora, Illinois, and used in the operation of the Station (the "Main
Studio Equipment");
(d) all of Infinity-Illinois's right, title and interest in
the equipment, spare parts, furniture and other physical property located at
180 N. Michigan Avenue, Chicago, Illinois, and used or held for use exclusively
in the operation of FM radio station WJMK, Chicago, Illinois (the "WJMK Studio
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Equipment," and together with the Transmitter Site Equipment and the Main
Studio Equipment, the "Personal Property");
(e) all of Seller's rights under and interest in, to the
extent assignable, the leases contained in Schedule 1.2(e) (the "Main Studio
and Transmitter Site Leases");
(f) all of Infinity-Illinois's rights under and interest in,
to the extent assignable, the lease for office space at 180 N. Michigan Avenue,
Chicago, Illinois, contained in Schedule 1.2(f) (the "Office Space Lease," and
together with the Main Studio and Transmitter Site Leases, the "Assumed
Contracts"); and
(g) the Station's public inspection file, filings with the
FCC related to the Station, executed copies of all written Assumed Contracts,
and such technical information, engineering data, rights under manufacturers'
warranties as exist at Closing and relate exclusively to the Personal Property
being conveyed hereunder.
The Station Assets shall be delivered without any representation or warranty by
Seller except as expressly set forth in this Agreement, and Buyer acknowledges
that is has not relied on or been induced to enter into this Agreement by any
representation or warranty other than those expressly set forth in ARTICLE 5
hereof. The Station Assets shall be conveyed to Buyer free and clear of all
Liens, except as otherwise expressly provided in this Agreement.
1.3. EXCLUDED ASSETS. Except as set forth in SECTION 1.2, the Station
Assets shall not include any properties, assets, privileges, rights, interests
and claims, real and personal, tangible and intangible, of every type and
description, wherever located, of Seller, Infinity-Illinois, Infinity,
Westinghouse or any of their affiliates.
ARTICLE 2
PURCHASE PRICE
2.1. PURCHASE PRICE.
(a) The purchase price ("Purchase Price") for the Station
Assets shall be $33,000,000.
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(b) The parties stipulate that the Purchase Price is not
based upon the ratings or financial performance of the Station, because Buyer
is neither purchasing the Station as a going concern nor acquiring any goodwill
or intellectual property of the Station. Therefore, the Seller makes no
representation or warranty as to the Station's ratings or cash flow from the
date of this Agreement to and after the Closing, and Buyer's obligations under
this Agreement are not conditioned in any way on the Station's financial
performance between the date of this Agreement and the Closing.
2.2. PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase
Price as follows:
(a) On the Closing Date, Buyer shall pay $30,000,000 by wire
transfer prior to 3:00 p.m., Washington, D.C. time, of immediately available
federal funds to an account at a bank or financial institution pursuant to wire
instructions that Seller shall deliver to Buyer at least one (1) business day
prior to the Closing Date.
(b) On the Closing Date, Buyer shall execute and deliver to
Seller a promissory note with a principal amount of $3,000,000 and otherwise in
a form reasonably acceptable to Seller and containing the provisions set forth
in Exhibit A (the "Promissory Note").
2.3. ALLOCATION. If Buyer and Seller are unable to agree between the
date hereof and the Closing on an allocation of the Purchase Price for income
tax purposes, Buyer shall arrange for an appraisal of the value of the tangible
assets included in the Station Assets. Any such appraisal shall be completed
within one hundred eighty (180) days after the Closing, and, based upon such
appraisal, if prepared, Buyer shall prepare an initial draft of IRS Form 8594.
Buyer shall forward such form to Seller for its approval. If the parties reach
an agreement on the contents of IRS Form 8594, Buyer and Seller shall each file
the IRS Form 8594 finally agreed upon by the parties with their respective
federal income tax return for the tax year in which the Closing occurs.
ARTICLE 3
ASSUMPTION OF OBLIGATIONS
3.1. ASSUMPTION OF OBLIGATIONS. At the Closing, Buyer shall assume
and undertake to pay, satisfy or discharge (a) all liabilities, obligations and
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commitments of Seller or Infinity-Illinois under the Assumed Contracts, arising
or accruing after 12:01 a.m., Chicago time, on the Closing Date (the "Effective
Time"), and (b) all liabilities, obligations and commitments arising from or
relating to the ownership of the Station Assets after the Effective Time.
3.2. LIMITATION. Except as set forth in this SECTION 3.1, Buyer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the transactions contemplated hereby, any
liabilities, obligations or commitments of Seller or Infinity-Illinois of any
nature whatsoever.
ARTICLE 4
PRORATIONS
All expenses arising from the operation of the Station Assets prior to
Closing shall be paid by Seller. All expenses arising from the operation of the
Station Assets after Closing shall be paid by Buyer. Any real estate taxes
shall be apportioned on the basis of the number of days that each party owned
such real property during the relevant tax year.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.1. ORGANIZATION AND STANDING. Seller is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware, and has all necessary corporate power and authority to own, lease and
operate and to carry on the business of the Station.
5.2. AUTHORIZATION AND BINDING OBLIGATION. Seller has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Seller's execution, delivery and
performance of this Agreement have been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Seller and constitutes its valid and binding obligation
enforceable against Seller in accordance with its terms.
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5.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in ARTICLE 7 and in Schedule 5.3 hereto, the execution, delivery and
performance of this Agreement by Seller: (a) do not and will not violate any
provisions of Seller's organizational documents; (b) do not and will not
require the consent or approval of or any filing with any third party or
governmental authority; (c) do not and will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority; and (d) do not and will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination or acceleration of or result in a breach of the terms,
conditions or provisions of, or constitute a default under any agreement,
lease, instrument, license or permit to which Seller is now subject.
5.4. FCC AUTHORIZATIONS.
(a) Schedule 1.2(a) contains a true and complete list of the
FCC Licenses, and there are no other licenses, permits or other authorizations
from the FCC required for the lawful conduct of the business and operation of
the Station in the manner now conducted. The FCC Licenses are in full force and
effect. All required FCC regulatory fees with respect to the FCC Licenses have
been paid. The FCC licenses have been issued for the full terms customarily
issued to a radio broadcast station in the State of Illinois, and the FCC
Licenses are not subject to any condition except for conditions shown on the
face of the FCC Licenses, applicable to radio broadcast licenses generally or
otherwise disclosed in Schedule 1.2(a).
(b) Except as set forth in Schedule 1.2(a), to Seller's
knowledge, there are no applications, petitions, complaints, proceedings or
other actions pending or threatened before the FCC relating to the Station,
other than proceedings affecting the radio broadcasting industry generally.
(c) Seller has no reason to believe that the FCC assignment
contemplated herein might be challenged or might not be granted by the FCC in
the ordinary course.
5.5. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing,
Seller or Infinity-Illinois, as the case may be, will have good title in the
Personal Property free and clear of all Liens. At the Closing, the Personal
Property will be in good operating condition and repair (ordinary wear and tear
excepted), will be performing satisfactory and will be in material compliance
with the rules and regulations of the FCC and all other applicable federal,
state and local statues,
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ordinances, rules and regulations. The operating equipment, at Closing, will be
sufficient to permit the Station to operate in accordance with the FCC Licenses
and the rules and regulations of the FCC.
5.6. ASSUMED CONTRACTS. Seller has delivered to Buyer true and
complete copies of all of the Assumed Contracts. At the Closing, all Assumed
Contracts will be valid, binding and enforceable by Seller or Infinity-Illinois
in accordance with their respective terms, except as limited by laws affecting
creditors' rights or equitable principles generally. At the Closing, Seller and
Infinity-Illinois will have complied in all material respects with all Assumed
Contracts. To Seller's knowledge, no other contracting party will be in
material default under any of the Assumed Contracts as of the Closing. Except
as set forth in Schedule 5.3, as of the Closing, Seller and Infinity-Illinois
will have full legal power and authority to assign their rights under the
Assumed Contracts to Buyer in accordance with this Agreement on terms and
conditions no less favorable than those in effect on the date hereof, and such
assignment will not require the consent of any third party or affect the
validity, enforceability and continuity of any of the Assumed Contracts.
5.7. LITIGATION. There is no claim, litigation, arbitration,
proceeding or investigation pending or, to Seller's knowledge, threatened
against or affecting the Station or the Station Assets in any court or before
any arbitrator, or before or by any governmental department, commission,
bureau, board, agency or instrumentality, domestic or foreign, or that seeks to
enjoin or prohibit, or otherwise questions the validity of, any action taken or
to be taken in connection with this Agreement.
5.8. COMPLIANCE WITH LAWS. Except as disclosed on Schedule 5.8, Seller
has complied in all material respects with, and is not in violation of any
federal, state or local laws, regulations or orders relating to the operation of
the Station. Without limiting the generality of the foregoing:
(a) The Station's transmitting and studio equipment is
operating in accordance with the terms and conditions of the FCC Licenses and
all underlying construction permits, and the rules, regulations and policies of
the FCC, including, without limitation all regulations concerning equipment
authorization and human exposure to radio frequency radiation.
(b) Seller has, in the conduct of the Station's business,
complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those concerning
wages, hours, equal
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employment, collective bargaining, pension and welfare benefit plans, and the
payment of social security and similar taxes, and Seller is not liable for any
arrearages of wages or any tax penalties due to any failure to comply with any
of the foregoing.
(c) Seller has received no notification from the FCC or any
other governmental agency that Seller's employment practices fail to comply
with established laws, rules and/or policies.
(d) All ownership reports, employment reports and other
documents required to be filed by the Seller with the FCC have been so filed.
Such items as are required to be placed in the Station's local public record
files have been placed in such files. All proofs of performance and
measurements that are required to be made by Seller with respect to the
Station's transmission facilities have been completed and filed at the Station.
All information contained in the foregoing documents is true, complete and
accurate in all material respects.
5.9. BROKER'S FEES. Neither Seller nor any person or entity acting on
his behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, and no person or entity is entitled to any such payment from Seller in
connection with the transactions contemplated by this Agreement.
5.10. BANKRUPTCY. No insolvency proceedings of any character,
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Seller, are pending or threatened, and Seller has not made any assignment for
the benefit of creditors or taken any action in contemplation of or which would
constitute the basis for the institution of such insolvency proceedings.
5.11. UTILITIES. All utilities that are required for the current
occupancy and use of the leased premises for the purpose for which such
properties are presently being used by Seller, including, without limitation,
electric, water, sewer, telephone and similar devices, have been connected and,
to the knowledge of Seller, are in working order.
5.12. ASSETS FOR OPERATIONS. At Closing, the Station's Assets will
constitute all tangible assets necessary for the operation of the Station by
Buyer consistent with the FCC Licenses.
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5.13. FCC PROCESSING. There are no facts known to Seller that would
delay the consummation of the transactions contemplated by this Agreement,
beyond the date of consummation of the Merger and the asset exchange under the
Cox Agreement and Seller has no reason to believe that the FCC Application
might be challenged or might not be granted by the FCC in the ordinary course.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
6.1. ORGANIZATION AND STANDING. Buyer is a corporation duly formed,
validly existing and in good standing under the laws of the State of New York
and has all necessary corporate power and authority to own, lease and operate
the Station Assets and to carry on the businesses of the Station on and after
the Closing Date.
6.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Buyer's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Buyer and constitutes its valid and binding obligation enforceable
against Buyer in accordance with its terms.
6.3. FCC QUALIFICATIONS. Buyer is qualified under the Communications
Act of 1934, as amended, and the rules and regulations of the FCC to be the
assignee of the FCC Licenses. There are no facts known to Buyer that would
delay the consummation of the transactions contemplated by this Agreement based
upon Buyer's qualifications. Buyer has no reason to believe that the FCC
assignment contemplated herein might be challenged or might not be granted by
the FCC in the ordinary course because of its qualifications. Buyer is
financially qualified to consummate the transactions contemplated by this
Agreement.
6.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except as set forth in ARTICLE 7, the execution, delivery and performance of
this Agreement by Buyer: (a) do not and will not violate any provision of
Buyer's organizational documents; (b) do not and will not require the consent
of any third
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party or governmental authority; (c) do not and will not violate any law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority; and (d) do not and will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination or acceleration of or result in a breach of the terms,
conditions or provisions of, or constitute a default under any agreement,
lease, instrument, license or permit to which Buyer is now subject.
6.5. BROKER'S FEES. Neither Buyer nor any person or entity acting on
its behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, other than Media Venture Partners, and Buyer is responsible for paying
any fees or commissions due to Media Venture Partners in connection with the
transactions contemplated by this Agreement.
6.6. BANKRUPTCY. No insolvency proceedings of any character,
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Buyer are pending or threatened, and Buyer has made no assignment for the
benefit of creditors or taken any action in contemplation of or which would
constitute the basis for the institution of such insolvency proceedings.
ARTICLE 7
GOVERNMENTAL CONSENTS
7.1. FCC APPLICATION. (a) The assignment of the FCC Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC. Between the date of this Agreement and the Closing, Buyer shall not
directly or indirectly, control the operation of the Station.
(b) No later than five (5) business days after the date of
this Agreement, Buyer and Seller shall each prepare and jointly file a complete
and grantable FCC Application. Seller and Buyer shall thereafter prosecute the
FCC Application in good faith and with all reasonable diligence and otherwise
use their best efforts to obtain the grant of the FCC Application as
expeditiously as practicable; provided, however, that neither Seller nor Buyer
shall have any obligation to satisfy any complainant or the FCC by taking any
steps which would have a material adverse effect upon Seller or Buyer or upon
any affiliated entity, but neither the expense nor inconvenience to a party of
defending against a complainant or an inquiry by the FCC shall be considered a
material adverse
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effect on such party. If the FCC Consent imposes any condition on any party
hereto, such party shall use its best efforts to comply with such condition;
provided, however, that no party shall be required to comply with any condition
that would have a material adverse effect upon it or any affiliated entity. If
reconsideration or judicial review is sought with respect to the FCC Consent,
the party or parties affected shall vigorously oppose such efforts for
reconsideration or judicial review; provided, however, that nothing herein
shall be construed to limit either party's right to terminate this Agreement
pursuant to ARTICLE 12 (Termination Rights).
(c) All FCC filing or grant fees shall be borne equally by
Buyer and Seller. Each party shall otherwise bear its own costs and expenses
(including the fees and disbursements of its counsel) in connection with the
preparation of the portion of the FCC Application to be prepared by it and in
connection with the processing and defense of that application.
7.2 COMPLIANCE WITH HSRA. Each party shall make or cause to be made in
a timely fashion, and in any event within thirty (30) days following the date
of this Agreement, all filings which are required in connection with the
transactions contemplated hereby under the HSRA, and shall furnish to the other
party all information that the other reasonably requests in connection with
such filings. The transfer of the Station Assets hereunder is conditioned upon
the expiration of the applicable waiting period under the HSRA without the
institution or threat of any action with respect to the consummation of the
transactions contemplated hereunder. Buyer and Seller shall split the cost of
any HSRA filing fees. Each party shall otherwise bear its own costs and
expenses (including the fees and disbursements of its counsel) in connection
with the preparation of any HSRA filing to be prepared by it and in connection
with the prosecution and defense of that filing; provided however, that Seller
shall reimburse Buyer for all reasonable attorneys' fees and expenses incurred
in responding on behalf of Buyer to any inquiry from the Federal Trade
Commission or the Antitrust Division of the Department of Justice.
7.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of
this Agreement, the parties shall prepare and file with the appropriate
governmental authorities any other requests for approval or waiver that are
required from such governmental authorities in connection with the transactions
contemplated hereby and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers.
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Each party shall bear its own costs and expenses in connection with the
preparation of any filings, documents or requests to be prepared by it in order
to obtain such governmental consents, approvals or waivers and in connection
with any prosecution or defense by it of such filings, documents or requests.
ARTICLE 8
COVENANTS
8.1. CONDUCT OF BUSINESS. Between the date of this Agreement and
the Closing Date, except as expressly permitted by this Agreement or with the
prior written consent of Buyer, which shall not be unreasonably withheld,
Seller shall:
(a) comply in all material respects with all laws and
contractual obligations applicable to the Station or to the conduct of the
business of the Station;
(b) perform all material obligations relating to the
business of the Station;
(c) not sell, assign, lease or otherwise transfer or dispose
of any of the Station Assets, except for assets consumed or disposed of in the
ordinary course of business;
(d) maintain the Station Assets in customary repair,
maintenance and condition, replace all items of equipment at time intervals
consistent with prior practice, and repair or replace (subject to SECTION 8.5
(Risk of Loss)) any asset that may be damaged or destroyed with items of equal
or greater value and utility unless Seller determines in good faith that such a
repair or replacement is not necessary or useful for the continued operation of
the Station; and
(e) not modify the Assumed Contracts, as amended through
the date of this Agreement.
8.2. NOTIFICATION.
(a) Between the date of this Agreement and the Closing Date,
Seller shall promptly notify Buyer of (i) any litigation, arbitration or
administrative proceeding pending or, to its knowledge, threatened against
Seller to revoke, cancel, rescind, modify or fail to renew in the ordinary
course any of the FCC Licenses or which challenges the transactions
contemplated hereby,
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including any challenges to the FCC Application; (ii) the issuance of any order
to show cause, notice of violation, notice of apparent liability or notice of
forfeiture with respect to the Station; (iii) the submission, to Seller's
knowledge, of any material complaint against the Station or Seller with respect
to the Station or (iv) any notification from the Federal Trade Commission or
the Department of Justice;
(b) Seller shall promptly notify Buyer of any developments
that occur prior to Closing that cause or might cause a material adverse
consequence to the assets or the operation of the Station; provided, however,
that Seller's compliance with the disclosure requirement of SECTION 8.2 shall
not release Seller of any obligations with respect to any representation,
warranty or covenant of Seller in this Agreement or waive any condition to
Buyer's obligation under this Agreement;
(c) If Seller receives any fine, order, complaint, citation
or notice prior to the Closing Date which states that any aspect of the
Station's operation violates any rule or regulation of the FCC or any other
governmental authority (an "Administrative Violation"), including, without
limitation, any rules or regulations concerning the employment of labor or
equal employment opportunity, Seller shall notify Buyer of the Administrative
Violation, remove or correct the Administrative Violation, and be responsible
for the payment of all costs associated therewith, including any fines or back
pay that may be assessed.
8.3. THIRD-PARTY CONSENTS. Between the date of this Agreement and the
Closing Date, Seller shall use reasonable efforts to obtain the consent of any
third party necessary for the assignment to Buyer of any of the Assumed
Contracts; provided, that Seller shall not be obligated to pay any money to
obtain such consent. In the event a consent or waiver required with respect to
the assignment by Seller to Buyer of any of the Assumed Contract has not been
obtained on or before the Closing Date, Seller shall use reasonable efforts to
provide Buyer with the benefits of any such Assumed Contract (including,
without limitation, permitting Buyer to enforce any rights of Seller under such
Assumed Contract), and Buyer shall, to the extent Buyer is provided with the
benefits of such Assumed Contract, perform all obligations of Seller
thereunder.
8.4. PRE-CLOSING EFFORTS. Between the date of this Agreement and
the Closing, each party shall use its reasonable efforts to cause the
fulfillment at the earliest practicable date of all of the conditions to the
obligations of the other party to consummate the sale and purchase under this
Agreement. Neither party shall take any action which is materially
inconsistent with its obligations under
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this Agreement or that would materially hinder or delay the consummation of the
transactions contemplated by this Agreement. In particular, neither party shall
take any action that would result in its disqualification to hold the FCC
Licenses or in any way delay grant of the FCC Application or consummation of
the transactions contemplated by this Agreement. Should either party become
aware of any such fact or circumstance, such party shall promptly inform the
other.
8.5. RISK OF LOSS. The risk of loss or damage to the Station Assets
prior to the Effective Time shall be upon Seller. Seller shall repair, replace
and restore any damaged or lost item of Personal Property to its prior
condition as soon as possible and in no event later than the Effective Time,
unless such item was obsolete and unnecessary for the continued operation of
the Station consistent with past practice. If Seller is unable or fails to
repair, restore or replace a lost or damaged item required to be repaired or
replaced by Seller prior to the Closing, Buyer shall reimburse Buyer for the
cost of the repair, restoration or replacement of such item incurred by Buyer
after the Closing.
8.6. CONFIDENTIALITY.
(a) Buyer and Seller shall each keep confidential all
information obtained by it with respect to the other in connection with this
Agreement, except where such information is known or available through other
lawful sources or where its disclosure is required in accordance with
applicable law. If the transactions contemplated hereby are not consummated for
any reason, Buyer and Seller shall return to the other, without retaining a
copy thereof, any schedules, documents or other written information, including
all financial information, obtained from the other in connection with this
Agreement and the transactions contemplated hereby.
(b) Except as required by the FCC in connection with the
filing of the FCC application, without the prior consent of both Buyer and
Seller, there shall be no public announcement relating to this Agreement or the
transactions proposed herein.
8.7. FURTHER ASSURANCES. Seller and Buyer shall cooperate and
take such actions, and execute such other documents, at the Closing or
subsequently, as may be reasonably requested by the other in order to carry out
the provisions and purposes of this Agreement.
8.8. ACCESS. Between the date hereof and the Closing Date, Seller
shall give, upon prior reasonable notice, Buyer or representatives of Buyer
(including
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consultants and advisors) reasonable access to the Station and its assets. It
is expressly understood that, pursuant to this SECTION 8.8, Buyer, at its sole
expense, shall be entitled to make such engineering and inspection of the
Station and its assets as Buyer may desire, so long as the same do not
unreasonably interfere with Seller's operation of the Station in Seller's
reasonable judgment.
8.9. EMPLOYEE MATTERS. It is specifically understood and agreed
that Buyer does not plan to offer employment to any of Station's employees on
the Closing Date. Rather, Seller shall be responsible for and pay all
termination, vacation and sick leave payments to all of its employees as of the
Closing Date.
ARTICLE 9
CONDITIONS PRECEDENT
9.1. TO BUYER'S OBLIGATIONS. The obligations of Buyer hereunder
are, at its option, subject to satisfaction, at or prior to the Closing Date,
of each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by
Seller in this Agreement shall be true and complete in all material respects on
and as of the Closing Date (except to the extent they expressly relate to an
earlier time, in which case they shall have been true and correct only as of
such earlier time) as if made on and as of that date, except to the extent
changes are permitted under SECTION 8.1 of this Agreement.
(ii) All of the terms, covenants and conditions to
be complied with and performed by Seller under this Agreement on or prior to
Closing Date shall have been complied with or performed in all material
respects.
(b) FCC CONSENT. The FCC Consent shall have been obtained
and shall be effective.
(c) NO INJUNCTION. No order of any court or administrative
agency shall be in effect which restrains or prohibits the transactions
contemplated by this Agreement in accordance with its terms.
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(d) DELIVERIES. Seller shall have made or stand willing to
make all deliveries required under SECTION 10.1.
9.2 TO SELLER'S OBLIGATIONS. The obligations of Seller hereunder
are, at its option, subject to satisfaction, at or prior to the Closing Date,
of each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by
Buyer in this Agreement shall be true and complete in all material respects on
and as of the Closing Date (except to the extent they expressly relate to an
earlier time, in which case they shall have been true and correct only as of
such earlier time) as if made on and as of that date.
(ii) All of the terms, covenants and conditions to
be complied with and performed by Buyer under this Agreement on or prior to the
Closing Date shall have been complied with or performed in all material
respects.
(b) FCC CONSENT. The FCC Consent shall have been obtained
and shall be effective.
(c) NO INJUNCTION. No order of any court or administrative
agency shall be in effect which restrains or prohibits the transactions
contemplated by this Agreement in accordance with its terms.
(d) ACQUISITION OF THE STATION. The asset exchange
pursuant to the Cox Agreement shall have been consummated.
(e) MERGER. The Merger pursuant to the Merger Agreement shall
have been consummated (or all conditions thereto shall have been satisfied
and/or waived and such consummation shall be taking place on the same day as
the Closing Date).
(f) DELIVERIES. Buyer shall have made or stand willing to
make all the deliveries required under SECTION 10.2 and shall have paid or
stand willing to pay the Purchase Price as provided in SECTION 2.2.
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ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING
10.1. DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller
shall deliver to Buyer the following:
(a) a copy of the resolution of the board of directors of
Seller, certified by an authorized officer of Seller, authorizing the
execution, delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to Buyer, effecting the sale,
transfer, assignment and conveyance of the Station Assets to Buyer, including,
but not limited to, the following:
(i) an assignment of the FCC Licenses;
(ii) bills of sale for all Personal Property;
(iii) assignments of the Assumed Contracts, together with
all third party consents as provided in SECTION 8.3;
(c) if by the Closing the FCC Consent has not become a Final
Order, an unwind agreement in the form attached at Exhibit B (the "Unwind
Agreement") executed by Seller; and
(d) such other documents as may reasonably be requested by
Buyer's counsel.
10.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer
shall deliver to Seller the following:
(a) a copy of the resolution of the board of directors of
Buyer, certified by an authorized officer of Buyer, authorizing the execution,
delivery and performance of this Agreement;
(b) instruments, in form and substance reasonably
satisfactory to Seller and its counsel, pursuant to which Buyer assumes the
obligations, liabilities and commitments of Seller as provided in ARTICLE 3;
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(c) immediately available wire transferred federal funds as
provided in SECTION 2.2;
(d) the Promissory Note executed by Buyer;
(e) if by the Closing the FCC Consent has not become a
Final Order, the Unwind Agreement executed by Buyer; and
(f) such other documents as may reasonably be requested by
Seller's counsel.
ARTICLE 11
INDEMNIFICATION, SURVIVAL
11.1. SELLER'S INDEMNITIES. From and after the Closing, Seller shall
indemnify, defend, and hold harmless Buyer and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them
for, all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from:
(a) any liabilities of Seller or its affiliates not assumed
by Buyer under this Agreement;
(b) the breach of any covenant set forth in this Agreement
to be performed prior to or after the Closing by Seller; or
(c) any failure to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby.
11.2. BUYER'S INDEMNITIES. From and after the Closing, Buyer shall
indemnify, defend and hold harmless Seller and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them
for, all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from the failure of Buyer to perform any of its obligations under
this Agreement or from the operation of Station by Buyer.
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11.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
(a) The party seeking indemnification under this ARTICLE 11
(the "Claimant") shall give notice to the party from whom indemnification is
sought (the "Indemnitor") of any claim, whether solely between the parties or
brought by a third party, reasonably specifying (i) the factual basis for the
claim, and (ii) the amount of the claim if then known. If the claim relates to
an action, suit or proceeding filed by a third party against Claimant, notice
shall be given by Claimant within fifteen (15) days after written notice of the
action, suit or proceeding was given to Claimant. In all other circumstances,
notice shall be given by Claimant within thirty (30) days after Claimant
becomes, or should have become, aware of the facts giving rise to the claim.
Notwithstanding the foregoing, Claimant's failure to give Indemnitor timely
notice shall not preclude Claimant from seeking indemnification from Indemnitor
if Claimant's failure has not materially prejudiced Indemnitor's ability to
defend the claim or litigation.
(b) With respect to claims between the parties, following
receipt of notice from the Claimant of a claim, the Indemnitor shall have
thirty (30) days to make any investigation of the claim that the Indemnitor
deems necessary or desirable. For the purposes of this investigation, the
Claimant agrees to make available to the Indemnitor and/or its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnitor cannot agree as to the validity and
amount of the claim within the 30- day period (or any mutually agreed upon
extension thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification hereunder, the Indemnitor shall
have the right at its own expense to participate in or assume control of the
defense of the claim with counsel reasonably acceptable to Claimant, and the
Claimant shall cooperate fully with the Indemnitor, subject to reimbursement
for reasonable expenses incurred by the Claimant as the result of a request by
the Indemnitor. If the Indemnitor elects to assume control of the defense of
any third-party claim, the Claimant shall have the right to participate in the
defense of the claim at its own expense. If the Indemnitor does not elect to
assume control or otherwise participate in the defense of any third party
claim, Claimant may, but shall have no obligation to, defend or settle such
claim or litigation in such a manner as it deems appropriate, and in any event
Indemnitor shall be bound by the results obtained by the Claimant with respect
to the claim (by default or otherwise) and shall promptly reimburse Claimant
for the amount of all expenses (including the amount of any judgment rendered),
legal or otherwise, incurred in connection
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with such claim or litigation. The Indemnitor shall be subrogated to all rights
of the Claimant against any third party with respect to any claim for which
indemnity was paid.
11.4. LIMITATIONS.
(a) Neither Seller nor Buyer shall have any obligation to the
other party for any matter described in SECTION 11.1 or SECTION 11.2, as the
case may be, except upon compliance by the other party with the provisions of
this ARTICLE 11, particularly SECTION 11.3.
(b) Neither party shall be required to indemnify the other
party under this ARTICLE 11 unless (i) written notice of a claim under this
ARTICLE 11 was received by the party within the pertinent survival period
specified in SECTION 11.5 and (ii) unless and until the aggregate amount of
claims against the party to which the other party (as a Claimant) is entitled
to be indemnified under this Agreement exceeds $5,000, and then only for the
excess over $5,000. Neither party shall have any liability to the other party
under any circumstances for special, consequential, punitive or exemplary
damages.
11.5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants, indemnities and agreements contained in
this Agreement or in any certificate, document or instrument delivered pursuant
to this Agreement are and will be deemed and construed to be continuing
covenants, indemnities and agreements and shall survive the Closing for a
period of twelve (12) months after the Closing Date (the "Survival Period"). No
claim may be brought under this Agreement unless written notice describing in
reasonable detail the nature and basis of such claim is given on or prior to
the last day of the Survival Period. In any event such notice is given, the
right to indemnification with respect thereto shall survive the Survival Period
until such claim is finally resolved and any obligations thereto are fully
satisfied. Any investigation by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation, warranty, covenant
or agreement contained herein.
11.6. SOLE REMEDY. After the Closing, the right to indemnification
under this ARTICLE 11 shall be the exclusive remedy of any party in connection
with any breach or default by another party under this Agreement.
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ARTICLE 12
TERMINATION RIGHTS
12.1. TERMINATION.
(a) This Agreement may be terminated by either Buyer or
Seller, if the party seeking to terminate is not in material default or breach
of this Agreement, upon written notice to the other upon the occurrence of any
of the following:
(i) if the other party is in material breach of this
Agreement and such breach has been neither cured within ten
(10) days after written notice of such breach nor waived by
the party giving such termination notice;
(ii) if there shall be in effect any order or decree
from the Department of Justice or any judgment, final decree
or order that would prevent or make unlawful the Closing or
if the FCC shall have released a hearing designation order
requiring a formal hearing on the FCC Application; or
(iii) if the Closing has not occurred by
June 30, 1997.
(b) This Agreement may be terminated by mutual written
consent of Buyer and Seller.
12.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement pursuant to
SECTION 12.1, this Agreement (other than SECTION 8.6 (Confidentiality), which
shall remain in full force and effect) shall forthwith become null and void,
and no party hereto (nor any of their respective affiliates, directors,
officers or employees) shall have any liability or further obligation, except
as provided in this ARTICLE 12 and in ARTICLE 13; provided, that nothing in
this SECTION 12.2 shall relieve any party from liability for any breach of this
Agreement.
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ARTICLE 13
REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE
13.1. DEFAULT BY SELLER; SPECIFIC PERFORMANCE. Seller recognizes that,
in the event Seller defaults in the performance of its obligations under this
Agreement, monetary damages alone will not be adequate. In such event, Buyer
shall be entitled to obtain specific performance of the terms of this
Agreement. In addition, Buyer shall be entitled to obtain from Seller court
costs and reasonable attorneys' fees and expenses incurred by it in enforcing
its rights hereunder. As a condition to seeking specific performance, Buyer
shall not be required to have tendered the Purchase Price specified in ARTICLE
2 of this Agreement, but shall be ready, willing and able to do so.
13.2. DEFAULT BY BUYER; LIQUIDATED DAMAGES. If Buyer breaches or
defaults in its obligations under this Agreement, Seller may pursue any legal
or equitable remedies available to it and shall be entitled to obtain from
Buyer court costs and reasonable attorneys' fees and expenses incurred by it in
enforcing its rights hereunder.
ARTICLE 14
OTHER PROVISIONS
14.1. TRANSFER TAXES AND EXPENSES. All recordation, transfer,
documentary, excise, sales or use taxes or fees imposed on this transaction
shall be split by Buyer and Seller. Except as otherwise provided in this
Agreement, each party shall be solely responsible for and shall pay all other
costs and expenses incurred by it in connection with the negotiation,
preparation and performance of and compliance with the terms of this Agreement.
14.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither Buyer nor Seller may assign its rights under
this Agreement without the prior written consent of the other party hereto;
provided, however, that Seller may, without the consent of Buyer, assign its
rights hereunder, together with the FCC Licenses and other of the Station
Assets owned or held by Seller, to a trust of which Seller or its affiliates is
the sole beneficiary (the "Disposition Trust"), whether directly or through a
transfer of such rights and assets to a subsidiary which is then conveyed to
such trust, all in accordance with applicable FCC rules and regulations.
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14.3. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement,
and the exhibits and schedules hereto and thereto, embody the entire agreement
and understanding of the parties hereto and supersede any and all prior
agreements, arrangements and understandings relating to the matters provided
for herein. Any matter that is disclosed in a Schedule hereto in such a way as
to make its relevance to the information called for by another Schedule readily
apparent shall be deemed to have been included in such other Schedule,
notwithstanding the omission of an appropriate cross-reference. No amendment,
waiver of compliance with any provision or condition hereof, or consent
pursuant to this Agreement shall be effective unless evidenced by an instrument
in writing signed by the party against whom enforcement of any waiver,
amendment, change, extension or discharge is sought. No failure or delay on the
part of Buyer or Seller in exercising any right or power under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power.
14.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
14.5. COMPUTATION OF TIME. If after making computations of time
provided for in this Agreement, a time for action or notice falls on Saturday,
Sunday or a Federal holiday, then such time shall be extended to the next
business day.
14.6. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and
performance of this Agreement shall be governed by the laws of the State of New
York without regard to its principles of conflict of law. BUYER AND SELLER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM
MADE IN SUCH ACTION OR PROCEEDING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE DECIDED SOLELY BY A JUDGE. Buyer and Seller hereby acknowledge that
they have each been represented by counsel in the negotiation, execution and
delivery of this Agreement and that their lawyers have fully explained the
meaning of the Agreement, including in particular the jury-trial waiver. Any
question of doubtful interpretation shall not be resolved by any rule providing
for interpretation against the party who causes the uncertainty to exist or
against the drafter of this Agreement.
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14.7. ATTORNEYS' FEES. In the event of any dispute between the parties
to this Agreement, Seller or Buyer, as the case may be, shall reimburse the
prevailing party for its reasonable attorneys' fees and other costs incurred in
enforcing its rights or exercising its remedies under this Agreement. Such
right of reimbursement shall be in addition to any other right or remedy that
the prevailing party may have under this Agreement.
14.8. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance shall, to any extent be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each such term and provision of this Agreement shall be valid and be enforced
to the fullest extent permitted by law.
14.9. NOTICES. Any notice, demand or request required or permitted
to be given under the provisions of this Agreement shall be in writing,
addressed to the following addresses, or to such other address as any party may
request.
If to Seller:
c/o Infinity Broadcasting Corporation
600 Madison Avenue, 4th Floor
New York, NY 10022
Attention: Mr. Mel Karmazin
Telephone: 212-750-6400
Facsimile: 212-888-2959
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman
2000 K Street, N.W., Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lerman, Esq.
Telephone: 202-429-8970
Facsimile: 202-293-7783
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If to Buyer:
Mr. Raul Alarcon, Jr.
Spanish Broadcasting System, Inc.
26 West 56th Street
New York, NY 10019
Telephone: 212-541-9200
Facsimile: 212-541-6904
With a copy (which shall not constitute notice) to:
Kaye Scholer Fierman Hays & Handler, LLP
901 15th Street, N.W., Suite 1100
Washington, D.C. 20005
Attention: Jason L. Shrinsky, Esq.
Telephone: 202-682-3500
Facsimile: 202-682-3580
Any such notice, demand or request shall be deemed to have been duly delivered
and received (a) on the date of personal delivery, or (b) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (c) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (d) on the
date of a signed receipt, if sent by an overnight delivery service, but only if
sent in the same manner to all persons entitled to receive notice or a copy.
14.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
14.11. EXCLUSIVE DEALINGS. For so long as this Agreement remains in
effect, if Buyer is not in breach, neither Seller, its officers, directors or
employees, nor any person acting on Seller's behalf, shall directly or
indirectly solicit or initiate any offer from, or conduct any negotiations
with, any person other than Buyer concerning the acquisition of the Station.
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ARTICLE 15
DEFINITIONS
15.1. DEFINED TERMS. Unless otherwise stated in this Agreement, the
following terms when used herein shall have the meanings assigned to them below
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined).
"Agreement" shall mean this Asset Purchase Agreement.
"Act" shall have the meaning set forth in the preamble of this
Agreement.
"Assumed Contracts" shall have the meaning set forth in SECTION 1.2.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Claimant" shall have the meaning set forth in SECTION 11.3.
"Closing" shall have the meaning set forth in SECTION 1.1.
"Closing Date" shall mean the date on which the Closing is completed.
"Cox Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Disposition Trust" shall have the meaning set forth in SECTION 14.2.
"Effective Time" shall have the meaning set forth in SECTION 3.1.
"FCC" shall have the meaning set forth in the preamble to this
Agreement.
"FCC Application" shall mean the application that Seller and Buyer
must file with the FCC requesting its consent to the assignment of the FCC
Licenses from Seller to Buyer.
"FCC Consent" shall mean the action by the FCC granting the FCC
Application.
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"FCC Licenses" shall have the meaning set forth in SECTION 1.2.
"Final Order" shall mean action by the FCC, with respect to the FCC
Application (i) which has not been vacated, reversed, stayed, or suspended;
(ii) with respect to which no timely appeal, request for stay or petition for
rehearing, reconsideration or review by any party or by the FCC on its own
motion, is pending; and (iii) as to which the time for filing any such appeal
request, petition, or similar document or for the reconsideration or review by
the FCC on its own motion under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, has expired.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
1976, as amended, and the regulations adopted thereunder.
"Indemnitor" shall have the meaning set forth in SECTION 11.3.
"Infinity" shall have the meaning set forth in the preamble to this
Agreement.
"Liens" shall mean mortgages, deeds of trust, liens, security
interests, pledges, collateral assignments, conditional sales agreements,
leases, encumbrances, claims, or other defects of title, but shall not include
(i) liens for current taxes not yet due and payable, (ii) other liens imposed
by law (such as materialman's, mechanic's, carrier's, worker's and repairman's
liens) arising in the ordinary course of business (provided that such liens do
not interfere in any material respect with the use of the Station Assets as
currently used), (iii) valid leases or subleases to third parties with respect
to property not used in the operation of the Station, and (iv) defects in title
or other matters that are not material to the owner or lessee, as the case may
be.
"Main Studio Equipment" shall have the meaning set forth in
SECTION 1.2.
"Main Studio and Transmitter Site Leases" shall have the meaning set
forth in SECTION 1.2.
"Merger" shall have the meaning set forth in the preamble to this
Agreement.
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"Merger Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Notice of Disagreement" shall have the meaning set forth in SECTION
4.2.
"Office Space Lease" shall have the meaning set forth in SECTION 1.2.
"Personal Property" shall have the meaning set forth in SECTION 1.2.
"Prime Rate" shall mean the "prime rate" as published daily in the
Money Rates column of the Wall Street Journal (or the average of such rates if
more than one rate is indicated).
"Promissory Note" shall mean a promissory note in the amount of
$3,000,000 in substantially the form attached at Exhibit A.
"Proration Schedule" shall have the meaning set forth in SECTION 4.2.
"Purchase Price" shall have the meaning set forth in SECTION 2.1.
"Referee" shall have the meaning set forth in SECTION 4.2.
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Seller's Proration Amount" shall have the meaning set forth in
SECTION 4.2.
"Station" shall have the meaning set forth in the preamble to this
Agreement.
"Station Assets" shall mean the assets to be transferred to Buyer
hereunder, as more fully specified in SECTION 1.2.
"Survival Period" shall have the meaning set forth in Section 11.5.
"To Buyer's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Buyer.
-28-
<PAGE> 34
"To Seller's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Seller.
"Transmitter Site Equipment" shall have the meaning set forth in
SECTION 1.2.
"Unwind Agreement" shall mean an unwind agreement in the form attached
at Exhibit B.
"Westinghouse" shall have the meaning set forth in the preamble to
this Agreement.
15.2. MISCELLANEOUS TERMS. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms apply to females; feminine terms apply to males.
The term "includes" or "including" is by way of example and not limitation.
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<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
SELLER:
INFINITY HOLDINGS CORP. OF ORLANDO
By: /s/ MEL KARMAZIN
-----------------------------------
Name: Mel Karmazin
------------------------------
Title: President/CEO
------------------------------
BUYER:
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ PAUL ALARCON
-----------------------------------
Name: Paul Alarcon
------------------------------
Title: President
------------------------------
<PAGE> 1
Exhibit 2(h)
EXECUTION COPY
===============================================================================
ASSET PURCHASE AGREEMENT
by and between
INFINITY BROADCASTING CORPORATION OF DALLAS
and
INSPIRATION MEDIA OF TEXAS, INC.
Dated as of September 30, 1996
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 ASSETS TO BE CONVEYED......................................................1
1.1. Closing....................................................................1
1.2. Transfer of KEWS Assets....................................................1
1.3. Excluded Assets............................................................2
ARTICLE 2 PURCHASE PRICE.............................................................2
2.1. Purchase Price.............................................................2
2.2. Payment of Cash Purchase Price.............................................3
2.3. Transfer of the KDFX Assets................................................3
2.4. Allocation.................................................................4
ARTICLE 3 ASSUMPTION OF OBLIGATIONS; PRORATIONS......................................4
3.1. Assumption of Obligations..................................................4
3.2. Limitation.................................................................4
3.3. Proration of Expenses......................................................5
3.4. Payment of Proration Items.................................................5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
COMMON TO BOTH INFINITY AND SALEM..........................................6
4.1. Organization and Standing..................................................6
4.2. Authorization and Binding Obligation.......................................6
4.3. Absence of Conflicting Agreements or Required Consents.....................6
4.4. No Litigation..............................................................6
4.5. Taxes......................................................................7
4.6. Insolvency Proceedings.....................................................7
4.7. Broker's Fees..............................................................7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF INFINITY.................................7
5.1. FCC Authorizations and Qualifications......................................7
5.2. Title to and Condition of Personal Property................................8
5.3. Assumed Contracts; Real Estate Leases......................................8
5.4. Compliance With Laws.......................................................9
5.5. Insurance.................................................................10
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SALEM...................................10
6.1. FCC Authorizations and Qualifications.....................................10
6.2. Title to and Condition of Personal Property...............................10
6.3. Assumed Contracts; Real Estate Leases.....................................11
6.4. Compliance With Laws......................................................11
6.5. Insurance.................................................................12
ARTICLE 7 GOVERNMENTAL CONSENTS.....................................................12
7.1. FCC Application...........................................................12
7.2 Compliance with HSRA......................................................13
7.3 Other Governmental Consents...............................................13
ARTICLE 8 COVENANTS.................................................................14
8.1. Conduct of Business.......................................................14
8.2. Notification..............................................................14
8.3. Access....................................................................14
8.4. Third-Party Consents......................................................15
8.5. Pre-Closing Efforts.......................................................15
8.6. Risk of Loss..............................................................15
8.7. Confidentiality...........................................................16
8.7. Further Assurances........................................................16
8.8. Covenant Not to Compete...................................................16
8.9. KDFX Transmitter Site Lease...............................................16
ARTICLE 9 CONDITIONS PRECEDENT......................................................16
9.1. To Salem's Obligations....................................................16
9.2. To Infinity's Obligations.................................................17
ARTICLE 10 DOCUMENTS TO BE DELIVERED AT THE CLOSING..................................18
10.1. Documents to be Delivered by Infinity.....................................18
10.2. Documents to be Delivered by Salem........................................18
ARTICLE 11 INDEMNIFICATION, SURVIVAL.................................................19
11.1. Infinity's Indemnities....................................................19
11.2. Salem's Indemnities.......................................................20
11.3. Procedure for Indemnification.............................................20
11.4. Limitations. ...........................................................21
</TABLE>
ii
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<TABLE>
<S> <C> <C>
11.5. Survival of Representations, Warranties and Covenants.....................22
11.6. Sole Remedy...............................................................22
ARTICLE 12 TERMINATION RIGHTS........................................................22
12.1. Termination...............................................................22
12.2. Effect of Termination.....................................................23
ARTICLE 13 REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE...............................23
13.1. Default by Infinity; Specific Performance. ...............................23
13.2. Default by Salem; Liquidated Damages......................................23
ARTICLE 14 OTHER PROVISIONS..........................................................24
14.1. Transfer Taxes and Expenses...............................................24
14.2. Benefit and Assignment....................................................24
14.3. Entire Agreement; Schedules; Amendment; Waiver............................24
14.4. Headings..................................................................24
14.5. Computation of Time.......................................................25
14.6. Governing Law; Waiver of Jury Trial.......................................25
14.7. Attorneys' Fees...........................................................25
14.8. Severability..............................................................25
14.9. Notices...................................................................25
14.10. Counterparts..............................................................26
ARTICLE 15 DEFINITIONS...............................................................26
15.1. Defined Terms.............................................................26
15.2. Miscellaneous Terms.......................................................30
</TABLE>
iii
<PAGE> 5
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Form of Covenant Not to Compete
Exhibit C Form of Amended KDFX Transmitter Site Lease
SCHEDULES
Schedule 1.2(a) KEWS FCC Licenses
Schedule 1.2(c) KEWS Main Studio Equipment
Schedule 1.2(d) KEWS Assumed Contracts
Schedule 2.3(a)(i) KDFX FCC Licenses
Schedule 2.3(a)(iii) KDFX Main Studio Equipment
Schedule 2.3(a)(iv) KDFX Assumed Contracts
Schedule 4.3(a) Infinity's Required Consents
Schedule 4.3(b) Salem's Required Consents
Schedule 5.1 Infinity's FCC Qualifications Exceptions
iv
<PAGE> 6
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), made as of the 30th
day of September 1996, is between Infinity Broadcasting Corporation of Dallas,
a Delaware corporation ("Infinity"), and Inspiration Media of Texas, Inc., a
Texas corporation ("Salem").
Infinity is the licensee of station KEWS-FM, 94.9 mHz, Arlington,
Texas ("KEWS"). Salem is the licensee of station KDFX(AM), 1190 kHz, Dallas,
Texas ("KDFX").
Salem has expressed an interest in acquiring certain assets used in
the operation of KEWS, including the KEWS FCC Licenses (as defined below).
Infinity has expressed an interest in acquiring certain assets used in the
operation of KDFX, including the KDFX FCC Licenses (as defined below). Infinity
has agreed to sell the KEWS Assets (as defined below) to Salem in return for
the payment of $32,000,000 and the assignment of the KDFX Assets (as defined
below). Definitions of capitalized terms in this Agreement are set forth in
SECTION 15.1.
The assignment of KEWS FCC Licenses to Salem and the assignment of the
KDFX FCC Licenses to Infinity require the prior consent of the Federal
Communications Commission ("FCC").
Therefore, the parties agree as follows:
ARTICLE 1
ASSETS TO BE CONVEYED
1.1. CLOSING. Subject to SECTION 12.1 (Termination Rights), the
closing (the "Closing") of the sale and purchase of the KEWS Assets and the
KDFX Assets shall take place in the offices of Leventhal, Senter & Lerman, 2000
K Street, N.W., Washington, D.C., at 10:00 a.m., local time, on the fifth (5th)
business day following the satisfaction or waiver of the conditions set forth
in SECTIONS 9.1(b) and 9.2(b) (FCC Consent), but in no event prior to December
2, 1996, or at such other place, time or date as Salem and Infinity may agree
in writing.
1.2. TRANSFER OF KEWS ASSETS. At the Closing, Infinity shall sell,
assign, transfer and convey to Salem, and Salem shall purchase from Infinity,
the following assets (the "KEWS Assets"):
(a) all of Infinity's rights in and to the FCC licenses,
permits and other authorizations, including any temporary waiver or
special temporary authorization, issued to or held by Infinity
exclusively in the operation of KEWS, including any pending
applications therefor, all as set forth in Schedule 1.2(a) (the "KEWS
FCC Licenses").
(b) all of Infinity's right, title and interest in the
equipment, spare parts and other tangible personal property located at
the KEWS transmitter site and used or held for use exclusively in the
operation of KEWS (the "KEWS Transmitter Site Equipment");
<PAGE> 7
(c) all of Infinity's right, title and interest in the
equipment, spare parts and other tangible personal property listed on
Schedule 1.2(c) (the "KEWS Main Studio Equipment" and together with
the KEWS Transmitter Site Equipment, the "KEWS Personal Property");
(d) all of Infinity's rights under and interest in, to
the extent assignable, the leases set forth contained in Schedule
1.2(d) (the "KEWS Assumed Contracts");
(e) KEWS's public inspection file, filings with the FCC
related to KEWS, executed copies of all written KEWS Assumed
Contracts, and such technical information, engineering data, rights
under manufacturers' warranties as exist at Closing and relate
exclusively to the KEWS Personal Property being conveyed hereunder.
The KEWS Assets shall be delivered without any representation or warranty by
Infinity except as expressly set forth in this Agreement, and Salem
acknowledges that it has not relied on or been induced to enter into this
Agreement by any representation or warranty other than those expressly set
forth in ARTICLES 4 AND 5 hereof. The KEWS Assets shall be conveyed to Salem
free and clear of all Liens, except as otherwise expressly provided in this
Agreement.
1.3. EXCLUDED ASSETS. Except as set forth in SECTION 1.2, the KEWS
Assets shall not include any properties, assets, privileges, rights, interests
and claims, real and personal, tangible and intangible, of every type and
description, wherever located, of Infinity or any of its affiliates, including
all right, title and interest in the call sign "KEWS," which Salem agrees
Infinity may use on any other station the Dallas/Ft. Worth market, including
station KDFX after it has been acquired by Infinity.
ARTICLE 2
PURCHASE PRICE
2.1. PURCHASE PRICE.
(a) The aggregate purchase price to be paid by Salem for the KEWS
Assets (the "Purchase Price") shall be (i) $32,100,000 (the "Cash Purchase
Price") plus (ii) the assignment of the KDFX Assets as provided in SECTION 2.3
below.
(b) The parties stipulate that the Purchase Price is not based in any
way upon the ratings or financial performance of either KEWS or KDFX. Neither
station is being sold as a going concern, and the assets being conveyed do not
include any goodwill or intellectual property. Therefore, neither Infinity nor
Salem makes any representation or warranty as to ratings or cash flow, and
neither Salem's nor Infinity's obligations under this Agreement are conditioned
in any way on the financial performance between the date of this Agreement and
the Closing of the station to be acquired.
2
<PAGE> 8
2.2. PAYMENT OF CASH PURCHASE PRICE. Salem shall pay the Cash
Purchase Price as follows:
(a) Simultaneous with the execution of this Agreement, Salem
shall deposit $1,600,000 with the Escrow Agent to be held and
distributed pursuant to the Escrow Agreement.
(b) At the Closing, Salem shall pay $30,500,000 by wire
transfer prior to 3:00 p.m., local Washington, D.C. time, of
immediately available federal funds to an account at a bank or
financial institution pursuant to wire instructions that Infinity
shall deliver to Salem at least one (1) business day prior to the
Closing Date.
2.3. TRANSFER OF THE KDFX ASSETS.
(a) At the Closing, Salem shall sell, assign, transfer and convey to
Infinity, and Infinity shall acquire from Salem, the following assets (the
"KDFX Assets"):
(i) all of Salem's rights in and to the FCC licenses, permits
and other authorizations, including any temporary waiver or special
temporary authorization, issued to or held by Salem exclusively in the
operation of KDFX, including any pending applications therefor, all as
set forth in Schedule 2.3(i) (the "KDFX FCC Licenses").
(ii) all of Salem's right, title and interest in the
equipment, spare parts and other tangible personal property located at
the KDFX transmitter site and used or held for use exclusively in the
operation of KDFX (the "KDFX Transmitter Site Equipment");
(iii) all of Salem's right, title and interest in the
equipment, spare parts and other tangible personal property included
on Schedule 2.3(a)(iii) (the "KDFX Main Studio Equipment" and together
with the KDFX Transmitter Site Equipment, the "KDFX Personal
Property");
(iv) subject to the requirement of SECTION 8.9 of this
Agreement, all of Salem's rights under and interest in, to the extent
assignable, the leases set forth in Schedule 2.3(a)(iv) (the "KDFX
Assumed Contracts");
(v) KDFX's public inspection file, filings with the FCC
related to KDFX, executed copies of all written KDFX Assumed
Contracts, and such technical information, engineering data, rights
under manufacturers' warranties as exist at Closing and relate
exclusively to the KDFX Personal Property being conveyed hereunder.
3
<PAGE> 9
The KDFX Assets shall be delivered without any representation or warranty by
Salem except as expressly set forth in this Agreement, and Infinity
acknowledges that it has not relied on or been induced to enter into this
Agreement by any representation or warranty other than those expressly set
forth in ARTICLES 4 AND 6 hereof. The KDFX Assets shall be conveyed to Infinity
free and clear of all Liens, except as otherwise expressly provided in this
Agreement.
(b) Except as set forth in this SECTION 2.3, the KDFX Assets shall not
include any properties, assets, privileges, rights, interests and claims, real
and personal, tangible and intangible, of every type and description, wherever
located, of Salem or any of its affiliates, including all right, title and
interest in the call sign "KDFX," which Infinity agrees Salem may use on any
other station the Dallas/Ft. Worth market, including station KEWS after it has
been acquired by Salem.
2.4. ALLOCATION. If Salem and Infinity are unable to agree between the
date hereof and the Closing on an allocation of the Purchase Price for income
tax purposes, Infinity shall arrange for an appraisal of the KDFX Assets and
the KEWS Assets. Any such appraisal shall be completed within one hundred
eighty (180) days after the Closing, and based upon such appraisal, if
prepared, Infinity shall prepare an initial draft of IRS Form 8594. Infinity
shall forward such form to Salem for its approval. If the parties reach an
agreement on the contents of IRS Form 8594, Salem and Infinity shall each file
the IRS Form 8594 finally agreed upon by the parties with their respective
federal income tax return for the tax year in which the Closing occurs.
ARTICLE 3
ASSUMPTION OF OBLIGATIONS; PRORATIONS
3.1. ASSUMPTION OF OBLIGATIONS.
(a) At the Closing, Salem shall assume and undertake to pay, satisfy
or discharge (i) all liabilities, obligations and commitments of Infinity under
the KEWS Assumed Contracts, arising or accruing after 12:01 a.m., local Dallas
time, on the Closing Date (the "Effective Time"), and (ii) all liabilities,
obligations and commitments arising from or relating to the ownership of the
KEWS Assets after the Effective Time.
(b) At the Closing, Infinity shall assume and undertake to pay,
satisfy or discharge (i) all liabilities, obligations and commitments of Salem
under the KDFX Assumed Contracts, arising or accruing after the Effective Time,
subject to the requirement of SECTION 8.9 of this Agreement, and (ii) all
liabilities, obligations and commitments arising from or relating to the
ownership of the KDFX Assets after the Effective Time.
3.2. LIMITATION. Except as set forth in SECTION 3.1, Infinity and
Salem expressly do not, and shall not, assume or be deemed to assume, under
this Agreement or otherwise by
4
<PAGE> 10
reason of the transactions contemplated hereby, any liabilities, obligations or
commitments of the other of any nature whatsoever.
3.3. PRORATION OF EXPENSES. All expenses arising from the operation of
the KEWS Assets and the KDFX Assets shall be prorated between Infinity and
Salem as of the Effective Time in accordance with GAAP. Such prorations shall
be based upon the principle that (a) Infinity shall be responsible for all
liabilities and obligations accruing in connection with the ownership of the
KEWS Assets until the Effective Time, and Salem shall (subject to SECTION 3.2
above) be responsible for such liabilities and obligations accruing thereafter
and (b) Salem shall be responsible for all liabilities and obligations accruing
in connection with the ownership of the KDFX Assets until the Effective Time,
and Infinity shall (subject to SECTION 3.2 above) be responsible for such
liabilities and obligations accruing thereafter. Such prorations shall include,
without limitation, all ad valorem and other property taxes (but excluding
taxes arising by reason of the transfers of the KEWS Assets and the KDFX Assets
as contemplated hereby, which shall be paid as set forth in SECTION 14.1 of
this Agreement), deposits, utility expenses, liabilities and obligations under
the KEWS Assumed Contracts and the KDFX Assumed Contracts, rents and similar
prepaid and deferred items and all other expenses attributable to the ownership
and operation of the KEWS Assets and the KDFX Assets. Any real estate taxes
shall be apportioned on the basis of the number of days that each party owned
such real property during the relevant tax year.
3.4. PAYMENT OF PRORATION ITEMS. Three (3) business days prior to the
Closing, Infinity shall deliver to Salem a preliminary list of all items to be
prorated pursuant to SECTION 3.3 and, to the extent feasible, such prorations
shall be made at the Closing. In the event Infinity and Salem do not reach a
final agreement on such prorations at the Closing, Salem shall deliver to
Infinity a schedule of its proposed prorations (which shall set forth in
reasonable detail the basis for those determinations) (the "Proration
Schedule") no later than forty-five (45) days after the Closing Date. The
Proration Schedule shall be conclusive and binding upon Infinity unless
Infinity provides Salem with written notice of objection (the "Notice of
Disagreement") within thirty (30) days after Infinity's receipt of the
Proration Schedule, which notice shall state the prorations of expenses
proposed by Infinity (the "Infinity's Proration Amount"). Salem shall have
twenty (20) days from receipt of a Notice of Disagreement to accept or reject
Infinity's Proration Amount. If Salem rejects Infinity's Proration Amount, the
dispute shall be submitted within ten (10) days to the Dallas office of Arthur
Andersen (the "Referee") for resolution of the dispute, such resolution to be
made within thirty (30) days after submission to the Referee and to be final,
conclusive and binding on Infinity and Salem. Salem and Infinity agree to share
equally the cost and expenses of the Referee, but each party shall bear its own
legal and other expenses, if any. Payment by Salem or Infinity, as the case may
be, for the proration amounts determined pursuant to this SECTION 3.4 shall be
due fifteen (15) days after the last to occur of (a) Infinity's acceptance of
the Proration Schedule or failure to give Salem a timely Notice of
Disagreement; (b) Salem's acceptance of Infinity's Proration Amount or failure
to reject Infinity's Proration Amount
5
<PAGE> 11
within twenty (20) days of receipt of a Notice of Disagreement; and (c) notice
to Infinity and Salem of the resolution of the disputed amount by the Referee.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
COMMON TO BOTH INFINITY AND SALEM
Infinity represents and warrants to Salem, and Salem represents and
warrants to Infinity, as follows (the party making the representations and
warranties being referred to as the "Representing Party"):
4.1. ORGANIZATION AND STANDING. The Representing Party (a) is a
corporation duly formed, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (b) if necessary, is qualified to do
business as a foreign corporation and is in good standing in the State of Texas
and (c) has all necessary corporate power and authority to own, lease and
operate the assets it is conveying hereunder and to carry on its business as
now conducted.
4.2. AUTHORIZATION AND BINDING OBLIGATION. The Representing Party has
the full right and authority to execute and deliver this Agreement, to perform
its obligations hereunder, and to consummate the transactions provided for
herein. All required corporate action with respect to the Representing Party
has been taken to approve this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the
Representing Party and constitutes its valid and binding obligation,
enforceable against the Representing Party in accordance with its terms.
4.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in ARTICLE 7 and in Schedules 4.3 (a) and (b) hereto, the execution,
delivery and performance of this Agreement by the Representing Party: (a) do
not and will not violate any provisions of the Representing Party's
organizational documents; (b) do not and will not require the consent or
approval of or any filing with any third party or governmental authority; (c)
do not and will not violate any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority; and (d) do
not and will not, either alone or with the giving of notice or the passage of
time, or both, conflict with, constitute grounds for termination or
acceleration of or result in a breach of the terms, conditions or provisions
of, or constitute a default under any agreement, lease, instrument, license or
permit to which the Representing Party is now subject.
4.4. NO LITIGATION. There are (a) no unsatisfied judgments,
awards, orders, writs, injunctions, arbitration decisions or decrees
outstanding, and (b) no claims, actions, suits, investigations or proceedings
pending or, to the best of the Representing Party's knowledge, threatened
against or affecting the Representing Party's assets to be conveyed hereunder,
in
6
<PAGE> 12
any court or before any governmental authority or arbitrator that (if adversely
determined, in the case of pending or threatened matters) would impair in any
material respect the ability of the Representing Party to perform its
obligations hereunder or would impair or hinder in any material respect the
ability or right of the Acquiring Party to operate the station to be conveyed
to it by the Representing Party after the Closing in the manner heretofore
operated by the Representing Party.
4.5 TAXES. There are no tax audits or other governmental proceedings
pending or, to the best of the Representing Party's knowledge, threatened that
could result in a Lien on the assets being conveyed by the Representing Party
hereunder or the imposition of any tax liability on the Acquiring Party and, to
the best of the Representing Party's knowledge, no event has occurred that
could impose on the applicable Acquiring Party any liability for any taxes,
penalties or interest due or to become due from the Representing Party.
4.6 INSOLVENCY PROCEEDINGS. Neither the Representing Party nor any of
the Representing Party's assets to be conveyed hereunder are the subject of any
pending insolvency proceedings of any character. The Representing Party has
neither made an assignment for the benefit of creditors nor taken any action
with a view to the institution of any such insolvency proceedings.
4.7. BROKER'S FEES. Except for the brokerage fee payable to Gary
Stevens & Co., neither the Representing Party nor any person or entity acting
on its behalf has agreed to pay a commission, finder's fee or similar payment
in connection with this Agreement or any matter related hereto to any person or
entity, and no person or entity is entitled to any such payment from the
Representing Party in connection with the transactions contemplated by this
Agreement. The parties agree that Infinity shall pay $100,000 and Salem shall
pay the balance of any brokerage fee payable to Gary Stevens & Co.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF INFINITY
Infinity represents and warrants to Salem as follows:
5.1. FCC AUTHORIZATIONS AND QUALIFICATIONS.
(a) Schedule 1.2(a) contains a true and complete list of the KEWS FCC
Licenses, and there are no other licenses, permits or other authorizations from
the FCC required for the lawful operation of KEWS in the manner now operated.
The KEWS FCC Licenses are in full force and effect. All required FCC regulatory
fees with respect to the KEWS FCC Licenses have been paid. The KEWS FCC
Licenses have been issued for the full terms customarily issued to a radio
broadcast station in the State of Texas, and the KEWS FCC Licenses are not
subject to any condition except for conditions shown on the face of the
7
<PAGE> 13
KEWS FCC Licenses, applicable to radio broadcast licenses generally or
otherwise disclosed in Schedule 1.2(a). Except as disclosed in Schedule 1.2(a),
KEWS is being operated at full authorized power in material compliance with the
terms and conditions of the KEWS FCC Licenses and the rules and regulations of
the FCC.
(b) Except as set forth in Schedule 1.2(a), to Infinity's knowledge,
there are no applications, petitions, complaints, proceedings or other actions
pending or threatened before the FCC relating to KEWS, other than proceedings
affecting the radio broadcasting industry generally.
(c) Except as disclosed on Schedule 5.1, to the best of its knowledge,
Infinity is legally, financially and otherwise qualified under the
Communications Act of 1934, as amended, and the rules and regulations of the
FCC (together, the "Act"), to become the assignee of the KDFX FCC Licenses.
Infinity has no reason to believe that the FCC Applications might be challenged
or might not be granted by the FCC in the ordinary course.
5.2. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing,
Infinity will have good title to the KEWS Personal Property free and clear of
all Liens. At the Closing, the KEWS Personal Property will be in good operating
condition and repair (ordinary wear and tear excepted), will be performing
satisfactory and will be in material compliance with the rules and regulations
of the FCC and all other applicable federal, state and local statues,
ordinances, rules and regulations.
5.3. ASSUMED CONTRACTS; REAL ESTATE LEASES.
(a) Infinity has delivered to Salem true and complete copies of all of
the KEWS Assumed Contracts. At the Closing, all KEWS Assumed Contracts will be
valid, binding and enforceable by Infinity in accordance with their respective
terms, except as limited by laws affecting creditors' rights or equitable
principles generally. At the Closing, Infinity will have complied in all
material respects with all KEWS Assumed Contracts. To Infinity's knowledge, no
other contracting party will be in material default under any of the KEWS
Assumed Contracts as of the Closing. Except as set forth in Schedule 4.3(a), as
of the Closing, Infinity will have full legal power and authority to assign its
rights under the KEWS Assumed Contracts to Salem in accordance with this
Agreement on terms and conditions no less favorable than those in effect on the
date hereof, and such assignment will not require the consent of any third
party or affect the validity, enforceability and continuity of any of the KEWS
Assumed Contracts.
(b) So long as Infinity fulfills its obligations under any real
property lease set forth on Schedule 1.2(d), Infinity has enforceable rights to
nondisturbance and quiet enjoyment, and no third party holds any interest in
the leased premises (the "KEWS Real Property") with the right to foreclose upon
Infinity's leasehold or subleasehold interest. All of KEWS's transmitting
antenna, antenna towers, guy anchors, transmitter buildings and related
8
<PAGE> 14
improvements are located entirely on the KEWS Real Property. Infinity has no
knowledge of any pending, threatened or contemplated action to take by eminent
domain or otherwise to condemn any part of the KEWS Real Property.
5.4. COMPLIANCE WITH LAWS. Infinity has complied in all material
respects with, and is not in violation of any federal, state or local laws,
regulations or orders relating to the operation of KEWS. Without limiting the
generality of the foregoing:
(a) The KEWS transmitting and other equipment to be conveyed
hereunder is operating in accordance with the terms and conditions of
the KEWS FCC Licenses and all underlying construction permits, and the
rules, regulations and policies of the FCC, including, without
limitation all regulations concerning equipment authorization and
human exposure to radio frequency radiation.
(b) All ownership reports, employment reports and other
documents required to be filed by Infinity with the FCC have been so
filed. Such items as are required to be placed in KEWS's local public
inspection files have been placed in such files. All proofs of
performance and measurements that are required to be made by Infinity
with respect to KEWS's transmission facilities have been completed and
filed at KEWS. All information contained in the foregoing documents is
true, complete and accurate in all material respects.
(c) To the best of Infinity's knowledge, (a) no Hazardous
Substance (i) is or has been used, treated, stored, disposed of,
released, spilled, generated, manufactured, transported or otherwise
handled on KEWS Real Property, (ii) has been spilled, released or
disposed of on property adjacent to the KEWS Real Property, or (iii)
has otherwise come to be located on or under the KEWS Real Property,
(b) the KEWS Real Property and all operations on the KEWS Real
Property are in compliance with all Environmental Laws, and (c)
Infinity has obtained all environmental, health and safety permits
necessary for the operation of KEWS, and all such permits are in full
force and effect, and Infinity is in compliance with the terms and
conditions of all such permits. No outstanding liens have been placed
on the KEWS Real Property under any Environmental Laws. Infinity has
not received any notice, and is not aware, of any administrative or
judicial investigations, proceedings or actions with respect to
violations, alleged or proven, of Environmental Laws by Infinity or
any tenants of Infinity, or otherwise involving the KEWS Real Property
or the operations conducted on the KEWS Real Property. The KEWS Real
Property and all operations conducted on the KEWS Real Property are in
compliance with all federal and state statutes and regulations
relating to Asbestos, and to the best of Infinity's knowledge, no
Asbestos-Containing Material is present in any of the improvements on
the KEWS Real Property or is otherwise located on the KEWS Real
Property. To the best of Infinity's knowledge, there are no
underground storage tanks, whether in use or closed, on or under the
KEWS Real Property, and no PCB is
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present on the KEWS Real Property. No PCB is used in the KEWS
Personal Property.
5.5. INSURANCE. The KEWS Assets are, and will be until the
Closing Date, in the reasonable judgment of Infinity, adequately insured.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SALEM
Salem represents and warrants to Infinity as follows:
6.1. FCC AUTHORIZATIONS AND QUALIFICATIONS.
(a) Schedule 2.3(a)(i) contains a true and complete list of
the KDFX FCC Licenses, and there are no other licenses, permits or other
authorizations from the FCC required for the lawful operation of KDFX in the
manner now operated. The KDFX FCC Licenses are in full force and effect. All
required FCC regulatory fees with respect to the KDFX FCC Licenses have been
paid. The KDFX FCC Licenses have been issued for the full terms customarily
issued to a radio broadcast station in the State of Texas, and the KDFX FCC
Licenses are not subject to any condition except for conditions shown on the
face of the KDFX FCC Licenses, applicable to radio broadcast licenses generally
or otherwise disclosed in Schedule 2.3(a)(i). Except as disclosed in Schedule
2.3(a)(i), KDFX is being operated at full authorized power in material
compliance with the terms and conditions of the KDFX FCC Licenses and the rules
and regulations of the FCC.
(b) Except as set forth in Schedule 2.3(a)(i), to Salem's
knowledge, there are no applications, petitions, complaints, proceedings or
other actions pending or threatened before the FCC relating to KDFX, other than
proceedings affecting the radio broadcasting industry generally.
(c) To the best of its knowledge, Salem is legally,
financially and otherwise qualified under the Act to be the assignee of the
KEWS FCC Licenses. Salem has no reason to believe that the FCC Applications
might be challenged or might not be granted by the FCC in the ordinary course.
6.2. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing,
Salem will have good title to the KDFX Personal Property free and clear of all
Liens. At the Closing, the KDFX Personal Property will be in good operating
condition and repair (ordinary wear and tear excepted), will be performing
satisfactory and will be in material compliance with the rules and regulations
of the FCC and all other applicable federal, state and local statues,
ordinances, rules and regulations.
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6.3. ASSUMED CONTRACTS; REAL ESTATE LEASES.
(a) Salem has delivered to Infinity true and complete copies of all of
the KDFX Assumed Contracts. At the Closing, all KDFX Assumed Contracts will be
valid, binding and enforceable by Salem in accordance with their respective
terms, except as limited by laws affecting creditors' rights or equitable
principles generally. At the Closing, Salem will have complied in all material
respects with all KDFX Assumed Contracts. To Salem's knowledge, no other
contracting party will be in material default under any of the KDFX Assumed
Contracts as of the Closing. Except as set forth in Schedule 4.3(b), as of the
Closing, Salem will have full legal power and authority to assign its rights
under the KDFX Assumed Contracts to Infinity in accordance with this Agreement
on terms and conditions no less favorable than those in effect on the date
hereof, and such assignment will not require the consent of any third party or
affect the validity, enforceability and continuity of any of the KDFX Assumed
Contracts.
(b) So long as Salem fulfills its obligations under any real property
lease set forth on Schedule 2.3(a)(iv), Salem has enforceable rights to
nondisturbance and quiet enjoyment, and no third party holds any interest in
the leased premises (the "KDFX Real Property") with the right to foreclose upon
Salem's leasehold or subleasehold interest. All of KDFX's transmitting towers,
ground radials, guy anchors, transmitter buildings and related improvements are
located entirely on the KDFX Real Property. Salem has no knowledge of any
pending, threatened or contemplated action to take by eminent domain or
otherwise to condemn any part of the KDFX Real Property.
6.4. COMPLIANCE WITH LAWS. Salem has complied in all material
respects with, and is not in violation of any federal, state or local laws,
regulations or orders relating to the operation of KDFX. Without limiting the
generality of the foregoing:
(a) The KDFX transmitting and other equipment to be conveyed
hereunder is operating in accordance with the terms and conditions of
the KDFX FCC Licenses and all underlying construction permits, and the
rules, regulations and policies of the FCC, including, without
limitation all regulations concerning equipment authorization and
human exposure to radio frequency radiation.
(b) All ownership reports, employment reports and other
documents required to be filed by Salem with the FCC have been so
filed. Such items as are required to be placed in KDFX's local public
inspection files have been placed in such files. All proofs of
performance and measurements that are required to be made by Salem
with respect to KDFX's transmission facilities have been completed and
filed at KDFX. All information contained in the foregoing documents is
true, complete and accurate in all material respects.
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(c) To the best of Salem's knowledge, (a) no Hazardous
Substance (i) is or has been used, treated, stored, disposed of,
released, spilled, generated, manufactured, transported or otherwise
handled on KDFX Real Property, (ii) has been spilled, released or
disposed of on property adjacent to the KDFX Real Property, or (iii)
has otherwise come to be located on or under the KDFX Real Property,
(b) the KDFX Real Property and all operations on the KDFX Real
Property are in compliance with all Environmental Laws, and (c) Salem
has obtained all environmental, health and safety permits necessary
for the operation of KDFX, and all such permits are in full force and
effect, and Salem is in compliance with the terms and conditions of
all such permits. No outstanding liens have been placed on the KDFX
Real Property under any Environmental Laws. Salem has not received any
notice, and is not aware, of any administrative or judicial
investigations, proceedings or actions with respect to violations,
alleged or proven, of Environmental Laws by Salem or any tenants of
Salem, or otherwise involving the KDFX Real Property or the operations
conducted on the KDFX Real Property. The KDFX Real Property and all
operations conducted on the KDFX Real Property are in compliance with
all federal and state statutes and regulations relating to Asbestos,
and to the best of Salem's knowledge, no Asbestos-Containing Material
is present in any of the improvements on the KDFX Real Property or is
otherwise located on the KDFX Real Property. To the best of Salem's
knowledge, there are no underground storage tanks, whether in use or
closed, on or under the KDFX Real Property, and no PCB is present on
the KDFX Real Property. No PCB is used in the KDFX Personal Property.
6.5. INSURANCE. The KDFX Assets are, and will be until the
Closing Date, in the reasonable judgment of Salem, adequately insured.
ARTICLE 7
GOVERNMENTAL CONSENTS
7.1. FCC APPLICATION.
(a) The assignments of the KEWS FCC Licenses and the KDFX FCC Licenses
as contemplated by this Agreement are subject to the prior consent and approval
of the FCC. Between the date of this Agreement and the Closing, Salem shall not
directly or indirectly, control the operation of KEWS, and Infinity shall not
directly or indirectly, control the operation of KDFX.
(b) No later than five (5) business days after the date of this
Agreement, Salem and Infinity shall each prepare and jointly file complete and
grantable applications requesting the FCC's consent to the assignment of the
KEWS FCC Licenses to Salem and the assignment of KDFX FCC Licenses to Infinity
pursuant to this Agreement (the "FCC
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Applications"). Infinity and Salem shall thereafter prosecute the FCC
Applications in good faith and with all reasonable diligence and otherwise use
their best efforts to obtain the grant of the FCC Applications as expeditiously
as practicable; provided, however, that neither Infinity nor Salem shall have
any obligation to satisfy any complainant or the FCC by taking any steps which
would have a material adverse effect upon Infinity or Salem or upon any
affiliated entity, but neither the expense nor inconvenience to a party of
defending against a complainant or an inquiry by the FCC shall be considered a
material adverse effect on such party. If the FCC Consent to either of the FCC
Applications imposes any condition on any party hereto, such party shall use
its best efforts to comply with such condition; provided, however, that no
party shall be required to comply with any condition that would have a material
adverse effect upon it or any affiliated entity. If reconsideration or judicial
review is sought with respect to one of the FCC Consents, the party or parties
affected shall vigorously oppose such efforts for reconsideration or judicial
review; provided, however, that nothing herein shall be construed to limit
either party's right to terminate this Agreement pursuant to ARTICLE 12
(Termination Rights).
(c) All FCC filing or grant fees shall be borne equally by Salem and
Infinity. Each party shall otherwise bear its own costs and expenses (including
the fees and disbursements of its counsel) in connection with the preparation
of the portion of the FCC Applications to be prepared by it and in connection
with the processing and defense of such applications.
7.2 COMPLIANCE WITH HSRA. Each party shall make or cause to be made
in a timely fashion, and in any event within ten (10) business days following
the date of this Agreement, all filings which are required in connection with
the transactions contemplated hereby under the HSRA, and shall furnish to the
other party all information that the other reasonably requests in connection
with such filings. The transfer of the KEWS Assets hereunder is conditioned upon
the expiration of the applicable waiting period under the HSRA without the
institution or threat of any action with respect to the consummation of the
transactions contemplated hereunder. Salem and Infinity shall split the cost of
any HSRA filing fees. Each party shall otherwise bear its own costs and expenses
(including the fees and disbursements of its counsel) in connection with the
preparation of any HSRA filing to be prepared by it and in connection with the
prosecution and defense of that filing.
7.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of
this Agreement, the parties shall prepare and file with the appropriate
governmental authorities any other requests for approval or waiver that are
required from such governmental authorities in connection with the transactions
contemplated hereby and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers. Each party shall bear its own costs and expenses in connection with
the preparation of any filings, documents or requests to be prepared by it in
order to obtain such
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governmental consents, approvals or waivers and in connection with any
prosecution or defense by it of such filings, documents or requests.
ARTICLE 8
COVENANTS
8.1. CONDUCT OF BUSINESS. Between the date of this Agreement and
the Closing, Infinity, with respect to KEWS, and Salem, with respect to KDFX,
shall, except as expressly permitted by this Agreement or with the prior
written consent of the other:
(a) comply in all material respects with all laws and
contractual obligations applicable to such station or to the conduct
of the business of such station;
(b) perform all material obligations relating to the
business of such station;
(c) refrain from selling, assigning, leasing or otherwise
transferring or disposing of any of the KEWS Assets or the KDFX
Assets, as the case may be, except for assets consumed or disposed of
in the ordinary course of business;
(d) maintain the KEWS Assets or the KDFX Assets, as the case
may be, in customary repair, maintenance and condition, replace all
items of equipment at time intervals consistent with prior practice,
and repair or replace (subject to SECTION 8.6 (Risk of Loss)) any
asset that may be damaged or destroyed with items of equal or greater
value and utility unless Infinity or Salem, as the case may be,
determines in good faith that such a repair or replacement is not
necessary or useful for the continued operation of such station; and
(e) not modify the KEWS Assumed Contracts or the KDFX Assumed
Contracts, as amended through the date of this Agreement.
8.2. NOTIFICATION. Between the date of this Agreement and the
Closing, Infinity and Salem shall each promptly notify the other of (a) any
pending or, to its knowledge, threatened litigation, arbitration or
administrative proceeding that seeks to revoke, cancel, rescind, modify or fail
to renew in the ordinary course any of the KEWS FCC Licenses or the KDFX FCC
Licenses, as the case may be, or that challenges the transactions contemplated
hereby, including any challenges to the FCC Applications; (b) the issuance of
any order to show cause, notice of violation, notice of apparent liability or
notice of forfeiture with respect to KEWS or KDFX; or (c) the submission, to
such party's knowledge, of any material complaint against or with respect to
KEWS or KDFX.
8.3. ACCESS. Between the date hereof and the Closing, Infinity
and Salem shall each give, upon prior reasonable notice, the other or it
representatives (including consultants
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and advisors) reasonable access to the KEWS Assets or the KDFX Assets as
applicable. It is expressly understood that, pursuant to this SECTION 8.3, the
Acquiring Party, at its sole expense, shall be entitled to make such
engineering and other inspections of the KEWS Assets or the KDFX Assets, as
applicable, as it may desire, so long as such inspection does not unreasonably
interfere with the operation of such station in the conveying party's
reasonable judgment.
8.4. THIRD-PARTY CONSENTS. Between the date of this Agreement and the
Closing, each party shall use reasonable efforts to obtain the consent of any
third party necessary for the assignment of any of the KEWS Assumed Contracts
or KDFX Assumed Contracts; provided, that neither party shall be obligated to
pay any money to obtain such consent. In the event a consent or waiver required
with respect to the assignment of any of the KEWS Assumed Contracts or the KDFX
Assumed Contracts has not been obtained on or before the Closing, Infinity or
Salem, as the case may be, shall use reasonable efforts to provide the other
with the benefits of any such assumed contract (including, without limitation,
permitting such other party to enforce any rights of Infinity or Salem under
such assumed contract), and Salem or Infinity shall, to the extent Salem or
Infinity, as the case may be, is provided with the benefits of such assumed
contract, perform all obligations of the other party thereunder.
8.5. PRE-CLOSING EFFORTS. Between the date of this Agreement and the
Closing, each party shall use its reasonable efforts to cause the fulfillment
at the earliest practicable date of all of the conditions to the obligations of
the other party to consummate the sale and purchase under this Agreement.
Neither party shall take any action which is materially inconsistent with its
obligations under this Agreement or that would materially hinder or delay the
consummation of the transactions contemplated by this Agreement. In particular,
neither party shall take any action that would result in its disqualification
to hold the KEWS FCC Licenses or the KDFX FCC Licenses, as the case may be, or
in any way delay grant of the FCC Applications or consummation of the
transactions contemplated by this Agreement. Should either party become aware
of any such fact or circumstance, such party shall promptly inform the other.
8.6. RISK OF LOSS. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the KEWS Assets from any cause
whatsoever shall be borne by Infinity at all times prior to the Closing. The
risk of any loss, damage, impairment, confiscation, or condemnation of any of
the KDFX Assets from any cause whatsoever shall be borne by Salem at all times
prior to the Closing. If there is any loss, damage, impairment, confiscation,
or condemnation of or to any of such assets, Infinity or Salem, as the case may
be, shall repair, replace, or restore such assets (the "Damaged Assets") to
their prior condition as represented in this Agreement as soon thereafter as
possible; provided, however, that no party shall have any obligation to repair
or replace any immaterial or obsolete asset no longer necessary or useful for
the continued operation of the station consistent with past practice. If
Infinity or Salem, as the case may be (the "Repairing Party"), is unable to
repair
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or replace the Damaged Assets by the date on which the Closing would otherwise
occur under this Agreement, then the Repairing Party shall reimburse all
reasonable costs incurred by the Acquiring Party in repairing or replacing the
Damaged Assets after the Closing.
8.7. CONFIDENTIALITY.
(a) Salem and Infinity shall each keep confidential all information
obtained by it with respect to the other in connection with this Agreement,
except where such information is known or available through other lawful
sources or where its disclosure is required in accordance with applicable law.
If the transactions contemplated hereby are not consummated for any reason,
Salem and Infinity shall return to the other, without retaining a copy thereof,
any schedules, documents or other written information, including all financial
information, obtained from the other in connection with this Agreement and the
transactions contemplated hereby.
(b) Except as required by the FCC in connection with the filing of the
FCC application, without the prior consent of both Salem and Infinity, there
shall be no public announcement relating to this Agreement or the transactions
proposed herein.
8.7. FURTHER ASSURANCES. Infinity and Salem shall cooperate and
take such actions, and execute such other documents, at the Closing or
subsequently, as may be reasonably requested by the other in order to carry out
the provisions and purposes of this Agreement.
8.8 COVENANT NOT TO COMPETE. At the Closing, Salem shall execute
and deliver, and cause its parent to execute and deliver, the Covenant Not to
Compete.
8.9 KDFX TRANSMITTER SITE LEASE. Prior to or at the Closing, Salem
shall enter into an amended lease for KDFX's transmitter site. Such amended
lease shall be in the form of EXHIBIT C hereto (the "Amended KDFX Transmitter
Site Lease").
ARTICLE 9
CONDITIONS PRECEDENT
9.1. TO SALEM'S OBLIGATIONS. The obligations of Salem hereunder
are, at its option, subject to satisfaction, at or prior to the Closing Date,
of each of the following conditions:
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(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by
Infinity in this Agreement shall be true and complete in all
material respects on and as of the Closing Date (except to
the extent they expressly relate to an earlier time, in which
case they shall have been true and correct only as of such
earlier time) as if made on and as of that date, except to
the extent changes are permitted under SECTION 8.1 of this
Agreement.
(ii) All of the terms, covenants and conditions to
be complied with and performed by Infinity under this
Agreement on or prior to Closing Date shall have been
complied with or performed in all material respects.
(b) FCC CONSENT. The FCC Consents to the Applications shall
have been obtained, without the imposition of any condition materially
adverse to Salem, and such FCC Consents shall have become Final
Orders; provided, that Salem agrees to waive the requirement of Final
Orders if its senior lenders consent to such waiver.
(c) NO INJUNCTION. No order of any court or administrative
agency shall be in effect which restrains or prohibits the
transactions contemplated by this Agreement
in accordance with its terms.
(d) DELIVERIES. Infinity shall have made or stand willing
to make all deliveries required under SECTION 10.1.
9.2 TO INFINITY'S OBLIGATIONS. The obligations of Infinity
hereunder are, at its option, subject to satisfaction, at or prior to the
Closing Date, of each of the following
conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by Salem
in this Agreement shall be true and complete in all material
respects on and as of the Closing Date (except to the extent
they expressly relate to an earlier time, in which case they
shall have been true and correct only as of such earlier
time) as if made on and as of that date.
(ii) All of the terms, covenants and conditions to
be complied with and performed by Salem under this Agreement
on or prior to the Closing Date shall have been complied with
or performed in all material respects.
(b) FCC CONSENT. The FCC Consents to the FCC Applications
shall have been obtained, without the imposition of any condition
materially adverse to Infinity, and such FCC Consents shall have
become Final Orders; provided, that Infinity agrees
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to waive the requirement of Final Orders if Salem's senior lenders
consent to Salem's waiving of the requirement.
(c) NO INJUNCTION. No order of any court or
administrative agency shall be in effect which restrains or prohibits
the transactions contemplated by this
Agreement in accordance with its terms.
(d) DELIVERIES. Salem shall have made or stand willing to
make all the deliveries required under SECTION 10.2 and shall have
paid or stand willing to pay the Cash Purchase Price as provided in
SECTION 2.2.
ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING
10.1. DOCUMENTS TO BE DELIVERED BY INFINITY. At the Closing,
Infinity shall deliver to Salem the following:
(a) a copy of the resolution of the board of directors
of Infinity, certified by an authorized officer of Infinity,
authorizing the execution, delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to Salem, effecting the
sale, transfer, assignment and conveyance of the KEWS Assets to Salem,
including, but not limited to, the following:
(i) an assignment of the KEWS FCC Licenses;
(ii) bills of sale for all KEWS Personal
Property;
(iii) assignments of the Assumed Contracts,
together with all third party consents as provided in SECTION
8.4;
(c) instruments, in form and substance reasonably
satisfactory to Salem and its counsel, pursuant to which Infinity
assumes the obligations, liabilities and commitments of Salem as
provided in ARTICLE 3; and
(d) such other documents as may reasonably be requested
by Salem's counsel.
10.2. DOCUMENTS TO BE DELIVERED BY SALEM. At the Closing, Salem
shall deliver to Infinity the following:
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(a) a copy of the resolution of the board of directors
of Salem, certified by an authorized officer of Salem, authorizing the
execution, delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to Infinity, effecting
the sale, transfer, assignment and conveyance of the KDFX Assets to
Infinity, including, but not limited to, the following:
(i) an assignment of the KDFX FCC Licenses;
(ii) bills of sale for all KDFX Personal
Property;
(iii) assignments of the Assumed Contracts,
together with all third party consents as provided in SECTION
8.4;
(c) instruments, in form and substance reasonably
satisfactory to Infinity and its counsel, pursuant to which Salem
assumes the obligations, liabilities and commitments of Infinity as
provided in ARTICLE 3;
(d) the Covenant Not to Compete duly executed by Salem
and its parent;
(e) immediately available wire transferred federal funds
as provided in SECTION 2.2;
(f) the Amended KDFX Transmitter Site Lease executed by
the landlord thereunder and dated the Closing Date; and
(g) such other documents as may reasonably be requested
by Infinity's counsel.
ARTICLE 11
INDEMNIFICATION, SURVIVAL
11.1. INFINITY'S INDEMNITIES. From and after the Closing, Infinity
shall indemnify, defend, and hold harmless Salem and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them
for, all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from:
(a) any liabilities or obligations of Infinity or its
affiliates not assumed by Salem under this Agreement;
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(b) any untrue representation, breach of warranty, or
nonfulfillment of any covenant by Infinity contained in this Agreement
or in any certificate document or instrument delivered to Salem under
this Agreement;
(c) Infinity's operation or ownership of KEWS prior to
the Effective Time;
(d) Infinity's operation or ownership of KDFX after the
Effective Time; or
(e) any failure to comply with any "bulk sales" laws
applicable to the sale of KEWS hereunder.
11.2. SALEM'S INDEMNITIES. From and after the Closing, Salem shall
indemnify, defend and hold harmless Infinity and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them
for, all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from:
(a) any liabilities or obligations of Salem or its
affiliates not assumed by Infinity under this Agreement;
(b) any untrue representation, breach of warranty, or
nonfulfillment of any covenant by Salem contained in this Agreement or
in any certificate document or instrument delivered to Infinity under
this Agreement;
(c) Salem's operation or ownership of KDFX prior to the
Effective Time;
(d) Salem's operation or ownership of KEWS after the
Effective Time; or
(e) any failure to comply with any "bulk sales" laws
applicable to the sale of KDFX hereunder.
11.3. PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(a) The party seeking indemnification under this ARTICLE 11
(the "Claimant") shall give notice to the party from whom
indemnification is sought (the "Indemnitor") of any claim, whether
solely between the parties or brought by a third party, reasonably
specifying (i) the factual basis for the claim, and (ii) the amount of
the claim if then known. If the claim relates to an action, suit or
proceeding filed by a third party against Claimant, notice shall be
given by Claimant within fifteen (15) days after written notice of the
action, suit or proceeding was given to Claimant. In all other
circumstances, notice shall be given by Claimant within thirty (30)
days after
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Claimant becomes, or should have become, aware of the facts giving
rise to the claim. Notwithstanding the foregoing, Claimant's failure
to give Indemnitor timely notice shall not preclude Claimant from
seeking indemnification from Indemnitor if Claimant's failure has not
materially prejudiced Indemnitor's ability to defend the claim or
litigation.
(b) With respect to claims between the parties, following
receipt of notice from the Claimant of a claim, the Indemnitor shall
have thirty (30) days to make any investigation of the claim that the
Indemnitor deems necessary or desirable. For the purposes of this
investigation, the Claimant agrees to make available to the Indemnitor
and/or its authorized representatives the information relied upon by
the Claimant to substantiate the claim. If the Claimant and the
Indemnitor cannot agree as to the validity and amount of the claim
within the 30-day period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume
control of the defense of the claim with counsel reasonably acceptable
to Claimant, and the Claimant shall cooperate fully with the
Indemnitor, subject to reimbursement for reasonable expenses incurred
by the Claimant as the result of a request by the Indemnitor. If the
Indemnitor elects to assume control of the defense of any third-party
claim, the Claimant shall have the right to participate in the defense
of the claim at its own expense. If the Indemnitor does not elect to
assume control or otherwise participate in the defense of any third
party claim, Claimant may, but shall have no obligation to, defend or
settle such claim or litigation in such a manner as it deems
appropriate, and in any event Indemnitor shall be bound by the results
obtained by the Claimant with respect to the claim (by default or
otherwise) and shall promptly reimburse Claimant for the amount of all
expenses (including the amount of any judgment rendered), legal or
otherwise, incurred in connection with such claim or litigation. The
Indemnitor shall be subrogated to all rights of the Claimant against
any third party with respect to any claim for which indemnity was
paid.
11.4. LIMITATIONS.
(a) Neither Infinity nor Salem shall have any obligation to the other
party for any matter described in SECTION 11.1 or SECTION 11.2, as the case may
be, except upon compliance by the other party with the provisions of this
ARTICLE 11, particularly SECTION 11.3.
(b) Neither party shall be required to indemnify the other party under
this ARTICLE 11 unless (i) written notice of a claim under this ARTICLE 11 was
received by the party within the pertinent survival period specified in SECTION
11.5 and (ii) unless and until the aggregate amount of claims against the party
to which the other party (as a Claimant) is entitled to be
21
<PAGE> 27
indemnified under this Agreement exceeds $50,000, and then only for the excess
over $50,000. The foregoing "deductible" shall not apply to (i) any proration
of expenses under SECTION 3.3, (ii) either party's obligation to indemnify by
reason of such party's non-compliance with the provisions of any bulk sales
laws applicable to this transaction, or (iii) any obligation to indemnify
against third-party claims. Neither party shall have any liability to the other
party under any circumstances for special, consequential, punitive or exemplary
damages.
11.5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants, indemnities and agreements contained in
this Agreement or in any certificate, document or instrument delivered pursuant
to this Agreement are and will be deemed and construed to be continuing
covenants, indemnities and agreements and shall survive the Closing for a
period of six (6) months after the Closing Date (the "Survival Period"). No
claim may be brought under this Agreement unless written notice describing in
reasonable detail the nature and basis of such claim is given on or prior to
the last day of the Survival Period. In any event such notice is given, the
right to indemnification with respect thereto shall survive the Survival Period
until such claim is finally resolved and any obligations thereto are fully
satisfied. Any investigation by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation, warranty, covenant
or agreement contained herein.
11.6. SOLE REMEDY. After the Closing, the right to
indemnification under this ARTICLE 11 shall be the exclusive remedy of any
party in connection with any breach or default by another party under this
Agreement.
ARTICLE 12
TERMINATION RIGHTS
12.1. TERMINATION.
(a) This Agreement may be terminated by either Salem or Infinity, if
the party seeking to terminate is not in material default or breach of this
Agreement, upon written notice to the other upon the occurrence of any of the
following:
(i) if, subject to the opportunity to cure period set
forth in Section 12.1(C) below, the other party is in material breach
of this Agreement;
(ii) if there shall be in effect any order or decree from
the Department of Justice or any judgment, final decree or order that
would prevent or make unlawful the Closing or if the FCC shall have
released a hearing designation order requiring a formal hearing on
either of the FCC Applications; or
(iii) if the Closing has not occurred by June 30, 1997 (the
"Upset Date").
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(b) This Agreement may be terminated by mutual written consent of
Salem and Infinity.
(c) If either party believes the other to be in breach or default
of this Agreement, the non-defaulting party shall, prior to exercising its right
to terminate under SECTION 12.1(A)(I), provide the defaulting party with notice
specifying in reasonable detail the nature of such breach or default. Except for
a failure to pay the Cash Purchase Price, the defaulting party shall have ten
(10) days from receipt of such notice to cure such default; provided, that if
the breach or default is due to no fault of the defaulting party and is
incapable of cure within such 10-day period, the cure period shall be extended
as long as the defaulting party is diligently and in good faith attempting to
effectuate a cure. Nothing in this SECTION 12.1(C) shall be interpreted to
extend the Upset Date.
12.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement pursuant to
SECTION 12.1, this Agreement (other than SECTION 8.7 (Confidentiality), which
shall remain in full force and effect) shall forthwith become null and void,
and no party hereto (nor any of their respective affiliates, directors,
officers or employees) shall have any liability or further obligation, except
as provided in this ARTICLE 12 and in ARTICLE 13; provided, that nothing in
this SECTION 12.2 shall relieve any party from liability for any breach of this
Agreement.
ARTICLE 13
REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE
13.1. DEFAULT BY INFINITY; SPECIFIC PERFORMANCE. Infinity recognizes
that, in the event Infinity defaults in the performance of its obligations
under this Agreement, monetary damages alone will not be adequate. In such
event, Salem shall be entitled to obtain specific performance of the terms of
this Agreement without being required to post bond or furnish other security.
In addition, Salem shall be entitled to obtain from Infinity court costs and
reasonable attorneys' fees and expenses incurred by it in enforcing its rights
hereunder. As a condition to seeking specific performance, Salem shall not be
required to have tendered the Purchase Price specified in ARTICLE 2 of this
Agreement, but shall be ready, willing and able to do so.
13.2. DEFAULT BY SALEM; LIQUIDATED DAMAGES. If Salem breaches or
defaults in its obligations under this Agreement, Infinity may pursue any legal
or equitable remedies available to it and shall be entitled to obtain from
Salem court costs and reasonable attorneys' fees and expenses incurred by it in
enforcing its rights hereunder; PROVIDED, HOWEVER, that if this Agreement is
terminated by Infinity pursuant to SECTION 12.1(A) as a result of a breach or
default by Salem of its representations, warranties, covenants or obligations
hereunder, then Salem shall pay Infinity $2,000,000 as liquidated damages, in
full settlement of any damages of any kind or nature that Infinity may suffer
or allege to suffer as a result thereof, it being
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<PAGE> 29
understood and agreed that the amount of liquidated damages represents Salem's
and Infinity's reasonable estimate of actual damages and does not constitute a
penalty. In the event that Infinity is entitled to liquidated damages, the
Escrow Deposit shall be paid over to Infinity in partial satisfaction of
Salem's liability for liquidated damages. In the event of a termination of this
Agreement pursuant to SECTION 12.1 for any other reason, the Escrow Deposit,
together with any interest and earnings thereon, shall be paid to Salem.
ARTICLE 14
OTHER PROVISIONS
14.1. TRANSFER TAXES AND EXPENSES. All recordation, transfer,
documentary, excise, sales or use taxes or fees imposed on this transaction
shall be shared equally by Salem and Infinity. Except as otherwise provided in
this Agreement, each party shall be solely responsible for and shall pay all
other costs and expenses incurred by it in connection with the negotiation,
preparation and performance of and compliance with the terms of this Agreement.
14.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither Salem nor Infinity may assign its rights under
this Agreement without the prior written consent of the other party hereto.
14.3. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This
Agreement, and the exhibits and schedules hereto and thereto, embody the entire
agreement and understanding of the parties hereto and supersede any and all
prior agreements, arrangements and understandings relating to the matters
provided for herein. Any matter that is disclosed in a Schedule hereto in such a
way as to make its relevance to the information called for by another Schedule
readily apparent shall be deemed to have been included in such other Schedule,
notwithstanding the omission of an appropriate cross-reference. No amendment,
waiver of compliance with any provision or condition hereof, or consent pursuant
to this Agreement shall be effective unless evidenced by an instrument in
writing signed by the party against whom enforcement of any waiver, amendment,
change, extension or discharge is sought. No failure or delay on the part of
Salem or Infinity in exercising any right or power under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.
14.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
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14.5. COMPUTATION OF TIME. If after making computations of time
provided for in this Agreement, a time for action or notice falls on Saturday,
Sunday or a Federal holiday, then such time shall be extended to the next
business day.
14.6. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and
performance of this Agreement shall be governed by the law of the State of New
York without regard to its principles of conflicts of law. SALEM AND INFINITY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM
MADE IN SUCH ACTION OR PROCEEDING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE DECIDED SOLELY BY A JUDGE. Salem and Infinity hereby acknowledge that
they have each been represented by counsel in the negotiation, execution and
delivery of this Agreement and that their lawyers have fully explained the
meaning of the Agreement, including in particular the jury-trial waiver. Any
question of doubtful interpretation shall not be resolved by any rule providing
for interpretation against the party who causes the uncertainty to exist or
against the drafter of this Agreement.
14.7. ATTORNEYS' FEES. In the event of any dispute between the
parties to this Agreement, Infinity or Salem, as the case may be, shall
reimburse the prevailing party for its reasonable attorneys' fees and other
costs incurred in enforcing its rights or exercising its remedies under this
Agreement. Such right of reimbursement shall be in addition to any other right
or remedy that the prevailing party may have under this Agreement.
14.8. SEVERABILITY. If any term or provision of this Agreement, or
the application thereof to any person or circumstance shall, to any extent be
held invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each such term and provision of this Agreement shall be valid and
be enforced to the fullest extent permitted by law.
14.9. NOTICES. Any notice, demand or request required or permitted
to be given under the provisions of this Agreement shall be in writing,
addressed to the following addresses, or to such other address as any party may
request.
If to Infinity:
c/o Infinity Broadcasting Corporation
600 Madison Avenue, 4th Floor
New York, NY 10022
Attention: Mr. Mel Karmazin
Telephone: 212-750-6400
Facsimile: 212-888-2959
25
<PAGE> 31
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman
2000 K Street, N.W., Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lerman, Esq.
Telephone: 202-429-8970
Facsimile: 202-293-7783
If to Salem:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathan L. Block, Esq.
Telephone: 805-987-0400
Facsimile: 805-482-8570
Any such notice, demand or request shall be deemed to have been duly delivered
and received (a) on the date of personal delivery, or (b) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (c) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (d) on the
date of a signed receipt, if sent by an overnight delivery service, but only if
sent in the same manner to all persons entitled to receive notice or a copy.
14.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
ARTICLE 15
DEFINITIONS
15.1. DEFINED TERMS. Unless otherwise stated in this Agreement, the
following terms when used herein shall have the meanings assigned to them below
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined).
"Acquiring Party" shall mean either Infinity or Salem, as required by
the context in which such term is used, in its capacity as the party acquiring
a station hereunder.
"Act" shall have the meaning set forth in SECTION 5.1(C).
"Agreement" shall mean this Asset Purchase Agreement.
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<PAGE> 32
"Amended KDFX Transmitter Site Lease" shall have the meaning set forth
in SECTION 8.9.
"Asbestos" shall mean any and all varieties of materials included in
the definition of "asbestos" under any federal or state law or regulation
relating to the protection of human health or the environment.
"Asbestos-Containing Material" shall mean any material containing more
than one (1) percent Asbestos by weight.
"Cash Purchase Price" shall have the meaning set forth in SECTION 1.2.
"Claimant" shall have the meaning set forth in SECTION 11.3.
"Closing" shall have the meaning set forth in SECTION 1.1.
"Closing Date" shall mean the date on which the Closing is completed.
"Covenant Not to Compete" shall mean the Covenant Not to Compete among
Infinity, Salem and Salem's parent substantially in the form of EXHIBIT B to
this Agreement.
"Damaged Assets" shall have the meaning set forth in SECTION 8.6.
"Effective Time" shall have the meaning set forth in SECTION 3.1.
"Environmental Laws" shall mean all applicable local, state and
federal statutes and regulations relating to the protection of human health or
the environment including the FCC's regulations concerning radio frequency
radiation.
"Escrow Agent" shall mean Gary Stevens & Co.
"Escrow Agreement" shall mean the agreement among Infinity, Salem and
Escrow Agent substantially in the form attached hereto as Exhibit A.
"Escrow Deposit" shall mean the amount held by the Escrow Agent
pursuant to the Escrow Agreement, including all earnings and interest thereon.
"FCC" shall have the meaning set forth in the preamble to this
Agreement.
"FCC Applications" shall have the meaning set forth in SECTION 7.1.
"FCC Consent" shall mean the action by the FCC granting the applicable
FCC Application.
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<PAGE> 33
"Final Order" shall mean action by the FCC, with respect to an FCC
Application, (i) which has not been vacated, reversed, stayed, or suspended;
(ii) with respect to which no timely appeal, request for stay or petition for
rehearing, reconsideration or review by any party or by the FCC on its own
motion, is pending; and (iii) as to which the time for filing any such appeal
request, petition, or similar document or for the reconsideration or review by
the FCC on its own motion under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, has expired.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Hazardous Substance" shall mean all hazardous or toxic waste or
material which, because of its quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. "Hazardous
Substance" shall include, but is not limited to, any and all hazardous or toxic
substances, materials or wastes as defined or listed under the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act or any
comparable state statute or any regulation promulgated under any of such
federal or state statutes. "Hazardous Substance" shall not include ordinary
quantities of consumer or commercial products used in the normal course of
broadcast station operations, including grounds and building operation and
maintenance; PROVIDED, that such products have been properly stored, handled
and disposed of.
"HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
1976, as amended, and the regulations adopted thereunder.
"Indemnitor" shall have the meaning set forth in SECTION 11.3.
"Infinity" shall have the meaning set forth in the preamble to this
Agreement.
"Infinity's Proration Amount" shall have the meaning set forth in
SECTION 3.4.
"KDFX" shall have the meaning set forth in the preamble to this
Agreement.
"KDFX Assets" shall have the meaning set forth in SECTION 2.3(A).
"KDFX Assumed Contracts" shall have the meaning set forth in SECTION
2.3(A)(IV).
"KDFX FCC Licenses" shall have the meaning set forth in SECTION
2.3(A)(I).
"KDFX Main Studio Equipment" shall have the meaning set forth in
SECTION 2.3(A)(III).
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"KDFX Personal Property" shall have the meaning set forth in SECTION
2.3(A)(III).
"KDFX Real Property" shall have the meaning set forth in SECTION
6.3(B).
"KDFX Transmitter Site Equipment shall have the meaning set forth in
SECTION 2.3(A)(II).
"KEWS" shall have the meaning set forth in the preamble to this
Agreement.
"KEWS Assets" shall mean the assets to be transferred to Salem
hereunder, as more fully specified in SECTION 1.2.
"KEWS Assumed Contracts" shall have the meaning set forth in SECTION
1.2.
"KEWS FCC Licenses" shall have the meaning set forth in SECTION 1.2.
"KEWS Main Studio Equipment" shall have the meaning set forth in
SECTION 1.2.
"KEWS Personal Property" shall have the meaning set forth in SECTION
1.2.
"KEWS Real Property" shall have the meaning set forth in SECTION
5.3(C).
"KEWS Transmitter Site Equipment" shall have the meaning set forth in
SECTION 1.2.
"Liens" shall mean mortgages, deeds of trust, liens, security
interests, pledges, collateral assignments, conditional sales agreements,
leases, encumbrances, claims, or other defects of title, but shall not include
(i) liens for current taxes not yet due and payable, (ii) other liens imposed
by law (such as materialman's, mechanic's, carrier's, worker's and repairman's
liens) arising in the ordinary course of business (provided that such liens do
not interfere in any material respect with the use of the Station Assets as
currently used), (iii) valid leases or subleases to third parties with respect
to property not used in the operation of the Station, and (iv) defects in title
or other matters that are not material to the owner or lessee, as the case may
be.
"Notice of Disagreement" shall have the meaning set forth in SECTION
3.4.
"PCB" shall mean polychlorinated biphenyl.
"Proration Schedule" shall have the meaning set forth in SECTION 3.4.
"Purchase Price" shall have the meaning set forth in SECTION 2.1.
"Referee" shall have the meaning set forth in SECTION 3.4.
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<PAGE> 35
"Repairing Party" shall have the meaning set forth in SECTION 8.6.
"Representing Party" shall have the meaning set forth in ARTICLE 4.
"Salem" shall have the meaning set forth in the preamble to this
Agreement.
"Survival Period" shall have the meaning set forth in Section 11.5.
"To Infinity's knowledge," or words of similar import, shall mean to
the actual knowledge of the president or chief financial officer of Infinity.
"To Salem's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Salem.
"Upset Date" shall have the meaning set forth in SECTION 12.1.
15.2. MISCELLANEOUS TERMS. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms apply to females; feminine terms apply to males.
The term "includes" or "including" is by way of example and not limitation.
[Signatures immediately following this page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
INFINITY BROADCASTING
CORPORATION OF DALLAS
By: /s/ FARID SULEMAN
---------------------------------
Name: Farid Suleman
----------------------------
Title: VP Finance/CFO
---------------------------
INSPIRATION MEDIA OF TEXAS, INC.
By: /s/ ERIC H. HALVORSON
---------------------------------
Eric H. Halvorson
Executive Vice President
<PAGE> 1
Exhibit 2(i)
EXECUTION COPY
---------------------------------------------------------
ASSET PURCHASE AGREEMENT
by and between
INFINITY BROADCASTING CORPORATION OF TEXAS
and
MARCOS RODRIGUEZ, INC.
for KDMM(AM), Highland Park, Texas
--------------------
Dated as of October 10, 1996
---------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 ASSETS TO BE CONVEYED....................................................1
1.1. Closing..................................................................1
1.2. Transfer of Assets.......................................................1
1.3. Excluded Assets..........................................................2
ARTICLE 2 PURCHASE PRICE...........................................................2
2.1. Purchase Price...........................................................2
2.2. Payment of Purchase Price................................................3
2.3. Allocation...............................................................3
2.4. Prorations...............................................................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER.................................3
3.1. Organization and Standing................................................4
3.2. Authorization and Binding Obligation.....................................4
3.3. Absence of Conflicting Agreements or Required Consents...................4
3.4. Absence of Litigation....................................................4
3.5. FCC Authorizations.......................................................4
3.6. Title to and Condition of Personal Property..............................5
3.7. Real Property............................................................5
3.8. Compliance With Laws.....................................................5
3.9. Broker's Fees............................................................6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER..................................6
4.1. Organization and Standing................................................6
4.2. Authorization and Binding Obligation.....................................7
4.3. Absence of Conflicting Agreements or Required Consents...................7
4.4. Absence of Litigation....................................................7
4.5 FCC Qualifications.......................................................7
4.6. Broker's Fees............................................................7
4.7. Bankruptcy...............................................................8
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 5 GOVERNMENTAL CONSENTS....................................................8
5.1. FCC Application..........................................................8
5.2 Other Governmental Consents..............................................9
ARTICLE 6 COVENANTS................................................................9
6.1. Conduct of Business......................................................9
6.2 Access..................................................................10
6.3. Notification............................................................10
6.4. Pre-Closing Efforts.....................................................10
6.5. Risk of Loss............................................................10
6.6. Confidentiality.........................................................11
6.7. Further Assurances......................................................11
6.8 Phase I Environmental Audit.............................................11
ARTICLE 7 CONDITIONS PRECEDENT....................................................12
7.1. To Buyer's Obligations..................................................12
7.2 To Seller's Obligations.................................................12
ARTICLE 8 DOCUMENTS TO BE DELIVERED AT THE CLOSING................................13
8.1. Documents to be Delivered by Seller.....................................13
8.2. Documents to be Delivered by Buyer......................................14
ARTICLE 9 INDEMNIFICATION, SURVIVAL...............................................14
9.1. Seller's Indemnities....................................................14
9.2. Buyer's Indemnities.....................................................15
9.3. Procedure for Indemnification...........................................15
9.4. Limitations. .........................................................16
9.5. Survival of Representations, Warranties and Covenants...................17
9.6. Sole Remedy.............................................................17
ARTICLE 10 TERMINATION RIGHTS......................................................17
10.1. Termination.............................................................17
10.2. Effect of Termination...................................................18
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 11 REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE.............................19
11.1. Default by Seller; Specific Performance.................................19
11.2. Default by Buyer; Liquidated Damages....................................19
ARTICLE 12 OTHER PROVISIONS........................................................19
12.1. Transfer Taxes and Expenses.............................................19
12.2. Benefit and Assignment..................................................20
12.3. Entire Agreement; Schedules; Amendment; Waiver..........................20
12.4. Headings................................................................20
12.5. Computation of Time.....................................................20
12.6. Governing Law; Waiver of Jury Trial.....................................21
12.7. Attorneys' Fees.........................................................21
12.8. Severability............................................................21
12.9. Notices.................................................................21
12.10. Counterparts............................................................22
ARTICLE 13 DEFINITIONS.............................................................23
13.1. Defined Terms...........................................................23
13.2. Miscellaneous Terms.....................................................26
</TABLE>
-iii-
<PAGE> 5
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Form of Unwind Agreement
SCHEDULES
Schedule 1.2(a) FCC Licenses
Schedule 1.2(b) Personal Property
Schedule 1.2(c) Real Property
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<PAGE> 6
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), made as of the 10th
day of October 1996, is between Infinity Broadcasting Corporation of Texas, a
Delaware corporation ("Seller"), and Marcos Rodriguez, Inc., a Delaware
corporation ("Buyer").
Seller is the licensee of Station KDMM(AM), 1150 kHz, Highland Park,
Texas (the "Station"). Buyer has expressed an interest in acquiring certain
assets used in the operation of the Station, including the FCC Licenses. Seller
has agreed to sell the Station Assets to Buyer in return for payment of
$675,000.
The assignment of the FCC Licenses to Buyer requires the prior consent
of the Federal Communications Commission ("FCC"). Definitions of capitalized
terms used in this Agreement are set forth in SECTION 13.1.
Therefore, the parties agree as follows:
ARTICLE 1
ASSETS TO BE CONVEYED
1.1. CLOSING. Subject to SECTION 10.1 (Termination Rights), the
closing (the "Closing") of the sale and purchase of the Station Assets shall
take place in the offices of Leventhal, Senter & Lerman, 2000 K Street, N.W.,
Washington, D.C., at 10:00 a.m., local time, on the fifth (5th) business day
following the satisfaction or waiver of the conditions set forth in SECTIONS
7.1(B) and 7.2(B) (FCC Consent), or at such other place, time or date as Buyer
and Seller may agree in writing.
1.2. TRANSFER OF ASSETS. At the Closing, Seller shall sell,
assign, transfer and convey to Buyer, and Buyer shall purchase from Seller, the
following assets (the "Station Assets"):
(a) all of Seller's rights in and to the FCC licenses,
permits and other authorizations, including any temporary waiver or
special temporary authorization, issued to or held by Seller
exclusively for use in the operation of the Station, including any
pending applications therefor, as set forth in Schedule 1.2(a) (the
"FCC Licenses").
(b) all of Seller's right, title and interest in the
equipment, spare parts and other tangible personal property located at
the Station's
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<PAGE> 7
transmitter site and used or held for use exclusively in the operation
of the Station and in any other tangible personal property identified
on Schedule 1.2(b) (the "Personal Property");
(c) all of Seller's right, title, and interest in, and to
the real property described in Schedule 1.2(c) (the "Real Property");
and
(d) the Station's public inspection file, filings with the
FCC related to the Station, and such technical information,
engineering data, rights under manufacturers' warranties as exist at
Closing and relate exclusively to the assets being conveyed hereunder.
The Station Assets shall be delivered as is, where is, without any
representation or warranty by Seller except as expressly set forth in this
Agreement, and Buyer acknowledges that it has not relied on or been induced to
enter into this Agreement by any representation or warranty other than those
expressly set forth in ARTICLE 3 hereof. The Station Assets shall be conveyed
to Buyer free and clear of all Liens, except as otherwise expressly provided in
this Agreement.
1.3. EXCLUDED ASSETS. Except as set forth in SECTION 1.2, the
Station Assets shall not include any properties, assets, privileges, rights,
interests and claims, real and personal, tangible and intangible, of every type
and description, wherever located, of Seller or any of its affiliates.
ARTICLE 2
PURCHASE PRICE
2.1. PURCHASE PRICE.
(a) Buyer shall pay $675,000 (the "Purchase Price") for the
Station Assets.
(b) The parties stipulate that the Purchase Price is not
based in any way upon the ratings or financial performance of the Station,
because Buyer is neither purchasing the Station as a going concern nor
acquiring any goodwill or intellectual property of the Station. Therefore,
Seller makes no representation or warranty concerning the Station's past
financial performance, and Buyer's obligations under this Agreement are not
conditioned in any way on the Station's financial performance between the date
of this Agreement and the Closing.
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<PAGE> 8
2.2. PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase
Price as follows:
(a) Simultaneous with the execution of this Agreement, Buyer
shall deposit $300,000 with the Escrow Agent to be held and distributed
pursuant to the Escrow Agreement.
(b) At the Closing, Buyer shall pay Seller $375,000 by wire
transfer prior to 3:00 p.m., Washington, D.C. time, of immediately available
federal funds to an account at a bank or financial institution pursuant to wire
instructions that Seller shall deliver to Buyer at least one (1) business day
prior to the Closing Date.
2.3. ALLOCATION. Prior to the Closing, Buyer and Seller shall attempt
to agree on an allocation of the Purchase Price for income tax purposes. If
Buyer and Seller do not agree on the allocation prior to the Closing, Buyer
shall arrange for an appraisal of the value of the tangible assets included in
the Station Assets after the Closing. Such appraisal shall be completed within
one hundred eighty (180) days after the Closing, and, based upon such
appraisal, Buyer shall prepare an initial draft of IRS Form 8594. Buyer shall
forward such form to Seller for its approval. If the parties reach an agreement
on the contents of IRS Form 8594, Buyer and Seller shall each file the IRS Form
8594 finally agreed upon by the parties with their respective federal income
tax return for the tax year in which the Closing occurs.
2.4. PRORATIONS. At the Closing, to the extent feasible, Buyer and
Seller shall prorate all expenses arising from the operation of the Station as
of 12:01 a.m., local Dallas time, on the Closing Date (the "Effective Time").
Any real estate taxes shall be apportioned on the basis of the number of days
that each party owned the Real Property during the relevant tax year.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1. ORGANIZATION AND STANDING. Seller (a) is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware; (b) is qualified to do business as a foreign corporation and is in
good
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standing in the State of Texas; and (c) has all necessary corporate power and
authority to own, lease and operate and to carry on the business of the
Station.
3.2. AUTHORIZATION AND BINDING OBLIGATION. Seller has all necessary
corporate power and authority to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller and constitutes its
valid and binding obligation enforceable against Seller in accordance with its
terms.
3.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in ARTICLE 5, the execution, delivery and performance of this
Agreement by Seller: (a) do not and will not violate any provisions of Seller's
organizational documents; (b) do not and will not require the consent or
approval of or any filing with any third party or governmental authority; (c)
do not and will not violate any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority; and (d) do
not and will not, either alone or with the giving of notice or the passage of
time, or both, conflict with, constitute grounds for termination or
acceleration of or result in a breach of the terms, conditions or provisions
of, or constitute a default under any agreement, lease, instrument, license or
permit to which Seller is now subject.
3.4. ABSENCE OF LITIGATION. There is no claim, litigation, arbitration
or proceeding pending or, to Seller's knowledge, threatened, before or by any
court, governmental authority or arbitrator that seeks to enjoin or prohibit,
that questions the validity of, or that might materially hinder or impair
Seller's performance of its obligations under this Agreement.
3.5. FCC AUTHORIZATIONS.
(a) Schedule 1.2(a) contains a true and complete list of the
FCC Licenses, and there are no other licenses, permits or other authorizations
from the FCC required for the lawful operation of the Station in the manner now
operated. The FCC Licenses are in full force and effect. All required FCC
regulatory fees with respect to the FCC Licenses have been paid. The FCC
Licenses have been issued for the full terms customarily issued to a radio
broadcast station in the State of Texas, and the FCC Licenses are not subject
to any condition except for conditions shown on the face of the FCC Licenses,
applicable to radio broadcast licenses generally or otherwise disclosed in
Schedule 1.2(a).
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(b) Except as set forth in Schedule 1.2(a), to Seller's
knowledge, there are no applications, petitions, complaints, proceedings or
other actions pending or threatened before the FCC relating to the Station,
other than proceedings affecting the radio broadcasting industry generally.
(c) Seller has no reason to believe that the FCC assignment
contemplated herein might be challenged or might not be granted by the FCC in
the ordinary course.
3.6. TITLE TO AND CONDITION OF PERSONAL PROPERTY. Seller has good
title to the Personal Property free and clear of all Liens. Prior to entering
into this Agreement, Buyer has inspected the Personal Property and is satisfied
with its present condition. At the Closing, the Personal Property will be the
same or better condition and will be in material compliance with the rules and
regulations of the FCC and all other applicable federal, state and local
statues, ordinances, rules and regulations.
3.7. REAL PROPERTY. Seller has good and marketable title to the
Real Property free and clear of all Liens except as disclosed in Schedule
1.2(c).
3.8. COMPLIANCE WITH LAWS. Seller has complied in all material
respects with, and is not in violation of any federal, state or local laws,
regulations or orders relating to the operation of the Station. Without
limiting the generality of the foregoing:
(a) The Station's transmitting and studio equipment is
operating in accordance with the terms and conditions of the FCC
Licenses and all underlying construction permits, and the rules,
regulations and policies of the FCC, including, without limitation all
regulations concerning equipment authorization and human exposure to
radio frequency radiation.
(b) All ownership reports, employment reports and other
documents required to be filed by Seller with the FCC have been so
filed. Such items as are required to be placed in the Station's local
public inspection files have been placed in such files. All proofs of
performance and measurements that are required to be made by Seller
with respect to the Station's transmission facilities have been
completed and filed at the Station. All information contained in the
foregoing documents is true, complete and accurate in all material
respects.
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(c) To the best of Seller's knowledge, (a) no Hazardous
Substance (i) is or has been used, treated, stored, disposed of,
released, spilled, generated, manufactured, transported or otherwise
handled on the Real Property, (ii) has been spilled, released or
disposed of on property adjacent to the Real Property, or (iii) has
otherwise come to be located on or under the Real Property, (b) the
Real Property and all operations on the Real Property are in
compliance with all Environmental Laws, and (c) Seller has obtained
all environmental, health and safety permits necessary for the
operation of , and all such permits are in full force and effect, and
Seller is in compliance with the terms and conditions of all such
permits. No outstanding liens have been placed on the Real Property
under any Environmental Laws. Seller has not received any notice, and
is not aware, of any administrative or judicial investigations,
proceedings or actions with respect to violations, alleged or proven,
of Environmental Laws by Seller or any tenants of Seller, or otherwise
involving the Real Property or the operations conducted on the Real
Property. To the best of Seller's knowledge, no Asbestos-Containing
Material is present in any of the improvements on the Real Property or
is otherwise located on the Real Property. To the best of Seller's
knowledge, there are no underground storage tanks, whether in use or
closed, on or under the Real Property, and no PCB is present on the
Real Property. No PCB is used in the Personal Property.
3.9. BROKER'S FEES. Neither Seller nor any person or entity acting on
Seller's behalf has agreed to pay a commission, finder's fee or similar payment
in connection with this Agreement or any matter related hereto to any person or
entity, and no person or entity is entitled to any such payment from Seller in
connection with the transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1. ORGANIZATION AND STANDING. Buyer is (a) a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware; (b) if necessary, is qualified to do business as a foreign
corporation and is in good standing in the State of Texas; and (c) has all
necessary corporate power and authority to own, lease and operate the Station
Assets and to carry on the businesses of the Station on and after the Closing
Date.
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4.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has all necessary
corporate power and authority to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Buyer and constitutes its
valid and binding obligation enforceable against Buyer in accordance with its
terms.
4.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as
set forth in ARTICLE 5, the execution, delivery and performance of this
Agreement by Buyer: (a) do not and will not violate any provision of Buyer's
organizational documents; (b) do not and will not require the consent of any
third party or governmental authority; (c) do not and will not violate any law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority; and (d) do not and will not, either alone or with the
giving of notice or the passage of time, or both, conflict with, constitute
grounds for termination or acceleration of or result in a breach of the terms,
conditions or provisions of, or constitute a default under any agreement,
lease, instrument, license or permit to which Buyer is now subject.
4.4. ABSENCE OF LITIGATION. There is no claim, litigation, arbitration
or proceeding pending, or to the Buyer's knowledge, threatened, before or by
any court, governmental authority or arbitrator, that seeks to enjoin or
prohibit, that questions the validity of, or that might materially hinder or
impair Buyer's performance of its obligations under this Agreement.
4.5 FCC QUALIFICATIONS. Buyer is qualified under the Communications
Act of 1934, as amended, and the rules and regulations of the FCC to be the
assignee of the FCC Licenses. There are no facts known to Buyer that would
delay the consummation of the transactions contemplated by this Agreement.
Buyer has no reason to believe that the FCC assignment contemplated herein
might be challenged or might not be granted by the FCC in the ordinary course
because of its qualifications. Buyer is financially qualified to consummate the
transactions contemplated by this Agreement.
4.6. BROKER'S FEES. Neither Buyer nor any person or entity acting on
its behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, other than Gammon Media Brokers, and Buyer is solely responsible for
paying any fees or commissions due to Gammon Media Brokers in connection with
the transactions contemplated by this Agreement.
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4.7. BANKRUPTCY. No insolvency proceedings of any character,
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Buyer or any of its affiliates are pending or threatened, and neither Buyer nor
any of its affiliates has made no assignment for the benefit of creditors or
taken any action in contemplation of or which would constitute the basis for
the institution of such insolvency proceedings.
ARTICLE 5
GOVERNMENTAL CONSENTS
5.1. FCC APPLICATION.
(a) The assignment of the FCC Licenses as contemplated by
this Agreement is subject to the prior consent and approval of the FCC. Between
the date of this Agreement and the Closing, Buyer shall not directly or
indirectly control the operation of the Station.
(b) No later than five (5) business days after the date of
this Agreement, Buyer and Seller shall each prepare and jointly file a complete
and grantable FCC Application. Seller and Buyer shall thereafter prosecute the
FCC Application in good faith and with all reasonable diligence and otherwise
use their best efforts to obtain the grant of the FCC Application as
expeditiously as practicable; provided, however, that neither Seller nor Buyer
shall have any obligation to satisfy any complainant or the FCC by taking any
steps which would have a material adverse effect upon Seller or Buyer or upon
any affiliated entity, but neither the expense nor inconvenience to a party of
defending against a complainant or an inquiry by the FCC shall be considered a
material adverse effect on such party. If the FCC Consent imposes any condition
on any party hereto, such party shall use its best efforts to comply with such
condition; provided, however, that no party shall be required to comply with
any condition that would have a material adverse effect upon it or any
affiliated entity. If reconsideration or judicial review is sought with respect
to the FCC Consent, the party or parties affected shall vigorously oppose such
efforts for reconsideration or judicial review; provided, however, that nothing
herein shall be construed to limit either party's right to terminate this
Agreement pursuant to ARTICLE 10 (Termination Rights).
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(c) All FCC filing or grant fees shall be shared equally by
Buyer and Seller. Each party shall otherwise bear its own costs and expenses
(including the fees and disbursements of its counsel) in connection with the
preparation of the portion of the FCC Application to be prepared by it and in
connection with the processing and defense of that application.
5.2 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of
this Agreement, the parties shall prepare and file with the appropriate
governmental authorities any other requests for approval or waiver that are
required from such governmental authorities in connection with the transactions
contemplated hereby and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers. Each party shall bear its own costs and expenses in connection with
the preparation of any filings, documents or requests to be prepared by it in
order to obtain such governmental consents, approvals or waivers and in
connection with any prosecution or defense by it of such filings, documents or
requests.
ARTICLE 6
COVENANTS
6.1. CONDUCT OF BUSINESS. Between the date of this Agreement and
the Closing Date, except as expressly permitted by this Agreement or with the
prior written consent of Buyer, which shall not be unreasonably withheld,
Seller shall:
(a) comply in all material respects with all laws
applicable to Seller's use of the Station Assets;
(b) refrain from selling, assigning, leasing or otherwise
transferring or disposing of any of the Station Assets, except for assets
consumed or disposed of in the ordinary course of business; and
(c) maintain the Station Assets in customary repair,
maintenance and condition, replace all items of equipment at time intervals
consistent with prior practice, and repair or replace (subject to SECTION 6.5
(Risk of Loss)) any asset that may be damaged or destroyed with items of equal
or greater value and utility unless Seller determines in good faith that such a
repair or replacement is not necessary or useful for the continued operation of
the Station.
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6.2 ACCESS. Between the date hereof and the Closing Date, Seller shall
give, upon prior reasonable notice, Buyer or representatives of Buyer
(including consultants and advisors) reasonable access to the Station and its
assets. It is expressly understood that, pursuant to this SECTION 6.2, Buyer,
at its sole expense, shall be entitled to make such engineering and other
inspections of the Station Assets as Buyer may desire, so long as such
inspection does not unreasonably interfere with Seller's operation of the
Station in Seller's reasonable judgment.
6.3. NOTIFICATION. Between the date of this Agreement and the Closing
Date, Seller shall promptly notify Buyer of (a) any pending or, to its
knowledge, threatened litigation, arbitration or administrative proceeding that
seeks to revoke, cancel, rescind, modify or fail to renew in the ordinary
course any of the FCC Licenses or that challenges the transactions contemplated
hereby, including any challenges to the FCC Application; (b) the issuance of
any order to show cause, notice of violation, notice of apparent liability or
notice of forfeiture with respect to the Station; or (c) the submission, to
Seller's knowledge, of any material complaint against the Station or Seller
with respect to the Station
6.4. PRE-CLOSING EFFORTS. Between the date of this Agreement and the
Closing, each party shall use its reasonable efforts to cause the fulfillment
at the earliest practicable date of all of the conditions to the obligations of
the other party to consummate the sale and purchase under this Agreement.
Neither party shall take any action which is materially inconsistent with its
obligations under this Agreement or that would materially hinder or delay the
consummation of the transactions contemplated by this Agreement. In particular,
neither party shall take any action that would result in its disqualification
to hold the FCC Licenses or in any way delay grant of the FCC Application or
consummation of the transactions contemplated by this Agreement. Should either
party become aware of any such fact or circumstance, such party shall promptly
inform the other.
6.5. RISK OF LOSS. The risk of loss or damage to the Station Assets
prior to the Effective Time shall be upon Seller. Seller shall repair, replace
and restore any damaged or lost item of Personal Property to its prior
condition as soon as possible and in no event later than the Effective Time,
unless such item was obsolete and unnecessary for the continued operation of
the Station consistent with past practice. If Seller is unable or fails to
repair, restore or replace a lost or damaged item required to be repaired or
replaced by Seller prior to the Closing, Seller shall reimburse Buyer for the
cost of the repair, restoration or replacement of such item incurred by Buyer
after the Closing.
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6.6. CONFIDENTIALITY.
(a) Buyer and Seller shall each keep confidential all
information obtained by it with respect to the other in connection with this
Agreement, except where such information is known or available through other
lawful sources or where its disclosure is required in accordance with
applicable law. If the transactions contemplated hereby are not consummated for
any reason, Buyer and Seller shall return to the other, without retaining a
copy thereof, any schedules, documents or other written information, including
all financial information, obtained from the other in connection with this
Agreement and the transactions contemplated hereby.
(b) Except as required by the FCC in connection with the
filing of the FCC Application, without the prior consent of both Buyer and
Seller, there shall be no public announcement relating to this Agreement or the
transactions proposed herein.
6.7. FURTHER ASSURANCES. Seller and Buyer shall cooperate and
take such actions, and execute such other documents, at the Closing or
subsequently, as may be reasonably requested by the other in order to carry out
the provisions and purposes of this Agreement.
6.8 PHASE I ENVIRONMENTAL AUDIT. Within thirty (30) days after the
date of this Agreement, Buyer may cause a Phase I environmental audit (the
"Environmental Audit") of the Real Property to be conducted. Buyer shall
provide Seller with a copy of such Environmental Audit within fifteen (15)
business days of its receipt by Buyer and at the same time shall give Seller
notice of any matter disclosed by such Environmental Audit that requires
remediation under Environmental Laws. Upon receipt of such notice, Seller shall
have the option either (a) to complete such remediation prior to the Closing or
(b) to notify Buyer that Seller does not intend to perform the remediation. If
Seller notifies Buyer that Seller does not intend to complete the remediation
or if for any other reason the remediation has not been completed by the date
on which the Closing would otherwise occur, Buyer shall have the option either
(i) to accept the Real Property as is and to relieve Seller from any
responsibility pertaining to the Real Property and as otherwise may exist under
this Agreement relating to Environmental Laws or (ii) to terminate this
Agreement. If Buyer fails to elect option (i) or (ii) above, Buyer shall be
deemed to have elected option (i). Nothing in this SECTION 6.8 shall be deemed
to extend the Closing Date.
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ARTICLE 7
CONDITIONS PRECEDENT
7.1. TO BUYER'S OBLIGATIONS. The obligations of Buyer hereunder
are, at its option, subject to satisfaction, at or prior to the Closing Date,
of each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by
Seller in this Agreement shall be true and complete in all
material respects on and as of the Closing Date (except to
the extent they expressly relate to an earlier time, in which
case they shall have been true and correct only as of such
earlier time) as if made on and as of that date, except to
the extent changes are permitted under SECTION 6.1 of this
Agreement.
(ii) All of the terms, covenants and conditions to
be complied with and performed by Seller under this Agreement
on or prior to Closing Date shall have been complied with or
performed in all material respects.
(b) FCC CONSENT. The FCC Consent shall have been obtained,
shall be effective and shall have become a Final Order; provided,
however, that Buyer agrees to waive the requirement of a Final Order,
if requested to do so by Seller, and to close on the same date that
the Merger is being consummated.
(c) NO INJUNCTION. No order of any court or administrative
agency shall be in effect which restrains or prohibits the
transactions contemplated by this Agreement in accordance with its
terms.
(d) DELIVERIES. Seller shall have made or stand willing to
make all deliveries required under SECTION 8.1.
7.2 TO SELLER'S OBLIGATIONS. The obligations of Seller hereunder
are, at its option, subject to satisfaction, at or prior to the Closing Date,
of each of the following conditions:
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(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by Buyer
in this Agreement shall be true and complete in all material
respects on and as of the Closing Date (except to the extent
they expressly relate to an earlier time, in which case they
shall have been true and correct only as of such earlier
time) as if made on and as of that date.
(ii) All of the terms, covenants and conditions to
be complied with and performed by Buyer under this Agreement on or
prior to the Closing Date shall have been complied with or performed
in all material respects.
(b) FCC CONSENT. The FCC Consent shall have been obtained
and shall be effective.
(c) NO INJUNCTION. No order of any court or administrative
agency shall be in effect which restrains or prohibits the
transactions contemplated by this Agreement in accordance with its
terms.
(d) DELIVERIES. Buyer shall have made or stand willing to
make all the deliveries required under SECTION 8.2 and shall have paid
or stand willing to pay the Purchase Price as provided in SECTION 2.2.
ARTICLE 8
DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1. DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller
shall deliver to Buyer the following:
(a) a copy of the resolution of the board of directors of
Seller, certified by an authorized officer of Seller, authorizing the
execution, delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to Buyer, effecting the
sale, transfer, assignment and conveyance of the Station Assets to
Buyer, including, but not limited to, the following:
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(i) an assignment of the FCC Licenses;
(ii) bills of sale for all Personal Property;
(iii) a quitclaim deed for the Real Property;
(c) if the Closing is occurring prior to the FCC Consent
becoming a Final Order, an Unwind Agreement in the form attached at
EXHIBIT B (the "Unwind Agreement") executed by Seller; and
(d) such other documents as may reasonably be requested by
Buyer's counsel.
8.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer
shall deliver to Seller the following:
(a) a copy of the resolution of the board of directors of
Buyer, certified by an authorized officer of Buyer, authorizing the
execution, delivery and performance of this Agreement;
(b) if the Closing is occurring prior to the FCC Consent
becoming a Final Order, the Unwind Agreement executed by Buyer;
(c) a joint notice to the Escrow Agent executed by Buyer,
stating that the Closing has occurred and directing the Escrow Agent to
pay the Escrow Deposit to Seller;
(d) immediately available wire transferred federal funds as
provided in SECTION 2.2; and
(e) such other documents as may reasonably be requested by
Seller's counsel.
ARTICLE 9
INDEMNIFICATION, SURVIVAL
9.1. SELLER'S INDEMNITIES. From and after the Closing, Seller
shall indemnify, defend, and hold harmless Buyer and its affiliates and their
respective
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directors, officers, employees, and representatives, and the successors and
assigns of any of them, from and against, and reimburse them for, all claims,
damages, costs and expenses, including, without limitation, interest,
penalties, court costs and reasonable attorneys' fees and expenses, resulting
from:
(a) Seller's ownership or operation of the Station Assets
prior to the Effective Time;
(b) any liabilities of Seller not assumed by Buyer under
this Agreement;
(c) the breach of any covenant set forth in this Agreement
to be performed prior to or after the Closing by Seller; or
(d) any failure to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby.
9.2. BUYER'S INDEMNITIES. From and after the Closing, Buyer shall
indemnify, defend and hold harmless Seller and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them
for, all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from the failure of Buyer to perform any of its obligations under
this Agreement or from the ownership or operation of the Station Assets from
and after the Effective Time.
9.3. PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(a) The party seeking indemnification under this ARTICLE 9
(the "Claimant") shall give notice to the party from whom
indemnification is sought (the "Indemnitor") of any claim, whether
solely between the parties or brought by a third party, reasonably
specifying (i) the factual basis for the claim, and (ii) the amount of
the claim if then known. If the claim relates to an action, suit or
proceeding filed by a third party against Claimant, notice shall be
given by Claimant within fifteen (15) days after written notice of the
action, suit or proceeding was given to Claimant. In all other
circumstances, notice shall be given by Claimant within thirty (30)
days after Claimant becomes, or should have become, aware of the facts
giving rise to the claim. Notwithstanding the foregoing, Claimant's
failure to give Indemnitor timely notice shall not preclude Claimant
from
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seeking indemnification from Indemnitor if Claimant's failure has not
materially prejudiced Indemnitor's ability to defend the claim or
litigation.
(b) With respect to claims between the parties, following
receipt of notice from the Claimant of a claim, the Indemnitor shall
have thirty (30) days to make any investigation of the claim that the
Indemnitor deems necessary or desirable. For the purposes of this
investigation, the Claimant agrees to make available to the Indemnitor
and/or its authorized representatives the information relied upon by
the Claimant to substantiate the claim. If the Claimant and the
Indemnitor cannot agree as to the validity and amount of the claim
within the 30-day period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume
control of the defense of the claim with counsel reasonably acceptable
to Claimant, and the Claimant shall cooperate fully with the
Indemnitor, subject to reimbursement for reasonable expenses incurred
by the Claimant as the result of a request by the Indemnitor. If the
Indemnitor elects to assume control of the defense of any third-party
claim, the Claimant shall have the right to participate in the defense
of the claim at its own expense. If the Indemnitor does not elect to
assume control or otherwise participate in the defense of any third
party claim, Claimant may, but shall have no obligation to, defend or
settle such claim or litigation in such a manner as it deems
appropriate, and in any event Indemnitor shall be bound by the results
obtained by the Claimant with respect to the claim (by default or
otherwise) and shall promptly reimburse Claimant for the amount of all
expenses (including the amount of any judgment rendered), legal or
otherwise, incurred in connection with such claim or litigation. The
Indemnitor shall be subrogated to all rights of the Claimant against
any third party with respect to any claim for which indemnity was
paid.
9.4. LIMITATIONS.
(a) Neither Seller nor Buyer shall have any obligation to the
other party for any matter described in SECTION 9.1 or SECTION 9.2, as the case
may be, except upon compliance by the other party with the provisions of this
ARTICLE 9, particularly SECTION 9.3.
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(b) Neither party shall be required to indemnify the other
party under this ARTICLE 9 unless (i) written notice of a claim under this
ARTICLE 9 was received by the party within the pertinent survival period
specified in SECTION 9.5 and (ii) unless and until the aggregate amount of
claims against the party to which the other party (as a Claimant) is entitled
to be indemnified under this Agreement exceeds $5,000, and then only for the
excess over $5,000. Neither party shall have any liability to the other party
under any circumstances for special, consequential, punitive or exemplary
damages, and in no event shall Seller's total liability to Buyer under this
Agreement exceed the amount of the Purchase Price.
9.5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties contained in this Agreement shall not survive
the Closing. The covenants, indemnities and other agreements contained in this
Agreement or in any certificate, document or instrument delivered pursuant to
this Agreement are and will be deemed and construed to be continuing covenants,
indemnities and agreements and shall survive the Closing for a period of one
(1) year after the Closing Date (the "Survival Period"). No claim may be
brought under this Agreement unless written notice describing in reasonable
detail the nature and basis of such claim is given on or prior to the last day
of the Survival Period. In any event such notice is given, the right to
indemnification with respect thereto shall survive the Survival Period until
such claim is finally resolved and any obligations thereto are fully satisfied.
Any investigation by or on behalf of any party hereto shall not constitute a
waiver as to enforcement of any representation, warranty, covenant or agreement
contained herein.
9.6. SOLE REMEDY. After the Closing, the right to
indemnification under this ARTICLE 9 shall be the exclusive remedy of any party
in connection with any breach or default by another party under this Agreement.
ARTICLE 10
TERMINATION RIGHTS
10.1. TERMINATION.
(a) This Agreement may be terminated by either Buyer or
Seller, if the party seeking to terminate is not in material default or breach
of this Agreement, upon written notice to the other upon the occurrence of any
of the following:
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(i) if the other party is in material breach of this
Agreement and such breach has been neither cured within ten
(10) days after written notice of such breach nor waived by
the party giving such termination notice;
(ii) if there shall be in effect any judgment, final
decree or order that would prevent or make unlawful the
Closing or if the FCC shall have released a hearing
designation order requiring a formal hearing on the FCC
Application; or
(iii) if the Closing has not occurred by June 30,
1997 (the "Upset Date").
(b) This Agreement may be terminated by Buyer pursuant to
SECTION 6.8.
(c) This Agreement may be terminated by mutual written
consent of Buyer and Seller.
(d) If either party believes the other to be in breach or
default of this Agreement, the non-defaulting party shall, prior to exercising
its right to terminate under SECTION 10.1(A)(I), provide the defaulting party
with notice specifying in reasonable detail the nature of such breach or
default. Except for a failure to pay the Purchase Price, the defaulting party
shall have ten (10) days from receipt of such notice to cure such default;
provided, that if the breach or default is due to no fault of the defaulting
party and is incapable of cure within such 10-day period, the cure period shall
be extended as long as the defaulting party is diligently and in good faith
attempting to effectuate a cure. Nothing in this SECTION 10.1(C) shall be
interpreted to extend the Upset Date.
10.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement pursuant to
SECTION 10.1, this Agreement (other than SECTION 6.6 (Confidentiality), which
shall remain in full force and effect) shall forthwith become null and void,
and no party hereto (nor any of their respective affiliates, directors,
officers or employees) shall have any liability or further obligation, except
as provided in this ARTICLE 10 and in ARTICLE 11; provided, that nothing in
this SECTION 10.2 shall relieve any party from liability for any breach of this
Agreement.
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<PAGE> 24
ARTICLE 11
REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE
11.1. DEFAULT BY SELLER; SPECIFIC PERFORMANCE. If Seller breaches or
defaults in its obligations under this Agreement, Buyer may pursue any legal or
equitable remedies available to it and shall be entitled to obtain from Seller
court costs and reasonable attorneys' fees and expenses incurred by it in
enforcing its rights hereunder. Seller recognizes that, in the event Seller
defaults in the performance of its obligations under this Agreement, monetary
damages alone will not be adequate. In such event, Buyer shall be entitled to
obtain specific performance of the terms of this Agreement. As a condition to
seeking specific performance, Buyer shall not be required to have tendered the
Purchase Price specified in ARTICLE 2 of this Agreement, but shall be ready,
willing and able to do so.
11.2. DEFAULT BY BUYER; LIQUIDATED DAMAGES. If Buyer breaches or
defaults in its obligations under this Agreement, Seller may pursue any legal
or equitable remedies available to it and shall be entitled to obtain from
Buyer court costs and reasonable attorneys' fees and expenses incurred by it in
enforcing its rights hereunder; provided, however, that if this Agreement is
terminated by Seller pursuant to SECTION 10.1(A) as a result of a breach or
default by Buyer of its representations, warranties, covenants or obligations
hereunder, then Buyer shall pay Seller $300,000 as liquidated damages, in full
settlement of any damages of any kind or nature that Seller may suffer or
allege to suffer as a result thereof, it being understood and agreed that the
amount of liquidated damages represents Buyer's and Seller's reasonable
estimate of actual damages and does not constitute a penalty. In the event that
Seller is entitled to liquidated damages, the Escrow Deposit shall be paid over
to Seller in satisfaction of Buyer's liability for liquidated damages under
this SECTION 11.2. In the event of a termination of this Agreement pursuant to
SECTION 10.1 for any other reason, the Escrow Deposit shall be paid to Buyer.
ARTICLE 12
OTHER PROVISIONS
12.1. TRANSFER TAXES AND EXPENSES. All recordation, transfer,
documentary, excise, sales or use taxes or fees imposed on this transaction
shall be paid by Buyer. Except as otherwise provided in this Agreement, each
party shall be solely responsible for and shall pay all other costs and
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
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<PAGE> 25
12.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither Buyer nor Seller may assign its rights under
this Agreement without the prior written consent of the other party hereto;
provided, however, that Seller may, without the consent of Buyer, assign its
rights hereunder, together with the FCC Licenses and other of the Station
Assets owned or held by Seller, to a trust of which Seller or its affiliates is
the sole beneficiary (the "Disposition Trust"), whether directly or through a
transfer of such rights and assets to a subsidiary which is then conveyed to
such trust, all in accordance with applicable FCC rules and regulations. If
Seller's assignment of its rights under this Agreement in any way delays the
Closing under this Agreement, the parties agree that the Upset Date shall be
extended by the period of such delay.
12.3. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement,
and the exhibits and schedules hereto and thereto, embody the entire agreement
and understanding of the parties hereto and supersede any and all prior
agreements, arrangements and understandings relating to the matters provided
for herein. Any matter that is disclosed in a Schedule hereto in such a way as
to make its relevance to the information called for by another Schedule readily
apparent shall be deemed to have been included in such other Schedule,
notwithstanding the omission of an appropriate cross-reference. No amendment,
waiver of compliance with any provision or condition hereof, or consent
pursuant to this Agreement shall be effective unless evidenced by an instrument
in writing signed by the party against whom enforcement of any waiver,
amendment, change, extension or discharge is sought. No failure or delay on the
part of Buyer or Seller in exercising any right or power under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power.
12.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
12.5. COMPUTATION OF TIME. If after making computations of time
provided for in this Agreement, a time for action or notice falls on Saturday,
Sunday or a Federal holiday, then such time shall be extended to the next
business day.
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12.6. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and
performance of this Agreement shall be governed by the law of the State of New
York without regard to its principles of conflict of law. BUYER AND SELLER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM
MADE IN SUCH ACTION OR PROCEEDING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE DECIDED SOLELY BY A JUDGE.
Buyer and Seller hereby acknowledge that they have each been represented by
counsel in the negotiation, execution and delivery of this Agreement and that
their lawyers have fully explained the meaning of the Agreement, including in
particular the jury-trial waiver. Any question of doubtful interpretation shall
not be resolved by any rule providing for interpretation against the party who
causes the uncertainty to exist or against the drafter of this Agreement.
12.7. ATTORNEYS' FEES. In the event of any dispute between the parties
to this Agreement, Seller or Buyer, as the case may be, shall reimburse the
prevailing party for its reasonable attorneys' fees and other costs incurred in
enforcing its rights or exercising its remedies under this Agreement. Such
right of reimbursement shall be in addition to any other right or remedy that
the prevailing party may have under this Agreement.
12.8. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance shall, to any extent be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each such term and provision of this Agreement shall be valid and be enforced
to the fullest extent permitted by law.
12.9. NOTICES. Any notice, demand or request required or permitted
to be given under the provisions of this Agreement shall be in writing,
addressed to the following addresses, or to such other address as any party may
request:
If to Seller:
c/o Infinity Broadcasting Corporation
600 Madison Avenue, 4th Floor
New York, NY 10022
Attention: Mr. Mel Karmazin
Telephone: 212-750-6400
Facsimile: 212-888-2959
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<PAGE> 27
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman
2000 K Street, N.W., Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lerman, Esq.
Telephone: 202-429-8970
Facsimile: 202-293-7783
If to Buyer:
Marcos A. Rodriguez, Jr.
7700 Carpenter Freeway
Dallas, Texas 75247
Telephone: 214-570-9400
Facsimile: 214-951-8130
With a copy (which shall not constitute notice) to:
James L. Anderson, Esq.
Suite 110
1227 W. Magnolia Avenue
Fort Worth, Texas 76104
Telephone: 817-921-9201
Facsimile: 817-921-9209
Any such notice, demand or request shall be deemed to have been duly delivered
and received (a) on the date of personal delivery, or (b) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (c) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (d) on the
date of a signed receipt, if sent by an overnight delivery service, but only if
sent in the same manner to all persons entitled to receive notice or a copy.
12.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
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<PAGE> 28
ARTICLE 13
DEFINITIONS
13.1. DEFINED TERMS. Unless otherwise stated in this Agreement, the
following terms when used herein shall have the meanings assigned to them below
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined).
"Agreement" shall mean this Asset Purchase Agreement.
"Asbestos" shall mean any and all varieties of materials included in
the definition of "asbestos" under any federal or state law or regulation
relating to the protection of human health or the environment.
"Asbestos-Containing Material" shall mean any material containing more
than one (1) percent Asbestos by weight.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Claimant" shall have the meaning set forth in SECTION 9.3.
"Closing" shall have the meaning set forth in SECTION 1.1.
"Closing Date" shall mean the date on which the Closing is completed.
"Disposition Trust" shall have the meaning set forth in SECTION 12.2.
"Effective Time" shall have the meaning set forth in SECTION 2.4.
"Environmental Audit" shall have the meaning set forth in SECTION 6.8.
"Environmental Laws" shall mean all applicable local, state and
federal statutes and regulations relating to the protection of human health or
the environment including the FCC's regulations concerning radio frequency
radiation.
"Escrow Agent" shall mean SouthWest Land Title, Dallas, Texas.
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<PAGE> 29
"Escrow Agreement" shall mean the agreement among Seller, Buyer and
Escrow Agent substantially in the form attached hereto as EXHIBIT A.
"Escrow Deposit" shall mean the amount held by the Escrow Agent
pursuant to the Escrow Agreement.
"FCC" shall have the meaning set forth in the preamble to this
Agreement.
"FCC Application" shall mean the application that Seller and Buyer
must file with the FCC requesting its consent to the assignment of the FCC
Licenses from Seller to Buyer.
"FCC Consent" shall mean the action by the FCC granting the FCC
Application.
"FCC Licenses" shall have the meaning set forth in SECTION 1.2.
"Final Order" shall mean action by the FCC, with respect to the FCC
Application, (i) which has not been vacated, reversed, stayed, or suspended;
(ii) with respect to which no timely appeal, request for stay or petition for
rehearing, reconsideration or review by any party or by the FCC on its own
motion, is pending; and (iii) as to which the time for filing any such appeal
request, petition, or similar document or for the reconsideration or review by
the FCC on its own motion under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, has expired.
"Hazardous Substance" shall mean all hazardous or toxic waste or
material which, because of its quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. "Hazardous
Substance" shall include, but is not limited to, any and all hazardous or toxic
substances, materials or wastes as defined or listed under the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act or any
comparable state statute or any regulation promulgated under any of such
federal or state statutes. "Hazardous Substance" shall not include ordinary
quantities of consumer or commercial products used in the normal course of
broadcast station operations, including grounds and building operation and
maintenance; provided, that such products have been properly stored, handled
and disposed of.
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<PAGE> 30
"Indemnitor" shall have the meaning set forth in SECTION 9.3.
"Liens" shall mean mortgages, deeds of trust, liens, security
interests, pledges, collateral assignments, conditional sales agreements,
leases, encumbrances, claims, or other defects of title, but shall not include
(i) liens for current taxes not yet due and payable, (ii) other liens imposed
by law (such as materialman's, mechanic's, carrier's, worker's and repairman's
liens) arising in the ordinary course of business (provided that such liens do
not interfere in any material respect with the use of the Station Assets as
currently used and that Seller remains liable for paying such liens), (iii)
valid leases or subleases to third parties with respect to property not used in
the operation of the Station, and (iv) defects in title or other matters that
do not materially adversely affect the continued use of the property as
currently used by Seller.
"Merger" shall mean the merger of Infinity Broadcasting Corporation, a
Delaware corporation, into Westinghouse Electric Company, a Pennsylvania
corporation pursuant to an Agreement and Plan of Merger dated as of June 20,
1996.
"PCB" shall mean polychlorinated biphenyl.
"Personal Property" shall have the meaning set forth in SECTION 1.2.
"Purchase Price" shall have the meaning set forth in SECTION 2.1.
"Real Property" shall have the meaning set forth in SECTION 1.2(C).
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Station" shall have the meaning set forth in the preamble to this
Agreement.
"Station Assets" shall mean the assets to be transferred to Buyer
hereunder, as more fully specified in SECTION 1.2.
"Survival Period" shall have the meaning set forth in Section 9.5.
"To Buyer's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Buyer.
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<PAGE> 31
"To Seller's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Seller.
"Unwind Agreement" shall have the meaning set forth in SECTION 8.1(C).
"Upset Date" shall have the meaning set forth in SECTION 10.1.
13.2. MISCELLANEOUS TERMS. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms apply to females; feminine terms apply to males.
The term "includes" or "including" is by way of example and not limitation.
[Signatures following this page.]
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<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
SELLER:
INFINITY BROADCASTING
CORPORATION OF TEXAS
By: /s/ FARID SULEMAN
------------------------------
Name: Farid Suleman
-----------------------
Title: CFO
-----------------------
BUYER:
MARCOS RODRIGUEZ, INC.
By: /s/ MARCOS PODRIGUEZ
------------------------------
Name: Marcos Podriguez
-----------------------
Title: President
-----------------------
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<PAGE> 1
[ARTICLE] 5
[CIK] 0000792863
[NAME] INFINITY BROADCASTING CORP.
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-START] JAN-01-1996
[PERIOD-END] SEP-30-1996
[CASH] 17,524
[SECURITIES] 0
[RECEIVABLES] 171,989
[ALLOWANCES] 3,135
[INVENTORY] 0
[CURRENT-ASSETS] 203,997
[PP&E] 60,450
[DEPRECIATION] 19,706
[TOTAL-ASSETS] 1,706,874
[CURRENT-LIABILITIES] 119,499
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 182
[OTHER-SE] 392,671
[TOTAL-LIABILITY-AND-EQUITY] 1706,874
[SALES] 0
[TOTAL-REVENUES] 462,244
[CGS] 0
[TOTAL-COSTS] 294,869
[OTHER-EXPENSES] 64,634
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 45,464
[INCOME-PRETAX] 59,046
[INCOME-TAX] 3,449
[INCOME-CONTINUING] 55,597
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 55,597
[EPS-PRIMARY] .48
[EPS-DILUTED] 0
</TABLE>
