UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission file number 0-16841
OSBORN COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1142367
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
130 Mason Street, Greenwich, Connecticut 06830
(Address of principal executive offices)(Zip Code)
(203) 629-0905
Registrant's telephone number, including area code
____________________________________________________________
(Former name, former address and former fiscal year, if
changed since last report)
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______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE LAST FIVE YEARS
Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Section
12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan
confirmed by a court. Yes_____ No______
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding in each of
the issuer's classes of common stock, as of the latest
practicable date.
Outstanding
Class at November 6, 1995
Common stock, $.01 par value 5,276,347
Non-voting common stock, $.01 par value -
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
(1) Consolidated Balance Sheets at September 30, 1995
(unaudited) and December 31, 1994
(2) Consolidated Statements of Operations for the three
and nine months ended September 30, 1995 and 1994
(unaudited)
(3) Consolidated Statements of Cash Flows for the nine
months ended September 30, 1995 and 1994 (unaudited)
(4) Consolidated Statement of Changes in Stockholders'
Equity for the nine months ended September 30, 1995
(unaudited)
(5) Notes to Unaudited Consolidated Financial
Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
September 30, December 31,
1995 1994
(Unaudited)
Current assets:
Cash and cash equivalents $2,181,164 $6,368,473
Accounts receivable, less allowance
for doubtful accounts of $486,677
in 1995 and $370,102 in 1994 5,310,749 5,435,792
Distribution receivable - 2,264,552
Note receivable - 1,620,455
Inventory 1,078,835 1,080,647
Prepaid expenses and other current assets 1,652,088 782,544
Total current assets 10,222,836 17,552,463
Investment in affiliated companies 530,640 535,913
Property, plant and equipment, at cost,
less accumulated depreciation of
$17,884,306 in 1995 and $15,945,361
in 1994 15,487,820 16,442,810
Intangible assets, net of accumulated
amortization of $15,578,240 in 1995
and $13,308,848 in 1994 41,423,105 44,418,927
Other noncurrent assets 124,561 216,373
Total assets $67,788,962 $79,166,486
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $3,118,329 $3,787,528
Accrued wages and sales commissions 142,703 304,781
Accrued interest payable 579,812 1,944,787
Accrued income taxes 474,228 535,489
Current portion of long-term debt 2,700,000 2,700,000
Total current liabilities 7,015,072 9,272,585
Long-term debt 44,500,000 48,313,905
Deferred income taxes 2,185,047 2,035,047
Other noncurrent liabilities 280,927 263,107
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, par value $.01 per
share; authorized 5,000,000 shares,
none issued and outstanding - -
Common stock, par value $.01 per share;
authorized 7,425,000 shares, issued
and outstanding shares: 5,286,347 and
5,276,347 respectively, in 1995;
5,369,747 and 5,359,747, respectively,
in 1994 52,764 53,598
Non-voting common stock, par value $.01
per share; authorized 75,000 shares,
none issued and outstanding - -
Additional paid-in capital 39,694,601 40,181,258
Accumulated deficit (25,939,449) (20,953,014)
Total stockholders' equity 13,807,916 19,281,842
Total liabilities and stockholders'
equity $67,788,962 $79,166,486
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
Net revenues $12,001,802 $11,547,756 $28,802,257 $23,675,365
Operating expenses:
Selling, technical
and program 2,817,392 2,744,017 8,869,892 6,122,852
Direct programmed music
and entertainment 3,773,692 3,243,356 7,148,981 6,630,437
General and
administrative 2,031,876 1,955,865 5,791,337 4,605,401
Depreciation and
amortization 1,398,887 1,329,817 4,315,622 3,445,799
Corporate expenses 426,674 480,510 1,276,051 1,927,615
Total operating
expenses 10,448,521 9,753,565 27,401,883 22,732,104
Operating income 1,553,281 1,794,191 1,400,374 943,261
Other income (expense) 76,030 117,320 1,975,009 (136,311)
Interest expense 1,290,320 1,454,115 4,137,330 2,809,436
Equity in loss of
affiliated company (5,273) - (5,273) -
Income (loss) before
income taxes 333,718 457,396 (767,220) (2,002,486)
Provision for income taxes 106,824 49,958 298,154 151,207
Income (loss) before
extraordinary item 226,894 407,438 (1,065,374) (2,153,693)
Extraordinary item:
Loss on debt
extinguishment (3,921,061) - (3,921,061) (436,329)
Net income (loss) ($3,694,167) $407,438 ($4,986,435) ($2,590,022)
Earnings per common share:
Income (loss) before
extraordinary item $0.05 $0.08 ($0.20) ($0.40)
Loss on extinguishment
of debt (0.75) - (0.75) (0.08)
Net income (loss) per
common share ($0.70) $0.08 ($0.95) ($0.48)
Weighted average common
shares outstanding 5,256,292 5,377,590 5,258,216 5,376,681
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<S> <C> <C>
1995 1994
Cash flows from operating activities:
Cash received from clients $28,557,416 $21,686,950
Cash paid to vendors and employees (24,415,386) (18,080,461)
Interest received 321,375 280,268
Interest paid (5,216,445) (3,000,189)
Income taxes paid (209,415) (57,725)
Net cash (used in) provided by
operating activities (962,455) 828,843
Cash flows from investing activities:
Distributions from affiliated companies 3,918,186 -
Payments for business acquisitions - (22,290,337)
Proceeds from note receivable 1,620,455 242,498
Capital expenditures (966,132) (686,904)
Expenditures for intangible assets (143,044) -
Reclassification of other noncurrent assets 91,812 (12,083)
Net cash provided by (used in)
investing activities 4,521,277 (22,746,826)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 44,500,000 48,460,982
Proceeds from issuance of stock warrant - 1,774,837
Debt issuance costs (1,258,640) (1,921,362)
Proceeds from exercise of stock options 154,863 6,000
Purchase and retirement of treasury stock (642,354) -
Prepayment penalty on debt retirement (500,000) -
Principal payments on long-term debt and
notes payable (50,000,000) (23,286,671)
Net cash (used in) provided by
financing activities (7,746,131) 25,033,786
Net (decrease) increase in cash and
cash equivalents (4,187,309) 3,115,803
Cash and cash equivalents at beginning
of period 6,368,473 1,321,175
Cash and cash equivalents at end of period $2,181,164 $4,436,978
Reconciliation of net loss to net cash (used
in) provided by operating activities:
Net loss ($4,986,435) ($2,590,022)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 4,315,622 3,415,799
Loss on extinguishment of debt 3,921,061 436,329
Write-off of registration statement costs - 397,583
Equity in loss of affiliated company 5,273 11,052
Deferred income taxes 150,000 -
Non-cash interest expense 285,860 -
Decrease (increase) in accounts receivable 125,043 (1,453,987)
Decrease (increase) in inventory 1,812 (276,262)
Distributions from affiliated companies (1,653,634) -
Increase in prepaid expenses and other
current assets (869,544) (175,557)
Increase (decrease) in accounts payable
and accrued expenses (669,199) 1,242,218
Decrease in accrued wages and sales
commissions (162,078) (81,039)
Decrease in accrued interest payable (1,364,975) (190,753)
Increase (decrease) in accrued income taxes (61,261) 93,482
Total adjustments 4,023,980 3,418,865
Net cash (used in) provided by operating
activities ($962,455) $828,843
Schedule of non-cash investing activities:
Acquisition of radio station through the
assumption of long-term debt - $2,464,181
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY
For the nine months ended September 30, 1995
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Voting Non-voting Additional
Par Par paid-in Accumulated
Shares value Shares value capital deficit
Balance at
December 31, 1994 5,359,747 $53,598 - - $40,181,258 ($20,953,014)
Purchase and
retirement of
treasury stock (107,059) (1,071) - - (641,283) -
Exercise of options 23,659 237 - - 154,626 -
Net loss - - - - - (4,986,435)
Balance at
September 30, 1995 5,276,347 $52,764 - - $39,694,601 ($25,939,449)
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
1. The financial information included herein is unaudited;
however, such information reflects all adjustments
(consisting solely of normal recurring adjustments) that
are, in the opinion of management, necessary for a fair
presentation of the financial position, results of
operations, and cash flows for the interim periods
presented.
2. In August 1995, the Company agreed to acquire
substantially all the assets of radio stations WKII-AM/WEEJ-
FM, Port Charlotte, Florida from Kneller Broadcasting of
Charlotte County, Inc. for $2.85 million, subject to Federal
Communications Commission ("FCC") approval and license
renewal. In the event that the Company is able to relocate
WEEJ-FM's broadcast antenna to the Company's Pine Island,
Florida tower, additional consideration of $750,000 will be
paid. Pending the closing of the transaction, which is
expected in 1996, the stations are being managed by the
Company pursuant to a Local Marketing Agreement.
In September 1995, the Company agreed to sell substantially
all the assets of radio stations WNDR-AM/WNTQ-FM, Syracuse,
New York to Pilot Communications of Syracuse, Inc. for $12.5
million, subject to FCC approval. Pending the closing of the
transaction, which is expected in early 1996, the stations
are being managed by the purchaser pursuant to a Local
Marketing Agreement.
In September 1995, the Company agreed to sell substantially
all the assets of radio stations WWRD-FM, Jacksonville,
Florida/Brunswick, Georgia and WFKS-FM, Daytona
Beach/Palatka, Florida, as well as the Company's 50%
interest in the broadcast tower serving WWRD-FM to Renda
Broadcasting Corporation for total consideration of $6.5
million. The closing of the transactions is subject to FCC
approval and, in the case of WFKS-FM, to license renewal.
The sale of WWRD-FM is expected to close in late 1995 and
the sale of WFKS-FM is expected to close in the second
quarter of 1996. Pending the closing of the transactions,
the stations are being managed by the purchaser pursuant to
a Local Marketing Agreement.
3. In August 1995, the Company entered into a credit
facility of $56.0 million with Society National Bank. The
facility consists of a $46.0 million revolving credit
agreement and a $10.0 million facility which may be used for
acquisitions. The initial drawdown of $44.5 million, along
with the Company's existing funds, was used to repay
existing loans from a financial institution totalling $50.0
million (see Note 8) plus transaction costs. Along with the
repayment of debt, the Company was able to cancel purchase
rights with respect to 676,000 warrant shares of the
1,014,000 warrant shares issued with the previous loans.
As a result of the repayment of the loans, the Company
recorded an extraordinary loss on the early extinguishment
of debt of approximately $3.9 million. The extraordinary
loss is primarily due to non-cash charges from the write-off
of deferred financing costs and debt discount.
4. On June 30, 1994, the Company, through wholly-owned
subsidiaries, acquired substantially all the assets of
three FM and one AM radio stations for an aggregate of $20.0
million plus transaction costs. The acquisition included
radio stations WKSF-FM/WWNC-AM, Asheville, North Carolina;
WOLZ-FM, Ft. Myers, Florida; and WFKS-FM, Daytona
Beach/Palatka, Florida. On August 1, 1994, the Company,
through a wholly-owned subsidiary, acquired substantially
all the assets of radio stations WQEN-FM/WAAX-AM, Gadsden,
Alabama for $1.75 million plus transaction costs. The
Gadsden market is adjacent to the Anniston market, in which
the Company owns and operates its television station. The
Company applied for a waiver from the FCC's regulations
prohibiting ownership of radio and television stations in
the same market. The FCC granted the waiver in August 1995.
Prior to the FCC's ruling on the waiver application, the
Gadsden radio stations were placed in a trust which operated
the stations on the Company's behalf.
The acquisitions have been accounted for as purchases.
Accordingly, the purchase price of each acquisition has been
allocated to the assets based upon their fair values at the
date of acquisition. The results of operations of the
acquired properties are included in the Company's
consolidated results of operations from the dates of
acquisition. The consolidated balance sheet at December 31,
1994 and the consolidated statements of operations for the
1994 periods have been restated to reflect the Gadsden
acquisition under the purchase method of accounting. Prior
to the FCC's ruling on the waiver application, the Gadsden
acquisition had been accounted for under the equity method
of accounting.
5. On March 30, 1994, Atlantic City Broadcasting Corp.
("Atlantic City"), a wholly-owned subsidiary of the Company,
acquired radio station WAYV-FM, Atlantic City, New Jersey,
for consideration of approximately $2.7 million. The
consideration consisted of a $2.7 million term loan assumed
by Atlantic City. The term loan is secured by the capital
stock and assets of Atlantic City, and is otherwise non-
recourse to the Company and its other assets. The Atlantic
City term loan agreement restricts Atlantic City's ability
to pay cash dividends or make other cash distributions to
the Company. The acquisition has been accounted for as a
purchase. Accordingly, the purchase price of the
acquisition has been allocated to the assets based upon
their fair values at the date of acquisition. The results
of operations of Atlantic City are included in the Company's
consolidated results of operations from the date of
acquisition.
In the second quarter of 1995, the Company agreed to sell
substantially all the assets of Atlantic City, subject to
FCC approval. The purchaser has defaulted on the sale
agreement and the Company has cancelled such agreement. The
Company plans to sell substantially all the assets of
Atlantic City.
6. In January 1995, the Company repurchased and
subsequently retired 107,059 unregistered shares of its
common stock which were held by an institution for $642,000.
7. In January 1995, the Company received a distribution
from Fairmont Communications Corporation of $2,265,000 which
was earned in 1994. In February 1995, the note receivable of
$1,620,000 relating to the 1988 disposition of the Toledo,
Ohio radio station and Muzak franchise was received.
8. On June 30, 1994, the Company entered into credit
agreements totalling $50.0 million with a financial
institution (see Note 3). The proceeds were used to fund
the acquisition of six radio stations (see Note 4); to repay
the Company's existing long-term debt; to fund transaction
expenses; and to provide working capital. The debt
repayments resulted in an extraordinary loss on the
extinguishment of debt of $436,000.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
On June 30, 1994, the Company acquired substantially all the
assets of three FM and one AM radio stations for an
aggregate of $20.0 million plus transaction costs. The
acquisition included radio stations WKSF-FM/WWNC-AM,
Asheville, North Carolina; WOLZ-FM, Ft. Myers, Florida; and
WFKS-FM, Daytona Beach/Palatka, Florida. On August 1, 1994,
the Company acquired substantially all the assets of radio
stations WQEN-FM/WAAX-AM, Gadsden, Alabama for $1.75 million
plus transaction costs. The Gadsden market is adjacent to
the Anniston market, in which the Company owns and operates
its television station. The Company applied for a waiver
from the Federal Communications Commission's ("FCC")
regulations prohibiting ownership of radio and television
stations in the same market. The FCC granted the waiver in
August 1995. Prior to the FCC's ruling on the waiver
application, the Gadsden radio stations were placed in a
trust which operated the stations on the Company's behalf.
On March 30, 1994, Atlantic City Broadcasting Corp.
("Atlantic City"), a wholly-owned subsidiary of the Company,
acquired radio station WAYV-FM, Atlantic City, New Jersey,
for consideration of approximately $2.7 million. The
consideration consisted of a $2.7 million term loan assumed
by Atlantic City. The term loan is secured by the capital
stock and assets of Atlantic City and is otherwise non-
recourse to the Company and its other assets. In the second
quarter of 1995, the Company agreed to sell substantially
all the assets of Atlantic City, subject to FCC approval.
The purchaser has defaulted on the sale agreement and the
Company has cancelled such agreement. The Company plans to
sell substantially all the assets of Atlantic City.
The acquisitions have been accounted for as purchases.
Accordingly, the purchase price of each acquisition has been
allocated to the assets based upon their fair values at the
date of acquisition. The results of operations of the
acquired properties are included in the Company's
consolidated results of operations from the dates of
acquisition. The consolidated balance sheet at December 31,
1994 and the consolidated statements of operations for the
1994 periods have been restated to reflect the Gadsden
acquisition under the purchase method of accounting. Prior
to the FCC's ruling on the waiver application, the Gadsden
acquisition had been accounted for under the equity method
of accounting.
Pending Transactions
In August 1995, the Company agreed to acquire substantially
all the assets of radio stations WKII-AM/WEEJ-FM, Port
Charlotte, Florida from Kneller Broadcasting of Charlotte
County, Inc. for $2.85 million, subject to FCC approval and
license renewal. In the event that the Company is able to
relocate WEEJ-FM's broadcast antenna to the Company's Pine
Island, Florida tower, additional consideration of $750,000
will be paid. Pending the closing of the transaction, which
is expected in 1996, the stations are being managed by the
Company pursuant to a Local Marketing Agreement.
In September 1995, the Company agreed to sell substantially
all the assets of radio stations WNDR-AM/WNTQ-FM, Syracuse,
New York to Pilot Communications of Syracuse, Inc. for $12.5
million, subject to FCC approval. Pending the closing of the
transaction, which is expected in early 1996, the stations
are being managed by the purchaser pursuant to a Local
Marketing Agreement.
In September 1995, the Company agreed to sell substantially
all the assets of radio stations WWRD-FM, Jacksonville,
Florida/Brunswick, Georgia and WFKS-FM, Daytona
Beach/Palatka, Florida, as well as the Company's 50%
interest in the broadcast tower serving WWRD-FM to Renda
Broadcasting Corporation for total consideration of $6.5
million. The closing of the transactions is subject to FCC
approval and, in the case of WFKS-FM, to license renewal.
The sale of WWRD-FM is expected to close in late 1995 and
the sale of WFKS-FM is expected to close in the second
quarter of 1996. Pending the closing of the transactions,
the stations are being managed by the purchaser pursuant to
a Local Marketing Agreement.
Results of Operations
Three months ended September 30, 1995 and 1994
Net revenues of $12,002,000 in the third quarter of 1995
represent a 4% increase from 1994 quarterly net revenues of
$11,548,000. Net revenues in 1994 include management fee
revenue of $572,000 related to the sale of Fairmont
Communications Corporation's ("Fairmont") radio stations
(see Management Agreements). For businesses owned and
operated for a comparable period in 1995 and 1994, net
revenues increased 10%. For broadcasting properties
operated for comparable periods, net revenues increased 9%,
to $8,979,000 in the third quarter of 1995 from $8,232,000
in 1994. The increase is primarily attributable to strong
performance by the Wheeling concert and entertainment
operations and Asheville radio stations, partially offset by
reduced revenue at the Syracuse radio stations. Net revenues
for the programmed music division increased from $2,274,000
in 1994 to $2,430,000 in 1995, which represents a 7%
increase.
Total operating expenses increased 7%, from $9,754,000 in
1994 to $10,449,000 in 1995. The increase is primarily
attributable to the increased level of activity at the
concert and entertainment businesses, partially offset by
reductions in corporate expenses.
Operating cash flow (operating income before depreciation,
amortization and corporate expenses) decreased 6%, to
$3,379,000 in 1995 from $3,605,000 in 1994. The decrease is
attributable to the Fairmont management fee revenue earned
in 1994 of $572,000. Operating cash flow for businesses
owned and operated for a comparable period in both years
increased by 13%. EBITDA (earnings before interest, taxes,
depreciation and amortization) of $2,952,000 in the third
quarter of 1995 decreased 6%, from $3,124,000 in 1994, due
to the Fairmont management fee revenue in 1994.
Operating income of $1,553,000 in 1995 compares to
$1,794,000 in 1994. Interest expense decreased to
$1,290,000 in 1995 from $1,454,000 in 1994, primarily
attributable to the lower debt level and cost of capital
related to the August 1995 debt refinancing (see Liquidity
and Capital Resources). Interest expense in 1995 includes
$77,000 of non-cash interest relating to deferred financing
cost and debt discount amortization.
Due to the debt refinancing (see Long-term debt) undertaken
in August 1995, net loss includes an extraordinary loss on
the early extinguishment of debt of $3,921,000, or $0.75 per
share. Along with the repayment of debt, the Company was
able to cancel purchase rights with respect to 676,000
warrant shares of the 1,014,000 warrant shares issued with
the previous loans. The extraordinary loss is primarily due
to non-cash charges from the write-off of deferred financing
costs and debt discount.
Income before extraordinary item of $227,000, or $0.05 per
share, compared to income before extraordinary item of
$407,000, or $0.08 per share, in 1994. Net loss of
$3,694,000 in 1995, or $0.70 per share, compares to net
income of $407,000, or $0.08 per share, in 1994.
Nine months ended September 30, 1995 and 1994
Net revenues of $28,802,000 in the first nine months of 1995
represent a 22% increase from 1994 net revenues of
$23,675,000. The increase is primarily attributable to the
radio stations acquired during 1994. Net revenues in 1994
include management fee revenue of $572,000 related to the
sale of Fairmont's radio stations (see Management
Agreements). For businesses owned and operated for a
comparable period in 1995 and 1994, net revenues increased
7%. For broadcasting properties operated for comparable
periods, net revenues increased 7%, to $16,477,000 in the
first nine months of 1995 from $15,470,000 in 1994. The
increase is primarily attributable to strong performance at
the Company's Wheeling, Asheville, Jackson, and Atlantic
City properties, partially offset by decreased revenue at
the Syracuse radio stations. The Anniston television
station's revenues declined slightly, although the prior
year included significant revenue from political advertising
which typically occurs in election years. Net revenues for
the programmed music division increased 8%, from $6,106,000
in 1994 to $6,620,000 in 1995.
Total operating expenses increased 21%, from $22,732,000 in
1994 to $27,402,000 in 1995. The increase is primarily
attributable to the radio stations acquired during 1994,
partially offset by reductions in corporate expenses of
$652,000. For businesses owned and operated for a
comparable period in 1995 and 1994, total operating expenses
increased 7%.
Operating cash flow increased 11%, to $6,992,000 in 1995
from $6,317,000 in 1994. The increase is primarily
attributable to the radio stations acquired during 1994, as
well as improved operations at the Company's broadcast and
entertainment properties owned for comparable periods in
both years. Results in 1994 include Fairmont management fee
revenue of $572,000. Operating cash flow for businesses
owned and operated for a comparable period in both years
increased by 8%. The increase for comparable properties is
attributable to improved operations at the Company's
broadcasting, entertainment and programmed music franchises.
EBITDA increased 30%, to $5,716,000 in 1995 from $4,389,000
in 1994.
Operating income increased 48%, to $1,400,000 in 1995 from
$943,000 in 1994. Other income of $1,975,000 in 1995
includes a distribution from Northstar Television Group of
$1,572,000 (see Management Agreements). Other expense in
1994 includes approximately $400,000 of costs associated
with the registration statement filed by the Company in
March 1994 and withdrawn in July 1994. Interest expense
increased to $4,137,000 in 1995 from $2,809,000 in 1994 due
to the greater level of debt resulting from the 1994
acquisitions (see Liquidity and Capital Resources).
Interest expense in 1995 includes $286,000 of non-cash
interest relating to deferred financing cost and debt
discount amortization.
Due to the debt refinancing (see Long-term debt) undertaken
in August 1995, net loss in 1995 includes an extraordinary
loss on the early extinguishment of debt of $3,921,000, or
$0.75 per share. Results in 1994 include an extraordinary
loss on the early extinguishment of debt of $436,000, or
$0.08 per share.
Loss before extraordinary item of $1,065,000, or $0.20 per
share, decreased from $2,154,000, or $0.40 per share, in
1994. Net loss of $4,986,000 in 1995, or $0.95 per share,
compares to net loss of $2,590,000, or $0.48 per share, in
1994. Per share amounts for 1994 are adjusted for the 1-for-
2 reverse stock split effected in July 1994.
Liquidity and Capital Resources
Cash flows from operating activities
In 1995, net cash used in operating activities was $962,000,
compared to net cash provided by operating activities of
$829,000 in 1994 (see Results of Operations). The
difference is primarily attributable to the amount and
timing of interest payments, partially offset by improved
operations.
Cash flows from investing activities
The Company received distribution payments in the first
quarter of 1995 from Fairmont Communications Corporation and
Northstar Television Group totalling $3,918,000 (see
Management Agreements and Results of Operations). The note
receivable of $1,620,000 relating to the 1988 disposition of
the Toledo, Ohio radio station and Muzak franchise was
received in the first quarter of 1995. In the second and
third quarters of 1994, the Company acquired six radio
stations for approximately $22.3 million.
In addition to debt service requirements, the Company's
remaining liquidity demands will be for capital expenditures
and to meet working capital needs. The Company made
capital expenditures of $966,000 and $687,000 in the first
nine months of 1995 and 1994, respectively, which are
primarily attributable to equipment installations related to
its programmed music franchises and improvements to
technical facilities of certain of the stations acquired in
1994.
For the remainder of 1995, capital expenditures made by the
Company's wholly-owned businesses will be a function of the
number of installations by the programmed music franchises,
as well as routine expenditures for the Company's
broadcasting properties. The Company is in the process of
relocating its Ft. Myers, Florida radio station to new
studio and office space and expects to make additional
capital expenditures as necessary.
Cash flows from financing activities
In January 1995, the Company repurchased and subsequently
retired 107,059 unregistered shares of its common stock
which were held by an institution for $642,000. Also in
January 1995, the Company paid $107,000 for the common
shares repurchased in December 1994.
Long-term debt
In August 1995, the Company entered into a credit facility
of $56.0 million with Society National Bank. The facility
consists of a $46.0 million revolving credit agreement and a
$10.0 million facility which may be used for acquisitions.
The initial drawdown of $44.5 million, along with the
Company's existing funds, was used to repay existing debt
issued in 1994 from a financial institution totalling $50.0
million plus transaction costs. Along with the repayment of
debt, the Company was able to cancel purchase rights with
respect to 676,000 warrant shares of the 1,014,000 warrant
shares issued with the previous loans.
As a result of the repayment of the loans, the Company
recorded an extraordinary loss on the early extinguishment
of debt of approximately $3.9 million (see Results of
Operations).
Long-term debt to total capitalization increased between
December 31, 1994 and September 30, 1995 from 73% to 77%.
Long-term debt includes $2.7 million of debt, net of
unamortized debt discount of $700,000, associated with the
Atlantic City radio station. The Atlantic City debt is
secured by the capital stock and assets of Atlantic City,
and is otherwise non-recourse to the Company or its other
assets. The Atlantic City term loan agreement restricts
Atlantic City's ability to pay cash dividends or make other
cash distributions to the Company. The Company plans to
sell the Atlantic City radio station. The Atlantic City
debt will be repaid with the proceeds from the sale.
Working capital
At September 30, 1995, cash and cash equivalents totalled
$2,181,000, compared to $6,368,000 at December 31, 1994.
Working capital decreased $5,072,000, from $8,280,000 to
$3,208,000 during the period, primarily due to the repayment
of long-term debt.
The Company believes that cash flows from operations and
existing funds will be sufficient to meet the Company's
current cash requirements for the foreseeable future. It is
not possible to ascertain the effect on the Company's
liquidity that would result from potential future
acquisitions, dispositions or debt repayments. The Company
expects to evaluate all viable forms of financing when
examining potential future acquisitions or its capital
structure. This could take the form of, among other things,
additional sales of stock or notes, bank and/or
institutional borrowings, or seller financing, as well as
internally generated funds.
Management Agreements
The Company currently owns 25% of the stock of Fairmont
Communications Corporation ("Fairmont"). Fairmont is
currently managed by the Company pursuant to a management
agreement, for which the Company receives a modest
management fee plus reimbursement of out-of-pocket expenses
and allocated overhead costs. All of Fairmont's stations
were sold by the second quarter of 1994. The Company will
continue to manage Fairmont pursuant to the management
agreement which expires upon the liquidation of Fairmont,
which is expected to occur in 1995.
The Company held a 32% interest in Northstar Television
Group, Inc. ("Northstar") and managed Northstar's four
television stations pursuant to a management agreement in
return for reimbursement of out-of-pocket expenses and
allocated overhead costs. In 1994, Northstar's creditors
and equity investors reached an agreement with respect to
restructuring Northstar's highly leveraged capital structure
pursuant to which, among other things, the Company received
a portion of accrued and unpaid management fees and retains
an economic interest. The Company's management agreement
with Northstar terminated following the restructuring. In
January 1995, three of Northstar's four television stations
were sold and the Company received a distribution of
approximately $1.6 million (see Results of Operations).
Osborn Healthcare
The Company's credit agreements allow for additional
investment in Osborn Healthcare by the Company of up to $2.5
million, of which approximately $700,000 has been invested.
Seasonality
For broadcasting properties, the first quarter is expected
to reflect the lowest revenues and net income of the year,
while the fourth quarter has historically had the highest
revenues and net income. This is due in part to increases
in retail advertising in the fall in preparation for the
holiday season, with a subsequent reduction of business
after the holidays.
The Company's entertainment properties are expected to
reflect the lowest revenues and net income of the year in
the first quarter due to the planned scheduling of the most
popular performers during the peak spring, summer and fall
seasons. Also, the Company's country music festival,
Jamboree in the Hills, takes place in the third quarter.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Holders
Not applicable
Item 5. Other information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Loan Agreement by and among Osborn Communications
Corporation, Society National Bank, and the
Financial Institutions Listed Herein as of August
18, 1995
Assets Purchase Agreement dated as of August 31,
1995 by and between Kneller Broadcasting of
Charlotte County, Inc. and Osborn Communications
Corporation
Asset Purchase Agreement dated as of August 31,
1995 by and between Nelson Broadcasting
Corporation and Renda Broadcasting Corporation
Asset Purchase Agreement dated as of August 31,
1995 by and between Daytona Beach Broadcasting
Corporation and Renda Broadcasting Corporation
Stock Purchase Agreement between Renda
Broadcasting Corporation and SNG Holdings, Inc.,
the sole stockholder of Nelson Tower Corporation,
dated as of August 31, 1995
Asset Purchase Agreement between Pilot
Communications of Syracuse, Inc. and Orange
Communications, Inc. dated as of September 18,
1995
(b) Reports on Form 8-K
None
<PAGE>
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.
OSBORN COMMUNICATIONS CORPORATION
(Registrant)
Date: November 7, 1995 /s/ Frank D. Osborn
(Signature)
Frank D. Osborn
President and Chief Executive
Officer
Date: November 7, 1995 /s/ Thomas S. Douglas
(Signature)
Thomas S. Douglas
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,181,164
<SECURITIES> 0
<RECEIVABLES> 5,797,426
<ALLOWANCES> 486,677
<INVENTORY> 1,078,835
<CURRENT-ASSETS> 10,222,836
<PP&E> 33,372,126
<DEPRECIATION> 17,884,306
<TOTAL-ASSETS> 67,788,962
<CURRENT-LIABILITIES> 7,015,072
<BONDS> 44,500,000
0
0
<COMMON> 52,764
<OTHER-SE> 13,755,152
<TOTAL-LIABILITY-AND-EQUITY> 67,788,962
<SALES> 28,802,257
<TOTAL-REVENUES> 28,802,257
<CGS> 0
<TOTAL-COSTS> 27,401,883
<OTHER-EXPENSES> 1,975,009
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,137,330
<INCOME-PRETAX> (767,220)
<INCOME-TAX> 298,154
<INCOME-CONTINUING> (1,065,374)
<DISCONTINUED> 0
<EXTRAORDINARY> (3,921,061)
<CHANGES> 0
<NET-INCOME> (4,986,435)
<EPS-PRIMARY> (0.95)
<EPS-DILUTED> 0
</TABLE>
[DESCRIPTION]Loan Agreement - Society National Bank
LOAN AGREEMENT
by and among
OSBORN COMMUNICATIONS CORPORATION,
as the Borrower,
SOCIETY NATIONAL BANK,
as Agent,
and
THE FINANCIAL INSTITUTIONS LISTED HEREIN
AS OF August 17, 1995
<PAGE>
TABLE OF CONTENTS
SECTION 1 DEFINITIONS.............................................1
1.1 DEFINITIONS.............................................1
1.2 OTHER TERMS............................................20
1.3 ACCOUNTING PROVISIONS..................................20
SECTION 2 THE LOANS..............................................21
2.1 THE REDUCING COMMITMENT AND THE REDUCING LOANS.........21
2.2 THE ACQUISITION COMMITMENT AND THE ACQUISITION LOANS...22
2.3 MAKING AND CONTINUATION/CONVERSION OF THE LOANS........23
2.4 THE NOTES..............................................24
2.5 FEES...................................................25
2.6 PREPAYMENT.............................................25
2.7 RESERVES OR DEPOSIT REQUIREMENTS, ETC..................28
2.8 EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE........................................29
2.9 CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL..........29
2.10 FUNDING................................................29
2.11 INDEMNITY..............................................29
2.12 CAPITAL ADEQUACY.......................................30
2.13 TAXES..................................................30
SECTION 3 INTEREST; PAYMENTS.....................................32
3.1 INTEREST...............................................32
3.2 MANNER OF PAYMENTS.....................................34
SECTION 4 CLOSING................................................34
SECTION 5 REPRESENTATIONS AND WARRANTIES OF THE BORROWER.........35
5.1 ORGANIZATION AND POWERS................................35
5.2 AUTHORIZATION..........................................35
5.3 FINANCIAL STATEMENTS...................................36
5.4 PROJECTIONS............................................36
5.5 CAPITALIZATION OF THE BORROWER AND ITS SUBSIDIARIES....36
5.6 TITLE TO PROPERTIES; PATENTS, TRADEMARKS, ETC..........37
5.7 LITIGATION; PROCEEDINGS................................37
5.8 TAXES..................................................37
5.9 ABSENCE OF CONFLICTS...................................38
5.10 INDEBTEDNESS...........................................38
5.11 COMPLIANCE.............................................39
5.12 STATEMENTS NOT MISLEADING..............................39
5.13 CONSENTS OR APPROVALS..................................40
5.14 MATERIAL CONTRACTS AND COMMITMENTS.....................40
5.15 EMPLOYEE BENEFIT PLANS.................................40
5.16 LICENSES AND OPERATING AGREEMENTS......................41
<PAGE>
Page ii
5.17 MATERIAL RESTRICTIONS..................................42
5.18 INVESTMENT COMPANY ACT.................................42
5.19 ABSENCE OF MATERIAL ADVERSE CHANGES....................42
5.20 DEFAULTS...............................................42
5.21 REAL ESTATE............................................42
5.22 SECURITIES LAWS........................................42
5.23 INSURANCE..............................................43
5.24 LABOR MATTERS..........................................43
5.25 ENVIRONMENTAL COMPLIANCE...............................43
5.26 SOLVENCY...............................................46
5.27 ATLANTIC CITY..........................................46
SECTION 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BANKS.......46
6.1 COMPLIANCE.............................................46
6.2 SECURITY AGREEMENTS....................................47
6.3 PLEDGE AGREEMENTS......................................47
6.4 REAL ESTATE MATTERS....................................48
6.5 FINANCING STATEMENTS...................................50
6.6 SUBSIDIARY GUARANTY....................................50
6.7 COLLATERAL ASSIGNMENT OF KEY MAN LIFE INSURANCE........50
6.8 OPINION OF BORROWER'S COUNSEL..........................50
6.9 FINANCIAL INFORMATION..................................51
6.10 ENGINEER'S REPORT......................................51
6.11 DUE DILIGENCE INVESTIGATION............................51
6.12 BORROWING REQUEST......................................51
6.13 INSURANCE CERTIFICATES.................................52
6.14 CORPORATE DOCUMENTS....................................52
6.15 LIEN SEARCHES, CONSENTS AND RELEASES OF LIENS..........52
6.16 NO ORDER, JUDGMENT OR DECREE...........................53
6.17 FEE LETTER; FEES AND EXPENSES..........................53
6.18 LEGAL APPROVAL.........................................53
6.19 OTHER DOCUMENTS........................................53
SECTION 7 AFFIRMATIVE COVENANTS OF THE BORROWER..................53
7.1 USE OF PROCEEDS........................................53
7.2 CONTINUED EXISTENCE; MAINTENANCE OF RIGHTS AND
LICENSES; COMPLIANCE WITH LAW..........................53
7.3 INSURANCE..............................................54
7.4 OBLIGATIONS AND TAXES..................................55
7.5 FINANCIAL STATEMENTS AND REPORTS.......................56
7.6 NOTICES................................................58
7.7 MAINTENANCE OF PROPERTY................................59
7.8 INFORMATION AND INSPECTION.............................59
7.9 MAINTENANCE OF LIENS...................................60
7.10 TITLE TO PROPERTY......................................60
7.11 ENVIRONMENTAL COMPLIANCE AND INDEMNITY.................60
7.12 RATE HEDGING OBLIGATIONS...............................62
7.13 FCC CONSENTS...........................................62
7.14 APPRAISALS.............................................63
7.15 GADSDEN AND ATLANTIC CITY..............................63
<PAGE>
Page iii
7.16 LICENSE SUBSIDIARIES..................................64
SECTION 8 NEGATIVE COVENANTS OF THE BORROWER....................65
8.1 INDEBTEDNESS..........................................65
8.2 LIENS.................................................65
8.3 GUARANTIES............................................66
8.4 [Intentionally Omitted]...............................66
8.5 [Intentionally Omitted]...............................66
8.6 CAPITAL LEASES........................................66
8.7 CAPITAL EXPENDITURES..................................66
8.8 NOTES, ACCOUNTS RECEIVABLE AND CLAIMS.................67
8.9 CAPITAL DISTRIBUTIONS; RESTRICTIONS ON PAYMENTS TO
STOCKHOLDERS..........................................67
8.10 DISPOSAL OF PROPERTY; MERGERS; ACQUISITIONS;
REORGANIZATIONS......................................68
8.11 INVESTMENTS..........................................71
8.12 AMENDMENT OF GOVERNING DOCUMENTS.....................72
8.13 FINANCIAL COVENANTS..................................72
8.14 MANAGEMENT AGREEMENTS AND FEES.......................73
8.15 FISCAL YEAR..........................................74
8.16 ERISA................................................74
8.17 AFFILIATES...........................................74
8.18 CHANGE OF NAME, IDENTITY OR CORPORATE STRUCTURE......74
8.19 AMENDMENTS OR WAIVERS................................74
8.20 ISSUANCE OR TRANSFER OF CAPITAL STOCK................75
8.21 CHANGE IN BUSINESS...................................75
8.22 REGULATION U.........................................75
8.23 LICENSE SUBSIDIARIES.................................75
SECTION 9 EVENTS OF DEFAULT....................................75
9.1 NON-PAYMENT..........................................75
9.2 FAILURE OF PERFORMANCE IN RESPECT OF OTHER OBLIGATIONS.76
9.3 BREACH OF WARRANTY...................................76
9.4 CROSS-DEFAULTS.......................................76
9.5 ASSIGNMENT FOR BENEFIT OF CREDITORS..................76
9.6 BANKRUPTCY...........................................76
9.7 APPOINTMENT OF RECEIVER; LIQUIDATION.................77
9.8 JUDGMENTS............................................77
9.9 IMPAIRMENT OF COLLATERAL; INVALIDATION OF ANY LOAN
DOCUMENT.............................................77
9.10 TERMINATION OF LICENSE OR OPERATING AGREEMENT........78
9.11 CHANGE OF CONTROL....................................78
9.12 CONDEMNATION.........................................79
9.13 CESSATION OF OPERATIONS..............................79
SECTION 10 REMEDIES............................................79
10.1 OPTIONAL DEFAULTS....................................79
10.2 AUTOMATIC DEFAULTS...................................80
10.3 PERFORMANCE BY THE BANKS.............................80
<PAGE>
Page iv
10.4 OTHER REMEDIES.......................................80
10.5 ENFORCEMENT AND WAIVER BY THE BANKS..................80
SECTION 11 THE AGENT...........................................81
11.1 APPOINTMENT.........................................81
11.2 POWERS..............................................81
11.3 GENERAL IMMUNITY....................................81
11.4 ACTION ON INSTRUCTIONS OF THE BANKS.................82
11.5 EMPLOYMENT OF AGENTS AND COUNSEL....................82
11.6 RELIANCE ON DOCUMENTS; COUNSEL......................82
11.7 AGENT'S REIMBURSEMENT AND
INDEMNIFICATION.....................................82
11.8 RIGHTS AS A BANK....................................83
11.9 BANK CREDIT DECISION................................83
11.10 SUCCESSOR AGENT.....................................83
11.11 RATABLE SHARING.....................................84
11.12 ACTIONS BY THE AGENT AND THE BANKS..................84
SECTION 12 MISCELLANEOUS.......................................84
12.1 CONSTRUCTION.........................................84
12.2 FURTHER ASSURANCE....................................85
12.3 EXPENSES OF THE AGENT AND THE BANKS; INDEMNIFICATION.85
12.4 NOTICES..............................................86
12.5 WAIVER AND RELEASE BY THE BORROWER...................87
12.6 RIGHT OF SET OFF.....................................87
12.7 SUCCESSORS AND ASSIGNS; PARTICIPATIONS...............88
12.8 APPLICABLE LAW.......................................90
12.9 BINDING EFFECT AND ENTIRE AGREEMENT..................90
12.10 COUNTERPARTS........................................90
12.11 SURVIVAL OF AGREEMENTS..............................90
12.12 MODIFICATION........................................90
12.13 SEPARABILITY........................................91
12.14 SECTION HEADINGS....................................91
12.15 ENFORCEMENT.........................................91
12.16 TERMINATION.........................................92
12.17 FCC COMPLIANCE......................................92
12.18 JURY TRIAL WAIVER...................................93
12.19 MARSHALING; PAYMENTS SET ASIDE......................94
12.20 CONFIDENTIALITY.....................................94
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of August 17,
1995, by and among OSBORN COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Borrower"), the FINANCIAL INSTITUTIONS listed on the
signature pages hereof, and SOCIETY NATIONAL BANK, as agent (the "Agent").
R E C I T A L S:
The Borrower desires to borrow up to $46,000,000 on a reducing
revolving credit basis and up to $10,000,000 on a revolving credit
converting to a term loan basis from the Banks (as that term is defined
below), the proceeds of which will be used for the payment of certain
existing indebtedness, for certain permitted acquisitions of radio
properties, for certain repurchases of the capital stock of the Borrower
and for capital expenditures and for working capital purposes in the
operations of the Borrower and its Subsidiaries.
A G R E E M E N T S:
Accordingly, the Borrower, the Banks and the Agent agree as
follows:
SECTION 1 DEFINITIONS.
1.` DEFINITIONS. All terms typed with leading capitals are
terms defined in this Agreement. For the purposes of this Agreement, the
terms defined in this Section 1 shall have the meanings set out below.
"ACQUISITION COMMITMENT" has the meaning assigned to it in
Section 2.2(a).
"ACQUISITION LOANS" has the meaning assigned to it in Section
2.2(a).
"ACQUISITION NOTES" has the meaning assigned to it in Section
2.4.
"AFFILIATE" means, with respect to any Person (a) any other
Person which is directly or indirectly controlled by, under common control
with or controlling the first specified Person;
<PAGE>
Page 2
(b) a Person owning beneficially or controlling 5% or more of the equity
interest in such other Person; or (c) any officer, director or partner of
such other Person. The term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person whether through the ownership of
voting securities, partnership interests, by contract or otherwise.
"APPLICABLE MARGIN" means, as of any date of determination, the
percentage determined from the following table based upon the ratio of the
principal amount of Total Debt outstanding as of such date to Operating
Cash Flow for the four quarter period then most recently ended:
Total Debt to Applicable Applicable Margin
Operating Margin for for LIBOR Loans:
Cash Flow for Base Rate
last four Loans:
quarters:
Greater than 1.50% 2.75%
5.25:1.0 but
less than or
equal to
5.50:1.0
Greater than 1.25% 2.50%
5.00:1.0 but
less than or
equal to
5.25:1.0
Greater than 1.00% 2.25%
4.50:1.0 but
less than or
equal to
5:00:1.0
Greater than 0.75% 2.00%
4.00:1.0 but
less than or
equal to
4.50:1.0
Greater than 0.50% 1.75%
3.50:1.0 but
less than or
equal to
4.00:1.0
Less than or 0.00% 1.50%
equal to
3.50:1.0
"APPLICABLE PERCENTAGE" means, as of any date of determination,
the percentage determined from the following table based upon the ratio of
the principal amount of Total Debt
<PAGE>
Page 3
outstanding as of such date to Operating Cash Flow for the fiscal year then
most recently ended:
Total Debt to Operating Applicable Percentage:
Cash Flow for prior
fiscal year:
Greater than 5.0:1.0 50%
Greater than 4.0:1.0 but 25%
less than or equal to
5.0:1.0
Less than or equal to 0%
4.0:1.0
PROVIDED, HOWEVER, that the Applicable Percentage shall be 100% if at the
time of determination a Possible Default or Event of Default exists.
"ASSET SALE" means the sale by the Borrower or any of its
Subsidiaries to any Person of any of the stock or other equity interests of
any Subsidiary or any other assets, other than (a) the sale of assets in
any transaction or related series of transactions with an aggregate value
which does not exceed an amount equal to $1,000,000 and (b) the sale in the
ordinary course of business of assets held for resale in the ordinary
course of business or the trade-in or replacement of assets in the ordinary
course of business.
"ATLANTIC CITY" means Atlantic City Broadcasting Corp., a
Delaware corporation, all of the issued and outstanding capital stock of
which is owned by the Borrower.
"BANKING DAY" means a day on which the main office of the Agent
is open to the public for the transaction of business, and on which, with
respect to any LIBOR Loan, banks are open for business in London, England,
and quoting deposit rates for dollar deposits.
"BANKS" means the financial institutions listed on the signature
pages of this Agreement and their respective successors and assigns.
"BASE RATE" means the rate of interest determined and publicly
announced by the Agent from time to time as its prime rate at its main
office in Cleveland, Ohio. The prime rate functions as a reference rate
index, and the Agent may charge borrowers more or less than the prime rate.
The Base Rate will automatically change as and when such prime rate
changes.
"BASE RATE LOANS" means those Loans described in Sections 2.1 and
2.2 on which the Borrower shall pay interest at a rate based on the Base
Rate.
<PAGE>
Page 4
"BENEFIT ARRANGEMENT" means any pension, profit-sharing, thrift,
or other retirement plan, medical, hospitalization, vision, dental, life,
disability or other insurance or benefit plan, deferred compensation, stock
ownership, stock purchase, stock option, performance share, bonus, fringe
benefit, savings or other incentive plan, severance plan or other similar
plan, agreement, arrangement or understanding, to which the Borrower or any
member of the Controlled Group is, or in the preceding six years was,
required to contribute on behalf of its employees or directors, whether or
not such plan, agreement, arrangement or understanding is subject to ERISA.
"BORROWER PLEDGE AGREEMENT" has the meaning assigned to it in
Section 6.3
"BORROWER SECURITY AGREEMENT" has the meaning assigned to it in
Section 6.2
"CAPITAL DISTRIBUTION" means any payment or distribution made,
liability incurred or other consideration given for the purchase,
acquisition, redemption or retirement of any stock, partnership interest or
other equity interest of the Borrower or any of its Subsidiaries or as a
dividend, return of capital or other payment or distribution of any kind to
a shareholder or partner of the Borrower or any of its Subsidiaries in
respect of the Borrower's or such Subsidiary's stock or partnership
interests.
"CAPITAL EXPENDITURES" means any payments by a Person for or in
connection with the rental, lease, purchase, construction or use of any
real or personal property the value or cost of which, under GAAP, should be
capitalized and appear on such Person's balance sheets in the category of
property, plant or equipment, without regard to the manner in which such
payments or the instrument pursuant to which they are made are
characterized by such Person or any other Person; PROVIDED, HOWEVER, that
neither (a) the capitalized portion of the purchase price payable in
connection with a Permitted Acquisition, nor (b) expenditures of proceeds
of casualty insurance policies reasonably and promptly applied to replace
insured assets, nor (c) exchanges of advertising time for such real or
personal property (up to a maximum of $300,000 in the aggregate for such
exchanges in any four quarter period) shall constitute a Capital
Expenditure for purposes of this Agreement.
"CAPITALIZED LEASE OBLIGATIONS" means, as to any Person, the
obligations of such Person to pay rent or other amounts under leases of, or
other agreements conveying the right to use real or personal property,
which obligations are required
<PAGE>
Page 5
to be classified and accounted for as capital leases on a balance sheet of
such Person, prepared in accordance with GAAP.
"CLOSING" and "CLOSING DATE" have the meanings assigned to them
in Section 4.
"CODE" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"COLLATERAL DOCUMENTS" means all promissory notes, agreements,
assignments, guaranties, mortgages, financing statements, certificates and
other instruments and documents which are required by this Agreement or any
other Collateral Document to be executed or delivered by or on behalf of
the Borrower, any of its Subsidiaries or any other Person.
"COMMITMENTS" means the Reducing Commitment and the Acquisition
Commitment, and "COMMITMENT" means either of such Commitments.
"CONTROLLED GROUP" means a controlled group of entities which are
treated as a single employer under Sections 414(b), 414(c) or 414(m) of the
Code of which the Borrower or any of its Subsidiaries is a part.
"CONVERSION DATE" means December 31, 1996.
"DEFAULT INTEREST RATE" means a rate of interest equal to the
Base Rate plus 3.5% per annum.
"DISCOUNT RATE" means, with respect to a prepayment or conversion
of a LIBOR Loan on a date other than the last day of its Interest Period, a
rate equal to the interest rate (as of the date of prepayment) on United
States Treasury obligations in a like amount as such Loan and with a
maturity approximately equal to the period between the prepayment or
conversion date and the last day of the Interest Period of such Loan, as
determined by the Agent.
"ENVIRONMENTAL CLAIM" means, with respect to any Person, any
written or oral notice, claim, demand, request for information, citation,
summons, order or other communication (each, a "CLAIM") by any other Person
alleging or asserting the liability of the recipient of such claim for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other property or health, personal injuries, fines or
penalties arising out of, based on or resulting from (a) the presence, or
Release, of any Hazardous Material at or from any location, whether or not
owned by such Person, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law. The term
"Environmental
<PAGE>
Page 6
Claim" shall include, without limitation, any claim by any
governmental authority for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable
Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief resulting from the presence or Release of Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
environment.
"ENVIRONMENTAL LAWS" means all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and binding standards promulgated by
the government of the United States of America or by any state or
municipality thereof or by any court, agency, instrumentality, regulatory
authority or commission of any of the foregoing concerning health, safety
and protection of, or regulation of the emission, release or discharge of
substances into, the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"EVENT OF DEFAULT" means any of the events specified in Section
9.
"EXCESS CASH FLOW" for any fiscal year of the Borrower means
Operating Cash Flow for such fiscal year, MINUS the sum of the following:
(a) all principal payments required to be made on the Reducing Loans
pursuant to Section 2.6(b)(i) during such fiscal year, PLUS (b) all
principal payments required to be made on the Acquisition Loans pursuant to
Section 2.2(d) during such fiscal year, PLUS (c) all principal payments
required to be made by the Borrower and its Subsidiaries on Total Debt
(other than the Loans) during such fiscal year, PLUS (d) all Interest
Expense of the Borrower and its Subsidiaries required to be paid during
such fiscal year, PLUS (e) Capital Expenditures paid by the Borrower and
its Subsidiaries to the extent permitted in Section 8.7 during such fiscal
year, less the net sales proceeds, if any, of property being replaced by
such Capital Expenditures, PLUS (f) federal and state income taxes paid
during such fiscal year, PLUS (g) $500,000, PLUS (g) the excess, if any, in
Working Capital as of the end of such fiscal year over Working Capital as
of the end of the prior fiscal year.
"FCC" means the Federal Communications Commission or any
governmental authority at any time substituted therefor.
"FINAL ORDER" means an action or order issued by the FCC
(a) which has not been reversed, stayed, enjoined, set aside, annulled or
suspended, and (b) with respect to which (i) no requests or petitions have
been filed for administrative or
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judicial review, reconsideration, rehearing, appeal or stay, and
the time for filing any such requests or petitions and for the FCC
to set aside the action on its own motion has expired, (ii) in the
event of review, reconsideration or appeal, the time for further
review, reconsideration or appeal has expired, and (iii) no appeal
to a court or request for stay by a court of such action is pending
or in effect, and, if any deadline for filing any such appeal or request is
designated by statute or rule, it has passed.
"GADSDEN" means Gadsden Broadcasting Corp., a Delaware
corporation, all of the stock of which is currently subject to the Trust
Agreement, and which is beneficially owned, indirectly, by the Borrower
"GAAP" means generally accepted accounting principles in effect
from time to time in the United States, consistently applied.
"GUARANTOR" means one who pledges its credit or property in any
manner, or otherwise becomes responsible for the payment or other
performance of the indebtedness, contract or other obligation of another
Person and includes (without limitation) any guarantor (whether of payment
or of collection), surety, co-maker, endorser or one who agrees
conditionally or otherwise to make any purchase, loan or investment in
order thereby to enable another to prevent or correct a default of any kind
and one who has endorsed (otherwise than for collection or deposit in the
ordinary course of business), or has discounted with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire
or become liable for, any Indebtedness or who has entered into any
agreement for the purchase or other acquisition of any product, materials
or supplies, or for the making of shipments, or for the payment for
services, if in any such case payment therefor is to be made regardless of
the nondelivery of the product, materials or supplies or the non-furnishing
of the services.
"GUARANTY" shall have the meaning assigned to it in Section 6.6.
"HAZARDOUS MATERIAL" means, collectively, (a) any petroleum or
petroleum products, flammable materials, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, and transformers or other
equipment that contain polychlorinated biphenyls ("PCBS"), (b) any
chemicals or other materials or substances that are now or hereafter become
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants", "pollutants" or words of
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Page 8
similar import under any Environmental Law and (c) any other chemical or
other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
"HEALTHCARE COMMUNICATIONS BUSINESS" means the business conducted
by Osborn Healthcare Communications, Inc., a Delaware corporation.
"HISTORICAL FIXED CHARGES" means as of the end of any four fiscal
quarter period of the Borrower, the sum of the aggregate amount of (a) all
principal payments required to be made pursuant to Section 2.6(b)(i) as a
result of a scheduled Reducing Commitment reduction pursuant to Section
2.1(b) during such four quarter period, (b) all principal payments required
to be paid on the Acquisition Loans pursuant to Section 2.2(d) during such
four quarter period, (c) all required principal payments on Total Debt
(other than the Loans) during such four quarter period, (d) all Interest
Expense of the Borrower or any of its Subsidiaries required to be paid
during such four quarter period, (e) Capital Expenditures made by the
Borrower or any of its Subsidiaries during such four quarter period
(excluding any Capital Expenditures permitted pursuant to Section 8.7(b) or
(c)), and (f) federal and state income taxes paid by the Borrower during
such four quarter period (other than any such taxes resulting from sales,
exchanges or other dispositions of property not in the ordinary course of
business). In calculating Historical Fixed Charges for any period which
includes any period prior to the Closing Date, the Total Debt of the
Borrower owing to World Subordinated Debt Partners, L.P. outstanding during
such period shall be deemed not to have been outstanding, and instead an
amount equal to the Loans made on the Closing Date hereunder shall be
deemed to be outstanding during such period, and the interest rate in
effect hereunder on the date of determination shall be deemed to be the
interest rate which was in effect on such indebtedness for such period.
"INDEBTEDNESS" of any Person means, without duplication, all
liabilities, obligations and reserves, contingent or otherwise, which, in
accordance with GAAP, would be reflected as a liability on a balance sheet
or the notes thereto (excluding trade accounts payable and accrued expenses
arising in the ordinary course of business and not more than ninety days
past due), including, without limitation, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to
assets purchased by such Person, (e) all obligations of such
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Page 9
Person incurred, issued or assumed as the deferred purchase price of property
or services (other than to the extent any such obligation is to be satisfied
by the delivery of common stock of the Borrower or preferred stock of the
Borrower which (i) has no mandatory dividend rights, other than dividends
payable solely by the delivery of common stock or preferred stock which
satisfies the conditions of this parenthetical, and (ii) has no liquidation
rights, put rights or other mandatory payment rights exercisable at any
time prior to one year after the Termination Date), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed by such Person, (g) all obligations or
liabilities in respect of which such Person is a Guarantor, (h) all
Capitalized Lease Obligations of such Person, (i) all Rate Hedging
Obligations, and (j) all obligations of such Person as an account party to
reimburse any Person in respect of letters of credit or bankers'
acceptances. The Indebtedness of any Person shall include any recourse
Indebtedness of any partnership in which such Person is a general partner.
"INTEREST EXPENSE" means, without duplication, for any period,
interest expense (net of any interest income) deducted in determining Net
Earnings for such period (including interest with respect to Capital
Leases), excluding: (a) the amortization of fees and costs incurred with
respect to this Agreement and (b) any interest paid in kind or other non-
cash interest expense. For purposes of the foregoing, interest expense
shall be determined after giving effect to any net payments made or
received by the Borrower with respect to Rate Hedging Obligations.
"INTEREST PERIOD" means, with respect to any LIBOR Loan, the
period selected by the Borrower, commencing on the date such Loan is made,
continued or converted and ending on the last day of such period as
selected by the Borrower. The Interest Period for each LIBOR Loan shall be
one, two, three or six months; PROVIDED, HOWEVER, that whenever the last
day of such Interest Period would otherwise occur on a day other than a
Banking Day, the last day of such Interest Period shall occur on the next
succeeding Banking Day; PROVIDED, FURTHER, that if such extension of time
would cause the last day of such Interest Period to occur in the next
calendar month, the last day of such Interest Period shall occur on the
next preceding Banking Day. The Borrower shall not select any Interest
Period which extends beyond any date on which a scheduled payment is or may
be required to be made pursuant to Section 2.2(d) or Section 2.6(b)(i)
unless the sum of the amount available to be drawn under the Commitments
plus the aggregate principal balance of all Base Rate Loans and all LIBOR
Loans with Interest Periods ending
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Page 10
prior to such date is at least equal to the maximum amount that is, or may
be, required to be paid on such date.
"LIBOR" means the average (rounded upwards, if necessary, to the
nearest 1/16th of 1%) of the per annum rates at which deposits in
immediately available funds in United States dollars for the relevant
Interest Period and in an amount approximately equal to the Loan to be
disbursed or to remain outstanding during such Interest Period, as the case
may be, are offered to the Agent by prime banks in the London Eurodollar
market, determined as of 11:00 a.m. London time (or as soon thereafter as
practicable), two Banking Days prior to the beginning of the relevant
Interest Period.
"LIBOR LOANS" means those Loans described in Sections 2.1 and 2.2
on which the Borrower shall pay interest at a rate based on the applicable
LIBOR Rate.
"LIBOR RATE" means a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the nearest 1/100th of 1%) by
dividing (a) the applicable LIBOR by (b) 1.00 minus the LIBOR Reserve
Percentage.
"LIBOR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation,
all basic, supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in reserve
requirements) for a member bank of the Federal Reserve System in respect of
Eurocurrency Liabilities (as that term is defined in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time). The LIBOR Rate shall be adjusted automatically on and as of the
effective date of any change in the LIBOR Reserve Percentage.
"LICENSE" means any authorization, permit, consent, franchise,
ordinance, registration, certificate, license, agreement or other right
filed with, granted by, or entered into by a federal, state or local
governmental authority which permits or authorizes the acquisition,
construction or operation of a radio or television broadcasting station, a
subscription audio or video service, a satellite distribution system for
audio or video programming or any part of a radio or television
broadcasting station or satellite distribution system or which is required
for the acquisition, ownership or operation of any Station or any part of
the Muzak Business or the Healthcare Communications Business.
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Page 11
"LICENSE SUBSIDIARY" means each Subsidiary formed pursuant to
Section 7.16 to hold Licenses issued by the FCC.
"LICENSING AUTHORITY" means a governmental authority which has
granted or issued a License.
"LIEN" as applied to the property of any Person means: (a) any
mortgage, lien, pledge, charge, lease constituting a Capitalized Lease
Obligation, conditional sale or other title retention agreement, or other
security interest or encumbrance of any kind in respect of any property of
such Person, or upon the income or profits therefrom; (b) any arrangement,
express or implied, under which any property of such Person is transferred,
sequestered or otherwise identified for the purpose of subjecting the same
to the payment of Indebtedness in priority to the payment of the general,
unsecured creditors of such Person; (c) the filing of, or any agreement to
give, any financing statement under the Uniform Commercial Code or its
equivalent of any jurisdiction in respect of Indebtedness; and (d) in the
case of securities or other equity interests, any purchase option, call or
similar right of a third party with respect to such securities or other
equity interests.
"LIFE INSURANCE ASSIGNMENT" has the meaning assigned to it in
Section 6.7.
"LOANS" means the Reducing Loans and the Acquisition Loans.
"MAJORITY BANKS" means, at any time, the Banks holding at least
66 2/3% of the then aggregate unpaid principal amount of the Notes, or, if
no principal amount of the Notes is then outstanding, the Banks having at
least 66 2/3% of the Commitments.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon or
change in (a) the properties, assets, business, operations, financial
condition or prospects of the Borrower or any of its Subsidiaries which,
together with any other of its Subsidiaries suffering or affected by the
same material adverse effect or change, has 15% or more of the consolidated
assets of, or contributed 15% or more to the consolidated Operating Cash
Flow of, the Borrower and its Subsidiaries taken as a whole, or on the
ability of the Borrower or any such Subsidiary to conduct its business, (b)
the ability of the Borrower, any of the Borrower's Subsidiaries or any
other party to a Collateral Document (other than the Agent or any Bank) to
perform its obligations hereunder or under any other Collateral Document to
which it is a party, (c) the validity or enforceability of this Agreement,
the Notes or any other Collateral Document, or (d) the rights or remedies
of the Agent or the Banks under this
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Agreement, the Notes or any other Collateral Document or at law or in equity.
"MORTGAGES" has the meaning assigned to it in Section 6.4(a).
"MUZAK BUSINESS" means the business conducted under the Muzak
Franchises.
"MUZAK FRANCHISE" means a franchise from (a) Muzak Limited
Partnership (or its successors) to market and distribute subscription music
services and adjunct services relating to the sequencing, changing and
switching of music-program communications and the delivery of advertising,
video and data communications or (b) some other Person with a system that
is substantially similar to the system described in (a).
"NET EARNINGS" means, with respect to the Borrower, the
consolidated net income (or deficit) of the Borrower for the period
involved, after taxes paid or accrued and after all proper charges and
reserves (excluding, however, non-recurring special charges and credits),
all as determined in accordance with GAAP; PROVIDED, HOWEVER, that in
calculating Net Earnings for any period that includes any calendar quarter
in 1994, the actual amount of corporate overhead deducted in respect of
such quarter shall be added back and an amount equal to $425,000 for such
quarter shall be subtracted.
"NOTES" means the Reducing Notes and the Acquisition Notes.
"OBLIGATIONS" means any obligation of the Borrower or any of its
Subsidiaries (a) to pay to the Banks the principal of and interest on the
Loans in accordance with the terms hereof and of the Notes, including,
without limitation, any interest accruing after the date of any filing by
the Borrower or any Subsidiary of any petition in bankruptcy or the
commencing of bankruptcy, insolvency or similar proceedings with respect to
the Borrower or any of its Subsidiaries, regardless of whether such
interest is allowable as a claim in any such proceeding; (b) in respect of
any Rate Hedging Obligations owing to any Bank or any Affiliate of any
Bank; (c) to pay, satisfy or perform any other liability or obligation to
the Agent or any Bank, arising under this Agreement or any Collateral
Document, whether now existing or hereafter incurred by reason of future
advances or otherwise, matured or unmatured, direct or contingent, joint or
several, including any extensions, modifications or renewals thereof and
substitutions therefor, and including without limitation all fees,
indemnification amounts, costs and expenses, including interest thereon and
reasonable attorneys' fees, incurred by the Agent or any Bank for the
protection, preservation or enforcement
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Page 13
of its rights and remedies arising hereunder or under the Collateral
Documents; (d) to repay to the Banks all amounts advanced at any
time by the Banks hereunder or under any Collateral Document,
including, without limitation, advances for principal or interest
payments to prior secured parties, mortgagees, lienors or other Persons, or
for taxes, levies, insurance, rent or repairs to, or maintenance or storage
of, any of the property of the Borrower or any of its Subsidiaries; (e) to
perform any covenant or agreement made with the Banks pursuant to this
Agreement or any Collateral Document; or (f) to take any other action in
respect of any other liability of any nature of the Borrower or any of its
Subsidiaries to the Banks under this Agreement or any Collateral Document.
"OPERATING AGREEMENT" means any programming agreement, time
brokerage, local marketing or similar agreement, network affiliation
agreement, franchise agreement, lease or other agreement relating to the
operation of a Station, the Muzak Business or the Healthcare Communications
Business by the Borrower or any of its Subsidiaries, the termination or
adverse modification of which could have a Material Adverse Effect.
"OPERATING CASH FLOW" means, during any period, the consolidated
Net Earnings of the Borrower for such period (excluding, to the extent
included in Net Earnings, (i) the effect of any exchange of advertising
time for non-cash consideration, such as merchandise or services, (ii) any
other non-cash income or expense (including the cumulative effect of a
change in accounting principles and extraordinary items), (iii) any gains
or losses from sales, exchanges and other dispositions of property not in
the ordinary course of business, and (iv) equity in results of affiliated
companies, as reflected on the Borrower's financial statements, including
Ruth Broadcasting Corporation, but only to the extent that losses
attributable to Ruth Broadcasting Corporation are actually funded by the
Borrower or any of its Subsidiaries), MINUS any interest income, investment
income and other non-operating income, MINUS any cash payments made in
respect of Programming Obligations in such period, PLUS the sum of (a)
depreciation on or obsolescence of fixed or capital assets and amortization
of intangibles and leasehold improvements (including, without limitation,
amortization in respect of Programming Obligations) for such period, PLUS
(b) Interest Expense for such period, PLUS (c) federal and state income
taxes for such period, PLUS (d) any cash payments of management fees
received by the Borrower from Fairmont Communications Corporation and
Northstar Television Group, Inc. in such period, all on a consolidated
basis and computed on the accrual method. For purposes of calculating
Operating Cash Flow in any period (other than for purposes of calculating
Excess Cash Flow), any acquisition of any Station, and any sale or other
disposition of any Station, which occurs
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Page 14
during such period shall be deemed to have occurred on the first day of
such period.
"PBGC" means the Pension Benefit Guaranty Corporation or any
governmental authority at any time substituted therefor.
"PENSION PLAN" means an employee pension benefit plan as defined
in Section 3(2) of ERISA which is subject to the provisions of Section 302
or Title IV of ERISA or Section 412 of the Code.
"PERMITTED ACQUISITION" has the meaning assigned to it in Section
8.10(b).
"PERMITTED DIVESTITURE" means (a) any sale by the Borrower or any
of its Subsidiaries of all or substantially all of the assets of, or more
than 50% of the capital stock of the Subsidiary which owns, any of the
following Stations: WOLZ-FM, Fort Myers, Florida; WFKS-FM, Daytona Beach,
Florida; WAAX-AM/WQEN-FM, Gadsden, Alabama; WAYV-FM, Atlantic City, New
Jersey; WWRD-FM, Jacksonville, Florida; WING-FM, Dayton, Ohio; WFXK-FM,
Raleigh, North Carolina; and WRWS, San Carlos, Florida; and (b) any sale by
Osborn Sound and Communications of Georgia, Inc. of the real property
located at 1209 Williams Street, NW, Atlanta, Georgia 30309.
"PERMITTED LIEN" means any of the following Liens:
(a) Liens for taxes or assessments and similar charges,
which are either not delinquent or being contested diligently and in good
faith by appropriate proceedings, and (i) as to which the Borrower or its
affected Subsidiary has set aside adequate reserves to the extent required
by and in accordance with GAAP on its books and (ii) which do not entail
any significant risk of loss, forfeiture, foreclosure or sale of the
property subject thereto;
(b) statutory Liens, such as mechanic's, materialman's,
warehouseman's, landlord's, artisan's, workman's, contractor's, carrier's
or other like Liens, (i) incurred in good faith in the ordinary course of
business, (ii) which are either not delinquent or are being contested
diligently and in good faith by appropriate proceedings, (iii) as to which
the Borrower or its affected Subsidiary has set aside adequate reserves to
the extent required by and in accordance with GAAP on its books or bonded
satisfactorily to the Agent and (iv) which do not entail any significant
risk of loss, forfeiture, foreclosure or sale of the property subject
thereto;
(c) encumbrances consisting of zoning restrictions,
easements, licenses, reservations, provisions,
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covenants, conditions, waivers, restrictions on the use of real property,
minor survey defects or minor irregularities of title, PROVIDED that none
of such encumbrances materially impairs the use or value of any property
in the operation of the Borrower's or any of its Subsidiaries' business;
(d) Liens securing conditional sale or purchase money
obligations to the extent the Indebtedness secured thereby is permitted
under Section 8.1 and Capitalized Lease Obligations permitted under Section
8.6 (and protective UCC-1 financing statements filed by lessors in
connection with leases not intended as security), but only in the property
which is the subject of such obligations;
(e) Liens arising under or pursuant to this Agreement or
any Collateral Document or otherwise securing any Obligation;
(f) Liens in respect of judgments or awards with respect to
which the Borrower or any of its Subsidiaries is, in good faith,
prosecuting an appeal or proceeding for review and with respect to which a
stay of execution upon such appeal or proceeding for review has been
secured, and as to which judgments or awards the Borrower or such
Subsidiary has established adequate reserves to the extent required by and
in accordance with GAAP on its books or has bonded in a manner satisfactory
to the Agent;
(g) pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation, or to participate in
any fund in connection with worker's compensation, unemployment insurance,
old-age pensions or other social security programs;
(h) Liens granted to secure the performance of bids,
tenders, contracts, leases, public or statutory obligations, surety,
customs, appeal and performance bonds and other similar obligations and not
incurred in connection with the borrowing of money, the obtaining of
advances or the payment of the deferred purchase price of any property;
(i) Liens on the assets and capital stock of Atlantic City
in favor of National Westminster Bank or its assignees securing loans to
Atlantic City in a principal amount not to exceed $3,400,000;
(j) leases or subleases granted to others not interfering
in any material respect with the business of the Borrower or its
Subsidiaries;
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(k) any interest or title of a lessor or sublessor under
any lease pursuant to which the Borrower or any of its Subsidiaries holds a
leasehold interest as tenant; and
(l) any other Liens listed on EXHIBIT G hereto or to which
the Majority Banks have consented in writing and renewals and extensions
thereof.
"PERSON" shall include natural persons, corporations, business
trusts, associations, companies, limited liability companies, joint
ventures and partnerships.
"PLAN" means any employee benefit plan, as defined under Section
3(3) of ERISA, established or maintained by the Borrower or any member of
the Controlled Group or any such Plan to which the Borrower or any member
of the Controlled Group is, or in the last six years was, required to
contribute on behalf of its employees.
"PLEDGE AGREEMENTS" means the Borrower Pledge Agreement and the
Subsidiary Pledge Agreement.
"POSSIBLE DEFAULT" means an event, condition, situation or thing
which constitutes, or which with the lapse of any applicable grace period
or the giving of notice or both would constitute, an Event of Default.
"PREPAYMENT PREMIUM" with respect to the prepayment or conversion
of any LIBOR Loan or any other receipt or recovery of any LIBOR Loan prior
to the end of the applicable Interest Period, whether by voluntary
prepayment, acceleration, conversion to a Base Rate Loan or otherwise,
means an amount equal to the sum of (a) the present value (discounted at
the Discount Rate) of the product of (i) the excess, if any, of the rate of
interest applicable to such Loan pursuant to Section 3.1 hereof at the time
of such prepayment or conversion on the principal amount so prepaid,
converted or accelerated, as the case may be, over the rate of interest on
United States Treasury obligations on the date of payment, conversion or
acceleration, as the case may be, of such principal amount and having a
maturity date approximating the last Banking Day of the applicable Interest
Period, as determined by the Agent, multiplied by (ii) the principal amount
so prepaid, converted or accelerated, as the case may be, multiplied by
(iii) a fraction, the numerator of which is the number of days remaining in
the related Interest Period and the denominator of which is 360 (taking
into consideration the applicable compounding for the frequency of
installment payments of the Loans being prepaid), plus (b) reasonable out-
of-pocket costs and expenses incurred by the Banks and the Agent with
respect to such prepayment.
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"PROGRAMMING OBLIGATIONS" means all direct or indirect
liabilities, contingent or otherwise, with respect to contracts for
television broadcast rights relating to television series or other programs
produced or distributed for television release.
"PROJECTED DEBT SERVICE" means, as of any date, the sum of (a)
all scheduled Reducing Commitment reductions pursuant to Section 2.1(b)
during the four quarter period following such date, (b) all principal
payments required to be made on the Acquisition Loans pursuant to Section
2.2(d) during such subsequent four quarter period, (c) all principal
payments required to be made by the Borrower and its Subsidiaries on Total
Debt (other than the Loans) during such subsequent four quarter period, and
(d) all Interest Expense of the Borrower and its Subsidiaries required to
be paid during such subsequent four quarter period. In calculating
Projected Debt Service, (i) the interest rate during such subsequent period
on any Indebtedness which does not bear interest at a rate which is fixed
for the entire subsequent period shall be deemed to be the interest rate in
effect on such Indebtedness as of the date of determination, (ii) for dates
of determination prior to the Conversion Date, it shall be assumed that the
principal amount of Acquisition Loans outstanding as of the date of
determination will be outstanding immediately following the Conversion
Date, and (iii) it shall be assumed that the principal amount of Reducing
Loans outstanding as of the date of determination will be outstanding for
the subsequent four quarter period, subject to required Reducing Commitment
reductions.
"QUARTERLY DATE" means the last day of each of the Borrower's
fiscal quarters.
"RATABLE SHARE" means with respect to any Bank, its pro rata
share of the Commitments or the Loans. Initially, the Ratable Share of
Society shall be 100%.
"RATE HEDGING OBLIGATIONS" means any and all obligations of the
Borrower, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions
and modifications thereof and substitutions therefor), under (a) any and
all agreements, devices or arrangements designed to protect the Borrower
from the fluctuations of interest rates, including interest rate exchange
or swap agreements, interest rate cap or collar protection agreements, and
interest rate options, puts and warrants, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any of
the foregoing.
"REDUCING COMMITMENT" has the meaning assigned to it in Section
2.1(a).
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"REDUCING LOANS" has the meaning assigned to it in Section
2.1(a).
"REDUCING NOTES" has the meaning assigned to it in Section 2.4.
"REGULATORY CHANGE" means the adoption of or any change in
federal, state or local treaties, laws, rules or regulations or the
adoption of or change in any interpretations, guidelines, directives or
requests of or under any federal, state or local treaties, laws, rules or
regulations (whether or not having the force of law) by any court,
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof.
"RELEASE" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata.
"REPORTABLE EVENT" means a reportable event as that term is
defined in Title IV of ERISA, excluding, however, such events as to which
the PBGC by regulation has waived the requirement of Section 4043(a) of
ERISA that it be notified within thirty days of the occurrence of such
event (PROVIDED that a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a Reportable
Event regardless of the issuance of any such waivers in accordance with
Section 412(d) of the Code).
"SECURITY AGREEMENTS" means the Borrower Security Agreement and
the Subsidiary Security Agreement.
"SOCIETY" means Society National Bank.
"STATIONS" means, as of any date, the radio and television
broadcasting stations owned by the Borrower or any of its Subsidiaries as
of such date, including any such stations being constructed; all auxiliary
stations owned or operated in connection with the foregoing or any
satellite, microwave or other communications station owned or operated at
such time by the Borrower or any of its Subsidiaries.
"SUBSIDIARY" means each partnership or corporation, the majority
of the outstanding partnership interests, capital stock or voting power of
which is (or upon the exercise of all outstanding warrants, options and
other rights would be) owned, directly or indirectly, at the time in
question by the Borrower. The foregoing to the contrary notwithstanding,
Atlantic City
<PAGE>
Page 19
shall not be deemed to be a Subsidiary of the Borrower until
such time as the debt owed by Atlantic City to National Westminster Bank
shall have been paid in full.
"SUBSIDIARY PLEDGE AGREEMENT" has the meaning assigned to it in
Section 6.3.
"SUBSIDIARY SECURITY AGREEMENT" has the meaning assigned to it in
Section 6.2.
"TERMINATION DATE" means December 31, 2001.
"TOTAL DEBT" means all Indebtedness of the Borrower and its
Subsidiaries for borrowed money, including, without limitation, the Loans,
all Capitalized Lease Obligations of the Borrower and its Subsidiaries, all
other Indebtedness of the Borrower or any of its Subsidiaries represented
by notes or drafts representing extensions of credit for borrowed money or
on which interest is typically charged, all obligations evidenced by bonds,
debentures, notes or other similar instruments (including all such
obligations to which any property or asset owned by the Borrower or any of
its Subsidiaries is subject, whether or not the obligation secured thereby
shall have been assumed), all obligations under conditional sale or other
title retention agreements relating to purchased assets, all obligations
incurred, issued or assumed as the deferred purchase price of property or
services (other than to the extent any such obligation is to be satisfied
by the delivery of common stock of the Borrower or preferred stock of the
Borrower which (a) has no mandatory dividend rights, other than dividends
payable solely by the delivery of common stock or preferred stock which
satisfies the conditions of this parenthetical, and (b) has no liquidation
rights, put rights or other mandatory payment rights exercisable at any
time prior to one year after the Termination Date), all obligations or
liabilities in respect of which the Borrower or any of its Subsidiaries is
a Guarantor, and all obligations as an account party to reimburse any
Person in respect of letters of credit or bankers' acceptances.
"TRUST AGREEMENT" means the Irrevocable Voting Trust Agreement
among Southeast Radio Holding Corp., Gadsden, the Borrower and James M.
Ward, Trustee, pursuant to which legal title to, and all voting rights
relating to, the stock of Gadsden are held by James M. Ward as trustee for
the benefit of Southeast Radio Holding Corp., a Delaware corporation which
is wholly owned by the Borrower.
"WORKING CAPITAL" means, as of any date, the excess of the
consolidated current assets, other than cash, of the Borrower and its
Subsidiaries over their consolidated current liabilities,
<PAGE>
Page 20
other than the current portion of long term debt, as of such date.
1.2 OTHER TERMS. Except as otherwise specifically provided
in this Agreement, each term not otherwise expressly defined herein which
is defined in the Uniform Commercial Code, as amended (the "UCC") as
adopted in any applicable jurisdiction shall have the meaning assigned to
it in the UCC in effect in such jurisdiction. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine
and neuter forms. All references herein to Sections or Exhibits shall be
deemed to be references to Sections of, and Exhibits to, this Agreement
unless the context shall otherwise require. Whenever any agreement,
promissory note or other instrument or document is defined in this
Agreement, such definition shall be deemed to mean and include, from and
after the date of any amendment, restatement or modification thereof, such
agreement, promissory note or other instrument or document as so amended,
restated or modified. All terms defined in this Agreement in the singular
shall have comparable meanings when used in the plural and vice versa. The
words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement.
1.3 ACCOUNTING PROVISIONS. All accounting terms used in this
Agreement which are not expressly defined herein shall have the respective
meanings given to them in accordance with GAAP, all computations shall be
made in accordance with GAAP, and all balance sheets and other financial
statements shall be prepared in accordance with GAAP. All financial
covenants and calculations required herein and all financial statements and
other information furnished to the Agent and the Banks pursuant to Section
7.5 (a) shall reflect the assets and results of operations of Gadsden, Ruth
Broadcasting Corporation (to the extent any losses of Ruth Broadcasting
Corporation are actually funded by the Borrower or any of its Subsidiaries)
and each other entity the assets or results of operations of which are
reflected in the Borrower's financial statements as "equity in results of
affiliated companies" as if each such entity were a consolidated Subsidiary
for purposes of GAAP and as if each such entity were owned by the Borrower
since July 1994 (in the case of Gadsden) or the date of the Borrower's
acquisition of such other entity, and (b) shall exclude the assets and
results of operations of Atlantic City as if Atlantic City were not a
subsidiary of the Borrower until such time as the debt owing by Atlantic
City to National Westminster Bank shall have been paid in full.
<PAGE>
Page 21
SECTION 2 THE LOANS.
2.1 THE REDUCING COMMITMENT AND THE REDUCING LOANS.
(a) Subject to the terms and conditions hereof, during the
period up to but not including the Termination Date, the Banks severally,
but not jointly, shall make loans to the Borrower in such amounts as the
Borrower may from time to time request (the "Reducing Loans") but not
exceeding in aggregate principal amount at any one time outstanding
$46,000,000 (as such amount may be reduced from time to time, the "Reducing
Commitment"). Each Reducing Loan requested by the Borrower shall be funded
by the Banks in accordance with their Ratable Shares of the requested
Reducing Loan. A Bank shall not be obligated hereunder to make any
additional Reducing Loan if immediately after making such Loan, the
aggregate principal balance of all Reducing Loans made by such Bank would
exceed such Bank's Ratable Share of the Reducing Commitment. The Reducing
Loans may be comprised of Base Rate Loans or LIBOR Loans, as provided in
Section 2.3.
(b) On each date set forth in the table below, the Reducing
Commitment shall automatically reduce by the amount set forth for such date
in such table:
<TABLE>
<CAPTION>
Calendar Year March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
1995 $0 $0 $0 $0
1996 $0 $0 $0 $1,518,000
1997 $1,023,500 $1,023,500 $1,023,500 $1,023,500
1998 $1,357,000 $1,357,000 $1,357,000 $1,357,000
1999 $1,725,000 $1,725,000 $1,725,000 $1,725,000
2000 $2,277,000 $2,277,000 $2,277,000 $2,277,000
2001 $2,208,000 $2,208,000 $2,208,000 $12,328,000
</TABLE>
(c) Prior to the Termination Date, the Borrower may, at its
option, from time to time prepay all or any portion of the Reducing Loans,
subject to the provisions of Section 2.6, and the Borrower may reborrow
from time to time hereunder amounts so paid up to the amount of the
Reducing Commitment in effect at the time of reborrowing.
(d) At any time prior to the Termination Date, by written
notice to the Agent no later than 11:00 A.M. Cleveland, Ohio time five
Banking Days prior to such termination or
<PAGE>
Page 22
reduction, the Borrower may permanently terminate, or from time to time
permanently reduce, the Reducing Commitment. Such notice shall be in
writing or by telephonic communication confirmed by telecopy or other
facsimile transmission on the same day as such telephone notice. Any
such partial reduction hereunder shall be in an amount which is not
less than $1,000,000 or an integral multiple of $1,000,000 in excess
thereof. The Agent shall notify the Banks of any such reduction or
termination of the Reducing Commitment.
(e) All Reducing Loans, together with all interest accrued
thereon, shall be paid in full no later than the Termination Date.
2.2 THE ACQUISITION COMMITMENT AND THE ACQUISITION LOANS.
(a) Subject to the terms and conditions hereof, during the
period up to but not including the Conversion Date, the Banks severally,
but not jointly, shall make loans to the Borrower in such amounts as the
Borrower may from time to time request (the "Acquisition Loans") but not
exceeding in aggregate principal amount at any one time outstanding
$10,000,000 (as such amount may be reduced from time to time, the
"Acquisition Commitment"). Each Acquisition Loan requested by the Borrower
shall be funded by the Banks in accordance with their Ratable Shares of the
requested Acquisition Loan. A Bank shall not be obligated hereunder to
make any additional Acquisition Loan if immediately after making such Loan,
the aggregate principal balance of all Acquisition Loans made by such Bank
would exceed such Bank's Ratable Share of the Acquisition Commitment. The
Acquisition Loans may be comprised of Base Rate Loans or LIBOR Loans, as
provided in Section 2.3.
(b) Prior to the Conversion Date, the Borrower may, at its
option, from time to time prepay all or any portion of the Acquisition
Loans, subject to the provisions of Section 2.6, and the Borrower may
reborrow from time to time hereunder amounts so paid up to the amount of
the Acquisition Commitment in effect at the time of reborrowing.
(c) At any time prior to the Conversion Date, by written
notice to the Agent no later than 11:00 A.M. Cleveland, Ohio time five
Banking Days prior to such termination or reduction, the Borrower may
permanently terminate, or from time to time permanently reduce, the
Acquisition Commitment. Such notice shall be in writing or by telephonic
communication confirmed by telecopy or other facsimile transmission on the
same day as such telephone notice. Any such partial reduction hereunder
shall be in an amount which is not less than $1,000,000 or an integral
multiple of $1,000,000 in excess thereof. The
<PAGE>
Page 23
Agent shall notify the Banks of any such reduction or termination of the
Acquisition Commitment.
(d) On the Conversion Date each then outstanding
Acquisition Loan shall automatically be converted into, and continued and
extended as, a five year term loan. The aggregate principal of the
Acquisition Loans shall be repaid in twenty consecutive quarterly
installments commencing on the first Quarterly Date after the Conversion
Date. No amount so paid may be reborrowed. The installments shall be due
on each date set forth in the following table, with each installment being
in an amount equal to that percentage set forth in such table for such date
of the principal amount of the Acquisition Loans outstanding on the
Conversion Date, with the final installment of all then outstanding
principal, together with all accrued interest, due no later than the
Termination Date:
<TABLE>
<CAPTION>
Calendar Year March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
1997 2.5% 2.5% 2.5% 2.5%
1998 5.0% 5.0% 5.0% 5.0%
1999 5.0% 5.0% 5.0% 5.0%
2000 6.25% 6.25% 6.25% 6.25%
2001 6.25% 6.25% 6.25% all remaining
principal
</TABLE>
2.3 MAKING AND CONTINUATION/CONVERSION OF THE LOANS.
(a) MAKING OF THE LOANS.
(i) Each Loan shall be made by the Banks in such
amount as the Borrower shall request, PROVIDED that each borrowing shall be
in an amount which is a minimum of (A), with respect to any LIBOR Loan,
$1,000,000, and integral multiples of $1,000,000 in excess thereof, and (B)
with respect to any Base Rate Loan, $500,000 and integral multiples of
$500,000 in excess thereof or such lesser amount as may be equal to the
then unused portion of the Reducing Commitment or the Acquisition
Commitment, as the case may be. The obligation of the Banks to make any
Loan is conditioned upon the fact that (x) no Possible Default or Event of
Default shall then exist or immediately after the Loan would exist; (y) all
of the Collateral Documents shall still be in full force and effect; and
(z) the representations and warranties contained herein and in the
Collateral Documents shall be true and correct in all material respects as
if made on and as
<PAGE>
Page 24
of the date of such borrowing, except to the extent that
any thereof expressly relate to an earlier date.
(ii) Loans shall be effected at the principal banking
office of the Agent in Cleveland, Ohio, and shall be made at such times as
the Borrower may request by notice to the Agent no later than 11:00 A.M.
Cleveland, Ohio time (A) three Banking Days prior to the date of a
requested LIBOR Loan and (B) one Banking Day prior to the date of a
requested Base Rate Loan. Such notices shall be in writing, or by
telephonic communication confirmed by telecopy or other facsimile
transmission on the same day as the telephone request, and shall specify
the proposed date and the amount of the requested Loan, whether it is to
bear interest initially based upon the Base Rate or the LIBOR Rate, and the
Interest Period thereof, if applicable.
(iii) Upon receipt of each borrowing notice for a
Loan, the Agent shall promptly notify each Bank of the type, Interest
Period, if applicable, amount and date of the proposed borrowing. Not
later than 11:00 A.M. Cleveland time, on the date of a proposed borrowing,
each Bank shall provide the Agent at its address specified in Section 12.4
hereof with immediately available funds covering such Bank's Ratable Share
of the borrowing, and the Agent shall pay over such immediately available
funds to the Borrower.
(b) CONVERSION/CONTINUATION OF THE LOANS. At the
Borrower's election pursuant to notice given to the Agent not later than
11:00 A.M. Cleveland, Ohio time three Banking Days prior to such conversion
or continuation, any Base Rate Loan or any LIBOR Loan may be converted to
or continued as a LIBOR Loan as requested by the Borrower; PROVIDED,
HOWEVER, that each conversion shall be in an amount which is a minimum of
$1,000,000, and integral multiples of $1,000,000 in excess thereof; and
PROVIDED, FURTHER, that no Loan may be continued as or converted to a LIBOR
Loan at any time that an Event of Default or Possible Default exists. If
the Borrower has not delivered to the Agent such notice with respect to any
terminating Interest Period at least three Banking Days prior to the end of
such Interest Period, the affected LIBOR Loan shall convert to a Base Rate
Loan at the end of such Interest Period.
(c) NUMBER OF INTEREST RATE OPTIONS. In no event shall the
Borrower have more than three LIBOR Loans outstanding at any time.
2.4 THE NOTES. All Reducing Loans shall be evidenced by
separate promissory notes payable to the Banks substantially in the form
attached hereto as EXHIBIT A to be duly executed and delivered by the
Borrower at or prior to the Closing in the
<PAGE>
Page 25
aggregate principal amount of the Reducing Commitment (the "Reducing Notes").
All Acquisition Loans shall be evidenced by separate promissory notes payable
to the Banks substantially in the form attached hereto as EXHIBIT B to be duly
executed and delivered by the Borrower at or prior to the Closing in the
aggregate principal amount of the Acquisition Commitment (the "Acquisition
Notes"). The Banks may, and are hereby authorized by the Borrower to, set
forth on the grids attached to the Notes, or in other comparable records
maintained by them, the amount of each Loan, all payments and prepayments of
principal and interest received, the current outstanding principal balance,
and other appropriate information. The aggregate unpaid amount of any Loan
set forth in any records maintained by a Bank with respect to a Note shall be
presumptive evidence of the principal amount owing and unpaid on such Note.
Failure of a Bank to record the principal amount of any Loan on the grid(s)
attached to a Note shall not limit or otherwise affect the obligation of
the Borrower hereunder or under such Note to repay the principal amount of
such Loan and all interest accruing thereon.
2.5 FEES.
(a) COMMITMENT FEES. The Borrower shall pay to the Agent
for the benefit of the Banks a post-closing commitment fee of 1/2% per
annum (based on a year having 360 days and actual days elapsed) on the
aggregate average daily undisbursed amount of each Commitment. Such
commitment fee shall (i) commence to accrue as of the Closing Date and
continue for each day to and including the Termination Date, with respect
to the Reducing Commitment, and the Conversion Date, with respect to the
Acquisition Commitment, (ii) be in addition to any other fee required by
the terms and conditions of this Agreement, (iii) be payable quarterly in
arrears on each Quarterly Date, and (iv) be shared by the Banks in
accordance with their Ratable Shares.
(b) OTHER FEES. The Borrower shall pay to the Agent such
other fees as are set forth in the letter agreement between the Borrower
and the Agent of even date herewith.
2.6 PREPAYMENT.
(a) VOLUNTARY PREPAYMENTS. By notice to the Agent (which
shall be in writing or by telephonic communication confirmed by telecopy or
other facsimile transmission on the same day as such telephone notice) no
later than 11:00 A.M. Cleveland, Ohio time on the Banking Day prior to such
prepayment (with respect to any Base Rate Loan) or on the third Banking Day
prior to such prepayment (with respect to any LIBOR Loan), the Borrower
may, at its option, prepay the Loans in whole at any time or in part from
time to time without penalty or premium (except that any such prepayment of
any LIBOR Loan shall be made together with
<PAGE>
Page 26
the applicable Prepayment Premium); PROVIDED, HOWEVER, that each partial
prepayment shall be in the aggregate principal amount of not less than
$1,000,000 or an integral multiple of $1,000,000 in excess thereof. All
accrued interest on the amount prepaid shall be paid with the prepayment.
Each voluntary prepayment of the Acquisition Loans after the Conversion
Date shall be applied to the principal installments due pursuant to
Section 2.2(d) pro rata, and no amount so prepaid may be reborrowed.
(b) MANDATORY PREPAYMENTS.
(i) REDUCTION OF COMMITMENT. If at any time the
outstanding principal amount of the Reducing Loans exceeds the Reducing
Commitment, or if at any time prior to the Conversion Date the outstanding
principal amount of the Acquisition Loans exceeds the Acquisition
Commitment, the Borrower shall immediately prepay the Reducing Notes or the
Acquisition Notes, as the case may be, without penalty or premium (except
that any such prepayment of any LIBOR Loan shall be made together with the
applicable Prepayment Premium), in an amount necessary to cause the
outstanding principal amount of the Reducing Loans not to exceed the
Reducing Commitment or to cause the outstanding principal amount of the
Acquisition Loans not to exceed the Acquisition Commitment, as the case may
be. All accrued interest on the amount prepaid shall be paid with the
prepayment.
(ii) EXCESS CASH FLOW. Within ninety days after the
end of each fiscal year of the Borrower, commencing with the fiscal year
ending on December 31, 1996, the Borrower shall make a mandatory prepayment
of the Loans in an amount equal to the Applicable Percentage of Excess Cash
Flow, if any, for such fiscal year. Mandatory prepayments made pursuant to
this Section 2.6(b)(ii) shall be determined from the annual financial
statements for such fiscal year delivered by the Borrower pursuant to
Section 7.5(a) and shall be accompanied by a certificate signed by the
Borrower's chief financial officer setting forth the calculations from
which the amount of such prepayment was determined.
(iii) PROCEEDS OF ASSET SALES. The Borrower shall
make a mandatory prepayment of the Loans in an amount equal to the cash
proceeds of any Asset Sale, net of any reasonable costs directly incurred
in connection with such Asset Sale and any taxes payable in connection with
such Asset Sale. Together with such prepayment, the Borrower shall deliver
to the Agent a certificate executed by the Borrower's chief financial
officer setting forth the calculation of the net cash proceeds of such
Asset Sale. Such prepayment shall be made within two Banking Days after
receipt by the Borrower of such cash proceeds.
<PAGE>
Page 27
(iv) INSURANCE PROCEEDS. Within 180 days after the
date of receipt of any cash payments under any insurance policy maintained
by the Borrower or any of its Subsidiaries which have not been reinvested
in assets of a kind then used or usable in the business of the Borrower or
such Subsidiary or used to maintain the business of the Borrower and its
Subsidiaries as going concerns as a consequence of any business
interruption, the Borrower shall make a mandatory prepayment of the Loans
in the amount of such unreinvested or unused proceeds; PROVIDED, HOWEVER,
that notwithstanding any of the foregoing to the contrary, upon and during
the continuance of any Event of Default or Possible Default, all such
insurance proceeds, regardless of reinvestment or other use, received by
the Borrower or any Subsidiary shall be applied as a prepayment of the
Loans.
(v) MANAGEMENT FEES. Within five days of receipt
thereof, the Borrower shall make a mandatory prepayment of the Reducing
Loans in the amount of any management fees or other payments (other than
fees paid by Fairmont Communications Corporation to the Borrower or any of
its Subsidiaries for actual services rendered in an aggregate amount not to
exceed $11,000 per month) which it or any of its Subsidiaries receives from
Fairmont Communications Corporation or Northstar Television Group, Inc.
(collectively, "Management Fees").
(c) APPLICATION OF PREPAYMENTS; REDUCTION OF COMMITMENTS.
(i) APPLICATION TO ACCRUED INTEREST. All prepayments
made pursuant to this Section 2.6 shall be applied first to any Prepayment
Premium then due, then to accrued interest and then to the principal
outstanding under the Loans. For purposes of the calculation of interest
and the determination of whether any Prepayment Premium is due in
connection with any such prepayment, such principal prepayments shall be
applied first to the Base Rate Loans and then to the LIBOR Loans with the
shortest remaining Interest Periods.
(ii) APPLICATION TO REDUCING LOANS AND ACQUISITION
LOANS. All mandatory prepayments of principal required to be made pursuant
to Section 2.6(b)(ii), (iii) or (iv) shall be applied first to the Reducing
Loans and then, after the Reducing Loans and the Reducing Commitment have
been reduced to zero, to the Acquisition Loans.
(iii) APPLICATION TO THE REDUCING LOANS AND THE
REDUCING COMMITMENT. Any mandatory prepayment of the Reducing Loans
pursuant to Sections 2.6(b)(ii), (iii) or (iv) shall cause the Reducing
Commitment to be immediately and automatically reduced by the amount of
such prepayment, and each
<PAGE>
Page 28
such mandatory prepayment shall be applied to the subsequent Reducing
Commitment reductions set forth in Section 2.1(b) in the inverse
order of maturity; PROVIDED, HOWEVER, that any mandatory
prepayment of the Reducing Loans from the proceeds of a Permitted
Divestiture shall not cause a reduction in the Reducing Commitment; and
PROVIDED, FURTHER, that any mandatory prepayment of the proceeds of an
Asset Sale other than a Permitted Divestiture shall be applied to the
scheduled Reducing Commitment reductions pro rata. Any mandatory
prepayment of the Reducing Loans pursuant to Section 2.6(b)(v) shall not
cause a reduction in the Reducing Commitment.
(iv) APPLICATION TO THE ACQUISITION LOANS AND THE
ACQUISITION COMMITMENT. Any mandatory prepayment of the Acquisition Loans
prior to the Conversion Date (other than pursuant to Section 2.6(b)(i))
shall cause the Acquisition Commitment to be immediately and automatically
reduced by the amount of such prepayment; PROVIDED, HOWEVER, that any
mandatory prepayment of the Acquisition Loans from the proceeds of a
Permitted Divestiture shall not cause a reduction in the Acquisition
Commitment. Any mandatory prepayment of the Acquisition Loans pursuant to
Section 2.6(b)(v) shall not cause a reduction in the Acquisition
Commitment. Any mandatory prepayment of the Acquisition Loan after the
Conversion Date shall be applied to the subsequent principal installments
due under Section 2.2(d) in the inverse order of maturity; PROVIDED,
HOWEVER, that any mandatory prepayment of the proceeds of an Asset Sale
other than a Permitted Divestiture shall be applied to the subsequent
principal installments due under Section 2.2(d) pro rata.
(d) PREPAYMENT PREMIUM. The Borrower shall pay to the
Agent, for the benefit of the Banks, the applicable Prepayment Premium upon
any prepayment or conversion (whether voluntary or involuntary) of any
LIBOR Loan not made on the last day of the applicable Interest Period.
2.7 RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time any
Regulatory Change (including without limitation, Regulation D of the Board
of Governors of the Federal Reserve System) shall impose any reserve and/or
special deposit requirement (other than reserves included in the LIBOR
Reserve Percentage, the effect of which is reflected in the interest rate
of any LIBOR Loan) against assets held by, or deposits in or for the amount
of any loans by, any Bank, and the result of the foregoing is to increase
the cost (whether by incurring a cost or adding to a cost) to such Bank of
taking or maintaining hereunder any LIBOR Loan or to reduce the amount of
principal, interest or fees received by such Bank with respect to any such
Loan, then such Bank shall notify the Agent and the Borrower of such
occurrence. Thereafter, upon demand by such Bank the Borrower
<PAGE>
Page 29
shall pay to such Bank additional amounts sufficient to compensate and
indemnify such Bank for such increased cost or reduced amount. A statement
as to the increased cost or reduced amount as a result of any event mentioned
in this Section shall be submitted by such Bank to the Agent and the Borrower
and shall, in the absence of manifest error, be conclusive and binding as to
the amount thereof.
2.8 EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. If any Bank determines that dollar deposits of the
relevant amount for the relevant Interest Period are not available to it in
the applicable Eurodollar market or that, by reason of circumstances
affecting such market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable to such Interest Period, or that the
LIBOR Rate does not adequately reflect the cost to such Bank of making such
Loan, as the case may be, such Bank shall promptly give notice of such
determination to the Agent and the Borrower, and any request for a new
LIBOR Loan or notice of conversion of an existing Loan to a LIBOR Loan
given thereafter or previously given by the Borrower and not yet converted
shall be deemed a notice to make a Base Rate Loan.
2.9 CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any
time any Regulatory Change shall make it unlawful for any Bank to fund any
LIBOR Loan which it has committed to make hereunder with moneys obtained in
the applicable Eurodollar market, such Bank shall notify the Agent and the
Borrower, and the obligation of the Banks to fund such Loan shall, upon the
happening of such event, forthwith be suspended for the duration of such
illegality. If any such change makes it unlawful for any Bank to continue
in effect the funding in the applicable Eurodollar market of any LIBOR Loan
previously made by it hereunder, such Bank shall, upon the happening of
such event, notify the Agent and the Borrower thereof in writing stating
the reasons therefor, and the Borrower shall, on the earlier of (a) the
last day of the then current Interest Period or (b) if required by such
Regulatory Change on such date as shall be specified in such notice, either
convert all such Loans to Base Rate Loans or prepay all such Loans in full.
2.10 FUNDING. Any Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States.
2.11 INDEMNITY. Without prejudice to any other provisions of
Sections 2.7 through Section 2.10, the Borrower hereby agrees to indemnify
each Bank against any loss or expense which it may sustain or incur as a
consequence of the Borrower's failure to borrow any LIBOR Loan requested
pursuant to this Agreement or any default by the Borrower in payment when due
of
<PAGE>
Page 30
any amount due hereunder in respect of any LIBOR Loan, including,
but not limited to, any premium or penalty actually incurred by such Bank
in respect of funds borrowed by it for the purpose of making or maintaining
such Loan, as determined by such Bank. A statement as to any such loss or
expense shall be submitted by such Bank to the Borrower for payment under
the aforesaid indemnification, with a copy to the Agent, which statement
shall, in the absence of manifest error, be conclusive and binding as to
the amount thereof.
2.12 CAPITAL ADEQUACY. If any Bank shall determine that any
Regulatory Change regarding capital adequacy or compliance by such Bank (or
its lending office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any governmental
authority, central bank or comparable agency has the effect of reducing the
rate of return on such Bank's capital (or on the capital of such Bank's
holding company) as a consequence of its obligations hereunder to a level
below that which such Bank (or its holding company) could have achieved but
for such Regulatory Change or compliance (taking into consideration such
Bank's policies or the policies of its holding company with respect to
capital adequacy) by an amount which such Bank deems to be material, then
from time to time, within ten days after demand by such Bank, the Borrower
shall pay to such Bank such additional amount or amounts as will compensate
such Bank (or its holding company) for such reduction. Such Bank will
designate a different lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
sole judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of such Bank claiming compensation under this Section and
setting forth the additional amount to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount,
such Bank may use any reasonable averaging and attribution methods.
Failure on the part of any Bank to demand compensation for any reduction in
return on capital with respect to any period shall not constitute a waiver
of such Bank's rights to demand compensation for any reduction in return on
capital in such period or in any other period. The protection of this
Section shall be available to each Bank regardless of any possible
contention of the invalidity or inapplicability of the law, regulation or
other condition which shall have been imposed.
2.13 TAXES.
(a) All sums payable by the Borrower hereunder or under the
Notes, whether of principal, interest, fees, expenses or otherwise, shall
be paid in full, free of any deductions or withholdings for any and all
present and future taxes, levies, imposts, stamps, duties, fees,
assessments, deductions, withholdings, and other governmental charges and
all liabilities
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with respect thereto, EXCLUDING, in the case of each Bank and the Agent,
(i) taxes imposed on its income, and franchise taxes imposed on it,
by the United States or the jurisdiction under the laws of which
such Bank or the Agent (as the case may be) is organized or any political
subdivision or taxing authority thereof or therein, and (ii) taxes imposed
on its income, and franchise taxes imposed on it, by the jurisdiction of
such Bank's or the Agent's principal office or lending office or any
political subdivision or taxing authority thereof or therein (all such non-
excluded taxes, levies, imposts, stamps, duties, fees, assessments,
deductions, withholdings and charges being hereafter referred to as
"TAXES"). If the Borrower is prohibited by law from making payments
hereunder or under the Notes free of such deductions or withholdings, then
the Borrower shall pay such additional amount as may be necessary in order
that the actual amount received by the Banks after such deduction or
withholding shall equal the full amount stated to be payable hereunder or
under the Notes. The Borrower shall pay directly to all appropriate taxing
authorities any and all present and future Taxes, and all liabilities with
respect thereto imposed by law or by any taxing authority on or with regard
to any aspect of the transactions contemplated by this Agreement or the
execution and delivery of this Agreement or the Notes, except for any Taxes
or other liabilities that the Borrower is contesting in good faith by
appropriate proceedings, PROVIDED that a Bank shall designate a different
lending office if, in the judgment of such Bank, such designation would
avoid the need for, or reduce the amount of, any Taxes required to be
deducted from or in respect of any sum payable hereunder to such Bank or
the Agent and would not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank.
(b) The Borrower hereby indemnifies the Agent and the Banks
and holds them harmless from and against any and all liabilities, fees or
additional expense with respect to or resulting from any delay in paying,
or omission to pay, Taxes; PROVIDED, HOWEVER, that, in the event any Bank
or the Agent (as the case may be) successfully contests the assessment of
such Taxes or any liability arising therefrom or with respect thereto, such
Bank or the Agent shall refund, to the extent of any refund thereof made to
such Bank or the Agent, any amount paid by the Borrower under this Section
2.13 in respect of such Taxes or liabilities arising therefrom or with
respect thereto. Each Bank shall notify the Borrower and the Agent of any
payment of Taxes required or requested of it and shall give due
consideration to any advice or recommendation given in response thereto by
the Borrower, and upon notice from such Bank that Taxes or any liability
relating thereto (including penalties and interest) have been paid, the
Borrower shall pay or reimburse such Bank therefor within ten days of such
notice.
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(c) Within thirty days after the payment by the Borrower of
any Taxes, the Borrower shall furnish the Agent with the original or a
certified copy of the receipt evidencing payment thereof, together with any
other information the Agent may reasonably require to establish to its
satisfaction that full and timely payment of such Taxes has been made.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States and the Agent, if organized under the laws of a
jurisdiction outside the United States, shall, on or prior to the Closing
Date or, with respect to an assignee that becomes a Bank pursuant to
Section 12.7(b), the effective date of the assignment to it of an interest
in the Loans and the Commitment, and from time to time thereafter if
requested in writing by the Borrower or the Agent (but only to the extent
such Bank or the Agent is and remains lawfully able to do so), provide the
Borrower and (in the case of any such Bank other than the Agent) the Agent
with two duly completed copies of Internal Revenue Service Form 1001 or
4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Bank or the Agent is entitled to
benefits under an income tax treaty to which the United States is a party
that reduces the rate of withholding tax on payments hereunder or under the
Notes or certifying that the income receivable pursuant to this Agreement
or the Notes is effectively connected with the conduct of a trade or
business in the United States.
(e) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section shall survive the payment in full of
principal and interest hereunder and under the Note.
SECTION 3 INTEREST; PAYMENTS.
3.1 INTEREST.
(a) Subject to Section 3.1(c), prior to maturity, LIBOR
Loans shall bear interest at the LIBOR Rate plus the Applicable Margin, and
Base Rate Loans shall bear interest at the Base Rate plus the Applicable
Margin.
(b) The Applicable Margin shall be determined by the Agent
quarterly based on the financial statements and the Compliance Certificate
delivered to the Banks pursuant to Sections 7.5(b) and (d) below. Any
change in the interest rate on the Loans due to a change in the Applicable
Margin shall be effective on the fifth Banking Day after delivery of such
financial statements and Compliance Certificate; PROVIDED, HOWEVER, that if
any such quarterly financial statements and
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Compliance Certificate indicate an increase in the Applicable Margin
and such financial statements and certificate are not provided
within the time period required in Section 7.5(b), the change
in the interest rate due to such change in the Applicable Margin
shall be effective retroactively as of the fifth Banking Day after
the date on which such financial statements and certificate were
due; PROVIDED, FURTHER, that if such quarterly financial statements and
certificate reflect a decrease in the Applicable Margin, such decrease
shall be effective as of the fifth Banking Day after the date on which such
financial statements and certificate are actually delivered. Until
delivery of financial statements for the first full fiscal quarter of the
Borrower after the Closing, for purposes of calculating the Applicable
Margin, the ratio of Total Debt to Operating Cash Flow shall be deemed to
be 5.5 to 1.0. The Borrower shall deliver to the Banks with each set of
quarterly financial statements which indicate a change in the Applicable
Margin a notice with respect to such change which notice shall set forth
the calculation of, and the supporting evidence for, such change.
(c) Upon the occurrence of any Event of Default, the entire
outstanding principal amount of each Loan and (to the extent permitted by
law) unpaid interest thereon and all other amounts due hereunder shall bear
interest from the date of occurrence of such Event of Default until paid in
full at the Default Interest Rate which shall be payable upon demand.
(d) Interest shall be computed on a Three Hundred Sixty day
year basis calculated for the actual number of days elapsed. Interest
accrued on each Base Rate Loan shall be paid quarterly in arrears on each
Quarterly Date after the date hereof until such Loan is paid in full, and
interest accrued on each LIBOR Loan shall be paid on the last day of the
Interest Period thereof and, in addition, if such Interest Period is more
than three months, on the day that would have been the last day of such
Interest Period if such Interest Period had been three months.
(e) The rate of interest payable on any Note from time to
time shall in no event exceed the maximum rate, if any, permissible under
applicable law. If the rate of interest payable on any Note is ever
reduced as a result of the preceding sentence and any time thereafter the
maximum rate permitted by applicable law shall exceed the rate of interest
provided for on such Note, then the rate provided for on such Note shall be
increased to the maximum rate permitted by applicable law for such period
as is required so that the total amount of interest received by the holder
of such Note is that which would have been received by such holder but for
the operation of the preceding sentence.
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Page
3.2 MANNER OF PAYMENTS.
(a) Prior to each Quarterly Date and the end of each
Interest Period, the Agent shall render a statement to the Borrower of all
amounts due to the Banks for principal, interest and fees hereunder. All
amounts listed on each such statement shall be due and payable on the
Quarterly Date or, as the case may be, the last day of such Interest
Period, in respect of which such statement was sent. As to all other
Obligations which become due and payable other than on a fixed date by
their terms, the Agent shall advise the Borrower by a written statement
that they are due and payable, and the Borrower shall pay the same within
five days of receipt of such statement. Any failure by the Agent to render
any such statement or give any such advice shall in no way relieve the
Borrower of any liability for or obligation to pay any amount due and
payable hereunder.
(b) Whenever any payment to be made hereunder, including
without limitation any payment to be made on a Note, shall be stated to be
due on a day which is not a Banking Day, such payment may be made on the
next succeeding Banking Day, and such extension of time shall in each case
be included in the computation of the interest payable on such Note.
(c) Unless otherwise provided in this Agreement, all
payments or prepayments made or due hereunder or under the Notes shall be
made in immediately available funds by federal funds wire transfer, and
without setoff, deduction or counterclaim, to the Agent prior to 11:00
A.M., Cleveland time, on the date when due, at its offices at 127 Public
Square, Cleveland, Ohio 44114, or at such other place as may be designated
by the Agent. Funds received after 1:00 P.M., Cleveland time, shall be
deemed to have been received on the next Banking Day. To the extent any
such payment is made for the ratable benefit of the Banks, the Agent shall
promptly distribute such payment to the Banks in accordance with their
respective Ratable Shares.
SECTION 4 CLOSING.
The closing of the transactions contemplated by this Agreement
shall take place at the offices of Dow, Lohnes & Albertson, 1255 23rd
Street, N.W., Washington, D.C. 20037 on or about August 17, 1995, or such
other date and place as to which the parties may agree (the "Closing" and
the "Closing Date"). Subject to the terms and conditions hereof, upon the
fulfillment or waiver in writing of all the conditions precedent set out in
Section 6 below, and the delivery to the Agent of the Notes, the Banks
shall make such Loans as may be requested by the Borrower.
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SECTION 5 REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
To induce the Banks to enter into this Agreement and to make the
Loans, the Borrower represents and warrants as follows:
5.1 ORGANIZATION AND POWERS.
(a) The Borrower is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Borrower is duly qualified or registered to conduct business and in good
standing under the laws of each other jurisdiction in which the character
of its business or the ownership of its assets makes such qualification or
registration necessary, except where failure to so qualify or register
could not reasonably be expected to have a Material Adverse Effect. The
Borrower has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and proposed to be
conducted, to enter into this Agreement, the Collateral Documents to which
it is a party and all other documents to be executed by it in connection
with the transactions contemplated hereby and thereby and to carry out the
terms hereof and thereof.
(b) Each Subsidiary of the Borrower is a corporation, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified or registered to
conduct business and in good standing under the laws of each other
jurisdiction in which the character of its business, the location of its
employees or the ownership of its assets makes such qualification or
registration necessary, except where failure to so qualify or register
could not reasonably be expected to have a Material Adverse Effect. Each
Subsidiary of the Borrower has all requisite power and authority to own and
operate its properties, to carry on its business as now conducted and
proposed to be conducted, to enter into the Collateral Documents to which
it is a party and all other documents to be executed by it in connection
with the transactions contemplated hereby and thereby and to carry out the
terms thereof.
5.2 AUTHORIZATION. All necessary corporate, shareholder or
other actions on the part of the Borrower and its Subsidiaries to authorize
the execution and delivery of this Agreement and the Collateral Documents
and the performance of the respective obligations of the Borrower and its
Subsidiaries herein and therein have been taken. This Agreement and each
Collateral Document are valid and legally binding upon each of the Borrower
and its Subsidiaries, to the extent it is a party thereto, and enforceable
in accordance with their respective terms, except to the extent that the
enforceability hereof and
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thereof may be limited by bankruptcy, insolvency or like laws affecting
creditors rights generally and by the application of general equitable
principles.
5.3 FINANCIAL STATEMENTS. EXHIBIT C attached hereto contains
(a) the audited consolidated financial statements of the Borrower and its
Subsidiaries for the fiscal years ending December 31, 1993, and December
31, 1994, and (b) the unaudited consolidated financial statements of the
Borrower and its Subsidiaries as of June 30, 1995, and for the six month
period then ended (the "Financial Statements"). The Financial Statements
are true and complete in all material respects (including, without
limitation, a disclosure of all material contingent liabilities) and
present fairly the financial condition and results of operations of the
Borrower and its Subsidiaries, as of the dates and for the periods
indicated and have been prepared in accordance with GAAP, subject in the
case of statements for interim periods to normal year-end adjustments and
the absence of footnotes.
5.4 PROJECTIONS. EXHIBIT D attached hereto contains the
Borrower's projections for the calendar years 1995 through 1999. Such
projections were prepared by the Borrower in good faith on the basis of
assumptions the Borrower believed were reasonable in light of the
conditions existing at the time of preparation thereof and remain
reasonable as of the date hereof.
5.5 CAPITALIZATION OF THE BORROWER AND ITS SUBSIDIARIES. The
capitalization of the Borrower and its Subsidiaries as of the Closing Date
is as set forth on EXHIBIT E attached hereto. The Borrower has no
Subsidiaries as of the Closing Date except as listed on EXHIBIT E. All of
the issued and outstanding capital stock of each of the Borrower and its
Subsidiaries has been duly and validly issued and is fully paid and
nonassessable. All of the authorized, issued and outstanding capital stock
of each of the Borrower and its Subsidiaries is free and clear of any Lien,
charge, encumbrance, or right or option to purchase, except for (a) the
Liens granted pursuant to the Pledge Agreements, (b) the pledge of the
stock of Atlantic City to National Westminster Bank and (c) the rights of
the trustee under the Trust Agreement. None of the capital stock of the
Borrower or of any of its Subsidiaries has been issued in violation of the
Securities Act of 1933, as amended, or the securities or "Blue Sky" or any
other applicable laws, rules or regulations of any applicable jurisdiction.
Except as set forth on EXHIBIT E, as of the Closing Date, neither the
Borrower nor any of its Subsidiaries has any commitment or obligation,
either firm or conditional, to issue, deliver, purchase or sell, under any
offer, option agreement, bonus agreement, purchase plan, incentive plan,
compensation plan, warrant, conversion rights, contingent share agreement,
shareholders agreement, partnership
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agreement or otherwise, any shares of its capital stock, or other equity
securities or securities convertible into shares of capital stock or other
equity securities.
5.6 TITLE TO PROPERTIES; PATENTS, TRADEMARKS, ETC. The Borrower
and each of its Subsidiaries have good and marketable title to all of their
assets, whether real or personal, tangible or intangible, free and clear of
any Liens or adverse claims, except Permitted Liens. The Borrower and each
of its Subsidiaries own or possess the valid right to use all the patents,
patent applications, patent and know-how licenses, inventions, technology,
permits, trademark registrations and applications, trademarks, service
marks, trade names, copyrights, product designs, applications, formulae,
processes, circulation, and other subscriber lists, industrial property
rights and licenses and rights in respect of the foregoing used or
necessary for the conduct of its business (collectively, "proprietary
rights"). The Borrower is not aware of any existing or threatened
infringement or misappropriation of (a) any such proprietary rights of
others by the Borrower or any of its Subsidiaries or (b) any proprietary
rights of the Borrower or any of its Subsidiaries by others.
5.7 LITIGATION; PROCEEDINGS. Except as disclosed on EXHIBIT F
attached hereto, there is no action, suit, complaint, proceeding, inquiry
or investigation at law or in equity, or by or before any court or
governmental instrumentality or agency, nor any order (including, without
limitation, any order to show cause or order of forfeiture), decree or
judgment in effect, pending or, to the best of the Borrower's knowledge,
threatened against or affecting the Borrower, any of its Subsidiaries, any
Station or any of the properties or rights relating to any Station which
could reasonably be expected to have a Material Adverse Effect. No Person
has filed or, to the best of the Borrower's knowledge, threatened to file,
any material competing application, petition to deny or other opposition
against any application, including any renewal application, filed or to be
filed by the Borrower or any of its Subsidiaries.
5.8 TAXES. All Federal, state and local tax returns, reports
and statements (including, without limitation, those relating to income
taxes, withholding, social security and unemployment taxes, sales and use
taxes, and franchise taxes) required to be filed by the Borrower or any of
its Subsidiaries have been properly filed with the appropriate governmental
agencies in all jurisdictions in which such returns, reports and statements
are required to be filed, which returns, reports and statements are
complete and accurate, and all taxes and other impositions due and payable
have been timely paid prior to the date on which any fine, penalty,
interest, late charge or loss may be added thereto for non-payment thereof
except where
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Page 38
contested in good faith and by appropriate proceedings. As of the
Closing Date, except for extensions through 1995 relating to the
Borrower's New York City tax returns for the years 1989, 1990 and 1991,
neither the Borrower nor any of its Subsidiaries has filed with the
Internal Revenue Service or any other governmental authority any agreement
or other document extending or having the effect of extending the period
for assessment or collection of any Federal, state, local or foreign taxes
or other impositions. All tax deficiencies asserted or assessments made as
a result of any examinations conducted by the Internal Revenue Service or
any other governmental authority relating to the Borrower or any of its
Subsidiaries have been fully paid or are being contested in accordance with
the provisions of Section 7.4. Proper and accurate amounts have been
withheld by the Borrower and its Subsidiaries from its employees for all
periods to fully comply with the tax, social security and unemployment
withholding provisions of applicable Federal, state, local and foreign law.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of any taxes or other governmental charges are
adequate.
5.9 ABSENCE OF CONFLICTS. The execution, delivery and
performance of this Agreement and the Collateral Documents and all actions
and transactions contemplated hereby and thereby will not (a) violate, be
in conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under (i) any provision of the Certificate
or Articles of Incorporation or By-Laws or any shareholders agreement or
other organizational document of the Borrower or any of its Subsidiaries,
(ii) any arbitration award or any order of any court or of any other
governmental agency or authority binding on the Borrower or any of its
Subsidiaries, (iii) any License of the Borrower or any of its Subsidiaries,
(iv) any applicable law, rule, order or regulation (including without
limitation, (A) the Communications Act of 1934, as amended, (B) any law,
rule, regulation or policy of the FCC or any other Licensing Authority or
(C) regulations G, T, U or X of the Board of Governors of the Federal
Reserve System) or (v) any Operating Agreement, Muzak Franchise, or other
material agreement, instrument or document relating to a Station, the Muzak
Business or the Healthcare Communications Business or to which the Borrower
or any of its Subsidiaries is a party, or by which the Borrower or any of
its Subsidiaries or any of their properties is bound, or (b) result in the
creation or imposition of any Lien of any nature whatsoever, other than
those Liens arising hereunder or under the Collateral Documents, upon any
of the properties of the Borrower or any of its Subsidiaries.
5.10 INDEBTEDNESS. As of the Closing Date, neither the Borrower
nor any of its Subsidiaries has any Indebtedness of any nature, whether due
or to become due, absolute, contingent or
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otherwise, including Indebtedness for taxes and any interest or
penalties relating thereto, except (a) the liability to pay
legal and accounting fees and reasonable closing expenses
in connection with this Agreement, (b) the Obligations, (c) Indebtedness
incurred in the ordinary course of business since June 30, 1995, (d) as
disclosed in the Financial Statements, and (e) as disclosed on EXHIBIT G
attached hereto.
5.11 COMPLIANCE. The Borrower, each of its Subsidiaries and the
ownership, construction and operation of each Station is in compliance with
all Licenses and all statutes, ordinances, laws, rules, regulations and
orders of the United States of America, the FCC (including, without
limitation, applicable federal laws and the rules, regulation, policies and
orders of the FCC relating to foreign ownership restrictions or to
limitations on the nature and number of media outlets that may be held
under common ownership or control), the Federal Aviation Administration and
any other federal, state, county, municipal or other governmental agency or
authority applicable to the Borrower or any of its Subsidiaries, their
properties, the ownership, construction or operation of any Station or the
conduct of their business except to the extent that failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries nor the ownership,
construction or operation of any Station is in violation of or has breached
the provisions of any indenture, License, Operating Agreement, Muzak
Franchise, note, lease, or other instrument or document to which it is a
party or by which it is bound, nor does there exist any default, or any
event or condition which, upon notice or lapse of time, or both, would
become a default, under any such indenture, License, Operating Agreement,
Muzak Franchise, note, lease, or other instrument or document if such
violation, breach or default could reasonably be expected to have a
Material Adverse Effect. The Borrower and each of its Subsidiaries have
the legal right and authority to conduct their respective businesses as now
conducted or proposed to be conducted.
5.12 STATEMENTS NOT MISLEADING. No statement, representation or
warranty made by the Borrower, any of its Subsidiaries or any other party
(other the Agent or the Banks) in or pursuant to this Agreement or the
Exhibits attached hereto or any of the Collateral Documents contains any
untrue statement of a material fact, nor omits to state a material fact
necessary to make such statement not misleading in light of the
circumstances under which such statement was made, or otherwise violates
any federal or state securities laws, rules or regulations. There is no
fact known to the Borrower (other than matters of a general economic nature
or relating to the broadcasting industry generally) that has had or could
reasonably be expected to have a Material Adverse Effect.
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5.13 CONSENTS OR APPROVALS. No consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority or any other Person (including, without limitation,
the FCC and any other Licensing Authority) is required to be obtained by
the Borrower or any of its Subsidiaries in connection with the execution,
delivery or performance of this Agreement or any of the Collateral
Documents, including without limitation, in connection with the granting of
Liens in the capital stock of the Borrower's Subsidiaries or in the assets
of the Borrower and its Subsidiaries, which has not already been obtained
or completed, except for (a) the filing with the FCC of this Agreement and
certain of the Collateral Documents pursuant to FCC rules, which shall be
accomplished within the required time period after the Closing, (b) the
filing of financing statements, the Mortgages and other actions expressly
required to be taken pursuant to the Collateral Documents, (c) the consents
listed on EXHIBIT H which have not been obtained and (d) the consent of the
FCC to the extent required in connection with the exercise by the Agent or
the Banks of their rights and remedies hereunder or under the Collateral
Documents.
5.14 MATERIAL CONTRACTS AND COMMITMENTS. EXHIBIT I attached
hereto contains a true and complete description of all material contracts
and commitments of the Borrower or any of its Subsidiaries or which relate
to a Station, the Muzak Business or the Healthcare Communications Business
as of the Closing Date, whether oral or written, including, without
limitation, (a) any security agreement, pledge agreement, mortgage or
guaranty; (b) any material management, construction supervision, service or
employment agreements, conditional sale contract or lease of personal
property; (c) any collective bargaining agreement; (d) any material
contract or commitment for the future purchase or sale of goods; (e) any
contract or commitment which involves a material Capital Expenditure; and
(h) all Licenses and Operating Agreements and Muzak Franchises. To the
best of the Borrower's knowledge, except as disclosed on EXHIBIT I, as of
the Closing Date, all of the items listed on EXHIBIT I are in full force
and effect without material default. EXHIBIT I further identifies each
such contract which requires consent to the granting of a Lien in favor of
the Agent for the benefit of the Banks on the rights of the Borrower or its
Subsidiaries under such contract. The Borrower has made available to the
Agent true and complete copies of each of the above.
5.15 EMPLOYEE BENEFIT PLANS. EXHIBIT J contains a true and
complete list of all Plans maintained by the Borrower or any member of the
Controlled Group. Neither the Borrower nor any member of the Controlled
Group has any liability, or reasonably anticipates any liability, of any
kind in excess, in the
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aggregate, of $75,000, to or in respect of any Plan or Benefit Arrangement.
With respect to the Plans and Benefit Arrangements maintained by the
Borrower or any member of the Controlled Group: (a) each
Plan that is intended to be qualified under Code Section 401(a) is so
qualified and has been so qualified since its adoption, and each trust
forming a part thereof is exempt from tax under Code Section 501(a); (b)
each Plan complies in all material respects with all applicable
requirements of law, has been administered in accordance with its terms and
all required contributions have been made; (c) neither the Borrower nor any
member of the Controlled Group knows or has reason to know that the
Borrower or any member of the Controlled Group has engaged in a transaction
which would subject it to any material tax, penalty or liability under
ERISA or the Code for any prohibited transaction; (d) no Plan is subject to
the minimum funding requirements under ERISA Section 302 or Code Section
412, is a multiemployer plan (as defined in ERISA Section 4001(a)(3)), is a
defined benefit plan (as defined under ERISA Section 3(35) or Code Section
414(j)), or is a multiple employer plan (as defined in ERISA Section 4063).
No Plan or Benefit Arrangement maintained by the Borrower or any member of
the Controlled Group is a multiple employer welfare arrangement (as defined
in ERISA Section 3(40)).
5.16 LICENSES AND OPERATING AGREEMENTS. The Licenses and
Operating Agreements shown on EXHIBIT I constitute all of the Licenses and
Operating Agreements which, as of the Closing Date, are necessary for the
lawful ownership, construction or operation of the Stations, the Muzak
Business and the Healthcare Communications Business and of the other
businesses of the Borrower and its Subsidiaries in the manner and to the
full extent they are currently owned, constructed and operated. EXHIBIT I
sets forth a correct and complete list, as of the Closing Date, of the
expiration date of each License and of each pending application for a
License. Except as specified on EXHIBIT I, all of the Licenses relating to
the Stations and all of the other Licenses of the Borrower and its
Subsidiaries have been duly and validly issued to and are legally held by
the Borrower or one of its Subsidiaries and are in full force and effect
without condition except those of general application. All such Licenses
have been issued in compliance with all applicable laws and regulations,
are legally binding and enforceable in accordance with their terms and are
in good standing. The Borrower knows of no facts or conditions which would
constitute grounds for any Licensing Authority to deny any pending
application for a License, to suspend, revoke, materially adversely modify,
designate for hearing, annul, fail to renew on or before its renewal date
or renew for less than a full license period any License or to impose a
material financial penalty on the Borrower or any of its Subsidiaries. On
or before June 17, 1993, RKZ Television, Inc. (the "TV Subsidiary") made a
valid
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election of must carry with respect to each cable system located
within the Area of Dominant Influence of television station WJSU. No cable
system has advised the TV Subsidiary of any signal quality or copyright
indemnity or other prerequisite to cable carriage of the TV Subsidiary's
signal, and no such cable system has declined or threatened to decline such
carriage or failed to respond to a request for carriage or sought any form
of relief from carriage from the FCC.
5.17 MATERIAL RESTRICTIONS. Except as disclosed in this
Agreement or the Exhibits attached hereto, neither the Borrower nor any of
its Subsidiaries is a party to any agreement or other instrument or subject
to any other restriction which has had or could reasonably be expected to
have a Material Adverse Effect.
5.18 INVESTMENT COMPANY ACT. The Borrower (a) is not an
investment company as that term is defined in the Investment Company Act of
1940, as amended, (b) does not directly or indirectly control, and is not
directly or indirectly controlled by, a company which is an investment
company as that term is defined in such act and (c) is not otherwise
subject to regulation under such act.
5.19 ABSENCE OF MATERIAL ADVERSE CHANGES. No Material Adverse
Effect has occurred since December 31, 1994.
5.20 DEFAULTS. No Possible Default or Event of Default now
exists or will exist upon the making of any Loan.
5.21 REAL ESTATE. EXHIBIT K attached hereto lists all real
estate owned as of the Closing Date by the Borrower or any of its
Subsidiaries and all leases pursuant to which the Borrower or any of its
Subsidiaries has acquired, as of the Closing Date, a leasehold interest in
real estate. EXHIBIT K lists the use of such owned and leased property in
the Borrower's or its Subsidiary's operations and the Borrower's good faith
estimate of the fair market value of each such owned parcel.
5.22 SECURITIES LAWS. No proceeds of any Loan will be used by
the Borrower or any of its Subsidiaries to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange
Act of 1934, as amended. Neither the registration of any security under
the Securities Act of 1933, as amended, or the securities laws of any
state, nor the qualification of an indenture in respect thereof under the
Trust Indenture Act of 1939, as amended, is required in connection with the
consummation of this Agreement or the execution and delivery of the Notes.
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5.23 INSURANCE. All policies of insurance of any kind or nature
owned by or issued to the Borrower or any of its Subsidiaries are in
compliance with the requirements of Section 7.3 and are in full force and
effect. In the past three years neither the Borrower nor any of its
Subsidiaries has been refused insurance for which it applied or had any
policy of insurance terminated (except at its own request).
5.24 LABOR MATTERS. There are no material strikes, unfair labor
practice charges or other material labor disputes or grievances pending or,
to the best of the Borrower's knowledge, threatened against the Borrower,
any of its Subsidiaries, any Station, the Muzak Business or the Healthcare
Communications Business. The Borrower has not received any written
complaints or knowledge of any threatened complaints, nor to the best of
the Borrower's knowledge, are any such complaints on file with any Federal,
state or local governmental agency, alleging employment discrimination by
the Borrower or any of its Subsidiaries or in connection with any Station,
the Muzak Business or the Healthcare Communications Business. All payments
due under any collective bargaining agreement to which the Borrower or any
of its Subsidiaries is a party have been paid or accrued as a liability on
the books of the Borrower or such Subsidiary.
5.25 ENVIRONMENTAL COMPLIANCE.
Except as set forth in EXHIBIT L attached hereto:
(a) The Borrower and each of its Subsidiaries have obtained
all material permits, licenses and other authorizations which are required
under all Environmental Laws. The Borrower and each of its Subsidiaries is
in material compliance with all terms and conditions of all such permits,
licenses and authorizations and are also in material compliance with all
other applicable limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained
in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, including, without limitation,
all Environmental Laws in all jurisdictions in which the Borrower or such
Subsidiary owns or operates a Station, a facility or site, arranges or has
arranged for disposal or treatment of Hazardous Materials, solid waste or
other wastes, accepts or has accepted for transport any Hazardous
Materials, solid waste or other wastes or holds or has held any interest in
real property or otherwise.
(b) No material Environmental Claim has been issued, no
material complaint has been filed, no material penalty has been assessed
and no material litigation, proceeding, investigation or review is pending
or, to the best of the
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Borrower's knowledge, threatened by any Person with respect to any alleged
failure by the Borrower, any of its Subsidiaries or any property owned by
the Borrower or any Subsidiary to comply with any Environmental Law or to
have any permit, license or authorization required in connection with
the conduct of the business of the Borrower or any of its Subsidiaries or
with respect to any generation, treatment, storage, recycling,
transportation, use, disposal or Release of any Hazardous Materials
generated by the Borrower or any of its Subsidiaries or with respect
to any real property in which the Borrower or any of its Subsidiaries
holds or has held an interest or any past or present operation of the
Borrower or any of its Subsidiaries.
(c) There are no Environmental Laws requiring any material
work, repairs, construction, Capital Expenditures or other remedial work of
any nature whatsoever, with respect to any real property in which the
Borrower or any of its Subsidiaries holds an interest.
(d) Neither the Borrower nor any of its Subsidiaries has
handled any Hazardous Material, on any property now or previously owned or
leased by the Borrower or any of its Subsidiaries in a manner that has, or
could reasonably be expected to have, a Material Adverse Effect.
(e) To the best of the Borrower's knowledge:
(i) no PCBs or asbestos is present at any property now
or previously owned or any premises now or previously leased by the
Borrower or any of its Subsidiaries except to the extent permitted under
Environmental Laws;
(ii) no underground storage tanks for Hazardous
Materials, active or abandoned, are now or were previously operated at any
property now or previously owned by the Borrower or any of its
Subsidiaries, and, with respect to premises now or previously leased by the
Borrower or any of its Subsidiaries, no underground storage tanks for
Hazardous Materials, active or abandoned, are now or were previously
operated by the Borrower or any of its Subsidiaries; and
(iii) no Hazardous Materials have been Released at, on
or under any property now or previously owned or any premises now or
previously leased by the Borrower or any of its Subsidiaries to an extent
that it has, or could reasonably be expected to have, a Material Adverse
Effect.
(f) Neither the Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Material to
any location that is listed on the National Priorities List ("NPL") under
the Comprehensive
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Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), listed for possible inclusion on the NPL by
the Environmental Protection Agency in the Comprehensive Environmental
Response and Liability Information System, as provided for by 40 C.F.R.
Section 300.5 ("CERCLIS"), or on any similar state or local list or that
is the subject of Federal, state or local enforcement actions or other
investigations that may lead to Environmental Claims against the Borrower
or any of its Subsidiaries.
(g) No Hazardous Material generated by the Borrower or any
of its Subsidiaries has been recycled, treated, stored, disposed of or
Released by the Borrower or any of its Subsidiaries at any location in a
manner which could form the basis for a material Environmental Claim
against the Borrower or any of its Subsidiaries or any of the properties of
the Borrower or any of its Subsidiaries.
(h) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of the Borrower or any of
its Subsidiaries and no property now or previously owned or premises leased
by the Borrower or any of its Subsidiaries is listed or proposed for
listing on the National Priorities list promulgated pursuant to CERCLA, on
CERCLIS or on any similar state list of sites requiring investigation or
clean-up where such notification or listing could form the basis for a
material Environmental Claim against the Borrower or any of its
Subsidiaries or any of the properties of the Borrower or any of its
Subsidiaries.
(i) There are no Liens arising under or pursuant to any
Environmental Laws on any of the property owned or premises leased by the
Borrower or any of its Subsidiaries, and no government actions have been
taken or are in process which could subject any of such property to such
Liens, and, to the best of the Borrower's knowledge, neither the Borrower
nor any of its Subsidiaries would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any property
owned by it in any deed to such property.
(j) Neither the Borrower nor any of its Subsidiaries has
retained or assumed any liabilities (contingent or otherwise) in respect of
any Environmental Claims under the terms of any contract or agreement or by
operation of law as a result of the sale of assets or stock.
(k) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or which are
in the possession of the Borrower or any of its Subsidiaries in relation to
any property or facility
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now or previously owned or leased by the Borrower or such Subsidiary which
have not been made available to the Banks.
5.26 SOLVENCY. The Borrower has received, or has the right
hereunder to receive, consideration which is the reasonable equivalent
value of the obligations and liabilities that the Borrower has incurred to
the Banks. The Borrower is not insolvent as defined in Section 101 of
Title 11 of the United States Code or any applicable state insolvency
statute, nor, after giving effect to the consummation of the transactions
contemplated herein, will the Borrower be rendered insolvent by the
execution and delivery of this Agreement, the Notes or the Collateral
Documents to the Banks. The Borrower is not engaged or about to engage in
any business or transaction for which the assets retained by it shall be an
unreasonably small capital, taking into consideration the obligations to
the Banks incurred hereunder. The Borrower does not intend to, nor does it
believe that it will, incur debts beyond its ability to pay them as they
mature.
5.27 ATLANTIC CITY. Atlantic City has operated in such a manner
as not to give rise to any inference, or otherwise mislead third Persons to
believe, that (a) it is not an entity separate and distinct from the
Borrower and the Borrower's other Subsidiaries and (b) it is not solely
responsible for its debts, without any support from the Borrower or any of
its other Subsidiaries. Neither Borrower nor any of its Subsidiaries has
commingled assets or funds with Atlantic City. Neither Borrower nor any of
its other Subsidiaries has guaranteed any of Atlantic City's Indebtedness,
contingent obligations or other obligations nor do such Persons have a
subscription for any Indebtedness or capital stock of, or other investment
in, Atlantic City. There is no basis for any creditors of Atlantic City to
assert any bona fide claim against the Borrower or any of its other
Subsidiaries for the payment of the obligations of Atlantic City to such
creditor.
SECTION 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BANKS.
The obligations of the Banks to make any Loan and the performance
by the Banks of the other actions to be taken by them on or after the
Closing Date are subject to the fulfillment or waiver in writing of each of
the following conditions precedent. The Borrower shall deliver to the
Agent copies for each Bank of each document, instrument or other item to be
delivered pursuant to this Section 6.
6.1 COMPLIANCE. All of the representations and warranties of
the Borrower and its Subsidiaries in Section 5 hereof and in the Collateral
Documents shall be true in all material respects on and as of the Closing
Date and the date of
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any subsequent Loan, as if made on and as of such date and time, except
to the extent that such representations and warranties expressly
relate to an earlier date, in which case such representations and
warranties shall be true in all material respects as of such earlier date.
The Borrower and its Subsidiaries shall have performed and shall be in
compliance with all the applicable terms and provisions of this Agreement
and the Collateral Documents and no Possible Default or Event of Default
shall have occurred and be continuing, on and as of the Closing Date and
the date of any subsequent Loan or after giving effect to the making of
such Loan. On the Closing Date, the Borrower shall deliver to the Banks a
certificate, dated as of the Closing Date and signed by an executive
officer of the Borrower certifying compliance with the conditions of this
Section 6.1. Each request by the Borrower for a Loan shall, in and of
itself, constitute a representation and warranty that the Borrower, as of
the date of such Loan, is in compliance with this Section.
6.2 SECURITY AGREEMENTS.
(a) The Borrower shall have executed and delivered to the
Agent a Security Agreement in form and substance satisfactory to the Agent
(the "Borrower Security Agreement"), granting to the Agent, for the benefit
of the Banks, a first priority security interest in substantially all of
the Borrower's personal property; and the Borrower Security Agreement, and
the security interests granted pursuant thereto, shall be in full force and
effect.
(b) Each Subsidiary of the Borrower (other than Gadsden)
shall have executed and delivered to the Agent a Security Agreement in form
and substance satisfactory to the Agent (the "Subsidiary Security
Agreement"), granting to the Agent, for the benefit of the Banks, a first
priority security interest in substantially all of such Subsidiary's
personal property; and the Subsidiary Security Agreement, and the security
interests granted pursuant thereto, shall be in full force and effect.
6.3 PLEDGE AGREEMENTS.
(a) The Borrower shall have executed and delivered to the
Agent a Pledge Agreement in form and substance satisfactory to the Agent
(the "Borrower Pledge Agreement"), granting to the Agent, for the benefit
of the Banks, a first priority security interest in all of the issued and
outstanding capital stock of each direct Subsidiary of the Borrower held by
the Borrower (other than Atlantic City); the Borrower shall have delivered
to the Agent stock certificates evidencing all of such stock and duly
executed blank stock powers in respect thereof and shall have taken all
other actions as may be required to effect
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the grant and perfection of the Agent's security interest in such stock;
and the Borrower Pledge Agreement, and the security interests granted
pursuant thereto, shall be in full force and effect.
(b) Each stockholder of an indirect Subsidiary of the
Borrower shall have executed and delivered to the Agent a Pledge Agreement
in form and substance satisfactory to the Agent (the "Subsidiary Pledge
Agreement"), granting to the Agent, for the benefit of the Banks, a first
priority security interest in all of the issued and outstanding capital
stock of such indirect Subsidiary (other than Gadsden) of which it is a
stockholder; each such stockholder shall have delivered to the Agent stock
certificates evidencing all of such stock and duly executed blank stock
powers in respect thereof and shall have taken all other actions as may be
required to effect the grant and perfection of the Agent's security
interest in such stock; and the Subsidiary Pledge Agreement, and the
security interests granted pursuant thereto, shall be in full force and
effect.
6.4 REAL ESTATE MATTERS.
(a) With respect to each parcel of real property owned by
the Borrower or any of its Subsidiaries (other than Gadsden), the Borrower
or such Subsidiary shall (on or prior to the Closing Date with respect to
real property owned as of the Closing Date and, with respect to real
property thereafter acquired, after acquisition thereof in accordance with
Section 7.9 hereof) have executed and delivered a first priority mortgage
or deed of trust, in form and substance reasonably satisfactory to the
Agent, covering such parcel of real property. With respect to each parcel
of real property leased by the Borrower or any of its Subsidiaries (other
than Gadsden and Atlantic City), the Borrower or such Subsidiary shall (on
or prior to the Closing Date with respect to leases held as of the Closing
Date listed on Schedule 6.4(a) hereto and, with respect to leases
thereafter acquired, promptly after acquisition thereof in accordance with
Section 7.4 hereof) have executed and delivered a first priority leasehold
mortgage, in form and substance reasonably satisfactory to the Agent,
covering such leasehold interest. With respect to each of the real
property leases listed on Schedule 6.4(b) hereto, the Borrower or the
Subsidiary which is tenant thereunder shall deliver a collateral assignment
of lease in form and substance reasonably satisfactory to the Agent. Such
mortgages, deeds of trust and leasehold mortgages may be referred to
hereinafter collectively as the "Mortgages". Each Mortgage shall have been
duly recorded, and the Borrower shall have paid all taxes, fees or charges
incurred in connection with the execution or recording thereof.
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(b) The Borrower shall have procured and delivered to the
Agent a commitment from a title insurance company reasonably satisfactory
to the Agent (the "Title Company") for an ALTA mortgagee's policy of title
insurance (Form 1970 if available, or 1984 or 1990 with 1970 Endorsement)
covering each parcel of real estate owned by the Borrower or any of its
Subsidiaries and subject to a Mortgage, which policy shall be for the
benefit of the Agent on behalf of the Banks and in form and in an amount
reasonably satisfactory to the Agent and shall insure that such Mortgage is
a valid first mortgage lien on the property covered thereby. Such policy
shall, to the extent available at commercially reasonable rates and
appropriate: (i) insure title to the real property and all recorded
easements benefitting such real property, (ii) contain an "Extended
Coverage Endorsement" insuring over the general exceptions contained
customarily in such policy, (iii) contain an endorsement insuring that the
real property described in the title insurance policy is the same real
estate as shown on the survey, if any, delivered with respect to such
property, (iv) contain an endorsement insuring that each street adjacent to
the real property is a public street and that there is direct and
unencumbered pedestrian and vehicular access to such street from the real
property, (v) if the real property consists of more than one record parcel,
contain a "contiguity" endorsement, if applicable, insuring that all of the
record parcels are contiguous to one another, and (vi) contain appropriate
endorsements insuring against encroachments. No title indemnities shall be
established in connection with the issuance of the aforesaid lender's title
insurance policy.
(c) With respect to each parcel of real property owned by
the Borrower and subject to a Mortgage, the Borrower shall have procured
and delivered to the Agent evidence as to whether such parcel of property
is located within a flood hazard area for purposes of the National Flood
Insurance Act of 1968, as amended.
(d) The Borrower shall obtain from each lessor under a
lease, in respect of which the Borrower or any of its Subsidiaries has
granted to the Agent a Mortgage, written consent to such grant in form and
substance reasonably satisfactory to the Agent. The Borrower shall use
commercially reasonable efforts to obtain from each lessor under a lease of
which the Borrower or any of its Subsidiaries has granted to Agent a
collateral assignment of lease, written consent to such Agent.
(e) The Borrower shall have provided to the Agent copies of
(i) Phase I environmental surveys, acceptable to the Agent, with respect to
each parcel of real estate owned by the Borrower or any of its
Subsidiaries, (ii) to the extent available, all environmental surveys or
audits performed during
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the past five years in connection with each of the parcels of real estate
which is subject to a Mortgage, and the results of a search of the public
records of the authorities in the relevant jurisdictions responsible for
environmental matters with respect to any proceeding or action affecting
any parcel of real estate which is subject o a Mortgage and (iii) such
other evidence concerning compliance (both past and present) with
Environmental Laws by the Borrower and its Subsidiaries as the Agent may
reasonably request. The results of each Phase I environmental survey
shall be reasonably satisfactory to the Agent.
(f) The Agent shall have received, with respect to each of
the properties listed on Schedule 6.4(f) hereto, a survey (collectively,
the "Surveys") of each parcel of real estate owned by the Borrower or any
of its Subsidiaries, dated not more than ninety days prior to the Closing
Date, certified to the Agent, made in accordance with the "Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys" established and
adopted by the American Land Title Association and American Congress on
Surveying and Mapping in 1992, showing all buildings and other
improvements, if any, all encroachments, if any, all set-back lines, if
any, and all areas affected by any easements or other instruments of
record, if any (the recording data in respect of which shall be marked on
the survey), containing metes and bounds description of such parcel,
setting forth the flood zone designations, if any, in which such parcel is
located.
6.5 FINANCING STATEMENTS. Any financing statements or fixture
filings required by the Security Agreements, the Pledge Agreements and the
Mortgages shall have been filed for record with the appropriate
governmental authorities.
6.6 SUBSIDIARY GUARANTY. Each Subsidiary of the Borrower (other
than Gadsden) shall have executed and delivered to the Agent, for the
benefit of the Banks, a guaranty (the "Guaranty"), in form and substance
satisfactory to the Agent, pursuant to which each such Subsidiary
guarantees the Obligations of the Borrower to the Bank.
6.7 COLLATERAL ASSIGNMENT OF KEY MAN LIFE INSURANCE. The
Borrower shall have executed and delivered to the Agent a collateral
assignment of the key man life insurance policy required pursuant to
Section 7.3, in form and substance satisfactory to the Agent (the "Life
Insurance Assignment"), granting to the Agent, for the benefit of the
Banks, a security interest in the Borrower's right, title and interest in
and to such policy.
6.8 OPINION OF BORROWER'S COUNSEL. On the Closing Date, the
Agent shall have received the favorable written opinions of special counsel
to the Borrower and the Subsidiaries,
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of FCC counsel to the Borrower and the Subsidiaries, and of such local counsel
as the Agent may request, in each case dated the Closing Date, addressed to
the Banks and in form and substance satisfactory to the Agent.
6.9 FINANCIAL INFORMATION.
(a) OPERATING CASH FLOW. The Borrower shall have delivered
to the Agent on or prior to the Closing Date a certificate, in form and
substance satisfactory to the Agent, signed by a firm of independent
certified public accountants acceptable to the Agent setting forth
Operating Cash Flow for the twelve month period ending no earlier than
thirty days prior to the Closing Date, together with a detailed calculation
thereof, which certificate shall also set forth all of the operating
revenues and expenses of the Stations, the Muzak Business and the
Healthcare Communications Business.
(b) PRO FORMA FINANCIAL STATEMENTS. On the Closing Date,
the Borrower shall have delivered to the Agent a consolidated pro forma
balance sheet and income statement as of the Closing Date giving effect to
the closing under this Agreement.
6.10 ENGINEER'S REPORT. On the Closing Date, the Borrower shall
have delivered to the Agent a detailed engineering report from the
Borrower's engineer, acceptable in form and substance to the Agent,
certifying that the construction, engineering, installation and operation
of each Station and the communications facilities and equipment included in
the Muzak Business or the Healthcare Communications Business conform in all
material respects with generally accepted standards of good engineering
practice and comply with all laws, rules and regulations of each
governmental authority and agency having jurisdiction over such Station,
facilities and equipment. Such certificate shall also list any material
equipment problems at any Station or relating to the Muzak Business or the
Healthcare Communications Business and any material upgrades of equipment
which are currently, or which will within six months be, required at any
Station or in connection with the Muzak Business or the Healthcare
Communications Business.
6.11 DUE DILIGENCE INVESTIGATION. On or prior to the Closing,
the Agent shall have conducted a due diligence investigation of the
Borrower, its Subsidiaries, their respective properties and businesses, and
the results of such investigation shall have been satisfactory to the
Agent.
6.12 BORROWING REQUEST. On the date of each Loan, the Borrower
shall have delivered to the Agent a borrowing request for such Loan in form
and substance satisfactory to the Agent,
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setting forth the application of the proceeds of such Loan, evidence that
such application is permitted pursuant to Section 7.1, and showing the
recipient, the amount of the payment and the wire transfer instructions.
6.13 INSURANCE CERTIFICATES. On the Closing Date, the Borrower
shall have furnished to the Agent certificates of insurance together with
copies, if requested by the Agent, of all policies or other satisfactory
evidence that the insurance required by Section 7.3 is in full force and
effect.
6.14 CORPORATE DOCUMENTS. On the Closing Date, the Borrower
shall deliver to the Agent the following:
(a) certificates of good standing for the Borrower and each
of its Subsidiaries from the Secretary of State of its state of
incorporation and from the Secretary of State of each other state in which
such corporation is qualified or registered to do business, in each case
dated as of a date as near to the Closing Date as practicable;
(b) a certificate signed by the Secretary or Assistant
Secretary of the Borrower, dated as of the Closing Date, certifying that
attached thereto are true and complete copies of (i) the Certificate of
Incorporation and By-Laws of the Borrower, (ii) the Certificate or Articles
of Incorporation and By-Laws of each of the Borrower's Subsidiaries, and
(iii) resolutions adopted by the respective Boards of Directors of the
Borrower and each of its Subsidiaries, authorizing the execution, delivery
and performance of this Agreement, the Collateral Documents and the
Obligations;
(c) incumbency certificates for the Borrower and each of
its Subsidiaries; and
(d) such other documents as any Bank may reasonably request
in connection with the proceedings taken by the Borrower or any of its
Subsidiaries authorizing this Agreement and the Collateral Documents.
6.15 LIEN SEARCHES, CONSENTS AND RELEASES OF LIENS. The Agent
shall have received: (a) certified copies of UCC search reports listing all
effective financing statements that name the Borrower or any of its
Subsidiaries as debtor together with copies of all such financing
statements, (b) consents to the granting of Liens in all Operating
Agreements, Muzak Franchises and other material contracts and leases of the
Borrower and each of its Subsidiaries, which by their terms require such
consent, and (c) releases of any existing Liens encumbering any assets of
the Borrower or any of its Subsidiaries, except for Permitted Liens.
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6.16 NO ORDER, JUDGMENT OR DECREE. No order, judgment or decree
of any court, arbitrator or governmental authority shall purport to enjoin
or restrain the Banks from making the Loans.
6.17 FEE LETTER; FEES AND EXPENSES. The Borrower shall have
executed and delivered to the Agent a fee letter in form and substance
reasonably satisfactory to the Agent, and the Borrower shall have paid all
fees, expenses and other amounts due pursuant hereto and thereto.
6.18 LEGAL APPROVAL. All legal matters incident to this
Agreement and the consummation of the transactions contemplated hereby
shall be satisfactory to Dow, Lohnes & Albertson, special counsel to the
Agent.
6.19 OTHER DOCUMENTS. The Agent shall have received all
Collateral Documents duly executed, and each Bank shall have received such
other certificates, opinions, agreements and documents, in form and
substance satisfactory to it, as it may reasonably request.
SECTION 7 AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower agrees with the Banks that so long as this Agreement
shall remain in effect or any of the Obligations shall remain unpaid or to
be performed, it shall perform and comply with the affirmative covenants
contained in this Section.
7.1 USE OF PROCEEDS. The Borrower shall use the proceeds of the
Reducing Loans only for the following purposes: (a) to pay at Closing
existing Indebtedness in an amount not to exceed $51,210,000, (b) to pay
the purchase price of Permitted Acquisitions, (c) for Capital Expenditures
to the extent permitted pursuant to Section 8.7, (d) for working capital
purposes (including the payment of closing costs in connection with this
Agreement), and (e) for repurchases of the stock of the Borrower to the
extent permitted pursuant to Section 8.9(a)(ii). The Borrower shall use
the proceeds of the Acquisition Loans only for Permitted Acquisitions, but
no Acquisition Loan shall be made at any time that there is availability
under the Revolving Commitment.
7.2 CONTINUED EXISTENCE; MAINTENANCE OF RIGHTS AND LICENSES;
COMPLIANCE WITH LAW. Except for the merger or liquidation into the
Borrower or a wholly owned Subsidiary of the Borrower of an inactive
Subsidiary or of a Subsidiary which has sold substantially all of its
assets pursuant to a Permitted Divestiture or pursuant to a sale otherwise
permitted pursuant to
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Section 8.10, the Borrower shall, and shall cause each of its Subsidiaries
to, do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its corporate existence and its material
rights and Licenses. Without limiting the generality of the foregoing,
the Borrower shall, and shall cause each of its Subsidiaries to,
maintain in full force and effect, until termination in accordance with
their respective terms, any and all Licenses, Operating Agreements and
other material contracts and other rights necessary to operate the
Stations, the Muzak Business and the Healthcare Communications Business,
not breach or violate the same in any material respect, and take all
actions which may be required to comply in all material respects with all
applicable laws, statutes, rules, regulations, orders and decrees now in
effect or hereafter promulgated by any governmental authority. The
Borrower shall, and shall cause each of its Subsidiaries to, obtain, renew
and extend all of the foregoing rights, Licenses and the like which may be
necessary for the continuance of the operation of the Stations, the Muzak
Business and the Healthcare Communications Business. The Borrower shall
use its best efforts to obtain any consents listed on EXHIBIT H attached
hereto which were not obtained on or prior to the Closing Date.
7.3 INSURANCE.
(a) The Borrower shall, and shall cause each of its
Subsidiaries to, keep its insurable properties insured to the full
replacement cost thereof at all times by financially sound and reputable
insurers reasonably acceptable to the Agent, and maintain such other
insurance, to such extent and against such risks, including fire,
lightning, vandalism, malicious mischief, flood (to the extent required by
the Agent, if any of the Borrower's or any of its Subsidiaries' property is
located in an identified flood hazard area, in which insurance has been
made available pursuant to the National Flood Insurance Act of 1968) and
other risks insured against by extended coverage, as is customary with
companies in the broadcasting business. All such insurance shall be in
amounts sufficient to prevent the Borrower or any of its Subsidiaries from
becoming a coinsurer, shall name the Agent, for the benefit of the Banks,
as loss payee and may contain loss deductible provisions which shall not
exceed $10,000. The Borrower shall maintain, for itself and its
Subsidiaries, in full force and effect liability insurance, business
interruption insurance, errors and omissions insurance, general accident
and public liability insurance and all other insurance as is usually
carried by companies engaged in the same or similar businesses similarly
situated against claims for personal or bodily injury, death or property
damage occurring upon, in, about or in connection with the use or operation
of any property or motor vehicles owned, occupied, controlled or used by
the Borrower, its Subsidiaries and their employees or agents, or
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arising in any other manner out of the business conducted by the Borrower
and its Subsidiaries. All of such insurance shall be in amounts reasonably
satisfactory to the Agent and shall be obtained and maintained by means of
policies with generally recognized, responsible insurance companies
authorized to do business in such states as may be necessary depending upon
the locations of the Borrower's and its Subsidiaries' assets and shall name
the Agent, for the benefit of the Banks, as an additional insured or loss
payee, as the case may be. The insurance to be provided may be blanket
policies. Each policy of insurance shall be written so as not to be
subject to cancellation or substantial modification without not less than
thirty days advance written notice to the Agent. The Borrower shall
furnish the Agent annually with certificates or other evidence satisfactory
to the Agent that the insurance required hereby has been obtained and is in
full force and effect and, prior to the expiration of any such insurance,
the Borrower shall furnish the Agent with evidence satisfactory to the
Agent that such insurance has been renewed or replaced. The Borrower
shall, upon request of the Agent, furnish the Agent such information about
such insurance as the Agent may from time to time reasonably request.
(b) The Borrower shall maintain key man life insurance
policies with responsible insurance carriers and pursuant to insurance
policies reasonably acceptable to the Agent, covering Mr. Frank Osborn in
an amount of not less than $5,000,000, and all such policies shall be
collaterally assigned to the Agent, for the benefit of the Banks, pursuant
to the Life Insurance Assignment, as security for the Obligations.
7.4 OBLIGATIONS AND TAXES. The Borrower shall, and shall cause
each of its Subsidiaries to, pay or perform all of its material
Indebtedness and other material liabilities and obligations in a timely
manner in accordance with normal business practices and with the terms
governing the same. The Borrower shall, and shall cause each of its
Subsidiaries to, comply with the terms and covenants of all material
agreements and all material leases of real or personal property and shall
keep them all in full force and effect until termination thereof in
accordance with their respective terms. The Borrower shall, and shall
cause each of its Subsidiaries to, pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon it or in
respect of its property before the imposition of any penalty, as well as
all lawful claims for labor, materials, supplies or other matters which, if
unpaid, might become a Lien or charge upon such properties or any part
hereof; PROVIDED, HOWEVER, that neither the Borrower nor any of its
Subsidiaries shall be required to pay and discharge any such tax,
assessment, charge, levy or claim so long as (a) the validity thereof is
being contested diligently and in good faith
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by appropriate proceedings and the enforcement thereof is stayed, pending the
outcome of such proceedings, (b) the Borrower or such Subsidiary has set
aside on its books adequate reserves in accordance with GAAP with respect
thereto, and (c) such contest will not endanger the Lien of the Agent in
any of the Borrower's or such Subsidiary's assets.
7.5 FINANCIAL STATEMENTS AND REPORTS. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain true and complete books
and records of account in accordance with GAAP. The Borrower shall furnish
to the Agent, for delivery to the Banks, the following financial statements
and projections at the following times:
(a) As soon as available, but in no event later than ninety
days after the end of each fiscal year of the Borrower, the Borrower shall
furnish (i) audited consolidated financial statements, including audited
consolidated balance sheets and income and expense statements, showing the
financial condition of the Borrower and its Subsidiaries as of the close of
such fiscal year and the results of their operations during such fiscal
year, and a consolidated statement of cash flows for such fiscal year,
together with such additional statements, schedules and footnotes as are
customary in a complete accountant's report (such financial statements
shall be certified by independent certified public accountants selected by
the Borrower and reasonably acceptable to the Agent and the opinion of such
accountants shall be unqualified); (ii) a copy of each management letter of
such accountants to the Borrower in respect of such annual financial
statements promptly after receipt thereof but in no event later than May 31
of each year; and (iii) a statement signed by such accountants to the
effect that in connection with their examination of such financial
statements they have reviewed the provisions of this Agreement and have no
knowledge of any event or condition which constitutes an Event of Default
or Possible Default or, if they have such knowledge, specifying the nature
and period of existence thereof; PROVIDED, HOWEVER, that in issuing such
statement, such independent accountants shall not be required to go beyond
normal auditing procedures conducted in connection with their opinion
referred to above;
(b) As soon as available, but in no event later than forty-
five days after the end of each fiscal quarter of the Borrower, the
Borrower shall furnish unaudited consolidated and consolidating financial
statements, including consolidated and consolidating balance sheets and
income and expense statements, showing the financial condition of the
Borrower and its Subsidiaries as of the end of such period and the results
of their operations during such period and for the then elapsed portion of
the fiscal year, and a consolidated and consolidating statement of cash
flows for the portion of the fiscal year ended
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with the last day of such quarter; all such financial statements shall set
forth, in comparative form, corresponding figures for the equivalent period
of the prior year and a comparison to budget, shall be in form and detail
satisfactory to the Agent, and shall be certified as to accuracy and
completeness by the chief financial officer of the Borrower;
(c) As soon as available, but in no event later than thirty
days after the end of each month, the Borrower shall furnish unaudited
statements of income and expense for each Station, the Muzak Business and
the Healthcare Communications Business, which shall contain a comparison
with the budget or projections for such period and a comparison to the
comparable period for the prior year, and which shall be certified by the
chief financial officer of the Borrower;
(d) The financial statements required under (a) and (b)
above shall be accompanied by a compliance certificate in the form attached
hereto as EXHIBIT M of the chief financial officer of the Borrower (i)
setting forth the computations showing compliance with the financial
covenants set forth in Section 8 below, and (ii) certifying that no
Possible Default or Event of Default has occurred, or if any Possible
Default or Event of Default has occurred, stating the nature thereof and
the actions the Borrower intends to take in connection therewith;
(e) The Borrower shall furnish (i) no later than the
fifteenth day of the first month of each fiscal year, an annual operating
budget or fiscal projections for such fiscal year, and (ii) promptly upon
preparation thereof, any material revisions of such annual budget or fiscal
projections;
(f) Promptly upon their becoming available, the Borrower
shall furnish (i) copies of any periodic or special reports filed by the
Borrower or any of its Subsidiaries with the FCC or any other federal,
state or local governmental agency or authority if such reports indicate
any material change in the ownership of the Borrower or such Subsidiary, or
any materially adverse change in the business, operations, affairs or
condition of the Borrower or such Subsidiary, (ii) copies of any material
notices and other material communications from the FCC or any other
federal, state or local governmental agency or authority which specifically
relate to the Borrower, any of its Subsidiaries, any Station or any
material License, and the substance of which relates to a matter that could
reasonably be expected to have a Material Adverse Effect, and (iii) copies
of the results of each survey conducted by the Borrower or any of its
Subsidiaries for the purpose of certifying to the FCC compliance with
federal laws and the rules, regulations, policies and orders of the FCC
relating to foreign ownership restrictions
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and to limitations on the nature and number of media outlets that may be
held under common ownership or control;
(g) Promptly upon their becoming available, the Borrower
shall furnish (i) copies of any registration statements and regular
periodic reports, if any, which the Borrower or any of its Subsidiaries
shall have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities
exchange, (ii) copies of all financial statements, reports and proxy
statements mailed to its public stockholders, and (iii) all press releases
and other public statements made available by the Borrower;
(h) The Borrower shall furnish (i) upon request, promptly
after the filing thereof with the Internal Revenue Service, copies of each
annual report with respect to each Plan established or maintained by the
Borrower or any member of the Controlled Group for each plan year,
including (A) where required by law, a statement of assets and liabilities
of such Plan as of the end of such plan year and statements of changes in
fund balance and in financial position, or a statement of changes in net
assets available for plan benefits, for such plan year, certified by an
independent public accountant satisfactory to the Agent, and (B) if
prepared by or available to the Borrower, an actuarial statement of such
Plan applicable to such plan year, certified by an enrolled actuary of
recognized standing acceptable to the Agent; and (ii) promptly after
receipt thereof, a copy of any notice the Borrower or a member of the
Controlled Group may receive from the Department of Labor or the Internal
Revenue Service with respect to any Plan (other than notices of general
application) which could result in a material liability to the Borrower;
the Borrower will promptly notify the Banks of any material taxes assessed,
proposed to be assessed or which the Borrower has reason to believe may be
assessed against the Borrower or any member of the Controlled Group by the
Internal Revenue Service with respect to any Plan or Benefit Arrangement;
and
(i) Upon the Agent's written request, such other
information about the financial condition, properties and operations of the
Borrower or any of its Subsidiaries as any Bank may from time to time
reasonably request.
7.6 NOTICES. The Borrower shall give the Agent, for
distribution to the Banks, notice (a) within five days after its receipt of
notice thereof, of any action, suit, investigation or proceeding by or
against the Borrower or any of its Subsidiaries, which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect,
including, without limitation, any material admonition, censure or adverse
citation or order by the FCC or any other governmental authority or
regulatory agency, (b) within three days after its receipt of notice
thereof, (i) of
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any action or event constituting an event of default or violation of
any License, Operating Agreement, Muzak Franchise or other material
contract to which the Borrower or any of its Subsidiaries is a party
or by which the Borrower or any such Subsidiary is bound, and (ii) of
any competing application, petition to deny or other opposition to any
license renewal application filed by the Borrower or any of its
Subsidiaries with the FCC, if such event of default, violation or other
matter could reasonably be expected to have a Material Adverse Effect, (c)
within three days after its receipt of notice thereof, of the occurrence of
any Possible Default or Event of Default and the actions the Borrower
intends to take in connection therewith, (d) within five days after its
receipt of notice thereof, of any cancellation of or any material amendment
to any of the insurance policies maintained in accordance with the
requirements of this Agreement, except for cancellations and amendments
that occur in the ordinary course of business, (e) promptly after the
occurrence thereof, of any material, adverse change in the business or
financial condition of the Borrower or any of its Subsidiaries, and (f)
promptly after the occurrence thereof, of any material strike, labor
dispute, slow down or work stoppage due to a labor disagreement (or any
material development regarding any thereof) affecting the Borrower or any
of its Subsidiaries.
7.7 MAINTENANCE OF PROPERTY. The Borrower shall, and shall
cause each of its Subsidiaries to, at all times maintain and preserve its
towers, machinery, equipment, motor vehicles, fixtures and other property
in good working order, condition and repair, normal wear and tear excepted,
and in compliance with all material applicable standards, rules or
regulations imposed by any governmental authority or agency (including,
without limitation, the FCC, the Federal Aviation Administration or any
other Licensing Authority) or policy of insurance, except for such property
which, in the judgment of the Borrower, is no longer necessary to the
business of the Borrower or any of its Subsidiaries.
7.8 INFORMATION AND INSPECTION. The Borrower shall furnish to
the Agent and the Banks from time to time, promptly upon request,
information reasonably requested by the Agent or any Bank pertaining to any
covenant, provision or condition hereof, or to any matter connected with
the books, records, operations, financial condition, properties, activities
or business of the Borrower or of any of its Subsidiaries. At all
reasonable times, the Borrower shall permit any authorized representative
designated by any Bank to visit and inspect any of the properties of the
Borrower or any of its Subsidiaries, and their books and records, and to
take extracts therefrom and make copies thereof, and to discuss the
Borrower's and its Subsidiaries' affairs, finances and accounts with the
management
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of the Borrower and its Subsidiaries and with the Borrower's independent
accountants.
7.9 MAINTENANCE OF LIENS. The Borrower shall do all things
necessary or requested by the Agent to preserve and perfect the Liens of
the Agent, for the benefit of the Banks, arising pursuant hereto and
pursuant to the Collateral Documents as first Liens, except for Permitted
Liens, and to insure that the Agent, for the benefit of the Banks, has a
Lien on substantially all of the assets of the Borrower and its
Subsidiaries (other than Gadsden, except as provided in Section 7.15). If
the Borrower or any of its Subsidiaries purchases any real property, the
Borrower or such Subsidiary shall notify the Agent and, within thirty days
of such purchase, execute, deliver and cause to be recorded a Mortgage in
connection therewith, which shall be a first lien, except for Permitted
Liens and take such other actions as would have been required pursuant to
Section 6.4 had such property been owned on the Closing Date. If the
Borrower or any of its Subsidiaries enters into a new Operating Agreement
or other material contract or lease which prohibits the assignment thereof
or the granting of a security interest therein without the consent of the
other party, the Borrower shall use commercially reasonable efforts to
obtain the written consent of such other party to the grant to the Agent,
for the benefit of the Banks, of a security interest therein pursuant to
the Security Agreements.
7.10 TITLE TO PROPERTY. The Borrower shall, and shall cause
each of its Subsidiaries to, own and hold title to all of its assets in its
own name and not in the name of any nominee.
7.11 ENVIRONMENTAL COMPLIANCE AND INDEMNITY.
(a) The Borrower shall, and shall cause each of its
Subsidiaries to, comply in all material respects with any and all
applicable Environmental Laws, including, without limitation, all
Environmental Laws in jurisdictions in which the Borrower or any of its
Subsidiaries owns or operates a facility or site, arranges for disposal or
treatment of Hazardous Materials, solid waste or other wastes, accepts for
transport any Hazardous Materials, solid wastes or other wastes or holds
any interest in real property or otherwise except where the failure to do
so would not reasonably be expected to have, either individually or in
aggregate, a Material Adverse Effect. The Borrower and each of its
Subsidiaries shall promptly take any and all necessary remedial actions in
response to the presence, storage, use, transportation or Release of any
Hazardous Materials on, under or about any real property owned, leased or
operated by the Borrower or any of its Subsidiaries, unless such presence,
storage, use, transportation or Release would not reasonably be expected to
have a Material Adverse Effect. In the event the Borrower or any of its
Subsidiaries undertakes any remedial action with respect
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to any Hazardous Material on, under or about any real property owned, leased
or operated by the Borrower or any of its Subsidiaries, the Borrower or the
relevant Subsidiary shall conduct and complete such remediation action in
compliance with applicable Environmental Laws, and in accordance with the
policies, orders and directives of all federal, state and local governmental
authorities, except where the liability of the Borrower or such Subsidiary
for such presence, storage, use, transportation or Release of any Hazardous
Material is being contested in good faith by the Borrower or such
Subsidiary and appropriate reserves therefor have been established in
accordance with GAAP. The Borrower shall notify the Banks promptly after
its receipt of notice thereof, of any Environmental Claim which the
Borrower receives involving any potential or actual material liability of
the Borrower or any of its Subsidiaries arising in connection with any
noncompliance with or violation of the requirements of any Environmental
Law or a material Release or threatened Release of any Hazardous Materials,
solid waste or other waste into the environment. The Borrower shall
promptly notify the Banks (i) of any material Release of Hazardous Material
on, under or from the real property in which the Borrower or any of its
Subsidiaries holds or has held an interest, upon the Borrower's learning
thereof by receipt of notice that the Borrower or any of its Subsidiaries
is or may be liable to any Person as a result of such Release or that the
Borrower or such Subsidiary has been identified as potentially responsible
for, or is subject to investigation by any governmental authority relating
to, such Release, and (ii) of the commencement or threat of any judicial or
administrative proceeding alleging a violation of any Environmental Laws.
(b) If the Agent at any time has a reasonable basis to
believe that there may be a violation of any Environmental Law by, or any
liability arising thereunder of, the Borrower or any of its Subsidiaries or
related to any real property owned, leased or operated by the Borrower or
any of its Subsidiaries or real property adjacent to such real property,
which violation or liability would reasonably be expected to have a
Material Adverse Effect, then the Borrower shall, upon request from the
Agent, provide the Agent with such reports, certificates, engineering
studies or other written material or data as the Agent may require so as to
satisfy the Agent that the Borrower or such Subsidiary is in material
compliance with all applicable Environmental Laws relating to the suspected
violation or liability.
(c) The Borrower shall defend, indemnify and hold the Agent
and the Banks, and their respective officers, directors, shareholders,
employees, agents, affiliates, successors and assigns harmless from and
against all costs, expenses, claims, demands, damages, penalties and
liabilities of every kind or nature whatsoever incurred by them (including
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reasonable attorneys fees) arising out of, resulting from or relating to
(i) the noncompliance of the Borrower, any of its Subsidiaries or any
property owned or leased by the Borrower or any of its Subsidiaries with
any Environmental Law (whether or not such non-compliance is disclosed to
the Agent or the Banks herein, in any Collateral Document or otherwise), or
(ii) any investigatory or remedial action involving the Borrower, any of
its Subsidiaries or any property owned or leased by the Borrower or any of
its Subsidiaries and required by Environmental Laws or by order of any
governmental authority having jurisdiction under any Environmental Laws, or
(iii) any injury to any person whatsoever or damage to any property arising
out of, in connection with or in any way relating to the breach of any of
the environmental warranties or covenants contained in this Agreement or
any facts or circumstances that cause any of the environmental
representations or warranties contained in this Agreement to cease to be
true, or (iv) the existence, treatment, storage, Release, generation,
transportation, removal, manufacture or other handling of any Hazardous
Material on or affecting any property owned or leased by the Borrower or
any of its Subsidiaries, or (v) the presence of any asbestos-containing
material or underground storage tanks, whether in use or closed, under or
on any property owned or leased by the Borrower or any of its Subsidiaries;
PROVIDED, HOWEVER, that the foregoing indemnity shall not apply to any such
costs, expenses, claims, demands, damages, penalties or liabilities that
arise solely out of the gross negligence or willful misconduct of the
indemnified person.
7.12 RATE HEDGING OBLIGATIONS. Within sixty days after the
Closing Date, the Borrower shall enter into, and shall at all times
thereafter maintain in full force and effect, agreements in form and
substance reasonably satisfactory to the Agent regarding Rate Hedging
Obligations so that the notional amount subject to such agreements equals
at all times at least 50% of the principal amount of the Loans then
outstanding; PROVIDED, HOWEVER, that the Borrower shall not be required to
maintain such agreements at any time that the ratio of Total Debt to
Operating Cash Flow for the most recently ended four quarter period is less
than or equal to 3.0 to 1.0.
7.13 FCC CONSENTS. The Borrower acknowledges that certain
transactions contemplated by this Agreement or the Collateral Documents,
and certain actions which may be taken by the Agent or the Banks in the
exercise of their rights under this Agreement or the Collateral Documents,
may require the consent of the FCC. If counsel to the Agent determines
that the consent of the FCC is required in connection with the execution,
delivery and performance of any of the aforesaid documents or any documents
delivered to the Agent or the Banks in connection therewith or as a result
of any action which may be taken pursuant thereto, then the Borrower, at
its sole cost and
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expense, shall use its best efforts to secure such consent and to cooperate
with the Agent and the Banks in any action commenced by the Agent or the
Banks to secure such consent. The Borrower shall not take any action
which interferes with the exercise or completion of any such action
taken by the Agent or the Banks. The Borrower further consents to
the transfer of control or assignment of Licenses to a receiver or
trustee or similar official or to any purchaser of the collateral
securing the Loans pursuant to any public or private sale, judicial sale,
foreclosure or exercise of other remedies available to the Agent or the
Banks as permitted by applicable law upon the occurrence of an Event of
Default.
7.14 APPRAISALS. If at any time any Bank determines that it
must have current appraisals of any of the real property subject to a
Mortgage to comply with any law, rule or regulation applicable to it, then,
upon request by such Bank, the Borrower shall, at its expense, order
appraisals of all of such real property. Such appraisals shall be in form
and substance reasonably acceptable to the Banks, shall be prepared by
appraisers reasonably acceptable to the Banks and shall be delivered to the
Agent within forty-five days of the request therefor.
7.15 GADSDEN AND ATLANTIC CITY.
(a) GADSDEN.
(i) Within ten Banking Days of the earlier of the
termination of the Trust Agreement or the reversion of the voting rights
relating to the capital stock of Gadsden from the trustee thereunder to
Southeast Radio Holding Corp., the Borrower shall cause Southeast Radio
Holding Corp. to pledge to the Agent, for the benefit of the Banks, all of
the capital stock of Gadsden and shall cause Gadsden to execute the
Guaranty and to grant to the Agent, for the benefit of the Banks, first
priority liens and security interests in all of its property, real and
personal, tangible and intangible, in each case pursuant to documentation
in form and substance reasonably satisfactory to the Agent.
(ii) The Banks and the Borrower acknowledge that
during the period the stock of Gadsden is held in the trust created by the
Trust Agreement, the Borrower cannot cause Gadsden to take any actions or
refrain from taking any actions, the trustee under such trust having all
voting power with respect to the stock of Gadsden. Consequently, the Banks
and the Borrower acknowledge that neither Gadsden nor the trustee under the
Trust Agreement is bound by the covenants set forth in this Agreement.
Notwithstanding the foregoing, if Gadsden takes any action or fails to take
any action which would be prohibited or required by the terms or covenants
of this Agreement, as the case may be, the
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Borrower shall be deemed to be in breach of such term or covenant.
(b) ATLANTIC CITY.
(i) The Borrower shall cause Atlantic City to operate
in such a manner as not to give rise to any inference, or otherwise mislead
third Persons to believe, that it is not an entity separate and distinct
from the Borrower and each of its other Subsidiaries or that it is not
solely responsible for its debts, without any support from the Borrower or
any of its other Subsidiaries. Neither the Borrower nor any of its other
Subsidiaries shall commingle assets or funds with Atlantic City or become a
Guarantor for the benefit of Atlantic City.
(ii) Within ten Banking Days after the payment in full
by Atlantic City of all amounts owed by it to National Westminster Bank or
its assignees, the Borrower shall pledge to the Agent, for the benefit of
the Banks, all of the capital stock of Atlantic City and shall cause
Atlantic City to execute the Guaranty and to grant to the Agent, for the
benefit of the Banks, first priority liens and security interests in all of
its property, real and personal, tangible and intangible, in each case
pursuant to documentation in form and substance reasonably satisfactory to
the Agent.
7.16 LICENSE SUBSIDIARIES. Upon the reasonable request of the
Agent and the Majority Banks, the Borrower shall form one or more wholly
owned Subsidiaries and shall cause all of the FCC Licenses held by it or
any of its Subsidiaries to be assigned to such Subsidiaries with the
consent of the FCC. Each such Subsidiary may be referred to herein as a
"License Subsidiary". Immediately upon the creation of a License
Subsidiary, the Borrower shall pledge to the Agent, for the benefit of the
Banks, all of the capital stock of such License Subsidiary and shall cause
such License Subsidiary to execute the Guaranty and to grant to the Agent,
for the benefit of the Banks, first priority liens and security interests
in all of its property, real and personal, tangible and intangible, in each
case pursuant to documentation in form and substance reasonably
satisfactory to the Agent. In addition, the Borrower shall deliver to the
Agent evidence reasonably satisfactory to the Agent to the effect that all
approvals, consents or authorizations required in connection with the
creation of such License Subsidiary and the assignment of the FCC Licenses
shall have been obtained and such opinions as the Agent may reasonably
request as to the corporate or other organization of such License
Subsidiary, the liens and security interests granted to the Agent as
required pursuant to this Section and as to the required regulatory
approvals.
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SECTION 8 NEGATIVE COVENANTS OF THE BORROWER.
The Borrower agrees with the Banks that so long as this Agreement
shall remain in effect or any of the Obligations shall remain unpaid or to
be performed, the Borrower shall not, directly or indirectly, take any of
the actions set out in this Section 8 nor permit any of the conditions set
out herein to occur.
8.1 INDEBTEDNESS. The Borrower shall not, and shall not permit
any of its Subsidiaries to, incur, create, assume or permit to exist any
Indebtedness, except:
(a) the Obligations;
(b) Indebtedness arising under conditional sale, rental and
purchase money arrangements incurred in the ordinary course of business and
Indebtedness permitted under Section 8.6 hereof, including, without
limitation, Capitalized Lease Obligations owing to Society in an aggregate
amount not to exceed $1,000,000;
(c) unsecured trade accounts payable and other unsecured
current Indebtedness incurred in the ordinary course of business (but
excluding any Indebtedness for borrowed money);
(d) Indebtedness for taxes, assessments, governmental
charges, liens or similar claims to the extent that payment thereof shall
not be required to be made by the provisions of Section 7.4;
(e) Indebtedness incurred in respect of Rate Hedging
Obligations required pursuant to Section 7.12;
(f) Intercompany Indebtedness among the Borrower and its
Subsidiaries;
(g) Indebtedness arising under deferred compensation
arrangements with employees or former employees in an aggregate amount not
to exceed $300,000 at any time; and
(h) Indebtedness of Atlantic City owing to National
Westminster Bank in a principal amount not to exceed $3,400,000 so long as
such indebtedness is non-recourse to the Borrower and all of its other
Subsidiaries.
8.2 LIENS. The Borrower shall not, and shall not permit any of
its Subsidiaries to, incur, create, assume or permit to exist any Lien of
any nature whatsoever on any property or assets now owned or hereafter
acquired by the Borrower or any of its Subsidiaries, other than Permitted
Liens. The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter
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into or permit to exist any arrangement or agreement, other than pursuant
to this Agreement or any Collateral Document, which directly or indirectly
prohibits the Borrower or any of its Subsidiaries from creating or
incurring any Lien on any of its assets, other than (a) leases and
agreements regarding purchase money Indebtedness (so long as such
prohibition only relates to the asset which is subject to such
lease or which secure such Indebtedness), and (b) provisions in
agreements which prohibit the assignment of such agreement.
8.3 GUARANTIES. The Borrower shall not, and shall not permit
any of its Subsidiaries to, become a Guarantor for any Person, except with
respect to (a) endorsements of negotiable instruments for collection in the
ordinary course of business, (b) the Guaranty, (c) contingent obligations
under indemnity agreements to title insurers to cause such title insurers
to issue to the Agent mortgagee title insurance policies, as provided in
Section 6.4, (d) contingent obligations incurred in the ordinary course of
business with respect to surety and appeal bonds, performance and return-
of-money bonds and other similar obligations not exceeding at any time
outstanding $25,000 in aggregate liability, and (e) contingent obligations
with respect to Indebtedness permitted by Section 8.1 (other than Section
8.1(h)).
8.4 [Intentionally Omitted]
8.5 [Intentionally Omitted]
8.6 CAPITAL LEASES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, incur, create, assume or permit to exist
Capitalized Lease Obligations if the aggregate amount payable by the
Borrower and its Subsidiaries in respect thereof in any fiscal year would
exceed the sum of $500,000 plus the amount of any such obligations incurred
pursuant to a Permitted Acquisition.
8.7 CAPITAL EXPENDITURES.
(a) Except as otherwise expressly provided in Sections
8.7(b) and (c) below, the Borrower and its Subsidiaries shall not make
Capital Expenditures (not including Capitalized Lease Obligations in
respect of equipment leased by the Borrower or any of its Subsidiaries
which is used in the Muzak Business) in any fiscal year which exceed, in
the aggregate, $1,000,000.
(b) Osborn Healthcare Communications, Inc. may make Capital
Expenditures which, during the term of this Agreement, do not exceed an
aggregate amount of $2,000,000. Such Capital Expenditures may include
investments in other healthcare communications businesses so long as (i)
such businesses have generated positive cash flow for the twelve month
period ended
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most recently prior to such acquisition, (ii) no Possible Default or
Event of Default exists or would exist after giving effect to
the acquisition of such investment and (iii) the interest of Osborn
Healthcare Communications, Inc. in such other healthcare communications
business is pledged to the Agent, for the benefit of the Banks, pursuant to
documents in form and substance reasonably satisfactory to the Agent.
(c) In addition to amounts permitted pursuant to Section
8.7(a), the Borrower may make, or permit its Subsidiaries to make, Capital
Expenditures in connection with Stations WWNC-AM/WKSF-FM, Asheville, North
Carolina; WOLZ-FM, Fort Myers, Florida; WFKS-FM, Daytona Beach, Florida;
and WQEN-FM and WAAX-AM, Gadsden, Alabama, which, for the period from the
date of acquisition of such Stations through the term of this Agreement, do
not exceed an aggregate amount of $500,000 so long as no Possible Default
or Event of Default exists or would exist after giving effect to the making
of any such Capital Expenditure.
8.8 NOTES, ACCOUNTS RECEIVABLE AND CLAIMS. The Borrower shall
not, and shall not permit any of its Subsidiaries to, sell, discount or
otherwise dispose of any note, account receivable or other right to receive
payment, with or without recourse, except for collection in the ordinary
course of business; or fail to timely assert any claim, cause of action or
contract right which it possesses against any third party or agree to
settle or compromise any such claim, cause of action or contract right
except in any case in the exercise of good business judgment and except for
settlements or compromises made in the reasonable exercise of business
judgment in the ordinary course of business.
8.9 CAPITAL DISTRIBUTIONS; RESTRICTIONS ON PAYMENTS TO
STOCKHOLDERS.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, make, or declare or incur any liability to make, any
Capital Distribution, except that:
(i) any Subsidiary of the Borrower may make Capital
Distributions to the Borrower or to a wholly owned Subsidiary of the
Borrower; and
(ii) the Borrower may make open market purchases of
its common stock so long as (i) on the date of any such purchase, and after
giving effect thereto, the ratio of Total Debt as of such date to Operating
Cash Flow for the four quarter period most recently ended is less than 3.0
to 1.0, (ii) no Possible Default or Event of Default exists or would exist
after giving effect to any such purchase, and (iii) the aggregate amount of
such purchases during the term of this Agreement does not exceed
$5,000,000.
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(b) The Borrower shall not permit any of its Subsidiaries
to agree to or to be subject to any restriction on its ability to make
Capital Distributions or loans or other asset transfers to its stockholders
other than restrictions imposed by applicable law and the restriction set
forth in this Section.
8.10 DISPOSAL OF PROPERTY; MERGERS; ACQUISITIONS;
REORGANIZATIONS.
(a) Except as provided in paragraphs (b), (c), (d) and (e)
below, the Borrower shall not, and shall not permit any of its Subsidiaries
to, (i) dissolve or liquidate; (ii) sell, lease, transfer or otherwise
dispose of any material portion of its properties and assets to any Person
except for (A) the disposition of assets in the ordinary course of business
in an aggregate amount not to exceed $1,000,000 in any transaction or
related series of transactions, (B) the disposition of any asset which, in
the good faith exercise of its business judgment, the Borrower determines
is no longer useful in the conduct of its or its Subsidiaries' business and
(C) other sales expressly permitted pursuant to Section 8.10(c) below;
(iii) be a party to any consolidation, merger, recapitalization or other
form of reorganization; (iv) make any acquisition of all or substantially
all the assets of any Person, or of a business division or line of business
of any Person, or of any other assets constituting a going business; (v)
create, acquire or hold any Subsidiary (other than the Subsidiaries of the
Borrower as of the date of this Agreement and the receipt of the stock of
Gadsden from the trustee pursuant to the Trust Agreement), or (vi) be or
become a party to any joint venture or other partnership.
(b) The Borrower or any wholly owned Subsidiary of the
Borrower may make acquisitions of substantially all of the assets of any
radio station or of all of the capital stock or other equity interests of a
Person which owns a radio station, subject to the satisfaction of the
following conditions (any such acquisition which satisfies all of such
conditions being referred to hereinafter as a "Permitted Acquisition"):
(i) such radio station shall be located in one of the
one hundred largest areas of dominant influence ("ADI"), as determined by
the Arbitron Company, in the United States of America, and shall have had
positive cash flow for the four quarter period most recently ended prior to
the closing of such acquisition;
(ii) the total purchase price (including all cash,
non-cash and deferred consideration and payments in respect of non-
competition covenants and similar payments) of any such acquisition shall
not exceed $7,500,000, and the aggregate total
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purchase price of all such acquisitions in any six month period shall not
exceed $15,000,000;
(iii) the Borrower shall have given to the Agent
written notice of such acquisition at least thirty days prior to executing
any binding commitment with respect thereto, which notice shall state the
additional amounts, if any, by which the Borrower proposes to increase the
dollar limitations set forth in Section 8.6;
(iv) the Borrower shall have demonstrated to the
satisfaction of the Agent that the Borrower will be in compliance with all
of the covenants contained herein after giving effect to such acquisition
and that no Event of Default or Possible Default then exists or would exist
after giving effect to such acquisition, and the Borrower shall have
delivered to the Agent within ten days prior to the consummation of such
acquisition an acquisition report signed by an executive officer of the
Borrower in form and substance satisfactory to the Agent which shall
contain calculations demonstrating on a pro forma basis the Borrower's
compliance with the financial covenants set forth in this Section 8 after
giving effect to such acquisition and projections for the Borrower for a
five year period after the closing of such acquisition giving effect to the
acquisition and including a statement of sources and uses of funds for such
acquisition showing, among other things, the source of financing for the
acquisition;
(v) the agreement governing such acquisition and all
related documents and instruments shall be reasonably satisfactory to the
Agent in form and substance;
(vi) if requested by the Agent, all FCC Licenses
acquired in connection with such acquisition shall be transferred
immediately upon consummation of such acquisition to a License Subsidiary
which shall have no other assets or liabilities;
(vii) the Borrower shall have taken any actions as may
be necessary or reasonably requested by the Agent to grant to the Agent,
for the benefit of the Banks, perfected Liens in all assets, real and
personal, tangible and intangible, acquired by the Borrower in such
acquisition pursuant to the Collateral Documents, subject to no prior Liens
except Permitted Liens;
(viii) if the Borrower acquires a Subsidiary or
creates a Subsidiary (including a License Subsidiary) pursuant to or in
connection with such acquisition,
(A) the Borrower shall, or shall cause the
stockholder of such newly acquired or created Subsidiary to,
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pledge to the Agent, for the benefit of the Banks, all of the stock or other
securities or equity interests of such acquired or created Subsidiary pursuant
to documentation in form and substance satisfactory to the Agent; and
(B) such acquired or created Subsidiary shall
execute and deliver to the Agent, for the benefit of the Banks, a Guaranty
and shall grant to the Agent, for the benefit of the Banks, a first
priority, perfected lien or security interest in substantially all of its
assets, real and personal, tangible and intangible, subject to no prior
Liens except for Permitted Liens, pursuant to documentation in form and
substance satisfactory to the Agent; and
(ix) the Borrower shall have delivered to the Agent
evidence reasonably satisfactory to the Agent to the effect that all
approvals, consents or authorizations required in connection with such
acquisition from any Licensing Authority or other governmental authority
shall have been obtained and that any consent of the FCC shall have become
a Final Order, and such opinions as the Agent may reasonably request as to
the Liens granted to the Agent, for the benefit of the Banks, as required
pursuant to this Section and as to any required regulatory approvals for
such acquisition.
(c) The Borrower may (i) make Permitted Divestitures, (ii)
sell or otherwise dispose of its interests in Fairmont Communications
Corporation and Northstar Television Group, Inc. and (iii) conduct other
Asset Sales not otherwise permitted pursuant to this Section 8.10 with the
consent of the Majority Banks. All such sales or other dispositions shall
be for cash, and the proceeds of each Permitted Divestiture and each other
Asset Sale shall be paid to the Agent for the benefit of the Banks as a
mandatory prepayment of the Loans pursuant to Section 2.6(b)(iii).
(d) The Borrower and its Subsidiaries may create wholly
owned corporate Subsidiaries subject to satisfaction of each of the
following conditions:
(i) no Event of Default or Possible Default then
exists or would exist after giving effect to such creation;
(ii) the Borrower shall have given the Agent five days
prior written notice of the creation of such wholly owned Subsidiary and
shall have provided information to the Agent as to the business purpose for
creating such Subsidiary;
(iii) the Borrower shall, or shall cause the
stockholder of such newly created Subsidiary to, pledge to the Agent, for
the benefit of the Banks, all of the stock of such
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wholly owned Subsidiary pursuant to documentation in form and substance
satisfactory to the Agent;
(iv) such wholly owned Subsidiary shall execute and
deliver to the Agent the Guaranty and shall grant to the Agent, for the
benefit of the Banks, a perfected Lien in all of its assets, real and
personal, tangible and intangible, subject to no prior Liens except for
Permitted Liens, pursuant to documentation in form and substance
satisfactory to the Agent; and
(v) the Borrower shall have delivered to the Agent
evidence reasonably satisfactory to the Agent to the effect that all
approvals, consents or authorizations required in connection with the
creation of such wholly owned Subsidiary and the transfer to it of any
assets and the grant of such Liens shall have been obtained and such
opinions as the Agent may reasonably request as to the corporate
organization of such Subsidiary, the Liens granted to the Agent for the
benefit of the Banks as required pursuant to this Section and such other
matters as the Agent may deem appropriate.
(e) The Borrower may cause the merger or liquidation into
the Borrower or a wholly owned Subsidiary of the Borrower of an inactive
Subsidiary or of a Subsidiary which has sold substantially all of its
assets pursuant to a Permitted Divestiture or pursuant to a sale otherwise
permitted pursuant to this Section.
8.11 INVESTMENTS. The Borrower shall not, and shall not permit
any of its Subsidiaries to, purchase or otherwise acquire, hold or invest
in any stock or other securities or evidences of indebtedness of, or any
interest or investment in, or make or permit to exist any loans or advances
to, any other Person, except:
(a) direct obligations of the United States Government
maturing within one year or investments in mutual funds which hold only
such direct obligations of the United States;
(b) certificates of deposit of a member bank of the Federal
Reserve System having capital, surplus and undivided profits in excess of
$2,000,000,000;
(c) any investment in commercial paper which at the time of
such investment is assigned the highest quality rating in accordance with
the rating systems employed by either Moody's Investors Service, Inc. or
Standard & Poor's Corporation;
(d) money market funds;
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(e) securities received pursuant to a plan of
reorganization adopted in an insolvency proceeding or otherwise in
immaterial amounts in exchange for accounts receivable of the entity which
is the subject of such insolvency proceeding generated in the ordinary
course of the Borrower's or any of its Subsidiaries' business;
(f) loans to employees not to exceed $250,000 and advances
of expenses to employees;
(g) investments in existing Subsidiaries listed on EXHIBIT
E and Subsidiaries created pursuant to Section 7.16 or 8.10;
(h) investments by Osborn Healthcare Communications, Inc.
permitted pursuant to Section 8.7(b);
(i) the investment as of the date hereof by the Borrower in
Ruth Broadcasting Corporation; and
(j) other investments which do not have an acquisition cost
which in the aggregate exceeds $50,000.
8.12 AMENDMENT OF GOVERNING DOCUMENTS. The Borrower shall not,
and shall not permit any of its Subsidiaries to, amend, modify or
supplement its Certificate or Articles of Incorporation, By-Laws or other
organizational or governing documents, unless required by law, in any
manner that is adverse to the interests of the Banks (as may be reasonably
determined by the Banks).
8.13 FINANCIAL COVENANTS.
(a) TOTAL DEBT TO OPERATING CASH FLOW RATIO. The Borrower
shall not permit the ratio of Total Debt outstanding at any time during any
period listed in Column A below to Operating Cash Flow for the four fiscal
quarter period then ended or most recently ended to be greater than the
ratio set forth in Column B below opposite such period:
COLUMN A COLUMN B
PERIOD: PERMITTED RATIO:
Closing through March 31, 5.50:1.0
1996:
April 1, 1996, through 5.25:1.0
June 30, 1996:
July 1, 1996, through 5.00:1.0
December 31, 1996:
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January 1, 1997, through 4.75:1.0
December 31, 1997:
January 1, 1998, through 4.50:1.0
December 31, 1998:
January 1, 1999, and 4.00:1.0
thereafter:
(b) OPERATING CASH FLOW TO PROJECTED DEBT SERVICE. The
Borrower shall not permit the ratio of Operating Cash Flow for any four
fiscal quarter period ending on or prior to June 30, 1997, to Projected
Debt Service as of the end of such four quarter period to be less than 1.10
to 1.00; and the Borrower shall not permit the ratio of Operating Cash Flow
for any four fiscal quarter period ending after June 30, 1997, to Projected
Debt Service as of the end of such four quarter period to be less than 1.05
to 1.00.
(c) OPERATING CASH FLOW TO HISTORICAL FIXED CHARGES. The
Borrower shall not permit the ratio of Operating Cash Flow for any four
fiscal quarter period ending on or prior to December 31, 1995, to
Historical Fixed Charges as of the end of such four quarter period to be
less than 1.20 to 1.00; and the Borrower shall not permit the ratio of
Operating Cash Flow for any four fiscal quarter period ending after
December 31, 1995, to Historical Fixed Charges as of the end of such four
quarter period to be less than 1.00 to 1.00.
8.14 MANAGEMENT AGREEMENTS AND FEES.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, make or enter into, or pay any management fees pursuant
to, any so-called management or service agreement or joint operating
agreement whereby management, supervision or control of its business, or
any significant aspect thereof, shall be delegated to or placed in any
Person other than an employee of the Borrower or such Subsidiary; PROVIDED,
HOWEVER, that the Borrower may pay consulting fees to certain of its
Directors as disclosed in the Borrower's Proxy Statement to its
stockholders dated April 11, 1995. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make or enter into, or receive any
management fees pursuant to, any so-called management or service agreement
or joint operating agreement whereby management, supervision or control of
the business of any other Person (other than a Subsidiary of the Borrower),
or any significant aspect thereof, shall be delegated to or placed in the
Borrower or any of its Subsidiaries.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, except in connection with a Permitted Acquisition, enter
into, or otherwise be obligated under, with
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respect to any radio or television station, including the Stations, any local
marketing agreement, time brokerage agreement, program service agreement,
facilities leasing agreement or similar arrangement, except (i) for such
agreements in effect as of the date hereof in respect of Stations WFXK-FM
and WING-FM, and (ii) any such agreements entered into in connection with
any Permitted Divestiture of Stations WFKS-FM and WWRD-FM.
8.15 FISCAL YEAR. The Borrower shall not, and shall not permit
any Subsidiary to, change its fiscal year, which shall be the calendar
year.
8.16 ERISA. Neither the Borrower nor any member of the
Controlled Group shall fail to make any contributions which are required
pursuant to the terms of any Plan or any Benefit Arrangement. Neither the
Borrower nor any member of the Controlled Group shall contribute to or
agree to contribute to any Plan which is (a) subject to the minimum funding
requirements under ERISA Section 302 or Code Section 412; (b) a
multiemployer plan (as defined in ERISA Section 4001(a)(3)); (c) a defined
benefit plan (as defined under ERISA Section 3(35) or Code Section 414(j));
(d) a multiple employer plan (as defined in ERISA Section 4063); or (e) a
multiple employer welfare arrangement (as defined in ERISA Section 3(40)).
8.17 AFFILIATES. Except as expressly provided in Section 8.14,
the Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into any transaction or agreement with any Affiliate of the Borrower
or pay any compensation or salary to any such Person unless such
transaction or agreement is in the ordinary course of and pursuant to the
reasonable requirements of the business of the Borrower or any of its
Subsidiaries and the terms of such transaction or agreement are not
substantially less favorable to the Borrower or such Subsidiary than could
be obtained in an arms-length transaction with an unaffiliated third party
or unless the amount paid to such person is not substantially in excess of
the fair value of the services rendered by such person.
8.18 CHANGE OF NAME, IDENTITY OR CORPORATE STRUCTURE. The
Borrower shall not, and shall not permit any of its Subsidiaries to, change
its name, identity or corporate structure without thirty days prior written
notice to the Agent.
8.19 AMENDMENTS OR WAIVERS. The Borrower shall not, and shall
not permit any of its Subsidiaries to, amend, alter or modify, or consent
to or suffer any amendment, alteration or modification of, any License or
any Operating Agreement or other material contract to which the Borrower or
such Subsidiary is a party, except for any amendments, alterations or
modifications
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which could not reasonably be expected to have a Material Adverse Effect.
8.20 ISSUANCE OR TRANSFER OF CAPITAL STOCK. The Borrower shall
not permit any of its Subsidiaries to sell or issue any capital stock or
other equity interests or any warrants, options or other securities
convertible into or exercisable for any capital stock or other equity
interests, and the Borrower shall not permit any of its Subsidiaries to
permit the transfer of any capital stock or other such equity interests.
8.21 CHANGE IN BUSINESS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, change the nature of its business in any
material respect. Neither the Borrower nor any of its Subsidiaries shall
engage in any business other than those described in the Borrower's annual
report to its stockholders for the year ending December 31, 1994, and other
activities incidental or related to such businesses.
8.22 REGULATION U. The Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, (a) apply any part of
the proceeds of the Loans to the purchasing or carrying of any "margin
stock" within the meaning of Regulations G, T, U or X of the Federal
Reserve Board, or any regulations, interpretations or rulings thereunder,
(b) extend credit to others for the purpose of purchasing or carrying any
such margin stock, or (c) retire Indebtedness which was incurred to
purchase or carry any such margin stock.
8.23 LICENSE SUBSIDIARIES. The Borrower shall not permit any
License Subsidiary to (a) incur, create, assume or permit to exist any
Indebtedness, (b) incur, create, assume or permit to exist any Lien of any
nature whatsoever on any property or assets now owned or hereafter acquired
by it except in favor of the Agent, for the benefit of the Banks, (c) make
any Capital Expenditures, (d) acquire any assets other than the Licenses,
(e) conduct any business, or (f) hire or engage any employees.
SECTION 9 EVENTS OF DEFAULT.
The occurrence of any one or more of the following events,
whether voluntarily or involuntarily or by operation of law, shall
constitute an Event of Default hereunder:
9.1 NON-PAYMENT. The Borrower shall fail to pay when due,
whether by acceleration of maturity or otherwise, any installment of
principal due hereunder or under any Note, or shall fail to pay when due,
or within two days after the date when due, any installment of interest due
hereunder or under any Note or any fee or other payment obligation in
respect of the Obligations.
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Page
9.2 FAILURE OF PERFORMANCE IN RESPECT OF OTHER OBLIGATIONS. (a)
The Borrower shall fail to observe, perform or be in compliance with any of
the provisions of Section 8, Section 7.1, Section 7.3, Section 7.8 or the
first sentence of Section 7.2; or (b) the Borrower, any of its Subsidiaries
or any other party to a Collateral Document (other than the Agent or a
Bank) shall fail to observe, perform or be in compliance with the terms of
any Obligation, covenant or agreement (other than those referred to in
Section 9.1, Section 8, Section 7.1, Section 7.3, Section 7.8 or the first
sentence of Section 7.2) to be observed, performed or complied with by the
Borrower, any of its Subsidiaries or such other party hereunder or under
any Collateral Document and, PROVIDED that such failure is of a type which
can be cured, such failure shall continue and not be cured for thirty days
after: (i) written notice thereof from the Agent or a Bank; or (ii) the
Banks are notified thereof or should have been notified thereof pursuant to
the provisions of Section 7.6 hereof, whichever is earlier.
9.3 BREACH OF WARRANTY. Any financial statement,
representation, warranty, statement or certificate made or furnished by the
Borrower, any of its Subsidiaries or any other party to a Collateral
Document (other than the Agent or a Bank) in or in connection with this
Agreement or any Collateral Document, or as an inducement to the Agent or
the Banks to enter into this Agreement and the Collateral Documents,
including, without limitation, those in Section 5 above, shall have been
false, incorrect or incomplete when made or deemed made in any material
respect.
9.4 CROSS-DEFAULTS. The Borrower or any of its Subsidiaries
shall default in any payment due on any Total Debt in excess of $250,000
and such default shall continue for more than the period of grace, if any,
applicable thereto; or the Borrower or any of its Subsidiaries shall
default in the performance of or compliance with any term of any evidence
of such Total Debt or of any mortgage, indenture or other agreement
relating thereto, and any such default shall continue for more than the
period of grace, if any, specified therein and shall not have been waived
pursuant thereto if such default causes, or permits the holder thereof to
cause, the acceleration of such Total Debt.
9.5 ASSIGNMENT FOR BENEFIT OF CREDITORS. The Borrower or any of
its Subsidiaries shall make an assignment for the benefit of its creditors,
or shall admit its insolvency or shall fail to pay its debts generally as
such debts become due.
9.6 BANKRUPTCY. Any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, shall be
filed by or against the Borrower or
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any of its Subsidiaries or any proceeding shall be commenced by or against the
Borrower or any of its Subsidiaries with respect to relief under the provisions
of any other applicable bankruptcy, insolvency or other similar law of the
United States or any State providing for the reorganization, winding-up or
liquidation of Persons or an arrangement, composition, extension or adjustment
with creditors; PROVIDED, HOWEVER, that no Event of Default shall be deemed to
have occurred if any such involuntary petition or proceeding shall be
discharged within sixty days of its filing or commencement.
9.7 APPOINTMENT OF RECEIVER; LIQUIDATION. A receiver or trustee
shall be appointed for the Borrower or any of its Subsidiaries or for any
substantial part of its assets, and such receiver or trustee shall not be
discharged within sixty days of his appointment; any proceedings shall be
instituted for the dissolution or the full or partial liquidation of the
Borrower or any of its Subsidiaries and such proceedings shall not be
dismissed or discharged within sixty days of their commencement; or the
Borrower or any of its Subsidiaries shall discontinue its business.
9.8 JUDGMENTS. The Borrower or any of its Subsidiaries shall
incur non-appealable final judgments for the payment of money aggregating
at any one time in excess of $250,000 (to the extent not covered by
insurance) and shall not discharge (or make adequate provision for the
discharge of) the same within a period of thirty days unless, pending
further proceedings, execution thereon has been effectively stayed; or a
non-monetary judgment or order shall be rendered against the Borrower or
any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect, and there shall be any period of thirty
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect.
9.9 IMPAIRMENT OF COLLATERAL; INVALIDATION OF ANY LOAN DOCUMENT.
(i) A creditor of the Borrower or any of its Subsidiaries shall obtain
possession of any significant portion of the collateral for the Obligations
by any means, including, without limitation, levy, distraint, replevin or
self-help, or any creditor shall establish or obtain any right in such
collateral which is equal or senior to a Lien of the Agent, for the benefit
of the Banks, in such collateral; or (ii) any material damage to, or loss,
theft or destruction of, any material collateral for the Loans shall occur,
except to the extent such loss, damage or injury is covered by insurance;
or (iii) the Agent, for the benefit of the Banks, shall cease to have a
first priority perfected lien in all of the issued and outstanding capital
stock of the Borrower's Subsidiaries (other than Atlantic City and Gadsden
except as provided in Section 7.15); or (iv) any Lien granted or created or
purported to be
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granted or created by this Agreement or any Collateral Document shall cease or
fail to be perfected with respect to any significant portion of the collateral
purported to be covered thereby; or (v) this Agreement, any Note or any
Collateral Document ceases to be a legal, valid and binding agreement or
obligation enforceable against any party thereto (including the Banks or the
Agent) in accordance with its terms, or shall be terminated, invalidated, set
aside or declared ineffective or inoperative.
9.10 TERMINATION OF LICENSE OR OPERATING AGREEMENT. The FCC or
any other Licensing Authority shall (a) revoke, terminate, substantially
and adversely modify or fail to renew any material License relating to a
Station, the Muzak Business or the Healthcare Business, or (b) designate
any material License for hearing or commence proceedings to suspend,
revoke, terminate or substantially and adversely modify any such License
and such proceedings shall not be dismissed or discharged within sixty
days; or any Operating Agreement, Muzak Franchise or any other agreement
which is necessary to the operation of a Station, the Muzak Business or the
Healthcare Communications Business shall be revoked or terminated or
materially, adversely modified and not replaced by a substitute acceptable
to the Majority Banks within thirty days of such revocation, termination or
modification.
9.11 CHANGE OF CONTROL. (i) Except as permitted pursuant to
this Agreement, the Borrower shall cease or fail to own, directly or
indirectly, beneficial and legal title to (a) all of the issued and
outstanding capital stock of each of its Subsidiaries which is wholly owned
by it or (b) at least 95%, on a fully diluted basis, of the issued and
outstanding capital stock of Osborn Healthcare Communications, Inc.; or
(ii) Mr. Frank D. Osborn shall, for any reason whatever (including death),
at any time cease to be the chief executive officer of the Borrower, or
shall become physically or mentally disabled or incapacitated (whether
totally or partially) and shall be unable, for a period of more than three
consecutive months, to perform his duties as the chief executive officer of
the Borrower, and within ninety days thereafter the Borrower shall not have
appointed as chief executive officer another Person with comparable skills
and experience in the broadcasting industry; or (iii) Mr. Frank D. Osborn
shall cease, for any reason (other than death), to own and control, both
legally and beneficially, with the power to vote and free and clear of any
Liens, at least 856,668 shares of common stock of the Borrower on a fully
diluted basis (as such number is appropriately adjusted to reflect stock
splits, stock dividends or other similar recapitalization); or (iv) any
Person (or group of Persons) is or becomes the "beneficial owner" (within
the meaning of Rule 13d-3 and 13d-5 under the federal Securities Exchange
Act of 1934, as amended), directly or indirectly, of a percentage of the
common equity interest of the Borrower greater than 33 1/3; or (v) Spears,
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Benzak, Salomon & Ferrel shall have the power to vote or direct the vote of
common equity interests of the Borrower greater than 33 1/3; or (vi) during
any period of twenty-four consecutive months, individuals who at the
beginning of such period constituted the Board of Directors of the Borrower
(together with any new directors whose election by such Board or whose
nomination for election by the stockholders of the Borrower was approved by
a majority of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
9.12 CONDEMNATION. Any court, government or governmental agency
shall condemn, seize or otherwise appropriate, or take custody or control
of any substantial portion of the assets of the Borrower or any of its
Subsidiaries pursuant to a final, non-appealable order unless such taking
could not reasonably be expected to have a Material Adverse Effect.
9.13 CESSATION OF OPERATIONS. The operations of any Station
shall be interrupted at any time for more than forty-eight hours, whether
or not consecutive, during any period of five consecutive days unless (a)
such interruption is covered by insurance sufficient to assure that its per
diem Operating Cash Flow during such period is a least equal to that which
could reasonably have been expected during such period but for the
interruption or (b) such interruption could not reasonably be expected to
have a Material Adverse Effect.
SECTION 10 REMEDIES.
Notwithstanding any contrary provision or inference herein or
elsewhere,
10.1 OPTIONAL DEFAULTS.
If any Event of Default referred to in Sections 9.1-9.4 or 9.8-
9.13 hereof shall occur, the Agent, with the consent of the Majority Banks,
upon written notice to the Borrower, may
(a) terminate the Commitments and the credit hereby
established and forthwith upon such election the obligations of the Banks
to make any further Loans hereunder immediately shall be terminated, and/or
(b) accelerate the maturity of the Loans and all other
Obligations, whereupon all Obligations shall become and thereafter be
immediately due and payable in full without any
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presentment or demand and without any further or other notice of any kind,
all of which are hereby waived by the Borrower.
10.2 AUTOMATIC DEFAULTS. If any Event of Default referred to in
Sections 9.5-9.7 shall occur,
(a) the Commitments and the credit hereby established shall
automatically and forthwith terminate, and the Banks thereafter shall be
under no obligation to grant any further Loans hereunder, and
(b) the principal of and interest on the Notes, then
outstanding, and all of the other Obligations shall thereupon become and
thereafter be immediately due and payable in full, all without any
presentment, demand or notice of any kind, which are hereby waived by the
Borrower.
10.3 PERFORMANCE BY THE BANKS. If at any time the Borrower or
any of its Subsidiaries fails or refuses to pay or perform any material
obligation or duty to any third Person, except for payments which are the
subject of bona fide disputes in the ordinary course of business, the Banks
may, in their sole discretion, but shall not be obligated to, pay or
perform the same on behalf of the Borrower or such Subsidiary, and the
Borrower shall promptly repay all amounts so paid, and all costs and
expenses so incurred. This repayment obligation shall become one of the
Obligations of the Borrower hereunder and shall bear interest at the
Default Interest Rate.
10.4 OTHER REMEDIES. Upon the occurrence of an Event of Default,
the Agent and the Banks may exercise any other right, power or remedy as
may be provided herein, in the Notes or in any other Collateral Document,
or as may be provided at law or in equity, including, without limitation,
the right to recover judgment against the Borrower for any amount due
either before, during or after any proceedings for the enforcement of any
security or any realization upon any security.
10.5 ENFORCEMENT AND WAIVER BY THE BANKS. The Banks shall have
the right at all times to enforce the provisions of this Agreement and all
Collateral Documents in strict accordance with the terms hereof and
thereof, notwithstanding any conduct or custom on the part of the Banks in
refraining from so doing at any time, unless the Banks shall have waived
such enforcement in writing in respect of a particular instance. The
failure of the Banks at any time to enforce their rights under such
provisions shall not be construed as having created a custom or course of
dealing in any way contrary to the specific provisions of this Agreement or
the Collateral Documents, or as having in any way modified or waived the
same. All rights, powers and remedies of the Banks are cumulative and
concurrent and the exercise of one
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right, power or remedy shall not be deemed a waiver or release of any other
right, power or remedy.
SECTION 11 THE AGENT.
11.1 APPOINTMENT. Society is hereby appointed Agent hereunder,
and each of the Banks irrevocably authorizes the Agent to act as the agent
of such Bank. The Agent agrees to act as such upon the express conditions
contained in this Section 11. The Agent shall not have a fiduciary
relationship in respect of any Bank by reason of this Agreement.
11.2 POWERS. The Agent shall have and may exercise such powers
hereunder as are specifically delegated to it by the terms hereof, together
with such powers as are reasonably incidental thereto. The Agent shall not
have any implied duties or any obligation to the Banks to take any action
hereunder except any action specifically provided by this Agreement to be
taken by the Agent.
11.3 GENERAL IMMUNITY. Neither the Agent nor any of its
directors, officers, affiliates, agents or employees shall be liable to the
Banks or any Bank for any action taken or omitted to be taken by it or them
hereunder or in connection herewith except for its or their own gross
negligence or wilful misconduct. Without limiting the foregoing, neither
the Agent nor any of its directors, officers, affiliates, agents or
employees shall be responsible for, or have any duty to examine (a) the
genuineness, execution, validity, effectiveness, enforceability, value or
sufficiency of this Agreement, any Collateral Document, or any other
document or instrument furnished pursuant to or in connection with this
Agreement or any Collateral Document, (b) the collectibility of any amounts
owed by the Borrower, (c) any recitals, statements, reports,
representations or warranties made in connection with this Agreement or any
Collateral Document, (d) the performance or satisfaction by the Borrower of
any covenant or agreement contained herein or in any Collateral Document,
(e) any failure of any party to this Agreement to receive any communication
sent, including any telegram, teletype, bank wire, cable, radiogram or
telephone message sent or any writing, application, notice, report,
statement, certificate, resolution, request, order, consent letter or other
instrument or paper or communication entrusted to the mails or to a
delivery service, or (f) the assets or liabilities or financial condition
or results of operations or business or credit-worthiness of the Borrower
or any of its Subsidiaries. The Agent shall not be bound to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement or any Collateral Document.
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11.4 ACTION ON INSTRUCTIONS OF THE BANKS. The Agent shall not be
required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the Majority
Banks (subject to Section 11.12 hereof), and such instructions shall be
binding upon all the Banks and all holders of the Notes; PROVIDED, HOWEVER,
that the Agent shall not be required to take any action which exposes it to
personal liability or which is contrary to this Agreement or applicable
law. The foregoing provisions of this Section 11.4 shall not limit in any
way the exercise by any Bank of any right or remedy granted to such Bank
pursuant to the terms of this Agreement or any Collateral Document. Except
as otherwise expressly provided herein, any reference in this Agreement to
action by the Banks shall be deemed to be a reference to the Majority
Banks.
11.5 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any
of its duties as Agent hereunder by or through employees, agents and
attorneys-in-fact and shall not be answerable to the Banks, except as to
money or securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care.
11.6 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons,
and, with respect to legal matters, upon the opinion of counsel selected by
the Agent, which counsel may be employees of the Agent, concerning all
matters pertaining to the agency hereby created and its duties hereunder.
11.7 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Banks agree
to reimburse and indemnify the Agent (which indemnification shall be shared
by the Banks ratably in proportion to their respective Ratable Shares) (a)
for any amounts not reimbursed by the Borrower for which the Agent is
entitled to reimbursement by the Borrower hereunder or under any Collateral
Document, (b) for any other expenses reasonably incurred by the Agent on
behalf of the Banks, in connection with the preparation, execution,
delivery, administration, amendment or enforcement hereof or of any of the
Collateral Documents and (c) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement, any Collateral Document or any other document
related hereto or thereto or the transactions contemplated hereby or the
enforcement of any of the terms hereof
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or thereof or of any such other documents, PROVIDED that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent.
11.8 RIGHTS AS A BANK. With respect to its Ratable Share of the
Commitments, the Loans made by it and the Notes issued to it, the Agent
shall have the same rights and powers hereunder as any Bank and may
exercise the same as though it were not the Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent may accept deposits from, lend money
to, and generally engage in any kind of banking or trust business with the
Borrower or any of its Subsidiaries as if it were not the Agent hereunder.
11.9 BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and
based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Collateral
Documents. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Collateral Documents. The Agent shall
not be required to keep the Banks informed as to the performance or
observance by the Borrower and its Subsidiaries of this Agreement or any
other document referred to or provided for herein or to inspect the
properties or books of the Borrower or any of its Subsidiaries. Except for
notices, reports and other documents and information expressly required to
be furnished to the Banks by the Agent hereunder, the Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the
Borrower or any of its Subsidiaries which may come into its possession.
11.10 SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks. Upon any such resignation, the
Majority Banks (with the consent of the Borrower, if at the time of such
resignation no Event of Default exists, which consent shall not be
unreasonably withheld) shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Majority Banks
(with the consent of the Borrower to the extent required) and shall have
accepted such appointment within thirty days after the notice of
resignation, then the retiring Agent may appoint a successor Agent. Such
successor Agent shall be a commercial bank having capital and retained
earnings of at least $500,000,000. Upon the acceptance of any appointment
as the Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed
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to and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation
hereunder as the Agent, the provisions of this Section 11 shall continue
in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Agent hereunder.
11.11 RATABLE SHARING. All principal and interest payments on
Loans and commitment fees received by the Agent shall be remitted to the
Banks in accordance with their Ratable Shares. Any amounts received by the
Agent or any other Bank upon the sale of any collateral for the Loans or
upon the exercise of any remedies hereunder or under any of the Collateral
Documents or upon the exercise of any right of setoff shall be remitted to
the Banks in accordance with their Ratable Shares; PROVIDED, HOWEVER, that,
solely for purposes of the sharing of any amounts received by the Agent or
any other Bank, if at the time of any such receipt the Borrower has
defaulted under any agreements regarding Rate Hedging Obligations entered
into pursuant to Section 7.12 hereof with any Bank or an Affiliate of any
Bank, such Bank's Ratable Share shall be proportionately increased and the
Ratable Shares of the other Banks shall be proportionately decreased based
upon the amount due to such Bank pursuant to such agreements. If any Bank
shall obtain any payment hereunder (whether voluntary, involuntary, through
exercise of any right of set-off or otherwise) in excess of its Ratable
Share, then such Bank shall immediately remit such excess to the other
Banks pro rata.
11.12 ACTIONS BY THE AGENT AND THE BANKS. The Agent shall take
formal action only upon the agreement of the Majority Banks; PROVIDED,
HOWEVER, that if the Agent gives notice to the Banks of a Possible Default
or an Event of Default, and the Majority Banks cannot agree (which
agreement shall not be unreasonably withheld) on a mutual course of action
within thirty days following such notice, the Agent may (but shall not be
required to) pursue such legal rights and remedies against the Borrower as
it deems necessary and appropriate to protect the Banks and any collateral
under the circumstances.
SECTION 12 MISCELLANEOUS.
12.1 CONSTRUCTION. The provisions of this Agreement shall be in
addition to those of the Collateral Documents and to those of any other
guaranty, security agreement, note or other evidence of the liability
relating to the Borrower held by the Banks, all of which shall be construed
as complementary to each other. Nothing contained herein shall prevent the
Agent or the Banks from enforcing any or all of such instruments in
accordance with their respective terms. Each right, power or privilege
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specified or referred to in this Agreement or in any Collateral Document is
in addition to any other rights, powers or privileges that the Agent or the
Banks may otherwise have or acquire by operation of law, by other contract
or otherwise. No course of dealing in respect of, nor any omission or
delay in the exercise of, any right, power or privilege by the Agent or the
Banks shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any further or other exercise thereof or of any
other, as each right, power or privilege may be exercised independently or
concurrently with others and as often and in such order as the Agent or the
Banks may deem expedient. Notwithstanding any other provision of this
Agreement, the Borrower shall not be required to pay any amount of interest
pursuant hereto which is in excess of the maximum amount permitted by law.
12.2 FURTHER ASSURANCE. From time to time, the Borrower shall
execute and deliver to the Banks such additional documents and take such
actions as the Agent may reasonably require to carry out the purposes of
this Agreement or any of the Collateral Documents, or to preserve and
protect the rights of the Banks hereunder or thereunder.
12.3 EXPENSES OF THE AGENT AND THE BANKS; INDEMNIFICATION.
(a) Whether or not the transactions contemplated by this
Agreement are consummated, the Borrower shall pay the costs and expenses,
including the reasonable fees and disbursements of the Agent's special
counsel, incurred by the Banks in connection with (i) the negotiation,
preparation, amendment or enforcement of this Agreement and the Collateral
Documents and any amendment or modification thereof and the closing of the
transactions contemplated hereby and thereby; (ii) the perfection of the
Liens granted pursuant hereto; (iii) the making of the Loans hereunder;
(iv) the negotiation, preparation or enforcement of any other document in
connection with this Agreement, the Collateral Documents or the Loans made
hereunder; (v) any proceeding brought or formal action taken by the Banks
to enforce any provision of this Agreement or any Collateral Document, or
to enforce or exercise any right, power or remedy hereunder or thereunder;
or (vi) any action which may be taken or instituted by any Person against
any Bank as a result of any of the foregoing. The estimated fees and
expenses of the Agent's special counsel through the Closing shall be paid
on the Closing Date. If any taxes, charges or fees shall be payable, or
ruled to be payable, to any state or Federal authority in respect of the
execution, delivery or performance of this Agreement, the Notes or any
other Collateral Document by reason of any existing or hereinafter enacted
Federal or state statute, the Borrower shall pay all such taxes, charges or
fees, including interest and
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penalties thereon, if any, and will indemnify and hold harmless the Banks
against any liability in connection therewith.
(b) The Borrower hereby indemnifies and holds harmless the
Agent and each Bank and their respective directors, officers, employees,
agents, counsel, subsidiaries and affiliates (the "Indemnified Persons")
from and against any and all losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever (including, without limitation, reasonable
attorneys fees) which may be imposed on, incurred by, or asserted against
any Indemnified Person in any way relating to or arising out of this
Agreement, the Collateral Documents, or any of them, or the Loans made
pursuant hereto, or the use of the proceeds thereof or any of the
transactions contemplated hereby or thereby or the ownership or operation
of the Stations, the Muzak Business, the Healthcare Communications Business
or any of the other assets of the Borrower or its Subsidiaries or the
breach by the Borrower or any of its Subsidiaries of any of the
representations, warranties, covenants and agreements contained herein or
in any Collateral Document; PROVIDED, HOWEVER, that the Borrower shall not
be liable to any Indemnified Person, if there is a final judicial
determination that such losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulted solely from the gross negligence or willful misconduct of such
Indemnified Person.
12.4 NOTICES. Except as otherwise expressly provided herein, all
notices, demands and requests required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed to
have been duly delivered and received (a) on the date of personal delivery,
(b) on the date of receipt (as shown on the return receipt) if mailed by
registered or certified mail, postage prepaid and return receipt requested,
(c) on the next business day after delivery to a courier service that
guarantees delivery on the next business day if the conditions to the
courier's guarantee are complied with, or (d) on the date of receipt by
telecopy, in each case addressed as follows:
TO THE AGENT:
Society National Bank
127 Public Square
M/C OH-01-127-0602
Cleveland, Ohio 44114-1306
Attention: Media Finance Division
Telecopy: 216-689-4666
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Copy to:
Timothy J. Kelley, Esq.
Dow, Lohnes & Albertson
1255 Twenty-third Street, N.W.
Suite 500
Washington, D.C. 20037
Telecopy: 202-857-2900
TO THE BANKS, AT THE ADDRESSES LISTED ON THE SIGNATURE PAGES
HEREOF OR IN THE ASSIGNMENT INSTRUMENT DELIVERED PURSUANT TO
SECTION 12.7(b)
TO THE BORROWER OR ANY OF ITS SUBSIDIARIES:
Osborn Communications Corporation
130 Mason Street
Greenwich, Connecticut 06830
Attention: Thomas S. Douglas
Telecopy: 203-629-1749
Copy to:
Robert M. Hirsh, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Telecopy: 212-759-3990
or to such other address or addresses as the party to which such notice is
directed may have designated in writing to the other parties hereto.
12.5 WAIVER AND RELEASE BY THE BORROWER. Neither the Agent, nor
any Bank, nor any affiliate, officer, director, employee, attorney, or
agent of the Agent or any Bank shall have any liability with respect to,
and the Borrower hereby waives, releases and agrees not to sue any of them
upon, any claim for any special, indirect, incidental or consequential
damages suffered or incurred by the Borrower or any of its Subsidiaries in
connection with, arising out of, or in any way related to, this Agreement
or any of the Collateral Documents, or any of the transactions contemplated
by this Agreement or any of the Collateral Documents, unless arising from
the gross negligence or willful misconduct of such Person as determined by
a final judgment of a court of competent jurisdiction.
12.6 RIGHT OF SET OFF. Upon the occurrence and during the
continuance of any Event of Default, each Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set-
off and apply any and all deposits (general or special, time or demand,
provisional or
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final) at any time held and other indebtedness at any time
owing by such Bank to or for the credit or the account of the Borrower or
any of its Subsidiaries against any and all of the obligations of the
Borrower or any of its Subsidiaries now or hereafter existing hereunder or
under any Collateral Document, irrespective of whether or not such Bank
shall have made any demand under any Collateral Document and although such
obligations may be unmatured. Such Bank agrees promptly to notify the
Borrower after any such set-off and application made by such Bank;
PROVIDED, HOWEVER, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Banks
under this Section are in addition to other rights and remedies (including
without limitation, other rights of set-off) which the Banks may have. The
Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in the Notes may
exercise rights of set-off or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were a
direct creditor of the Borrower or any of its Subsidiaries in the amount of
such participation.
12.7 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; PROVIDED, HOWEVER, that the Borrower may not assign
or transfer any of its rights or obligations hereunder or under the Notes
without the prior written consent of all of the Banks and the Agent.
(b) Each Bank may assign all or any part of any of its
Loans, its Notes, and its share of the Commitments with the consent of the
Borrower and the Agent, which consent shall not be unreasonably withheld;
PROVIDED that (i) no such consent by the Borrower shall be required (w) for
any such assignment by any Bank to an Affiliate of such Bank, (x) if, at
the time of such assignment, an Event of Default has occurred and is
continuing, (y) in the case of any assignment to another branch of a
principal office of a Bank, or (z) for any such assignment to another Bank
or an Affiliate of another Bank; and (ii) any such partial assignment shall
be in an amount at least equal to $10,000,000. Upon execution and delivery
by the assignor and the assignee to the Borrower and the Agent of an
instrument in writing pursuant to which such assignee agrees to become a
"Bank" hereunder (if not already a Bank) having the share of the
Commitments and Loans specified in such instrument, and upon consent
thereto by the Borrower, to the extent required above, and the Agent, the
assignee shall have, to the extent of such assignment (unless otherwise
provided in such assignment with the consent of the Borrower and the
Agent), the obligations, rights and benefits of a Bank hereunder holding the
share of the Commitments and Loans (or portions thereof) assigned to it (in
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addition to the share of the Commitments and Loans, if any, theretofore
held by such assignee) and the assigning Bank shall, to the extent of such
assignment, be released from the share of the Commitments and the
obligations hereunder so assigned.
(c) Upon its receipt of an assignment pursuant to Section
12.7(b) above duly executed by an assigning Bank and the assignee, together
with any Notes subject to such assignment and the Agent's standard
processing and recordation fee of $2,500, the Agent shall, if such
assignment has been completed, accept such assignment. Within five
business days after receipt of such notice, the Borrower, at Borrower's own
expense, shall execute and deliver to the Agent in exchange for the
surrendered Notes new Notes to the order of the assignee in an amount equal
to the share of the Commitments and of the Loans assumed by the assignee
and, if the assigning Bank has retained a portion of the Commitments and
the Loans hereunder, new Notes to the order of the assigning Bank in an
amount equal to the share of the Commitments and the Loans retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal
to the aggregate principal amount of such surrendered Notes, shall be dated
the effective date of such assignment and shall otherwise be in
substantially the form of EXHIBITS A AND B hereto, as the case may be.
Cancelled Notes shall be returned to the Borrower.
(d) A Bank may sell or agree to sell to one or more other
Persons (each, a "Participant") a participation in all or any part of any
Loans held by it, or in its share of the Commitments. Except as otherwise
provided in the last sentence of this Section 12.7(d), no Participant shall
have any rights or benefits under this Agreement or any Note or any other
Collateral Documents (the Participant's rights against such Bank in respect
of such participation to be those set forth in the agreements executed by
such Bank in favor of the Participant). All amounts payable by the
Borrower to any Bank under Section 2 hereof in respect of Loans held by it,
and its share of the Commitments, shall be determined as if such Bank had
not sold or agreed to sell any participations in such Loans and share of
the Commitments, and as if such Bank were funding each of such Loan and its
share of the Commitments in the same way that it is funding the portion of
such Loan and its share of the Commitments in which no participations have
been sold. In no event shall a Bank that sells a participation agree with
the Participant to take or refrain from taking any action hereunder or
under any other Collateral Document except that such Bank may agree with
the Participant that it will not, without the consent of the Participant,
agree to any modification, supplement or waiver hereof or of any of the
other Collateral Documents to the extent that the same, under Section 12.12
hereof, requires the consent of each Bank. The Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.7 through 2.13
and Section 12.6 with respect to its participating interest.
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(e) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 12.7, any Bank may
assign and pledge all or any portion of its Loans and its Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release the
assigning Bank from its obligations hereunder.
(f) A Bank may furnish any information concerning the
Borrower and its Subsidiaries in the possession of such Bank from time to
time to assignees and participants (including prospective assignees and
participants).
(g) Anything in this Section 12.7 to the contrary
notwithstanding, no Bank may assign or participate any interest in any Loan
held by it hereunder to the Borrower or any of its Affiliates without the
prior written consent of all of the Banks.
12.8 APPLICABLE LAW. This Agreement and the Collateral
Documents, and the duties, rights, powers and remedies of the parties
hereto and thereto, shall be construed in accordance with, and governed by,
the laws of the State of Ohio, without regard to the conflicts of laws
provisions thereof, except to the extent that any Collateral Document
provides that the local law of another jurisdiction governs the grant,
perfection or enforcement of the Liens granted pursuant to such Collateral
Document.
12.9 BINDING EFFECT AND ENTIRE AGREEMENT. This Agreement shall
inure to the benefit of, and shall be binding upon, the respective
successors and permitted assigns of the parties hereto. This Agreement,
the Exhibits hereto, which are hereby incorporated in this Agreement, and
the Collateral Documents constitute the entire agreement among the parties
on the subject matter hereof.
12.10 COUNTERPARTS. This Agreement may be executed in any number
of counterparts or duplicate originals, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
12.11 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein or in any Collateral Document
shall survive any investigation and the Closing and shall continue in full
force and effect so long as any of the Obligations remain to be performed
or paid or the Banks have any obligation to advance sums hereunder.
12.12 MODIFICATION. Any term of this Agreement or of the Notes
may be amended and the observance of any term of this
<PAGE>
Page 91
Agreement or of the Notes may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Borrower and the Majority Banks; PROVIDED, HOWEVER, that no such
amendment or waiver or other action shall, without the prior written consent of
all of the Banks or the holders of all of the Notes at the time outstanding,
(a) extend the maturity or reduce the principal amount of, or reduce the
rate or extend the time of payment of interest on, or reduce the amount or
extend the time of payment of any principal of, any Note, (b) reduce the
amount or extend the time of payment of the commitment fees, (c) change the
Commitments or the Ratable Share of any Bank (other than any change in
Commitments or Ratable Share resulting from the sale of a participation in
or assignment of any Bank's interest in the Commitments and Loans in
accordance with subsection 12.7), (d) change the percentage referred to in
the definition of "Majority Banks" contained in Section 1.1, (e) amend this
Section 12.12, (f) amend or waive compliance with Section 2.6(b), or (g)
release any collateral for the Loans except in connection with a sale
permitted pursuant to Section 8.10; and PROVIDED, FURTHER, that
notwithstanding the foregoing provisions of this Section 12.12, this
Agreement and the Notes may be amended or modified in the manner
contemplated by Section 12.7 for the purpose of permitting any Bank to
assign its interest, rights and obligations hereunder to another bank or
financial institution, if the appropriate assignment agreement or
counterparts thereof are executed by the Borrower (to the extent required),
the Agent and the appropriate Bank assignor and assignee. Any amendment or
waiver effected in accordance with this Section 12.12 shall be binding upon
each holder of any Note at the time outstanding, each future holder of any
Note and the Borrower.
12.13 SEPARABILITY. If any one or more of the provisions
contained in this Agreement or any Collateral Document should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of all remaining provisions shall not in any way be affected
or impaired. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.14 SECTION HEADINGS. The section headings contained herein
are for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
12.15 ENFORCEMENT. The Borrower (a) hereby irrevocably submits
to the jurisdiction of the state courts of the State of Ohio and to the
jurisdiction of the United States District Court for the Northern District
of Ohio, for the purpose
<PAGE>
Page 92
of any suit, action or other proceeding arising out of or based upon
this Agreement or any Collateral Document or the subject matter
hereof or thereof brought by the Banks or their successors or
assigns and (b) hereby waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding,
any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment
or execution, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Agreement or any Collateral Document or the subject
matter hereof or thereof may not be enforced in or by such court, and (c)
hereby waives and agrees not to seek any review by any court of any other
jurisdiction which may be called upon to grant an enforcement of the
judgment of any such Ohio state or federal court. The Borrower hereby
consents to service of process by registered mail at the address to which
notices are to be given. The Borrower agrees that its submission to
jurisdiction and its consent to service of process by mail is made for the
express benefit of the Banks. Final judgment against the Borrower in any
such action, suit or proceeding may be enforced in other jurisdictions by
suit, action or proceeding on the judgment, or in any other manner provided
by or pursuant to the laws of such other jurisdiction; PROVIDED, HOWEVER,
that the Banks may at their option bring suit, or institute other judicial
proceedings, against the Borrower or any of its assets in any state or
federal court of the United States or of any country or place where the
Borrower, or such assets, may be found.
12.16 TERMINATION. This Agreement shall terminate when all
amounts due hereunder, under the Notes and under each Collateral Document
shall have been indefeasibly paid in full in cash and all other Obligations
hereunder or thereunder shall have been fully performed, so long as the
Banks have no further obligation to advance sums hereunder. Upon such
termination, at the request of the Borrower, the Agent and the Banks shall
release all Liens granted herein or in any Collateral Document at the
Borrower's expense and return all collateral held pursuant hereto or to any
Collateral Document without recourse or representation. Notwithstanding
anything to the contrary contained herein, each expense reimbursement and
indemnification provision in this Agreement or in any Collateral Document
shall survive the repayment in full of the Loans and the termination of
this Agreement.
12.17 FCC COMPLIANCE.
(a) Notwithstanding anything herein or in any of the
Collateral Documents to the contrary, but without limiting or waiving the
Borrower's or any of its Subsidiaries' obligations hereunder or under any
of the Collateral Documents, the Agent's and the Banks' remedies hereunder
and under the Collateral
<PAGE>
Page 93
Documents are subject to compliance with the Communications Act of 1934, as
amended, and to all applicable rules, regulations and policies of the FCC, and
neither the Agent nor the Banks will take any action pursuant to this
Agreement or any of the Collateral Documents that will constitute or result in
any assignment of a License issued by the FCC or any change of control of the
Borrower or any of its Subsidiaries which owns any FCC License if such
assignment of License or change of control would require under then existing
law (including the written rules and regulations promulgated by the FCC),
the prior approval of the FCC, without first obtaining such approval of the
FCC. This Agreement, the Collateral Documents and the transactions
contemplated hereby and thereby do not and will not constitute, create, or
have the effect of constituting or creating, directly or indirectly, actual or
practical ownership of the Borrower or any of its Subsidiaries by the Agent
or the Banks or control, affirmative or negative, direct or indirect, of
the Borrower or any of its Subsidiaries by the Agent or the Banks, over the
management or any other aspect of the operation of the Borrower or any of
its Subsidiaries, which ownership and control remain exclusively and at all
times in the stockholders and directors of the Borrower and its
Subsidiaries until such time as the Banks have complied with such law,
rules, regulations and policies.
(b) Furthermore, the parties acknowledge their intent that,
upon the occurrence of an Event of Default, the Banks shall receive, to the
fullest extent permitted by applicable law and governmental policy
(including, without limitation, the rules, regulations and policies of the
FCC), all rights necessary or desirable to obtain, use or sell the Licenses
and the collateral securing the Loans, and to exercise all remedies
available to them under this Agreement, the Collateral Documents, the
Uniform Commercial Code or other applicable law. Therefore, the parties
agree that, in the event of changes in law or governmental policy occurring
after the date hereof that affect in any manner the Agent's or the Banks'
rights of access to, or use or sale of, the Licenses or such collateral, or
the procedures necessary to enable the Agent or the Banks to obtain such
rights of access, use or sale, the Agent, the Banks and the Borrower shall
amend this Agreement and the Collateral Documents in such manner as the
Agent shall reasonably request, in order to provide the Agent and the Banks
such rights to the greatest extent possible consistent with then applicable
law and governmental policy.
12.18 JURY TRIAL WAIVER. THE BORROWER AND THE BANKS EACH WAIVE
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE BANKS AND THE BORROWER
ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR
THE NOTES OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN
<PAGE>
Page 94
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS. THE BORROWER, THE AGENT AND THE BANKS ACKNOWLEDGE THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
THE BORROWER, THE AGENT AND THE BANKS FURTHER WARRANT AND REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (UNLESS EXPRESSLY
MODIFIED IN WRITING BY ALL PARIES HERETO), AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, THE COLLATERAL DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.19 MARSHALING; PAYMENTS SET ASIDE. The Agent and the Banks
shall not be under any obligation to marshal any assets in favor of the
Borrower or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Borrower or any of its Subsidiaries
makes a payment or payments to the Banks or the Agent or any Bank enforces
its security interest or exercises its rights of setoff, and such payment
or payments or the process of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such recovery, the Obligations or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect
as if such payment had not been made or such enforcement had not occurred.
12.20 CONFIDENTIALITY. In handling any information which the
Borrower has identified to the Agent and the Banks as being confidential,
the Agent and the Banks shall exercise the same degree of care that they
exercise with respect to their own proprietary information of the same
types to maintain the confidentiality of any non-public information thereby
received or received pursuant to this Agreement except that disclosure of
such information may be made (a) to the subsidiaries or affiliates of the
Agent or any Bank in connection with their present or prospective business
relations with the Borrower or any of its Subsidiaries, (b) to the Agent's
or any Bank's business and legal advisors, (c) to prospective transferees or
<PAGE>
Page 95
purchasers of any interest in the Loans, provided that they have agreed
to abide by confidentiality restrictions similar to those set forth in this
Section, (d) as required by law, regulations, rule or order, subpoena,
judicial order or similar order and (e) as may be required in connection
with the examination, audit or similar investigation of the Agent or any
Bank.
<PAGE>
Page 96
TO WITNESS THE ABOVE, the Borrower, the Banks and the Agent have
caused this Loan Agreement to be executed by their respective
representatives thereunto duly authorized as of the date first above
written.
BORROWER:
OSBORN COMMUNICATIONS CORPORATION
By:___________________________
Name: Thomas S. Douglas
Title: Senior Vice President
BANKS:
SOCIETY NATIONAL BANK
By:___________________________
Name: Kenneth J. Keeler
Title: Vice President
Address: 127 Public Square
Cleveland, Ohio 44114-1306
Attention: Media Finance Division
AGENT:
SOCIETY NATIONAL BANK
By:___________________________
Name: Kenneth J. Keeler
Title: Vice President
<PAGE>
LIST OF EXHIBITS
Exhibit A Form of Reducing Note
Exhibit B Form of Acquisition Note
Exhibit C Financial Statements
Exhibit D Projections
Exhibit E Subsidiaries and Capitalization
Exhibit F Proceedings and Litigation
Exhibit G Liens and Indebtedness
Exhibit H Consents to be Obtained
Exhibit I Schedule of Contracts, Commitments, Material
Agreements, licenses and Consents
Exhibit J ERISA Liabilities and Plans
Exhibit K Real Estate
Exhibit L Environmental Matters
Exhibit M Form of Compliance Certificate
[DESCRIPTION]Asset Purchase Agreement - Nelson Broadcasting Corporation
___________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of August 31, 1995
by and between
NELSON BROADCASTING CORPORATION
(Seller)
and
RENDA BROADCASTING CORPORATION
(Buyer)
___________________________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I ASSIGNMENT OF LICENSES AND THE PURCHASE AND SALE OF
ASSETS
1.1 Assignment of Licenses and Transfer
of Assets................................................1
1.2 Excluded Assets............................................3
1.3 Liabilities to be Assumed..................................4
1.4 Purchase Price.............................................4
1.5 Proration of Income and Expenses...........................4
1.6 Allocation of Purchase Price...............................6
1.7 Escrow Deposit.............................................6
ARTICLE II CLOSING, LMA OPERATION AND TERMINATION
2.1 Closing....................................................7
2.2 Transactions at the Closing................................7
2.3 Termination................................................9
2.4 Operation of Station pursuant to
the LMA.................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation.........................................11
3.2 Authority; No Conflict....................................11
3.3 Government Authorizations.................................12
3.4 Compliance with Regulations...............................13
3.5 Personal Property.........................................13
3.6 Real Property.............................................14
3.7 Real Estate Contracts.....................................14
3.8 Consents..................................................14
3.9 Contracts.................................................14
3.10 Environmental.............................................15
3.11 Intellectual Property.....................................16
3.12 Financial Statements......................................16
3.13 Personnel Information; Labor Contracts....................16
3.14 Employee Benefit Plans....................................17
3.15 Litigation................................................17
3.16 Compliance with Laws......................................18
3.17 Insurance.................................................18
3.18 Instruments of Conveyance; Good Title.....................18
3.19 Undisclosed Liabilities...................................18
3.20 Absence of Certain Changes................................18
3.21 Insolvency Proceedings....................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation.........................................20
4.2 Authority; No Conflict....................................20
4.3 Consents..................................................20
4.4 Litigation................................................21
4.5 Compliance with Laws......................................21
4.6 Qualification.............................................21
4.7 Financing.................................................21
ARTICLE V COVENANTS OF SELLER
5.1 Continued Operation of Station............................21
5.2 Third Party Consents......................................22
5.3 Encumbrances..............................................22
5.4 Assignment of Assets......................................22
5.5 Commission Licenses and Authorizations....................22
5.6 Compensation Increases....................................23
5.7 Insurance.................................................23
5.8 Negotiations with Third Parties...........................23
ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application....................................23
6.2 Performance...............................................23
6.3 Conditions................................................23
6.4 Confidentiality...........................................24
6.5 Cooperation...............................................24
6.6 Consents to Assignment....................................24
6.7 Bulk Sales Laws...........................................25
6.8 Employee Matters..........................................25
6.9 Collection of Receivables.................................25
6.10 LMA.......................................................26
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals......................................26
7.2 Performance...............................................26
7.3 Representations and Warranties............................26
7.4 Consents..................................................27
7.5 No Litigation.............................................27
7.6 Documents.................................................27
7.7 Opinions of Counsel.......................................27
7.8 Ancillary Agreements......................................27
7.9 LMA .....................................................27
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance...............................................27
8.2 Representations and Warranties............................28
8.3 Government Approvals......................................28
8.4 Documents.................................................28
8.5 Opinion of Counsel........................................28
8.6 Escrow Agreement..........................................28
8.7 LMA.......................................................28
ARTICLE IX SURVIVAL AND INDEMNIFICATION
9.1 Survival..................................................28
9.2 Indemnification by Seller.................................28
<PAGE>
9.3 Indemnification by Buyer..................................29
9.4 Notification of Claims....................................29
9.5 Limitation on Indemnification.............................30
ARTICLE X MISCELLANEOUS
10.1 Assignment................................................31
10.2 Brokerage.................................................31
10.3 Expenses of the Parties...................................31
10.4 Entire Agreement..........................................32
10.5 Headings..................................................32
10.6 Governing Law.............................................32
10.7 Counterparts..............................................32
10.8 Notices...................................................32
10.9 Specific Performance......................................33
10.10 Consent to Jurisdiction...................................34
10.11 Further Assurances........................................34
10.12 Public Announcements......................................34
10.13 Exhibits and Schedules....................................34
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this 31st day of
August, 1995 by and between NELSON BROADCASTING CORPORATION, a
corporation formed under the laws of the State of Delaware ("Seller"),
and RENDA BROADCASTING CORPORATION, a corporation formed under the laws
of the Commonwealth of Pennsylvania ("Buyer").
R E C I T A L S
WHEREAS, Seller owns and operates and has been duly licensed by
the Federal Communications Commission (the "FCC" or the "Commission") to
operate radio station WWRD(FM), Brunswick, Georgia (the "Station");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase, the assets utilized in connection with the operation of the
Station, and Seller and Buyer further desire that Seller assign to Buyer
the licenses and other authorizations issued to Seller by the Commission
for the purpose of operating the Station; and
WHEREAS, simultaneously with the execution of this Agreement,
Seller and Buyer have entered into a Local Marketing Agreement ("LMA");
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
ASSIGNMENT OF LICENSES AND THE
PURCHASE AND SALE OF ASSETS
1.1 ASSIGNMENT OF LICENSES AND TRANSFER OF ASSETS. Seller
agrees to assign, transfer, convey and deliver to Buyer and Buyer agrees
to acquire, accept and receive from Seller, on the Closing Date, all of
Seller's right, title and interest in and to the following station
licenses and the assets relating to the Station (the "Station Assets")
free and clear of all liens and encumbrances:
(a) LICENSES AND AUTHORIZATIONS. All licenses, permits
and other authorizations issued by the FCC or any other state or federal
regulatory agency pertaining to the Station, including, without
limitation, those licenses, permits or authorizations listed in Section
1.1(a) of the disclosure schedule delivered by Seller to Buyer and
<PAGE>
Page 2
dated of even date herewith (the "Disclosure Schedule"), together with any
renewals, extensions or modifications thereof and additions thereto made
between the date of this Agreement and the Closing Date and any
applications filed at the FCC during such period (the "Licenses"). The
Licenses include the right to use the call letters of the Station,
including but not limited to the call letters WWRD(FM).
(b) TANGIBLE PERSONAL PROPERTY. All of the tangible
personal property owned by Seller and used or useable in the operation of
the Station, including but not limited to the items of personal property
listed in Section 1.1(b) of the Disclosure Schedule, together with all
additions, modifications or replacements thereto made in the ordinary
course of business between the date of this Agreement and the Closing
Date, as hereafter defined (the "Personal Property").
(c) REAL ESTATE CONTRACTS. All of the leasehold
interests in real property leased by Seller and used by the Station,
including all agreements, leases, and contracts of Seller relating to the
tower, transmitter, studio site, and offices of the Station (the "Real
Estate Contracts"), other than security or other deposits made with
respect to such Real Estate Contracts, all as described in Section 1.1(c)
of the Disclosure Schedule. Buyer shall assume, pay and perform all
obligations under such Real Estate Contracts arising after the Closing
Date.
(d) INTELLECTUAL PROPERTY. All of Seller's trade names,
copyrights, trademarks, service marks, patents, patent applications or
other similar rights relating to the operation of the Station including,
but not limited to, those listed in Section 1.1(d) of the Disclosure
Schedule, together with any necessary additions or modifications thereto
between the date hereof and the Closing Date (the "Intellectual
Property").
(e) LEASES AND CONTRACTS. All leases, contracts,
agreements and franchises in effect as of the date of this Agreement
relating to the operation of the Station (other than contracts for the
sale of broadcast time and leases for real property) listed and
identified in Section 1.1(e) of the Disclosure Schedule and those leases,
contracts, agreements and franchises described in Section1.1(h) of this
Agreement (the "Contracts"). Buyer shall assume, pay and perform all
obligations under such Contracts arising after the Closing Date.
(f) CONTRACTS FOR SALE OF BROADCAST TIME. All contracts
for sale of broadcast time on the Station in effect as of the date of this
Agreement that provide for payment by the customer solely on a cash basis
and that are to be in effect on the Closing Date as listed and identified
<PAGE>
Page 3
in Section 1.1(f) of the Disclosure Schedule (the "Broadcast
Agreements"). Buyer shall assume, pay and perform all obligations under
the Broadcast Agreements arising after the Closing Date, PROVIDED,
HOWEVER, Buyer will not assume any contract for the sale of time entered
into prior to the date of this Agreement pursuant to which payment is to
be received in whole or in part in services, merchandise or other non-
cash considerations ("Trade Agreements"), except as set forth in Section
1.1(f) of the Disclosure Schedule.
(g) OPERATING AND BUSINESS RECORDS. All files, records,
logs and program materials pertaining to the operation of the Station
required to be maintained and kept under the rules of the Commission and
such other files and records as Buyer shall reasonably require for the
continuing business and operation of the Station. Seller shall have the
right to reasonable access to such business records that Seller delivers
to Buyer under this Section 1.1(g) upon Seller's request for five years
after the Closing Date.
(h) FUTURE CONTRACTS. All leases, contracts, agreements
and franchises entered into between the date hereof and the Commencement
Date of the LMA (as such term is defined therein) in the usual and
ordinary course of business.
(i) INVENTORY AND COMPUTER SOFTWARE. All of Seller's
items of inventory related to the business of the Station, including,
without limitation, broadcast programs, as well as all computer software
used or useable by the Station.
(j) OTHER RIGHTS AND PRIVILEGES. Any and all other
franchises, materials, supplies, easements, rights-of-way, licenses, and
other rights and privileges of Seller relating to and used, useable or
necessary in the operation of the Station.
1.2 EXCLUDED ASSETS. There shall be excluded from the sale
transaction described herein the following assets relating to the
Station:
(a) CASH AND DEPOSITS. Cash-on-hand or in banks (or
their equivalents) and other investments belonging to Seller and relating
to the operation of the Station as of the Closing Date.
(b) ACCOUNTS RECEIVABLE. All accounts receivable of the
Seller with regard to the operation of the Station prior to the
Commencement Date of the LMA (as such term is defined therein).
(c) PROPERTY CONSUMED. All property of the Station
disposed of or consumed (including ordinary wear and
<PAGE>
Page 4
tear) in the ordinary course of business between the date hereof and the
Closing Date.
(d) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All
contracts described in Sections 1.1(e), (f) and (h) to the Disclosure
Schedule that are terminated or will have expired prior to the Closing
Date in the ordinary course of business.
(e) PENSION AND PROFIT-SHARING PLANS. All pension and
profit-sharing plans, trusts established thereunder and assets thereof,
if any, of Seller.
(f) OTHER EMPLOYEE BENEFIT PLANS. All other employee
benefit plans (including health insurance) of Seller and the assets
thereof.
(g) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS. All
employment agreements and collective bargaining agreements of Seller.
(h) OTHER ASSETS. Those assets, if any, listed in
Section 1.2(h) of the Disclosure Schedule.
1.3 LIABILITIES TO BE ASSUMED. Except as otherwise provided
herein, Buyer assumes no liabilities or obligations of Seller of any
nature whatsoever, contingent or otherwise, except for obligations
arising after the date hereof in connection with the conduct of the
business and operations of the Station or pursuant to the LMA (the "Post-
Signing Agreements") and post-closing obligations related to Real Estate
Contracts, Contracts, Broadcast Agreements, Trade Agreements and Post-
Signing Agreements (collectively, the "Assumed Contracts") assigned to
and specifically assumed by Buyer.
1.4 PURCHASE PRICE. In consideration of Seller's performance
of this Agreement and the sale, assignment, transfer, conveyance and
delivery of the Station Assets to Buyer free and clear of all liens and
encumbrances, Buyer shall pay to Seller on the Closing Date, by wire
transfer, the sum of One Million Nine Hundred Thousand Dollars
(US$1,900,000.00) (the "Purchase Price").
1.5 PRORATION OF INCOME AND EXPENSES. Subject to the
provisions of the LMA, all income and revenues arising from the Seller's
operations of the Station up to and including 11:59 p.m. (the "Cut-Off
Time") of the day prior to the Commencement Date, and all costs and
expenses arising from the operations of the Station up to and including
11:59 p.m. of the operations of the day prior to the Commencement Date,
will be prorated between Buyer and Seller so that Seller (a)shall be
entitled to receive all income and revenues and all refunds, and
(b)shall be responsible for
<PAGE>
Page 5
all expenses, costs, liabilities and obligations allocable to the conduct of
the business and the operation of the Station for the period prior to the
Cut-Off Time; and Buyer (x)shall be entitled to receive all income and
revenues and all refunds and (y)shall be responsible for all expenses,
costs, liabilities and obligations allocable to the conduct of the business
and the operation of the Station for the period after the Cut-Off Time. All
income and revenues and costs and expenses arising from the conduct of the
business and operation of the Station shall be allocated to the period during
which the service to which such income and revenue is attributable was
performed. Items to be apportioned pursuant to this paragraph shall
include the following:
(i) all personal property taxes, real estate taxes, water
taxes, ad valorem, and other property taxes or assessments on or with
respect to the assets and property interests to be transferred or
assigned to Buyer hereunder;
(ii) business and license fees including any FCC
Regulatory Fees (and any retroactive adjustments thereof), music license
fees, commissions, wages, salaries and benefits of employees (including
accruals up to the Cut-Off Time for insurance premiums, bonuses,
commissions, sick pay, vacation and severance pay and the like and
related payroll taxes) and similarly prepaid and deferred items;
(iii) liabilities and obligations under all Broadcast
Agreements and any negative balances under the Trade Agreements to be
assigned and assumed hereunder;
(iv) sewer rents and charges for water, electricity and
other utility expenses and fuel;
(v) personal property and equipment rentals, applicable
copyright or other fees, sales and other charges; and
(vi) rents, additional rents and similar prepaid and
deferred items, taxes and other items payable under any lease, contract,
commitment or other agreement or arrangement to be assigned and assumed
hereunder and all other income and expenses attributable to the ownership
and operation of the Station.
Taxes to be apportioned pursuant to this Section1.5 shall be apportioned
in proportion to (x)the number of days in the taxable period before and
including the Cut-Off Time and (y)the number of days in the taxable
period after the Cut-Off Time. No apportionment shall be made pursuant
to this Section of any federal, state, foreign or local income taxes.
Any tax refunds or rebates accruing before the Cut-Off Time for taxes
that were paid prior to Closing shall
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remain the property of Seller, whether such refund is paid before or after the
Closing Date.
(a) TIME FOR PAYMENT. The prorations and adjustments
contemplated by this Section1.5, to the extent practicable, shall be
made on the Closing Date. Not less than three (3) Business Days prior to
the Closing Date, Seller shall submit to Buyer a written estimate of
adjustments and prorations to be made in accordance with this Article.
Prior to the Closing, Buyer and Seller will attempt in good faith to
agree on an amount of any adjustment and proration payment to be made on
the Closing Date. As to those prorations and adjustments not capable of
being ascertained on the Closing Date, an adjustment and proration shall
be made within 90 days after the Closing Date.
(b) DISPUTE RESOLUTION. In the event of any disputes
between the parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at the time provided in Section1.5(a) and such
disputes shall be determined by an independent certified public
accountant mutually acceptable to the parties whose determination shall
be final, and the fees and expenses of such accountant shall be paid one-
half by Seller and one-half by Buyer.
1.6 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that
the Purchase Price shall be allocated among the Station Assets in a
manner to be determined by Buyer and Seller. Buyer and Seller agree to
use such allocation in completing and filing Internal Revenue Service
Form 8594 for federal income tax purposes. Buyer and Seller further
agree that they shall not take any position inconsistent with such
allocation upon examination of any return, in any refund claim, in any
litigation, or otherwise.
1.7 ESCROW DEPOSIT. As security for Buyer's failure to Close
and as an inducement for Seller to perform its obligations hereunder
Buyer shall deposit with Paul, Weiss, Rifkind, Wharton& Garrison (the
"Escrow Agent") in a separate account maintained for such purpose, an
amount equal to Eighty Four Thousand Seven Hundred Forty Dollars
(US$84,740.00) (the "Escrow Deposit"), which Escrow Deposit shall be held
and disbursed by the Escrow Agent, in the event of a termination of this
Agreement, pursuant to Sections2.3 (c), (d), (e) and (f) herein and,
upon Closing, disbursed to Seller in partial satisfaction of the Purchase
Price. Buyer and Seller agree that the rate of interest in respect of
the Escrow Deposit shall be determined by Buyer and Seller, and further
agree that such interest shall accrue, and be payable, to Buyer.
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ARTICLE II
CLOSING, LMA OPERATION AND TERMINATION
2.1 CLOSING. The purchase and sale of the Station Assets
contemplated by this Agreement (the "Closing") shall take place at 10:00
a.m. on a mutually agreed upon date and place within five (5) days after
the Commission's approval of the Assignment Application, as defined in
Section 6.1 below, becomes a Final Order, or such other time and place as
shall be mutually agreed upon by the parties (the "Closing Date"). For
purposes of this Agreement, a "Final Order" shall mean any action of the
Commission which has not been reversed, stayed, enjoined, set aside,
annulled or suspended and with respect to which no requests are pending
for administrative or judicial review, reconsideration, appeal or stay,
and the time for filing any such requests and the time for the Commission
to set aside the action on its own motion shall have expired. Buyer may,
at its sole election, waive the requirement that the Commission's
approval of the Assignment Application shall have become a Final Order.
2.2 TRANSACTIONS AT THE CLOSING.
(a) At the Closing, Seller shall deliver to Buyer the
following:
(i) assignments of the Licenses and other pertinent
authorizations transferring the same to the Buyer in customary form
and substance;
(ii) the certificates contemplated by Sections 7.2 and
7.3;
(iii) a copy of the resolutions of the board of
directors of Seller authorizing the execution, delivery and
performance of this Agreement and the agreements and documents
listed in Section 2.2 of the Disclosure Schedule (the "Ancillary
Agreements"), and the consummation of the transactions contemplated
hereby and thereby, together with a certificate of the Secretary of
Seller, dated as of the Closing Date, that such resolutions were
duly adopted and are in full force and effect;
(iv) a bill of sale and all other appropriate
documents and instruments assigning to Buyer good and marketable
title to the Station Assets free and clear of any security
interests, mortgages, liens, pledges, attachments, conditional sales
contracts, claims, charges or encumbrances of any kind whatsoever;
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(v) the Ancillary Agreements, duly executed by Seller
as appropriate;
(vi) written consents of the respective lessors,
landowners, and any other persons or entities whose consents may be
required to permit Buyer to assume the liabilities, contracts,
leases, licenses, understandings and agreements constituting the
Assumed Contracts provided that Seller shall not be required to
deliver any written consents referred to in Section 3.7(b) herein to
the extent Seller has used reasonable efforts to obtain such
consents.
(vii) evidence satisfactory to Buyer's counsel that no
financing statements are outstanding on the Station Assets;
(viii) all files, records, logs, and program materials
relating to the Station;
(ix) a copy of the resolution of the board of
directors of Osborn Communications Corporation ("OCC") authorizing
the execution, delivery and performance by OCC of an indemnification
agreement contained in Article IX hereof, together with a
certificate of OCC dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect;
(x) the opinion of counsel for Seller, dated the
Closing Date, as described in Section 7.8;
(xi) assignments to Buyer of all the Assumed
Contracts; and
(xii) such other documents and instruments as Buyer may
reasonably request to consummate the transactions contemplated hereby.
(b) At the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i) the Purchase Price;
(ii) a copy of the resolutions of the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby,
together with a certificate of the Secretary of Buyer dated as of
Closing Date, that such resolutions were duly adopted and are in
full force and effect;
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(iii) the certificates contemplated by Sections 8.1 and
8.2;
(iv) the Ancillary Agreements, duly executed by Buyer
as appropriate;
(v) the opinion of counsel for Buyer, dated the
Closing Date, as described in Section8.5; and
(vi) such other documents and instruments as Seller
may reasonably request to consummate the transactions contemplated
hereby.
2.3 TERMINATION.
(a) Notwithstanding anything to the contrary contained in
this Agreement, this Agreement may be terminated at any time by:
(i) the mutual written consent of the parties hereto;
(ii) either Buyer or Seller if the Closing does not
occur before June 30, 1996, PROVIDED, HOWEVER, that the party
seeking termination under this Section 2.3(a)(ii) shall not have
prevented the Closing from occurring;
(iii) either Buyer or Seller if the Assignment
Application is not granted within nine (9) months from the date the
FCC Form314 is placed on Commission public notice or is denied by
the Commission by a Final Order or is designated for hearing by the
Commission; PROVIDED, HOWEVER, that the party seeking termination
under this Section 2.3(a)(iii) is not the party which by omission or
commission has caused the Commission to take the action described
above; FURTHER PROVIDED, that in the event the Assignment
Application is designated for hearing by the Commission the
provisions of Section2.3(e) shall apply.
(iv) Buyer, if any of the conditions set forth in
Article VII shall have become incapable of fulfillment, and shall
not have been waived by Buyer, or if Seller shall have breached in
any material respect any of its representations, warranties or
obligations hereunder and such breach shall not have been cured in
all material respects or waived prior to the Closing; or
(v) Seller, if any of the conditions set forth in
Article VIII shall have become incapable of fulfillment, and shall
not have been waived by Seller,
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or if Buyer shall have breached in any material respect any of its
representations, warranties or obligations hereunder and such breach
shall not have been cured in all material respects or waived prior to
the Closing.
(b) In the event of the termination of this Agreement by
Buyer or Seller pursuant to this Section 2.3, written notice thereof
shall promptly be given to the other party and, except as otherwise
provided herein, the transactions contemplated by this Agreement shall be
terminated, without further action by any party.
(c) In the event Seller terminates this Agreement under
Section2.3(a)(ii), (iii) or (v) Buyer shall forfeit the Escrow Deposit
to Seller, except in the event Buyer also has the right to terminate
under Section2.3(a)(ii) or (iii) the Escrow Deposit shall be returned to
Buyer.
(d) In the event Buyer terminates this Agreement under
Section2.3(a)(ii), (iii) or (iv) the Escrow Deposit shall be returned to
Buyer.
(e) The time for Commission approval provided in Section
2.3(a)(iii) notwithstanding, either party may terminate this Agreement
upon written notice to the other, if, for any reason, the Assignment
Application is designated for hearing by the Commission, PROVIDED,
HOWEVER, that written notice of termination must be given within twenty
(20) days after release of the Hearing Designation Order and that the
party giving such notice is not in default and has otherwise complied
with its obligations under this Agreement. Upon termination pursuant to
this Section, the parties shall be released and discharged from any
further obligation hereunder and the Escrow Deposit shall be returned to
the Buyer.
(f) It is further PROVIDED, HOWEVER, that no party may
terminate this Agreement if such party is in default hereunder, or if a
delay in any decision or determination by the Commission respecting the
Assignment Application has been caused or materially contributed to
(i)by any failure of such party to furnish, file or make available to
the Commission information within its control; (ii)by the willful
furnishing by such party of incorrect, inaccurate or incomplete
information to the Commission; and (iii)by any other action taken by
such party for the purpose of delaying the Commission's decision or
determination respecting the Assignment Application. Upon such
termination for failure of the Commission to act, the parties shall be
released and discharged from any further obligation hereunder.
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(g) A party shall be deemed to be in default under this
Agreement only if such party has materially breached or failed to perform
its obligations hereunder, and non-material breaches or failures shall
not be grounds for declaring a party to be in default, postponing the
Closing, or terminating this Agreement.
(h) Neither the rights nor the remedies of either Buyer
or Seller under Sections2.3(c), (d) or (e) shall prejudice any other
rights or remedies either Buyer or Seller may have under this Agreement.
(i) If the Closing occurs, the Escrow Deposit shall be
applied to the Purchase Price at Closing.
4.i OPERATION OF STATION PURSUANT TO THE LMA. Notwithstanding
any provision to the contrary in this Agreement:
(a) As of the Commencement Date of the LMA (as such term is
defined therein) the business and operation of the Station
shall be conducted pursuant to the terms of the LMA;
(b) All liabilities, obligations, contracts or claims that
arise by reason of the LMA (the "LMA Liabilities") shall
not constitute or be the basis of, (i) a breach of a
representation or warranty, or covenant of Seller, or
(ii)the failure of any condition to the obligation of
Buyer to close;
(c) All LMA Liabilities shall be assumed by Buyer as of the
Commencement Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 DUE INCORPORATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and is duly qualified to do business in and is in good
standing in the State of Georgia. Seller has the corporate power and
authority to own and to operate the Station and the Station Assets.
3.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements have been duly and validly
authorized and approved by the
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board of directors of Seller, and Seller has the corporate power and
authority to execute, deliver and perform this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated
hereby and thereby. Neither such execution, delivery or performance
nor compliance by Seller with the terms and provisions hereof, or with
respect to the Ancillary Agreements, will (assuming receipt of all
necessary approvals from the Commission) conflict with or result in a
breach of any of the terms, conditions or provisions of (a) the
Certificate of Incorporation or Bylaws of Seller, (b) any
judgment, order, injunction, decree, regulation or ruling of any
court or other governmental authority to which Seller is subject, or (c)
any material agreement, lease or contract, written or oral, to which
Seller is subject. This Agreement shall constitute the valid and binding
obligation of Seller with respect to the terms hereof, subject to
Commission approval of the transactions contemplated hereby.
3.3 GOVERNMENT AUTHORIZATIONS. Section 1.1(a) of the
Disclosure Schedule contains a true and complete list of all the
Licenses, which Seller holds with regular, unconditional renewals thereof
and which were granted for the full license terms and the Licenses are
sufficient for the lawful conduct of the business and operation of the
Station in the manner and to the full extent they are currently
conducted. None of the Licenses is subject to any restriction or
condition which would limit in any material respect the full operation of
the Station as now operated. There are no applications, complaints or
proceedings pending or, to the best of Seller's knowledge, threatened as
of the date hereof before the Commission or any other governmental
authority relating to the business or operations of the Station, other
than applications, complaints or proceedings which generally affect the
broadcasting industry as a whole, and other than reports and forms filed
in the ordinary course of the Station's business. Seller has delivered
to Buyer true and complete copies of the Licenses, including any and all
additions, amendments and other modifications thereto. The Licenses are
validly issued, in good standing, are in full force and effect and are
unimpaired by any act or omission of Seller or its officers, directors or
employees, and Seller has fulfilled and performed all of its obligations
with respect thereto and has full power and authority to operate
thereunder; and the operation of the Station is in accordance with the
Licenses and the Communications Act of 1934, as amended, and the rules,
regulations, and policies of the Federal Communications Commission. To
the knowledge of Seller no proceedings are pending or are threatened
which may result in the revocation, modification, non-renewal or
suspension of any of the Licenses, the denial of any pending
applications, the issuance of any cease and desist order, the imposition
of any administrative actions
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by the Commission with respect to the Licenses or which may affect
Buyer's ability to continue to operate the Station as it is
currently operated. Seller has taken no action which, to its
knowledge, could lead to revocation or non-renewal of the
Licenses, nor omitted to take any action which, by reason of its
omission, could lead to revocation of the Licenses. All material
reports, forms and statements required to be filed with the Commission
with respect to the Station since the grant of the last renewal of the
Licenses have been filed and are complete and accurate. To the knowledge
of Seller, there are no material facts which, under the Communications
Act of 1934, as amended, or the existing rules and regulations of the
Commission, would disqualify Seller as assignor, and Buyer as assignee,
in connection with the Assignment Application.
For purposes of this Section, the term "material" shall mean
any application, complaint, petition, or other proceeding which could
result in a fine, forfeiture, short term renewal or revocation or non-
renewal of the Licenses or a failure on the part of the FCC to approve
the application.
3.4 COMPLIANCE WITH REGULATIONS. The operation of the Station
is in compliance in all material respects with (i)all applicable
engineering standards required to be met under Commission rules, and (ii)
all other applicable rules, regulations, requirements and policies of the
Commission, the Communications Act of 1934, as amended, and all other
applicable governmental authorities, including, but not limited to, ANSI
Radiation Standards, to the extent required to be met under applicable
Commission rules and regulations; and there are no existing material
claims known to Seller to the contrary.
3.5 PERSONAL PROPERTY. Section 1.1(b) of the Disclosure
Schedule contains a true and complete list of the Personal Property.
Except for those assets designated on Section 1.1(b) of the Disclosure
Schedule as being subject to lease agreements, Seller owns and has, and
will have on the Closing Date, good and marketable title to such Personal
Property, and none of such Personal Property on the Closing Date will be
subject to any security interest, mortgage, pledge, conditional sales
agreement or other lien or encumbrance. The Personal Property is in all
material respects in good operating condition, ordinary wear and tear
excepted, and is available for immediate use in the conduct of the
business and operation of the Station. The technical equipment,
including, without limitation, all transmitters and studio equipment,
constituting part of the Personal Property, has been maintained in
accordance with industry practice and is in good operating condition,
ordinary wear and tear excepted, (except as noted in Section 1.1(b) of
the Disclosure Schedule) and complies in
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all material respects with all applicable rules and regulations of the
Commission and the terms of the Licenses. The Personal Property
includes such items and equipment necessary to conduct in all
material respects the business and operations of the Station as now
conducted.
3.6 REAL PROPERTY. Neither Seller nor any affiliate of Seller
owns any real property used in connection with the operation of the
Station.
3.7 REAL ESTATE CONTRACTS.
(a) Section1.1(c) of the Disclosure Schedule contains a
true and complete list and summary of all the Real Estate Contracts. The
present use by the Station of all real property leased pursuant to the
Real Estate Contracts conforms in all material respects with all
applicable building, zoning, land use and other laws, ordinances, codes,
orders and regulations, and, to the knowledge of Seller, all other
governmental regulations.
(b) As of the date hereof, Seller has complied in all
material respects with all of the Real Estate Contracts and has not
received or given written notice of any default thereunder from or to any
of the other parties thereto. Seller shall use reasonable efforts to
obtain valid and binding third-party consents, if any are necessary, from
all required third parties to the Real Estate Contracts to be conveyed
and assigned to Buyer as part of the Station Assets.
3.8 CONSENTS. No consent, approval, authorization or order
of, or registration, qualification or filing with, any court, regulatory
authority or other governmental body is required for the execution,
delivery and performance by Seller of this Agreement or the Ancillary
Agreements to which it is a party, other than (i)approval by the
Commission of the Assignment Application as contemplated hereby and
(ii)Seller's filing with the Commission of this Agreement and Buyer's
filing with the Commission of the LMA pursuant to Section73.3613 of the
Commission's rules, if the Assignment Application (including the LMA) is
not filed within thirty days of the execution of this Agreement. Except
as set forth in Section3.8 of the Disclosure Schedule, no consent of any
other party (including, without limitation, any party to any Real Estate
Contract or Contract) is required for the execution, delivery and
performance by Seller of this Agreement, the Escrow Agreement or the
Ancillary Agreements to which it is a party.
3.9 CONTRACTS. Section 1.1(e) of the Disclosure Schedule
contains a true and complete list of all Contracts, and Section 1.1(f)
contains a true and complete
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list of all Broadcast Agreements and Trade Agreements. Seller
has delivered to Buyer true and complete copies of all written
Contracts, Broadcast Agreements and Trade agreements in the
possession of Seller, including any and all amendments and other
modifications to same. All such Contracts, Broadcast Agreements and
Trade Agreements are valid, binding and enforceable by Seller in
accordance with their respective terms, except as limited by laws
affecting creditors' rights or equitable principles generally. Seller
has complied in all material respects with all such Contracts, Broadcast
Agreements and Trade Agreements, and Seller is not in default beyond any
applicable grace periods under any of same, and to the knowledge of
Seller no other contracting party is in material default under any of
same. Seller has full legal power and authority to assign its respective
rights under such Contracts, Broadcast Agreements and Trade Agreements 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 materially affect the validity, enforceability and continuity of
any such Contracts, Broadcast Agreements and Trade Agreements, except to
the extent third party consents are required.
3.10 ENVIRONMENTAL. As of the date hereof, Seller has not
unlawfully disposed of any Hazardous Waste, including any Polychlorinated
Biphenyls ("PCBs"), in a manner which has caused, or could cause, Buyer
to incur a material liability under applicable law in connection
therewith; and Seller warrants that the technical equipment included in
the Personal Property does not contain any Hazardous Waste that is
required by law to be removed, or, if any equipment does contain
Hazardous Waste, that such equipment is stored and maintained in
compliance with applicable law. As of the date hereof, Seller has
complied in all material respects with all federal, state and local
environmental laws, rules and regulations applicable to the Station and
its operations, including but not limited to the Commission's guidelines
regarding RF radiation. No Hazardous Waste has been disposed of by
Seller, and, to the best of Seller's knowledge, no Hazardous Waste has
been disposed of by any other person, on the property subject to Real
Estate Contracts in a condition which requires investigation or
remediation pursuant to Environmental Laws. As used herein, the term
"Hazardous Waste" shall mean all materials regulated by any federal,
state, local or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata). If
Seller learns between the date of this Agreement and the Closing Date
that Seller is in breach of the representation and warranty set forth in
this Section 3.11 and such breach is attributable to Seller's action or
failure to act prior to the Commencement
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Date (as defined in the LMA), Seller shall begin remedial action
promptly, if such is required by Environmental Laws, and shall use
reasonable best efforts to complete such remedial action to the
satisfaction of Buyer before the Closing Date.
3.11 INTELLECTUAL PROPERTY. Section1.1(d) of the Disclosure
Schedule is a true and complete list of all the material Intellectual
Property. Such Intellectual Property has been duly registered in, filed
with, or issued by the appropriate offices within all jurisdictions where
such registration, filing or issuance is necessary to protect such
Intellectual Property from infringement, including, without limitation,
the United States Copyright Office and the United States Patent and
Trademark Office. Seller has not granted any license or other rights
with respect to such Intellectual Property. Seller has not received any
written notice of any infringement or unlawful use of the Intellectual
Property and Seller has not violated or infringed any patent, trademark,
trade secret or copyright held by others or any license, authorization or
permit held by it.
3.12 FINANCIAL STATEMENTS. Section 3.12 of the Disclosure
Schedule contains a copy of the unaudited statements of income, and the
related balance sheets for Seller for the period after Seller acquired
the Station through June 30, 1995 (the "Financial Statements"). The
Financial Statements have been prepared in all material respects in
accordance with generally accepted accounting principles and in
accordance with the policies and procedures of the Corporation applicable
thereto, consistently applied. The Financial Statements present fairly
the financial condition and results of operations of the Station for the
periods indicated in all material respects.
3.13 PERSONNEL INFORMATION; LABOR CONTRACTS.
(a)Section 3.13 of the Disclosure Schedule contains a
true and complete list of all persons employed at the Station as of the
date hereof, including the date of hire, a description of material
compensation arrangements (other than employee benefit plans, if any, set
forth in Section 3.14 of the Disclosure Schedule) and a list of other
terms of any and all material agreements affecting such persons.
(b) Seller is not a party to any contract with any labor
organization, nor has Seller agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of Seller's employees.
Seller has no knowledge of any organizational effort
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currently being made or threatened by or on behalf of any labor union with
respect to employees of the Station. During the past two years, Seller has
not experienced any strikes, work stoppages, grievance proceedings, claims of
unfair labor practices filed, or other significant labor difficulties of
any nature.
(c) Seller has complied in all material respects with
all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal
employment opportunity and the payment and withholding of taxes.
3.14 EMPLOYEE BENEFIT PLANS. Section 3.14 of the Disclosure
Schedule contains a true and complete list and summary, as of the date of
this Agreement, of all employee benefit plans (as that term is defined in
Section 3(3) of ERISA) applicable to the employees of Seller. Seller
maintains no other employee benefit plan. Each of Seller's employee
benefit plans has been operated and administered in all material respects
in accordance with its terms and applicable law, including, without
limitation, ERISA and the Internal Revenue Code.
3.15 LITIGATION. Except as set forth in Section3.15 of the
Disclosure Schedule, Seller is not subject to any judgment, award, order,
writ, injunction, arbitration decision or decree, and there is no
litigation, proceeding or investigation pending or, to the best of
Seller's knowledge, threatened against Seller or the Station in any
federal, state or local court, or before any administrative agency or
arbitrator (including, without limitation, any proceeding which seeks the
forfeiture of, or opposes the renewal of, any of the Licenses), or before
any other tribunal duly authorized to resolve disputes, which would
reasonably be expected to have any material adverse effect upon the
business, property, assets or condition (financial or otherwise) of the
Station or which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection
with this Agreement. In particular, but without limiting the generality
of the foregoing, except as set forth in Section3.16 of the Disclosure
Schedule, there are no applications, complaints or proceedings pending
or, to the best of Seller's knowledge, threatened before the Commission
or any other governmental organization with respect to the business or
operation of the Station which would reasonably be expected to have any
material adverse effect upon the Station Assets, other than applications,
complaints or proceedings which affect the broadcast industry generally.
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3.16 COMPLIANCE WITH LAWS. Seller has not received any notice
asserting any non-compliance with any applicable statute, rule or
regulation (federal, state or local) whether or not related to the
business or operation of the Station which would have any material
adverse effect on the business or operation of the Station. Seller is
not in default with respect to any judgment, order, injunction or decree
of any court, administrative agency or other governmental authority or to
any other tribunal duly authorized to resolve disputes in any respect
material to the transactions contemplated hereby. Seller is in
compliance in all material respects with all laws, regulations and
governmental orders whether or not applicable to the conduct of the
business and operation of the Station and any other business or
operations conducted by Seller.
3.17 INSURANCE. Section 3.17 of the Disclosure Schedule
contains a true and complete list of all Seller's insurance policies.
All such policies are in full force and effect and Seller has received no
notice of cancellation with respect thereto.
3.18 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The instruments
to be executed by Seller and delivered to Buyer at Closing, conveying the
Station Assets to Buyer, will be in a form sufficient to transfer good
and marketable title to the Station Assets free and clear of all
liabilities, obligations and encumbrances in all material respects,
except as provided herein.
3.19 UNDISCLOSED LIABILITIES. To knowledge of the Seller,
there has been no failure to disclose any material obligations of Seller,
except obligations incurred in the ordinary and usual course of business.
3.20 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section3.20 of the Disclosure Schedule, between the Balance Sheet Date
and the date of this Agreement there has not been:
(a) Any material adverse change in the working capital,
financial condition, business, results of operations, assets or
liabilities of the Seller;
(b) Except with reference to the LMA, any change in the
manner in which the Station conducts its business and operations other
than changes in the ordinary and usual course of business consistent with
past practice;
(c) Any amendment to the Certificate of Incorporation or
Bylaws of the Seller;
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(d) Any material contract or commitment, to which the
Seller is a party, entered into, modified or terminated, except in the
ordinary and usual course of business;
(e) Any creation or assumption of any mortgage, pledge
or other lien or encumbrance upon any of the Station Assets except in the
ordinary and usual course of business;
(f) Any sale, assignment, lease, transfer, or other
disposition of any of the Station Assets, except in the ordinary and
usual course of business;
(g) The incurring of any material liabilities or
obligations, except items incurred in the ordinary and usual course of
business;
(h) The write-off or determination to write off as
uncollectible any accounts receivable or portion thereof, except for
write-offs in the ordinary course of business consistent with past
practice at a rate no greater than during the twelve months prior to the
Balance Sheet Date;
(i) The cancellation of any debts or claims, or waiver
of any rights, having an aggregate value in excess of $10,000;
(j) The disposition, lapse or termination of any
Intellectual Property;
(k) The increase or promise to increase the rate of
commissions, fixed salary or wages, draw, bonus or other compensation
payable to any employee of the Seller, except in the ordinary and usual
course of business consistent with past practice; or
(l) Any change in any method of accounting or accounting
practice used by the Seller.
3.21INSOLVENCY PROCEEDINGS. No insolvency proceedings of any
character including, without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary, affecting Seller or the Station Assets are pending or, to
Seller's knowledge, threatened, and Seller has made no assignment for the
benefit of creditors, nor taken any action with a view to, or which would
constitute the basis for, the institution of any such insolvency
proceedings.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 DUE INCORPORATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth
of Pennsylvania and as of the Closing Date shall be duly qualified to do
business in and be in good standing in the Commonwealth of Pennsylvania
and the States of Georgia, Florida and Oklahoma.
4.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements have been duly and validly
authorized and approved by the board of directors of Buyer, and Buyer has
the corporate power and authority to execute, deliver and perform this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. The execution, delivery, performance
hereof, and compliance by Buyer with the terms and provisions hereof, or
with respect to the Ancillary Agreements, thereof, will not (assuming
receipt of all necessary approvals from the Commission) conflict with or
result in a breach of any of the terms, conditions or provisions of
(a)the Certificate of Incorporation or Bylaws of Buyer, (b)any
judgment, order, injunction, decree, regulation or ruling of any court or
other governmental authority to which Buyer is subject, or (c)any
material agreement, lease or contract, written or oral, to which Buyer is
subject. This Agreement will constitute the valid and binding obligation
of Buyer with respect to the terms hereof, subject to Commission approval
of the transactions contemplated hereby.
4.3 CONSENTS. No consent, approval, authorization or order
of, or registration, qualification or filing with, any court, regulatory
authority or other governmental body is required for the execution,
delivery and performance by Buyer of this Agreement or the Ancillary
Agreements to which it is a party, other than (i)the approval by the
Commission of the Assignment Application as contemplated hereby and
(ii)Seller's filing with the Commission of this Agreement and Buyer's
filing with the Commission of the LMA pursuant to Section73.3613 of the
Commission's rules, if the Assignment Application (including the LMA) is
not filed within thirty days of the execution of this Agreement. Except
as set forth in Section4.3 of the Disclosure Schedule, no consent of any
other party is required for the execution, delivery and performance by
Buyer of this Agreement or the Ancillary Agreements to which it is a
party.
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4.4 LITIGATION. There is no litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened
against Buyer in any federal, state or local court, or before any
administrative agency or arbitrator, or before any other tribunal duly
authorized to resolve disputes, that would reasonably be expected to have
any material adverse effect upon the ability of Buyer to perform its
obligations hereunder, or that seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or
in connection with this Agreement.
4.5 COMPLIANCE WITH LAWS. Buyer is not in default with
respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or of any other
tribunal duly authorized to resolve disputes in any respect material to
the transactions contemplated hereby. Buyer is not in violation of any
law, regulation or governmental order, the violation of which would have
a material adverse effect on Buyer or its ability to perform its
obligations pursuant to this Agreement.
4.6 QUALIFICATION. To the best of Buyer's knowledge, Buyer is
legally, technically, financially and otherwise qualified to be the
assignee of the Licenses and the other Station Assets, and, prior to the
Closing Date, Buyer will exercise its best efforts to refrain from doing
any act which would disqualify Buyer from being the assignee of the
Licenses and the other Station Assets.
4.7 FINANCING. Buyer possesses adequate financial resources
necessary to fund the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLER
Between the date of this Agreement and the Closing Date, Seller
shall have complete control of the Station and its operations, and Seller
covenants as follows with respect to such period:
5.1 CONTINUED OPERATION OF STATION. Subject to the LMA,
Seller shall continue to operate the Station under the terms of the
Licenses in the manner in which the Station has been operated heretofore,
in the usual and ordinary course of business, in conformity with all
material applicable laws, ordinances, regulations, rules and orders, and
in a manner so as to preserve and foster the goodwill and business
relationships of the Station and Seller, including, without limitation,
relationships with
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advertisers, suppliers, customers, and employees. Seller shall file
with the Commission and any other applicable governmental authority
all material applications and other documents required to be filed
in connection with the continued operation of the Station. Seller
shall not enter into or amend any contracts or commitments involving
expenditures by the Seller in an aggregate amount in excess of $10,000
except in accordance with the terms of the LMA.
5.2 THIRD PARTY CONSENTS. Seller shall use commercially
reasonable efforts to obtain from any third party waivers, permits,
licenses, approvals, authorizations, qualifications, orders and consents
necessary for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, including, without limitation,
approval from the Commission of the Assignment Application contemplated
hereby.
5.3 ENCUMBRANCES. Seller shall not suffer or permit the
creation of any mortgage, conditional sales agreement, security interest,
lease, lien, hypothecation, deed of trust or pledge, encumbrance,
restriction, liability, charge, or imperfection of title with respect to
the Station Assets.
5.4 ASSIGNMENT OF ASSETS. Seller shall not sell, assign,
lease or otherwise transfer or dispose of any Station Assets, whether now
owned or hereafter acquired, except for retirements in the normal and
usual course of business or in connection with the acquisition of similar
property or assets, as provided for herein.
5.5COMMISSION LICENSES AND AUTHORIZATIONS. Seller shall not
by any act or omission surrender, modify adversely, forfeit or fail to
renew under regular terms the Licenses, cause the Commission or any other
governmental authority to institute any proceeding for the revocation,
suspension or modification of any such License, fail to prosecute with
due diligence any pending applications with respect to the Licenses at
the Commission or any other applicable governmental authority, or fail to
object or respond to any filing with the Commission that may have a
material adverse effect on the Licenses. Between the date of execution
of this Agreement and the Closing Date, Seller shall provide Buyer with
(i)copies of any reports, notices, correspondence, or other written
materials it sends to or receives from the Commission, (ii)a summary of
any oral communications with the Commission affecting the Licenses, and
(iii)copies of any applications or other filings by third parties that
may have a material adverse effect on the Licenses.
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5.6COMPENSATION INCREASES. Seller shall not permit any
increase in the rate of commissions, fixed salary or wages, draw or other
compensation payable to any employees of Seller other than in the
ordinary course of business consistent with past practice.
5.7INSURANCE. Seller shall maintain at all times between the
date hereof and the Closing Date all policies listed in Section3.18 of
the Disclosure Schedule or else replace such policies with comparable
policies.
5.8NEGOTIATIONS WITH THIRD PARTIES. Seller shall not, before
Closing or the termination of this Agreement, enter into discussions with
respect to any sale or offer of the Station, any Station Assets or any
stock of Seller to any third party, nor shall Seller offer the Station,
any Station Assets or any stock of Seller to any third party.
ARTICLE VI
JOINT COVENANTS OF BUYER AND SELLER
Buyer and Seller covenant and agree that between the date
hereof and the Closing Date, they shall act in accordance with the
following:
6.1 ASSIGNMENT APPLICATION. As promptly as practicable after
the date of this Agreement, and in no event later than ten (10) days
after execution of this Agreement, Seller and Buyer shall join in and
file an application on FCC Form314 with the Commission requesting its
consent to the assignment of the Licenses from Seller to Buyer (the
"Assignment Application"). Seller and Buyer agree to prosecute the
Assignment Application with all reasonable diligence and to use their
best efforts to obtain prompt Commission grant of the Assignment
Application filed at the Commission.
6.2 PERFORMANCE. Buyer and Seller shall perform all acts
required of them under this Agreement and refrain from taking or omitting
to take any action that would violate their representations and
warranties hereunder or render same inaccurate as of the Closing Date.
6.3 CONDITIONS. If any event should occur, either within or
without the control of any party hereto, which would prevent fulfillment
of the conditions placed upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, the parties
hereto shall use their best efforts to cure the event as expeditiously as
possible.
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6.4 CONFIDENTIALITY. Buyer and Seller shall each keep
confidential all information they obtain with respect to any other party
hereto in connection with this Agreement and the negotiations preceding
this Agreement, and will use such information solely in connection with
the transactions contemplated by this Agreement. If the transactions
contemplated hereby are not consummated for any reason, each party hereto
shall return to the party so providing, without retaining a copy thereof,
any schedules, documents or other written information obtained from the
party so providing such information in connection with this Agreement and
the transactions contemplated hereby. Notwithstanding the foregoing, no
party shall be required to keep confidential or return any information
which (i)is known or available through other lawful sources, (ii)is or
becomes publicly known through no fault of the receiving party or its
agents, (iii)is required to be disclosed pursuant to an order or request
of a judicial or governmental authority (provided the disclosing party is
given reasonable prior notice), or (iv)is developed by the receiving
party independently of the disclosure by the disclosing party.
6.5 COOPERATION. Buyer and Seller shall cooperate fully and
with each other in taking any actions to obtain the required consent of
any governmental instrumentality or any third party necessary or helpful
to accomplish the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that no party shall be required to take any action which would
have a material adverse effect upon it or any entity affiliated with it.
6.6 CONSENTS TO ASSIGNMENT. To the extent that any Assumed
Contract or other contract identified in the Disclosure Schedule that is
to be assigned under this Agreement is not capable of being sold,
assigned, transferred, delivered or subleased without the waiver or
consent of any third person withholding same (including a government or
governmental unit), or if such sale, assignment, transfer, delivery or
sublease or attempted sale, transfer, delivery or sublease would
constitute a breach thereof or a violation of any law or regulation, this
Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an
attempted sale, assignment, transfer, delivery or sublease thereof. In
those cases where consents, assignments, releases and/or waivers have not
been obtained at or prior to the Closing Date to the transfer and
assignment to Buyer of such contracts, Buyer may in its sole discretion
elect to have this Agreement and any assignments executed pursuant
hereto, to the extent permitted by law, constitute an equitable
assignment by Seller to Buyer of all of Seller's rights, benefits, title
and interest in and to such contracts, and where necessary
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or appropriate, Buyer shall be deemed to be Seller's agent for the purpose
of completing, fulfilling and discharging all of Seller's rights and
liabilities arising after the Closing Date under such contracts. Seller
shall use its reasonable best efforts to provide Buyer with the benefits
of such contracts (including, without limitation, permitting Buyer to
enforce any rights of Seller arising under such contracts), and Buyer
shall, to the extent Buyer is provided with the benefits of such
contracts, assume, perform and in due course pay and discharge all debts,
obligations and liabilities of Seller under such contracts.
6.7 BULK SALES LAWS. Buyer hereby waives compliance by Seller
with the provisions of the "bulk sales" or similar laws of any state.
Seller agrees to indemnify Buyer and hold it harmless against any and all
claims, losses, damages, liabilities, costs and expenses incurred by
Buyer or any affiliate as a result of any failure to comply with any
"bulk sales" or similar laws.
6.8 EMPLOYEE MATTERS. While under no obligation to hire any
employees of the Station, Buyer shall make reasonable efforts to offer
employment at will to certain employees of the Station. Upon review of a
full list of employees and salaries, Buyer shall notify Seller of those
employees to whom it will so offer employment as soon as practicable.
Seller shall be responsible for all salary and benefits of the employees
of the Station who do not accept, or are not offered, employment with
Buyer. Seller shall be responsible for all salary and other compensation
due to be paid for work for Seller for employees of the Station who
become employees of Buyer and Buyer shall be responsible for the salary
and other compensation due to be paid for work for Buyer on or after the
date of hire by Buyer for such employees. Seller shall be responsible
for severance payments which may be applicable under its employee benefit
plans to any employees not so offered employment and hired by Buyer.
6.9 COLLECTION OF RECEIVABLES. Buyer and Seller agree that
Buyer shall collect all accounts receivable (the "Receivable Amounts") of
the Seller with regard to the operation of the Station prior to the
Commencement Date of the LMA (as such term is defined therein) and which
remain outstanding as of the date hereof, and Buyer and Seller further
agree that Buyer shall remit such Receivable Amounts to Seller on a
monthly basis within ten (10) days after the end of any month in which
such Receivable Amounts are collected. Buyer shall provide Seller with
monthly reports in respect of the collection of such Receivable Amounts
for up to six (6) months following the Closing Date.
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6.10 LMA. Buyer and Seller shall enter into a definitive LMA
as of the date hereof pursuant to which Buyer shall provide program and
other services to the Station as of the Commencement Date (as such term
is defined in the LMA) until Closing unless earlier terminated in
accordance with the terms of this Agreement or the LMA.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The performance of the obligations of the Buyer hereunder is
subject, at the election of the Buyer, to the following conditions
precedent:
7.1 COMMISSION APPROVALS. Notwithstanding anything herein to
the contrary, the consummation of this Agreement is conditioned upon
(a)a grant by the Commission of the Assignment Application, and
(b)compliance by the parties with the conditions, if any, imposed by the
Commission in connection with the grant of the Assignment Application
(provided that neither party shall be required to accept or comply with
any condition which would be unreasonably burdensome or which would have
a materially adverse effect upon it). All required governmental filings
shall have been made, and all requisite governmental approvals for the
consummation of the transactions contemplated hereby shall have been
granted. The Licenses shall be in unconditional full force and effect,
shall be valid for the balance of the current license term applicable
generally to radio stations licensed to communities located in the State
of Georgia, and shall be unimpaired by any acts or omissions of Seller's
employees or agents, or Seller.
7.2 PERFORMANCE. The Station Assets shall have been
transferred to Buyer by Seller, and all of the terms, conditions and
covenants to be complied with or performed by Seller on or before the
Closing Date shall have been duly complied with and performed in all
material respects, and Buyer shall have received from Seller a
certificate or certificates to such effect, in form and substance
reasonably satisfactory to Buyer.
7.3 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller to Buyer shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect
as if then made, and Buyer shall have received from Seller a certificate
or certificates to such effect, in form and substance reasonably
satisfactory to Buyer.
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7.4 CONSENTS. Seller shall have received all consents
(including landlords' consents for the studio and tower sites) specified
in Section3.9 of the Disclosure Schedule.
7.5 NO LITIGATION. No litigation, proceeding, or
investigation of any kind shall have been instituted or, to Seller's
knowledge, threatened which would materially adversely affect the ability
of Seller to comply with the provisions of this Agreement or would
materially adversely affect the operation of the Station.
7.6 DOCUMENTS. Seller shall have obtained, executed, where
necessary, and delivered to Buyer, where applicable, all of the
documents, reports, orders and statements required of it herein, as well
as any other documents (including collateral assignments) required by any
entity providing financing for the transactions contemplated by this
Agreement and the Ancillary Agreements.
7.7 OPINIONS OF COUNSEL. Seller shall have delivered to Buyer
an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to
Seller, substantially in the form attached hereto as ExhibitA. In
addition, Seller shall have delivered to Buyer a written opinion of
Haley, Bader & Potts, Seller's FCC counsel, dated as of the Closing Date
substantially in the form attached hereto as ExhibitB.
7.8ANCILLARY AGREEMENTS. Buyer and Seller shall have entered
into the Ancillary Agreements on terms and conditions satisfactory to
Buyer.
7.9LMA. The LMA has not been terminated by the Buyer in
accordance with the terms thereof.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The performance of the obligations of Seller hereunder is
subject, at the election of Seller, to the following conditions
precedent:
8.1 PERFORMANCE. All of the terms, conditions and covenants
to be complied with or performed by Buyer on or before the Closing Date
shall have been duly complied with and performed in all material
respects, and Seller shall have received from Buyer a certificate or
certificates to such effect, in form and substance reasonably
satisfactory to Seller.
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8.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer to Seller shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect
as if then made, and Seller shall have received from Buyer a certificate
or certificates to such effect, in form and substance reasonably
satisfactory to Seller.
8.3 GOVERNMENT APPROVALS. All required governmental filings
shall have been made and all requisite governmental approvals for the
consummation of the transactions contemplated hereby shall have been
granted.
8.4 DOCUMENTS. Buyer shall have obtained, executed, where
necessary, and delivered to Seller, where applicable, all of the
documents, reports, orders and statements required of it herein.
8.5 OPINION OF COUNSEL. Buyer shall have delivered to Seller
an opinion of counsel to Buyer substantially in the form attached hereto
as ExhibitC addressed to and reasonably satisfactory to Seller.
8.6 ESCROW AGREEMENT. Seller and Buyer shall have entered
into an Escrow Agreement substantially in the form attached hereto as
ExhibitD.
8.7LMA. The LMA has not been terminated by the Seller in
accordance with the terms thereof.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 SURVIVAL. The representations and warranties provided for
in this Agreement shall survive the Closing for 9months from the Closing
Date (such 9-month period being the "Indemnification Period") for the
benefit of the parties hereto and their successors and assigns. The
covenants and agreements of the parties hereto shall survive the Closing
in accordance with their terms.
9.2 INDEMNIFICATION BY SELLER. From and after the Closing
Date, Seller and OCC agree to and shall jointly and severally indemnify,
defend and hold Buyer harmless, and shall reimburse Buyer for and against
any and all actions, losses, expenses, damages, liabilities, penalties or
assessments, judgments and costs (including reasonable legal expenses
related thereto) resulting from or arising out of:
(a) Any breach by Seller of any representation or
warranty contained in this Agreement, any
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Ancillary Agreement or in any certificate furnished to or to be furnished
pursuant hereto or in connection with the transactions contemplated hereby;
(b) Any failure to comply with any covenant of Seller
contained in this Agreement, any Ancillary Agreement or in any
certificate furnished or to be furnished pursuant hereto or in connection
with the transactions contemplated hereby; and
(c) Any liabilities of any kind or nature, absolute or
contingent, not assumed by Buyer, including, without limitation, any
liabilities relating to or arising from the business and operation of the
Station by Seller prior to the Closing Date and not assumed by the Buyer
pursuant to the LMA.
9.3 INDEMNIFICATION BY BUYER. From and after the Closing
Date, Buyer agrees to and shall indemnify, defend and hold Seller
harmless, and shall reimburse Seller for and against any and all actions,
losses, expenses, damages, liabilities, penalties or assessments,
judgments and costs (including reasonable legal expenses related thereto)
resulting from or arising out of:
(a) Any breach by Buyer of any representation or warranty
contained in this Agreement, any Ancillary Agreement or in any
certificate furnished or to be furnished pursuant hereto or in connection
with the transactions contemplated hereby;
(b) Any failure to comply with any covenant of Buyer
contained in this Agreement, any Ancillary Agreement or in any
certificate furnished or to be furnished pursuant hereto or in connection
with the transactions contemplated hereby; and
(c) Any liabilities of any kind or nature, absolute or
contingent, relating to or arising from the business and operation of the
Station (i) subsequent to the Commencement Date of the LMA, as defined in
the LMA and assumed by the Buyer pursuant thereto, and (ii) subsequent to
the Closing Date.
9.4 NOTIFICATION OF CLAIMS.
(a)A party entitled to be indemnified pursuant to
Sections9.2 or 9.3 (the "Indemnified Party") shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing of
any claim or demand which the Indemnified Party has determined has given
or could give rise to a right of indemnification under this Agreement.
Subject to the Indemnifying Party's right to defend in good faith third
party claims as hereinafter
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provided, the Indemnifying Party shall satisfy its obligations under this
ArticleIX within thirty (30) days after the receipt of a written notice
thereof from the Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section9.4(a), and
if such claim or demand relates to a claim or demand asserted by a third
party against the Indemnified Party which the Indemnifying Party
acknowledges is a claim or demand for which it must indemnify or hold
harmless the Indemnified Party under Sections9.2 or 9.3, the
Indemnifying Party shall have the right to employ counsel acceptable to
the Indemnified Party to defend any such claim or demand asserted against
the Indemnified Party. The Indemnified Party shall have the right to
participate in the defense of any such claim or demand. The Indemnifying
Party shall notify the Indemnified Party in writing, as promptly as
possible (but in any case before the due date for the answer or response
to a claim) after the date of the notice of claim given by the
Indemnified Party to the Indemnifying Party under Section9.4(a) of its
election to defend in good faith any such third party claim or demand.
So long as the Indemnifying Party is defending in good faith any such
claim or demand asserted by a third party against the Indemnified Party,
the Indemnified Party shall not settle or compromise such claim or
demand. The Indemnified Party shall make available to the Indemnifying
Party or its agents all records and other materials in the Indemnified
Party's possession reasonably required by it for its use in contesting
any third party claim or demand. Whether or not the Indemnifying Party
elects to defend any such claim or demand, the Indemnified Party shall
have no obligations to do so. Upon payment of any claim or demand
pursuant to this ArticleIX, the Indemnifying Party shall, to the extent
of payment, be subrogated to all rights of the Indemnified Party.
9.5 LIMITATION ON INDEMNIFICATION. Notwithstanding any
provision contained herein, (a)if Buyer has actual knowledge of a breach
by Seller of any representation, warranty, covenant or agreement
hereunder and Buyer closes notwithstanding such breach, Seller shall not
be responsible for any claim arising from such breach and Buyer shall not
be indemnified for such breach hereunder, and (b)if Seller has actual
knowledge of a breach by Buyer of any representation, warranty, covenant
or agreement hereunder and Seller closes notwithstanding such breach,
Buyer shall not be responsible for any claim arising from such breach and
Seller shall not be indemnified for such breach hereunder.
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ARTICLE X
MISCELLANEOUS
10.1 ASSIGNMENT.
(a)This Agreement shall not be assigned or conveyed by
either party hereto to any other person or entity without the prior
written consent of the other parties hereto; PROVIDED, HOWEVER, that
Buyer may assign this Agreement without Seller's prior consent to one or
more corporations or other entities controlled by Buyer. Subject to the
foregoing, this Agreement shall be binding and shall inure to the benefit
of the parties hereto, their successors and assigns.
(b) Notwithstanding anything to the contrary set forth
herein, Buyer may assign and transfer to any entity providing financing
for the transactions contemplated by this Agreement (or any refinancing
of such financing) as security for such financing all of the interest,
rights and remedies of Buyer with respect to this Agreement and the
Ancillary Agreements to the extent permitted by law, and Seller shall
expressly consent to such assignment. Any such assignment will be made
for collateral security purposes only and will not release or discharge
Buyer from any obligations it may have pursuant to this Agreement.
Notwithstanding anything to the contrary set forth herein, Buyer may
(i)authorize and empower such financing sources to assert, either
directly or on behalf of Buyer, any claims Buyer may have against Seller
under this Agreement and (ii)make, constitute and appoint one agent bank
in respect of such financing (and all officers, employees and agents
designated by such agent) as the true and lawful attorney and agent-in-
fact of Buyer for the purpose of enabling the financing sources to assert
and collect any such claims.
10.2 BROKERAGE. Seller and Buyer warrant and represent to one
another that, with the exception of Mark Hubbard, broker for the Seller,
there has been no broker in any way involved in the transactions
contemplated hereby and that no one other than Mark Hubbard is or will be
entitled to any fee or other compensation in the nature of a brokerage
fee or finder's fee as a result of the Closing hereunder. Seller shall
be wholly responsible for any brokerage or other fee due to Mark Hubbard.
10.3 EXPENSES OF THE PARTIES. It is expressly understood and
agreed that all expenses of preparing this Agreement and of preparing and
prosecuting the Assignment Application with the Commission, and all other
expenses, whether or not the transactions contemplated hereby are
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consummated, shall be borne solely by the party who shall have incurred
the same and the other party shall have no liability in respect thereto,
except as otherwise provided herein. All costs of transferring the
Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use
taxes, shall be borne equally by Seller and Buyer. Any filing or grant
fees imposed by any governmental authority the consent of which is
required for the transactions contemplated hereby shall be borne equally
by Seller and Buyer.
10.4 ENTIRE AGREEMENT. This Agreement, together with any
related Schedules or Exhibits, contains all the terms agreed upon by the
parties with respect to the subject matter herein, and supersedes all
prior agreements and understandings among the parties and may not be
changed or terminated orally. No attempted change, termination or waiver
of any of the provisions hereof shall be binding unless in writing and
signed by the party against whom the same is sought to be enforced.
10.5 HEADINGS. The headings set forth in this Agreement have
been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any manner, or be deemed to interpret in whole or in
part, any of the terms or provisions of this Agreement. Unless otherwise
specified herein, the section references contained herein refer to
sections of this Agreement.
10.6 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of NewYork.
10.7 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be
deemed an original, but all of such shall constitute one and the same
instrument.
10.8 NOTICES. Any notices or other communications shall be in
writing and shall be considered to have been duly given when deposited
into first class, certified mail, postage prepaid, return receipt
requested, delivered personally (which shall include delivery by Federal
Express or other recognized overnight courier service that issues a
receipt or other confirmation of delivery) or delivered via facsimile
machine;
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IF TO SELLER:
Mr. Frank D. Osborn
Osborn Communications Corp.
130 Mason Street
Greenwich, CT 06830
Fax: (203) 629-1749
Phone: (203) 629-0905
With a copy to:
Robert M. Hirsh
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
IF TO BUYER:
Anthony F. Renda
Renda Broadcasting Corporation
Broadcast Plaza
Crane Avenue
Pittsburgh, PA 15220-4098
Fax: (412) 531-7259
Phone: (412) 531-9500
With a copy to:
Henry S. Pool
Tucker Arensberg, P.C.
1500 One PPG Place
Pittsburgh, PA 15222
Any party may at any time change the place of receiving notice
by giving notice of such change to the other as provided herein.
10.9 SPECIFIC PERFORMANCE. Seller acknowledges that the
Station is of a special, unique and extraordinary character and that
damages are inadequate to compensate Buyer for Seller's breach of this
Agreement. Accordingly, in the event of a material breach by Seller of
its representations, warranties, covenants and agreements under this
Agreement, Buyer may sue at law for damages or, at Buyer's sole election,
Buyer may seek a decree of specific performance requiring Seller to
fulfill its obligations under this Agreement, and Seller agrees to waive
its defense that an adequate remedy at law exists; PROVIDED, HOWEVER,
that if Buyer chooses to pursue a remedy at law for damages, Buyer shall
not also pursue a decree of specific performance and recoverable damages
shall not exceed ten percent (10%)of the Purchase Price.
<PAGE>
Page 34
10.10 CONSENT TO JURISDICTION. Seller and Buyer hereby submit
to the nonexclusive jurisdiction of the courts of the State of NewYork
and the federal courts of the United States of America located in such
state solely in respect of the interpretation and enforcement of the
provisions hereof and of the documents referred to herein, and hereby
waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such
document, that they are not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or
that this Agreement or any of such documents may not be enforced in or by
said courts or that the Station property is exempt or immune from
execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or proceeding
is improper.
10.11 FURTHER ASSURANCES. Seller and Buyer agree to execute
all such documents and take all such actions after the Closing Date as
any other party shall reasonably request in connection with carrying out
and effectuating the intent and purpose hereof and all transactions and
things contemplated by this Agreement, including, without limitation, the
execution and delivery of any and all confirmatory and other documents in
addition to those to be delivered on the Closing Date and all actions
which may reasonably be necessary or desirable to complete the
transactions contemplated hereby.
10.12 PUBLIC ANNOUNCEMENTS. No public announcement (including
an announcement to employees) or press release concerning the
transactions provided for herein and in the LMA shall be made by either
party without the prior approval of the other party, except as required
by law.
10.13 EXHIBITS AND SCHEDULES. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references
herein to Sections, subsections, clauses, Exhibits and Schedules shall be
deemed references to such parts of this Agreement, unless the context
shall otherwise require.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or have
caused this Agreement to be executed by a duly authorized officer on the
day and year first above written.
SELLER
NELSON BROADCASTING CORPORATION
By:
-------------------------------
Name: Frank D. Osborn
Title: President
BUYER
RENDA BROADCASTING CORPORATION
By:
------------------------------
Name: Anthony F. Renda
Title: President
IN WITNESS WHEREOF, Osborn Communications Corporation has
caused this Agreement to be executed by a duly authorized officer on the
day and year first above written for the sole purpose of being bound by
the provisions of ArticleIX hereof.
OSBORN COMMUNICATIONS CORPORATION
By:
--------------------------------
Name: Frank D. Osborn
Title: President
[DESCRIPTION]Asset Purchase Agreement - Daytona Beach Broadcasting Corporation
___________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of August 31, 1995
by and between
DAYTONA BEACH BROADCASTING CORPORATION
(Seller)
and
RENDA BROADCASTING CORPORATION
(Buyer)
___________________________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I ASSIGNMENT OF LICENSES ANDTHE PURCHASE AND SALE OF ASSETS
1.1 Assignment of Licenses and
Transfer of Assets...........................................1
1.2 Excluded Assets...............................................3
1.3 Liabilities to be Assumed.....................................4
1.4 Purchase Price................................................4
1.5 Proration of Income and Expenses..............................4
1.6 Allocation of Purchase Price..................................6
1.7 Escrow Deposit................................................6
ARTICLE II CLOSING, LMA OPERATION AND TERMINATION
2.1 Closing.......................................................7
2.2 Transactions at the Closing...................................7
2.3 Termination...................................................9
2.4 Operation of Station pursuant to the LMA.....................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation............................................11
3.2 Authority; No Conflict.......................................11
3.3 Government Authorizations....................................12
3.4 Compliance with Regulations..................................13
3.5 Personal Property............................................13
3.6 Real Property................................................14
3.7 Real Estate Contracts........................................14
3.8 Consents.....................................................14
3.9 Contracts....................................................14
3.10 Environmental................................................15
3.11 Intellectual Property........................................16
3.12 Financial Statements.........................................16
3.13 Personnel Information; Labor Contracts.......................16
3.14 Employee Benefit Plans.......................................17
3.15 Litigation...................................................17
3.16 Compliance with Laws.........................................18
3.17 Insurance....................................................18
3.18 Instruments of Conveyance; Good Title........................18
3.19 Undisclosed Liabilities......................................18
3.20 Absence of Certain Changes...................................18
3.21 Insolvency Proceedings.......................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation............................................20
4.2 Authority; No Conflict.......................................20
<PAGE>
4.3 Consents.....................................................20
4.4 Litigation...................................................21
4.5 Compliance with Laws.........................................21
4.6 Qualification................................................21
4.7 Financing....................................................21
ARTICLE V COVENANTS OF SELLER
5.1 Continued Operation of Station...............................21
5.2 Third Party Consents.........................................22
5.3 Encumbrances.................................................22
5.4 Assignment of Assets.........................................22
5.5 Commission Licenses and Authorizations.......................22
5.6 Compensation Increases.......................................23
5.7 Insurance....................................................23
5.8 Negotiations with Third Parties..............................23
ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application.......................................23
6.2 Performance..................................................23
6.3 Conditions...................................................23
6.4 Confidentiality..............................................24
6.5 Cooperation..................................................24
6.6 Consents to Assignment.......................................24
6.7 Bulk Sales Laws..............................................25
6.8 Employee Matters.............................................25
6.9 Collection of Receivables....................................25
6.10 LMA..........................................................26
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals.........................................26
7.2 Performance..................................................26
7.3 Representations and Warranties...............................26
7.4 Consents.....................................................27
7.5 No Litigation................................................27
7.6 Documents....................................................27
7.7 Opinions of Counsel..........................................27
7.8 Ancillary Agreements.........................................27
7.9 LMA .........................................................27
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance..................................................27
8.2 Representations and Warranties...............................28
8.3 Government Approvals.........................................28
8.4 Documents....................................................28
8.5 Opinion of Counsel...........................................28
8.6 Escrow Agreement.............................................28
8.7 LMA .........................................................28
<PAGE>
ARTICLE IX SURVIVAL AND INDEMNIFICATION
9.1 Survival.....................................................28
9.2 Indemnification by Seller....................................28
9.3 Indemnification by Buyer.....................................29
9.4 Notification of Claims.......................................29
9.5 Limitation on Indemnification................................30
ARTICLE X MISCELLANEOUS
10.1 Assignment...................................................31
10.2 Brokerage....................................................31
10.3 Expenses of the Parties......................................31
10.4 Entire Agreement.............................................32
10.5 Headings.....................................................32
10.6 Governing Law................................................32
10.7 Counterparts.................................................32
10.8 Notices......................................................32
10.9 Specific Performance.........................................33
10.10 Consent to Jurisdiction......................................34
10.11 Further Assurances...........................................34
10.12 Public Announcements.........................................34
10.13 Exhibits and Schedules.......................................34
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this 31st day of
August, 1995 by and between DAYTONA BEACH BROADCASTING CORPORATION, a
corporation formed under the laws of the State of Delaware ("Seller"),
and RENDA BROADCASTING CORPORATION, a corporation formed under the laws
of the Commonwealth of Pennsylvania ("Buyer").
R E C I T A L S
WHEREAS, Seller owns and operates and has been duly licensed by
the Federal Communications Commission (the "FCC" or the "Commission") to
operate radio station WFKS(FM), Palatka, Florida (the "Station");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase, the assets utilized in connection with the operation of the
Station, and Seller and Buyer further desire that Seller assign to Buyer
the licenses and other authorizations issued to Seller by the Commission
for the purpose of operating the Station; and
WHEREAS, simultaneously with the execution of this Agreement,
Seller and Buyer have entered into a Local Marketing Agreement ("LMA");
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
ASSIGNMENT OF LICENSES AND
THE PURCHASE AND SALE OF ASSETS
1.1 ASSIGNMENT OF LICENSES AND TRANSFER OF ASSETS. Seller
agrees to assign, transfer, convey and deliver to Buyer and Buyer agrees
to acquire, accept and receive from Seller, on the Closing Date, all of
Seller's right, title and interest in and to the following station
licenses and the assets relating to the Station (the "Station Assets")
free and clear of all liens and encumbrances:
(a) LICENSES AND AUTHORIZATIONS. All licenses, permits
and other authorizations issued by the FCC or any other state or federal
regulatory agency pertaining to the Station, including, without
limitation, those licenses, permits or authorizations listed in Section
1.1(a) of the disclosure schedule delivered by Seller to Buyer and
<PAGE>
Page 2
dated of even date herewith (the "Disclosure Schedule"), together with any
renewals, extensions or modifications thereof and additions thereto made
between the date of this Agreement and the Closing Date and any
applications filed at the FCC during such period (the "Licenses"). The
Licenses include the right to use the call letters of the Station,
including but not limited to the call letters WFKS(FM).
(b) TANGIBLE PERSONAL PROPERTY. All of the tangible
personal property owned by Seller and used or useable in the operation of
the Station, including but not limited to the items of personal property
listed in Section 1.1(b) of the Disclosure Schedule, together with all
additions, modifications or replacements thereto made in the ordinary
course of business between the date of this Agreement and the Closing
Date, as hereafter defined (the "Personal Property").
(c) REAL ESTATE CONTRACTS. All of the leasehold
interests in real property leased by Seller and used by the Station,
including all agreements, leases, and contracts of Seller relating to the
tower, transmitter, studio site, and offices of the Station (the "Real
Estate Contracts"), other than security or other deposits made with
respect to such Real Estate Contracts, all as described in Section 1.1(c)
of the Disclosure Schedule. Buyer shall assume, pay and perform all
obligations under such Real Estate Contracts arising after the Closing
Date.
(d) INTELLECTUAL PROPERTY. All of Seller's trade names,
copyrights, trademarks, service marks, patents, patent applications or
other similar rights relating to the operation of the Station including,
but no limited to, those listed in Section 1.1(d) of the Disclosure
Schedule, together with any necessary additions or modifications thereto
between the date hereof and the Closing Date (the "Intellectual
Property").
(e) LEASES AND CONTRACTS. All leases, contracts,
agreements and franchises in effect as of the date of this Agreement
relating to the operation of the Station (other than contracts for the
sale of broadcast time and leases for real property) listed and
identified in Section 1.1(e) of the Disclosure Schedule and those leases,
contracts, agreements and franchises described in Section 1.1(h) of this
Agreement (the "Contracts"). Buyer shall assume, pay and perform all
obligations under such Contracts arising after the Closing Date.
(f) CONTRACTS FOR SALE OF BROADCAST TIME. All contracts
for sale of broadcast time on the Station in effect as of the date of this
Agreement that provide for payment by the customer solely on a cash basis
and that are to be in effect on the Closing Date as listed and identified
<PAGE>
Page 3
in Section 1.1(f) of the Disclosure Schedule (the "Broadcast
Agreements"). Buyer shall assume, pay and perform all obligations under
the Broadcast Agreements arising after the Closing Date, PROVIDED,
HOWEVER, Buyer will not assume any contract for the sale of time entered
into prior to the date of this Agreement pursuant to which payment is to
be received in whole or in part in services, merchandise or other non-
cash considerations ("Trade Agreements"), except as set forth in Section
1.1(f) of the Disclosure Schedule.
(g) OPERATING AND BUSINESS RECORDS. All files, records,
logs and program materials pertaining to the operation of the Station
required to be maintained and kept under the rules of the Commission and
such other files and records as Buyer shall reasonably require for the
continuing business and operation of the Station. Seller shall have the
right to reasonable access to such business records that Seller delivers
to Buyer under this Section 1.1(g) upon Seller's request for five years
after the Closing Date.
(h) FUTURE CONTRACTS. All leases, contracts, agreements
and franchises entered into between the date hereof and the Commencement
Date of the LMA (as such term is defined therein) in the usual and
ordinary course of business.
(i) INVENTORY AND COMPUTER SOFTWARE. All of Seller's
items of inventory related to the business of the Station, including,
without limitation, broadcast programs, as well as all computer software
used or useable by the Station.
(j) OTHER RIGHTS AND PRIVILEGES. Any and all other
franchises, materials, supplies, easements, rights-of-way, licenses, and
other rights and privileges of Seller relating to and used, useable or
necessary in the operation of the Station.
1.2 EXCLUDED ASSETS. There shall be excluded from the sale
transaction described herein the following assets relating to the
Station:
(a) CASH AND DEPOSITS. Cash-on-hand or in banks (or
their equivalents) and other investments belonging to Seller and relating
to the operation of the Station as of the Closing Date.
(b) ACCOUNTS RECEIVABLE. All accounts receivable of the
Seller with regard to the operation of the Station prior to the
Commencement Date of the LMA (as such term is defined therein).
(c) PROPERTY CONSUMED. All property of the Station
disposed of or consumed (including ordinary wear and
<PAGE>
Page 4
tear) in the ordinary course of business between the date hereof and the
Closing Date.
(d) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All
contracts described in Sections 1.1(e), (f) and (h) to the Disclosure
Schedule that are terminated or will have expired prior to the Closing
Date in the ordinary course of business.
(e) PENSION AND PROFIT-SHARING PLANS. All pension and
profit-sharing plans, trusts established thereunder and assets thereof,
if any, of Seller.
(f) OTHER EMPLOYEE BENEFIT PLANS. All other employee
benefit plans (including health insurance) of Seller and the assets
thereof.
(g) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS. All
employment agreements and collective bargaining agreements of Seller.
(h) OTHER ASSETS. Those assets, if any, listed in
Section 1.2(h) of the Disclosure Schedule.
1.3 LIABILITIES TO BE ASSUMED. Except as otherwise provided
herein, Buyer assumes no liabilities or obligations of Seller of any
nature whatsoever, contingent or otherwise, except for obligations
arising after the date hereof in connection with the conduct of the
business and operations of the Station or pursuant to the LMA (the "Post-
Signing Agreements") and post-closing obligations related to Real Estate
Contracts, Contracts, Broadcast Agreements, Trade Agreements and Post-
Signing Agreements (collectively, the "Assumed Contracts") assigned to
and specifically assumed by Buyer.
1.4 PURCHASE PRICE. In consideration of Seller's performance
of this Agreement and the sale, assignment, transfer, conveyance and
delivery of the Station Assets to Buyer free and clear of all liens and
encumbrances, Buyer shall pay to Seller on the Closing Date, by wire
transfer, the sum of Four Million Dollars (US$4,000,000.00) (the
"Purchase Price").
1.5 PRORATION OF INCOME AND EXPENSES. Subject to the
provisions of the LMA, all income and revenues arising from the Seller's
operations of the Station up to and including 11:59 p.m. (the "Cut-Off
Time") of the day prior to the Commencement Date, and all costs and expenses
arising from the operations of the Station up to and including 11:59 p.m.
of the operations of the day prior to the Commencement Date, will be prorated
between Buyer and Seller so that Seller (a) shall be entitled to receive all
income and revenues and all refunds, and (b) shall be responsible for
<PAGE>
Page 5
all expenses, costs, liabilities and obligations allocable to the
conduct of the business and the operation of the Station for the
period prior to the Cut-Off Time; and Buyer (x) shall be entitled
to receive all income and revenues and all refunds and (y)
shall be responsible for all expenses, costs, liabilities and
obligations allocable to the conduct of the business and the operation of
the Station for the period after the Cut-Off Time. All income and
revenues and costs and expenses arising from the conduct of the business
and operation of the Station shall be allocated to the period during
which the service to which such income and revenue is attributable was
performed. Items to be apportioned pursuant to this paragraph shall
include the following:
(i) all personal property taxes, real estate taxes, water
taxes, ad valorem, and other property taxes or assessments on or with
respect to the assets and property interests to be transferred or
assigned to Buyer hereunder;
(ii) business and license fees including any FCC
Regulatory Fees (and any retroactive adjustments thereof), music license
fees, commissions, wages, salaries and benefits of employees (including
accruals up to the Cut-Off Time for insurance premiums, bonuses,
commissions, sick pay, vacation and severance pay and the like and
related payroll taxes) and similarly prepaid and deferred items;
(iii) liabilities and obligations under all Broadcast
Agreements and any negative balances under the Trade Agreements to be
assigned and assumed hereunder;
(iv) sewer rents and charges for water, electricity and
other utility expenses and fuel;
(v) personal property and equipment rentals, applicable
copyright or other fees, sales and other charges; and
(vi) rents, additional rents and similar prepaid and
deferred items, taxes and other items payable under any lease, contract,
commitment or other agreement or arrangement to be assigned and assumed
hereunder and all other income and expenses attributable to the ownership
and operation of the Station.
Taxes to be apportioned pursuant to this Section 1.5 shall be apportioned
in proportion to (x) the number of days in the taxable period before and
including the Cut-Off Time and (y) the number of days in the taxable
period after the Cut-Off Time. No apportionment shall be made pursuant
to this Section of any federal, state, foreign or local income taxes.
Any tax refunds or rebates accruing before the Cut-Off Time for taxes
that were paid prior to Closing shall
<PAGE>
Page
remain the property of Seller, whether such refund is paid before
or after the Closing Date.
(a) TIME FOR PAYMENT. The prorations and adjustments
contemplated by this Section 1.5, to the extent practicable, shall be
made on the Closing Date. Not less than three (3) Business Days prior to
the Closing Date, Seller shall submit to Buyer a written estimate of
adjustments and prorations to be made in accordance with this Article.
Prior to the Closing, Buyer and Seller will attempt in good faith to
agree on an amount of any adjustment and proration payment to be made on
the Closing Date. As to those prorations and adjustments not capable of
being ascertained on the Closing Date, an adjustment and proration shall
be made within 90 days after the Closing Date.
(b) DISPUTE RESOLUTION. In the event of any disputes
between the parties as to such adjustments, the amounts not in dispute
shall nonetheless be paid at the time provided in Section 1.5(a) and such
disputes shall be determined by an independent certified public
accountant mutually acceptable to the parties whose determination shall
be final, and the fees and expenses of such accountant shall be paid one-
half by Seller and one-half by Buyer.
1.6 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that
the Purchase Price shall be allocated among the Station Assets in a
manner to be determined by Buyer and Seller. Buyer and Seller agree to
use such allocation in completing and filing Internal Revenue Service
Form 8594 for federal income tax purposes. Buyer and Seller further
agree that they shall not take any position inconsistent with such
allocation upon examination of any return, in any refund claim, in any
litigation, or otherwise.
1.7 ESCROW DEPOSIT. As security for Buyer's failure to Close
and as an inducement for Seller to perform its obligations hereunder
Buyer shall deposit with Paul, Weiss, Rifkind, Wharton & Garrison (the
"Escrow Agent") in a separate account maintained for such purpose, an
amount equal to One Hundred Seventy Eight Thousand Four Hundred Ninety
Dollars (US$178,490.00) (the "Escrow Deposit"), which Escrow Deposit
shall be held and disbursed by the Escrow Agent, in the event of a
termination of this Agreement, pursuant to Sections 2.3 (c), (d), (e) and
(f) herein and, upon Closing, disbursed to Seller in partial satisfaction
of the Purchase Price. Buyer and Seller agree that the rate of interest
in respect of the Escrow Deposit shall be determined by Buyer and Seller,
and further agree that such interest shall accrue, and be payable, to
Buyer.
<PAGE>
Page 7
ARTICLE II
CLOSING, LMA OPERATION AND TERMINATION
2.1 CLOSING. The purchase and sale of the Station Assets
contemplated by this Agreement (the "Closing") shall take place at 10:00
a.m. on a mutually agreed upon date and place within five (5) days after
the Commission's approval of the Assignment Application, as defined in
Section 6.1 below, becomes a Final Order, or such other time and place as
shall be mutually agreed upon by the parties (the "Closing Date"). For
purposes of this Agreement, a "Final Order" shall mean any action of the
Commission which has not been reversed, stayed, enjoined, set aside,
annulled or suspended and with respect to which no requests are pending
for administrative or judicial review, reconsideration, appeal or stay,
and the time for filing any such requests and the time for the Commission
to set aside the action on its own motion shall have expired. Buyer may,
at its sole election, waive the requirement that the Commission's
approval of the Assignment Application shall have become a Final Order.
2.2 TRANSACTIONS AT THE CLOSING.
(a) At the Closing, Seller shall deliver to Buyer the
following:
(i) assignments of the Licenses and other pertinent
authorizations transferring the same to the Buyer in customary form
and substance;
(ii) the certificates contemplated by Sections 7.2 and
7.3;
(iii) a copy of the resolutions of the board of
directors of Seller authorizing the execution, delivery and
performance of this Agreement and the agreements and documents
listed in Section 2.2 of the Disclosure Schedule (the "Ancillary
Agreements"), and the consummation of the transactions contemplated
hereby and thereby, together with a certificate of the Secretary of
Seller, dated as of the Closing Date, that such resolutions were
duly adopted and are in full force and effect;
(iv) a bill of sale and all other appropriate
documents and instruments assigning to Buyer good and marketable
title to the Station Assets free and clear of any security
interests, mortgages, liens, pledges, attachments, conditional sales
contracts, claims, charges or encumbrances of any kind whatsoever;
<PAGE>
Page 8
(v) the Ancillary Agreements, duly executed by Seller
as appropriate;
(vi) written consents of the respective lessors,
landowners, and any other persons or entities whose consents may be
required to permit Buyer to assume the liabilities, contracts,
leases, licenses, understandings and agreements constituting the
Assumed Contracts provided that Seller shall not be required to
deliver any written consents referred to in Section 3.7(b) herein to
the extent Seller has used reasonable efforts to obtain such
consents;
(vii) evidence satisfactory to Buyer's counsel that no
financing statements are outstanding on the Station Assets;
(viii) all files, records, logs, and program materials
relating to the Station;
(ix) a copy of the resolution of the board of
directors of Osborn Communications Corporation ("OCC") authorizing
the execution, delivery and performance by OCC of an indemnification
agreement contained in Article IX hereof, together with a
certificate of OCC dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect;
(x) the opinion of counsel for Seller, dated the
Closing Date, as described in Section 7.8;
(xi) assignments to Buyer of all the Assumed
Contracts; and
(xii) such other documents and instruments as Buyer may
reasonably request to consummate the transactions contemplated hereby.
(b) At the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i) the Purchase Price;
(ii) a copy of the resolutions of the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby,
together with a certificate of the Secretary of Buyer dated as of
Closing Date, that such resolutions were duly adopted and are in
full force and effect;
<PAGE>
Page 9
(iii) the certificates contemplated by Sections 8.1 and
8.2;
(iv) the Ancillary Agreements, duly executed by Buyer
as appropriate;
(v) the opinion of counsel for Buyer, dated the
Closing Date, as described in Section 8.5; and
(vi) such other documents and instruments as Seller
may reasonably request to consummate the transactions contemplated
hereby.
2.3 TERMINATION.
(a) Notwithstanding anything to the contrary contained in
this Agreement, this Agreement may be terminated at any time by:
(i) the mutual written consent of the parties hereto;
(ii) either Buyer or Seller if the Closing does not
occur before June 30, 1996, PROVIDED, HOWEVER, that the party
seeking termination under this Section 2.3(a)(ii) shall not have
prevented the Closing from occurring;
(iii) either Buyer or Seller if the Assignment
Application is not granted within nine (9) months from the date the
FCC Form 314 is placed on Commission public notice or is denied by
the Commission by a Final Order or is designated for hearing by the
Commission; PROVIDED, HOWEVER, that the party seeking termination
under this Section 2.3(a)(iii) is not the party which by omission or
commission has caused the Commission to take the action described
above; FURTHER PROVIDED that in the event the Assignment Application
is designated for hearing by the Commission the provisions of
Section 2.3(e) shall apply;
(iv) Buyer, if any of the conditions set forth in
Article VII shall have become incapable of fulfillment, and shall
not have been waived by Buyer, or if Seller shall have breached in
any material respect any of its representations, warranties or
obligations hereunder and such breach shall not have been cured in
all material respects or waived prior to the Closing; or
(v) Seller, if any of the conditions set forth in
Article VIII shall have become incapable of fulfillment, and shall
not have been waived by Seller,
<PAGE>
Page 10
or if Buyer shall have breached in any material respect any of its
representations, warranties or obligations hereunder and such breach
shall not have been cured in all material respects or waived prior
to the Closing.
(b) In the event of the termination of this Agreement by
Buyer or Seller pursuant to this Section 2.3, written notice thereof
shall promptly be given to the other party and, except as otherwise
provided herein, the transactions contemplated by this Agreement shall be
terminated, without further action by any party.
(c) In the event Seller terminates this Agreement under
Section 2.3 (a)(ii), (iii) or (v) Buyer shall forfeit the Escrow Deposit
to Seller, except in the event Buyer also has the right to terminate
under Section 2.3(a)(ii) or (iii) the Escrow Deposit shall be returned to
Buyer.
(d) In the event Buyer terminates this Agreement under
Section 2.3(a)(ii), (iii) or (iv) the Escrow Deposit shall be returned to
Buyer.
(e) The time for Commission approval provided in Section
2.3(a)(iii) notwithstanding, either party may terminate this Agreement
upon written notice to the other, if, for any reason, the Assignment
Application is designated for hearing by the Commission, PROVIDED,
HOWEVER, that written notice of termination must be given within twenty
(20) days after release of the Hearing Designation Order and that the
party giving such notice is not in default and has otherwise complied
with its obligations under this Agreement. Upon termination pursuant to
this Section, the parties shall be released and discharged from any
further obligation hereunder and the Escrow Deposit shall be returned to
the Buyer.
(f) It is further PROVIDED, HOWEVER, that no party may
terminate this Agreement if such party is in default hereunder, or if a
delay in any decision or determination by the Commission respecting the
Assignment Application has been caused or materially contributed to
(i) by any failure of such party to furnish, file or make available to
the Commission information within its control; (ii) by the willful
furnishing by such party of incorrect, inaccurate or incomplete
information to the Commission; and (iii) by any other action taken by
such party for the purpose of delaying the Commission's decision or
determination respecting the Assignment Application. Upon such
termination for failure of the Commission to act, the parties shall be
released and discharged from any further obligation hereunder.
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(g) A party shall be deemed to be in default under this
Agreement only if such party has materially breached or failed to perform
its obligations hereunder, and non-material breaches or failures shall
not be grounds for declaring a party to be in default, postponing the
Closing, or terminating this Agreement.
(h) Neither the rights nor the remedies of either Buyer
or Seller under Sections 2.3(c), (d) or (e) shall prejudice any other
rights or remedies either Buyer or Seller may have under this Agreement.
(i) If the Closing occurs, the Escrow Deposit shall be
applied to the Purchase Price at Closing.
2.4 OPERATION OF STATION PURSUANT TO THE LMA. Notwithstanding
any provision to the contrary in this Agreement:
(a) As of the Commencement Date of the LMA (as such term is
defined therein) the business and operation of the Station
shall be conducted pursuant to the terms of the LMA;
(b) All liabilities, obligations, contracts or claims that
arise by reason of the LMA (the "LMA Liabilities") shall
not constitute or be the basis of, (i) a breach of a
representation or warranty, or covenant of Seller, or
(ii) the failure of any condition to the obligation of
Buyer to close;
(c) All LMA Liabilities shall be assumed by Buyer as of the
Commencement Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 DUE INCORPORATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and is duly qualified to do business in and is in good
standing in the State of Florida. Seller has the corporate power and
authority to own and to operate the Station and the Station Assets.
3.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements have been duly and validly
authorized and approved by the board of directors of Seller, and Seller
has the corporate
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power and authority to execute, deliver and perform this Agreement
and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. Neither such execution, delivery
or performance nor compliance by Seller with the terms and
provisions hereof, or with respect to the Ancillary Agreements, will
(assuming receipt of all necessary approvals from the Commission)
conflict with or result in a breach of any of the terms, conditions or
provisions of (a) the Certificate of Incorporation or Bylaws of Seller,
(b) any judgment, order, injunction, decree, regulation or ruling of any
court or other governmental authority to which Seller is subject, or (c)
any material agreement, lease or contract, written or oral, to which
Seller is subject. This Agreement shall constitute the valid and binding
obligation of Seller with respect to the terms hereof, subject to
Commission approval of the transactions contemplated hereby.
3.3 GOVERNMENT AUTHORIZATIONS. Section 1.1(a) of the
Disclosure Schedule contains a true and complete list of all the
Licenses, which Seller holds with regular, unconditional renewals thereof
and which were granted for the full license terms and the Licenses are
sufficient for the lawful conduct of the business and operation of the
Station in the manner and to the full extent they are currently
conducted. None of the Licenses is subject to any restriction or
condition which would limit in any material respect the full operation of
the Station as now operated. There are no applications, complaints or
proceedings pending or, to the best of Seller's knowledge, threatened as
of the date hereof before the Commission or any other governmental
authority relating to the business or operations of the Station, other
than applications, complaints or proceedings which generally affect the
broadcasting industry as a whole, and other than reports and forms filed
in the ordinary course of the Station's business. Seller has delivered
to Buyer true and complete copies of the Licenses, including any and all
additions, amendments and other modifications thereto. The Licenses are
validly issued, are in good standing, are in full force and effect and
are unimpaired by any act or omission of Seller or its officers,
directors or employees, and Seller has fulfilled and performed all of its
obligations with respect thereto and has full power and authority to
operate thereunder; and the operation of the Station is in accordance
with the Licenses and the Communications Act of 1934, as amended, and the
rules, regulations, and policies of the Federal Communications
Commission. To the knowledge of Seller no proceedings are pending or are
threatened which may result in the revocation, modification, non-renewal
or suspension of any of the Licenses, the denial of any pending
applications, the issuance of any cease and desist order, the imposition
of any administrative actions by the Commission with respect to the
Licenses or which may
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affect Buyer's ability to continue to operate the Station as
it is currently operated. Seller has taken no action which,
to its knowledge, could lead to revocation or non-renewal of the
Licenses, nor omitted to take any action which, by reason of its
omission, could lead to revocation of the Licenses. All material
reports, forms and statements required to be filed with the Commission
with respect to the Station since the grant of the last renewal of the
Licenses have been filed and are complete and accurate. To the knowledge
of Seller, there are no material facts which, under the Communications
Act of 1934, as amended, or the existing rules and regulations of the
Commission, would disqualify Seller as assignor, and Buyer as assignee,
in connection with the Assignment Application.
For purposes of this Section, the term "material" shall mean
any application, complaint, petition, or other proceeding which could
result in a fine, forfeiture, short term renewal or revocation or non-
renewal of the Licenses or a failure on the part of the FCC to approve
the application.
3.4 COMPLIANCE WITH REGULATIONS. The operation of the Station
is in compliance in all material respects with (i) all applicable
engineering standards required to be met under Commission rules, and (ii)
all other applicable rules, regulations, requirements and policies of the
Commission and all other applicable governmental authorities, including,
but not limited to, ANSI Radiation Standards, to the extent required to
be met under applicable Commission rules and regulations; and there are
no existing material claims known to Seller to the contrary.
3.5 PERSONAL PROPERTY. Section 1.1(b) of the Disclosure
Schedule contains a true and complete list of the Personal Property.
Except for those assets designated on Section 1.1(b) of the Disclosure
Schedule as being subject to lease agreements, Seller owns and has, and
will have on the Closing Date, good and marketable title to such Personal
Property, and none of such Personal Property on the Closing Date will be
subject to any security interest, mortgage, pledge, conditional sales
agreement or other lien or encumbrance. The Personal Property is in all
material respects in good operating condition, ordinary wear and tear
excepted, and is available for immediate use in the conduct of the
business and operation of the Station. The technical equipment,
including, without limitation, all transmitters and studio equipment,
constituting part of the Personal Property, has been maintained in
accordance with industry practice and is in good operating condition,
ordinary wear and tear excepted, (except as noted in Section 1.1(b) of
the Disclosure Schedule) and complies in all material respects with all
applicable rules and
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regulations of the Commission and the terms of the Licenses. The Personal
Property includes such items and equipment necessary to conduct in all
material respects the business and operations of the Station as now conducted.
3.6 REAL PROPERTY. Neither Seller nor any affiliate of Seller
owns any real property used in connection with the operation of the
Station.
3.7 REAL ESTATE CONTRACTS.
(a) Section 1.1(c) of the Disclosure Schedule contains a
true and complete list and summary of all the Real Estate Contracts. The
present use by the Station of all real property leased pursuant to the
Real Estate Contracts conforms in all material respects with all
applicable building, zoning, land use and other laws, ordinances, codes,
orders and regulations, and, to the knowledge of Seller, all other
governmental regulations.
(b) As of the date hereof, Seller has complied in all
material respects with all of the Real Estate Contracts and has not
received or given written notice of any default thereunder from or to any
of the other parties thereto. Seller shall use reasonable efforts to
obtain valid and binding third-party consents, if any are necessary, from
all required third parties to the Real Estate Contracts to be conveyed
and assigned to Buyer as part of the Station Assets.
3.8 CONSENTS. No consent, approval, authorization or order
of, or registration, qualification or filing with, any court, regulatory
authority or other governmental body is required for the execution,
delivery and performance by Seller of this Agreement or the Ancillary
Agreements to which it is a party, other than (i) approval by the
Commission of the Assignment Application as contemplated hereby and
(ii) Seller's filing with the Commission of this Agreement and Buyer's
filing with the Commission of the LMA pursuant to Section 73.3613 of the
Commission's rules, if the Assignment Application (including the LMA) is
not filed within thirty days of the execution of this Agreement. Except
as set forth in Section 3.8 of the Disclosure Schedule, no consent of any
other party (including, without limitation, any party to any Real Estate
Contract or Contract) is required for the execution, delivery and
performance by Seller of this Agreement, the Escrow Agreement or the
Ancillary Agreements to which it is a party.
3.9 CONTRACTS. Section 1.1(e) of the Disclosure Schedule
contains a true and complete list of all Contracts, and Section 1.1(f)
contains a true and complete list of all Broadcast Agreements and Trade
Agreements.
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Seller has delivered to Buyer true and complete copies of
all written Contracts, Broadcast Agreements and Trade agreements in the
possession of Seller, including any and all amendments and other
modifications to same. All such Contracts, Broadcast Agreements and
Trade Agreements are valid, binding and enforceable by Seller in
accordance with their respective terms, except as limited by laws
affecting creditors' rights or equitable principles generally. Seller
has complied in all material respects with all such Contracts, Broadcast
Agreements and Trade Agreements, and Seller is not in default beyond any
applicable grace periods under any of same, and to the knowledge of
Seller no other contracting party is in material default under any of
same. Seller has full legal power and authority to assign its respective
rights under such Contracts, Broadcast Agreements and Trade Agreements 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 materially affect the validity, enforceability and continuity of
any such Contracts, Broadcast Agreements and Trade Agreements, except to
the extent third party consents are required.
3.10 ENVIRONMENTAL. As of the date hereof, Seller has not
unlawfully disposed of any Hazardous Waste, including any Polychlorinated
Biphenyls ("PCBs"), in a manner which has caused, or could cause, Buyer
to incur a material liability under applicable law in connection
therewith; and Seller warrants that the technical equipment included in
the Personal Property does not contain any Hazardous Waste that is
required by law to be removed, or, if any equipment does contain
Hazardous Waste, that such equipment is stored and maintained in
compliance with applicable law. As of the date hereof, Seller has
complied in all material respects with all federal, state and local
environmental laws, rules and regulations applicable to the Station and
its operations, including but not limited to the Commission's guidelines
regarding RF radiation. No Hazardous Waste has been disposed of by
Seller, and, to the best of Seller's knowledge, no Hazardous Waste has
been disposed of by any other person, on the property subject to Real
Estate Contracts in a condition which requires investigation or
remediation pursuant to Environmental Laws. As used herein, the term
"Hazardous Waste" shall mean all materials regulated by any federal,
state, local or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata). If
Seller learns between the date of this Agreement and the Closing Date
that Seller is in breach of the representation and warranty set forth in
this Section 3.11 and such breach is attributable to Seller's action or
failure to act prior to the Commencement Date (as defined in the LMA),
Seller shall begin remedial action
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promptly, if such is required by Environmental Laws, and shall use
reasonable best efforts to complete such remedial action to the
satisfaction of Buyer before the Closing Date.
3.11 INTELLECTUAL PROPERTY. Section 1.1(d) of the Disclosure
Schedule is a true and complete list of all the material Intellectual
Property. Such Intellectual Property has been duly registered in, filed
with, or issued by the appropriate offices within all jurisdictions where
such registration, filing or issuance is necessary to protect such
Intellectual Property from infringement, including, without limitation,
the United States Copyright Office and the United States Patent and
Trademark Office. Seller has not granted any license or other rights
with respect to such Intellectual Property. Seller has not received any
written notice of any infringement or unlawful use of the Intellectual
Property and Seller has not violated or infringed any patent, trademark,
trade secret or copyright held by others or any license, authorization or
permit held by it.
3.12 FINANCIAL STATEMENTS. Section 3.12 of the Disclosure
Schedule contains a copy of the unaudited statements of income, and the
related balance sheets for Seller for the period after Seller acquired
the Station through June 30, 1995 (the "Financial Statements"). The
Financial Statements have been prepared in all material respects in
accordance with generally accepted accounting principles and in
accordance with the policies and procedures of the Corporation applicable
thereto, consistently applied. The Financial Statements present fairly
the financial condition and results of operations of the Station for the
periods indicated in all material respects.
3.13 PERSONNEL INFORMATION; LABOR CONTRACTS.
(a) Section 3.13 of the Disclosure Schedule contains a
true and complete list of all persons employed at the Station as of the
date hereof, including the date of hire, a description of material
compensation arrangements (other than employee benefit plans, if any, set
forth in Section 3.14 of the Disclosure Schedule) and a list of other
terms of any and all material agreements affecting such persons.
(b) Seller is not a party to any contract with any labor
organization, nor has Seller agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of Seller's employees.
Seller has no knowledge of any organizational effort currently being made
or threatened by or on behalf of any
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labor union with respect to employees of the Station. During the past
two years, Seller has not experienced any strikes, work stoppages,
grievance proceedings, claims of unfair labor practices filed, or other
significant labor difficulties of any nature.
(c) Seller has complied in all material respects with
all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal
employment opportunity and the payment and withholding of taxes.
3.14 EMPLOYEE BENEFIT PLANS. Section 3.14 of the Disclosure
Schedule contains a true and complete list and summary, as of the date of
this Agreement, of all employee benefit plans (as that term is defined in
Section 3(3) of ERISA) applicable to the employees of Seller. Seller
maintains no other employee benefit plan. Each of Seller's employee
benefit plans has been operated and administered in all material respects
in accordance with its terms and applicable law, including, without
limitation, ERISA and the Internal Revenue Code.
3.15 LITIGATION. Except as set forth in Section 3.15 of the
Disclosure Schedule, Seller is not subject to any judgment, award, order,
writ, injunction, arbitration decision or decree, and there is no
litigation, proceeding or investigation pending or, to the best of
Seller's knowledge, threatened against Seller or the Station in any
federal, state or local court, or before any administrative agency or
arbitrator (including, without limitation, any proceeding which seeks the
forfeiture of, or opposes the renewal of, any of the Licenses), or before
any other tribunal duly authorized to resolve disputes, which would
reasonably be expected to have any material adverse effect upon the
business, property, assets or condition (financial or otherwise) of the
Station or which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection
with this Agreement. In particular, but without limiting the generality
of the foregoing, except as set forth in Section 3.16 of the Disclosure
Schedule, there are no applications, complaints or proceedings pending
or, to the best of Seller's knowledge, threatened before the Commission
or any other governmental organization with respect to the business or
operation of the Station which would reasonably be expected to have any
material adverse effect upon the Station Assets, other than applications,
complaints or proceedings which affect the broadcast industry generally.
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3.16 COMPLIANCE WITH LAWS. Seller has not received any notice
asserting any non-compliance with any applicable statute, rule or
regulation (federal, state or local) whether or not related to the
business or operation of the Station which would have any material
adverse effect on the business or operation of the Station. Seller is
not in default with respect to any judgment, order, injunction or decree
of any court, administrative agency or other governmental authority or to
any other tribunal duly authorized to resolve disputes in any respect
material to the transactions contemplated hereby. Seller is in
compliance in all material respects with all laws, regulations and
governmental orders whether or not applicable to the conduct of the
business and operation of the Station and any other business or
operations conducted by Seller.
3.17 INSURANCE. Section 3.17 of the Disclosure Schedule
contains a true and complete list of all Seller's insurance policies.
All such policies are in full force and effect and Seller has received no
notice of cancellation with respect thereto.
3.18 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The instruments
to be executed by Seller and delivered to Buyer at Closing, conveying the
Station Assets to Buyer, will be in a form sufficient to transfer good
and marketable title to the Station Assets free and clear of all
liabilities, obligations and encumbrances in all material respects,
except as provided herein.
3.19 UNDISCLOSED LIABILITIES. To the knowledge of the Seller,
there has been no failure to disclose any material obligations of Seller,
except obligations incurred in the ordinary and usual course of business.
3.20 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.20 of the Disclosure Schedule, between the Balance Sheet Date
and the date of this Agreement there has not been:
(a) Any material adverse change in the working capital,
financial condition, business, results of operations, assets or
liabilities of the Seller;
(b) Except with reference to the LMA, any change in the
manner in which the Station conducts its business and operations other
than changes in the ordinary and usual course of business consistent with
past practice;
(c) Any amendment to the Certificate of Incorporation or
Bylaws of the Seller;
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(d) Any material contract or commitment, to which the
Seller is a party, entered into, modified or terminated, except in the
ordinary and usual course of business;
(e) Any creation or assumption of any mortgage, pledge
or other lien or encumbrance upon any of the Station Assets except in the
ordinary and usual course of business;
(f) Any sale, assignment, lease, transfer, or other
disposition of any of the Station Assets, except in the ordinary and
usual course of business;
(g) The incurring of any material liabilities or
obligations, except items incurred in the ordinary and usual course of
business;
(h) The write-off or determination to write off as
uncollectible any accounts receivable or portion thereof, except for
write-offs in the ordinary course of business consistent with past
practice at a rate no greater than during the twelve months prior to the
Balance Sheet Date;
(i) The cancellation of any debts or claims, or waiver
of any rights, having an aggregate value in excess of $10,000;
(j) The disposition, lapse or termination of any
Intellectual Property;
(k) The increase or promise to increase the rate of
commissions, fixed salary or wages, draw, bonus or other compensation
payable to any employee of the Seller, except in the ordinary and usual
course of business consistent with past practice; or
(l) Any change in any method of accounting or accounting
practice used by the Seller.
3.21 INSOLVENCY PROCEEDINGS. No insolvency proceedings of any
character including, without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary, affecting Seller or the Station Assets are pending or, to
Seller's knowledge, threatened, and Seller has made no assignment for the
benefit of creditors, nor taken any action with a view to, or which would
constitute the basis for, the institution of any such insolvency
proceedings.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 DUE INCORPORATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth
of Pennsylvania and as of the Closing Date shall be duly qualified to do
business in and be in good standing in the Commonwealth of Pennsylvania
and the States of Georgia, Florida and Oklahoma.
4.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements have been duly and validly
authorized and approved by the board of directors of Buyer, and Buyer has
the corporate power and authority to execute, deliver and perform this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. The execution, delivery, performance
hereof, and compliance by Buyer with the terms and provisions hereof, or
with respect to the Ancillary Agreements, thereof, will not (assuming
receipt of all necessary approvals from the Commission) conflict with or
result in a breach of any of the terms, conditions or provisions of
(a) the Certificate of Incorporation or Bylaws of Buyer, (b) any
judgment, order, injunction, decree, regulation or ruling of any court or
other governmental authority to which Buyer is subject, or (c) any
material agreement, lease or contract, written or oral, to which Buyer is
subject. This Agreement will constitute the valid and binding obligation
of Buyer with respect to the terms hereof, subject to Commission approval
of the transactions contemplated hereby.
4.3 CONSENTS. No consent, approval, authorization or order
of, or registration, qualification or filing with, any court, regulatory
authority or other governmental body is required for the execution,
delivery and performance by Buyer of this Agreement or the Ancillary
Agreements to which it is a party, other than (i) the approval by the
Commission of the Assignment Application as contemplated hereby and
(ii) Seller's filing with the Commission of this Agreement and Buyer's
filing with the Commission of the LMA pursuant to Section73.3613 of the
Commission's rules, if the Assignment Application (including the LMA) is
not filed within thirty days of the execution of this Agreement. Except
as set forth in Section 4.3 of the Disclosure Schedule, no consent of any
other party is required for the execution, delivery and performance by
Buyer of this Agreement or the Ancillary Agreements to which it is a
party.
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4.4 LITIGATION. There is no litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened
against Buyer in any federal, state or local court, or before any
administrative agency or arbitrator, or before any other tribunal duly
authorized to resolve disputes, that would reasonably be expected to have
any material adverse effect upon the ability of Buyer to perform its
obligations hereunder, or that seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or
in connection with this Agreement.
4.5 COMPLIANCE WITH LAWS. Buyer is not in default with
respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or of any other
tribunal duly authorized to resolve disputes in any respect material to
the transactions contemplated hereby. Buyer is not in violation of any
law, regulation or governmental order, the violation of which would have
a material adverse effect on Buyer or its ability to perform its
obligations pursuant to this Agreement.
4.6 QUALIFICATION. To the best of Buyer's knowledge, Buyer is
legally, technically, financially and otherwise qualified to be the
assignee of the Licenses and the other Station Assets, and, prior to the
Closing Date, Buyer will exercise its best efforts to refrain from doing
any act which would disqualify Buyer from being the assignee of the
Licenses and the other Station Assets.
4.7 FINANCING. Buyer possesses adequate financial resources
necessary to fund the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF SELLER
Between the date of this Agreement and the Closing Date, Seller
shall have complete control of the Station and its operations, and Seller
covenants as follows with respect to such period:
5.1 CONTINUED OPERATION OF STATION. Subject to the LMA,
Seller shall continue to operate the Station under the terms of the
Licenses in the manner in which the Station has been operated heretofore,
in the usual and ordinary course of business, in conformity with all
material applicable laws, ordinances, regulations, rules and orders, and
in a manner so as to preserve and foster the goodwill and business
relationships of the Station and Seller, including, without limitation,
relationships with
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advertisers, suppliers, customers, and employees. Seller shall file with
the Commission and any other applicable governmental authority all material
applications and other documents required to be filed in connection with
the continued operation of the Station. Seller shall not enter into or
amend any contracts or commitments involving expenditures by the Seller
in an aggregate amount in excess of $10,000 except in accordance with the
terms of the LMA.
5.2 THIRD PARTY CONSENTS. Seller shall use commercially
reasonable efforts to obtain from any third party waivers, permits,
licenses, approvals, authorizations, qualifications, orders and consents
necessary for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, including, without limitation,
approval from the Commission of the Assignment Application contemplated
hereby.
5.3 ENCUMBRANCES. Seller shall not suffer or permit the
creation of any mortgage, conditional sales agreement, security interest,
lease, lien, hypothecation, deed of trust or pledge, encumbrance,
restriction, liability, charge, or imperfection of title with respect to
the Station Assets.
5.4 ASSIGNMENT OF ASSETS. Seller shall not sell, assign,
lease or otherwise transfer or dispose of any Station Assets, whether now
owned or hereafter acquired, except for retirements in the normal and
usual course of business or in connection with the acquisition of similar
property or assets, as provided for herein.
5.5 COMMISSION LICENSES AND AUTHORIZATIONS. Seller shall not
by any act or omission surrender, modify adversely, forfeit or fail to
renew under regular terms the Licenses, cause the Commission or any other
governmental authority to institute any proceeding for the revocation,
suspension or modification of any such License, fail to prosecute with
due diligence any pending applications with respect to the Licenses at
the Commission or any other applicable governmental authority, or fail to
object or respond to any filing with the Commission that may have a
material adverse effect on the Licenses. Between the date of execution
of this Agreement and the Closing Date, Seller shall provide Buyer with
(i) copies of any report, notices, correspondence, or other written
materials it sends to or receives from the Commission, (ii) a summary of
any oral communications with the Commission affecting the Licenses, and
(iii) copies of any applications or other filings by third parties that
may have a material adverse effect on the Licenses.
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5.6 COMPENSATION INCREASES. Seller shall not permit any
increase in the rate of commissions, fixed salary or wages, draw or other
compensation payable to any employees of Seller other than in the
ordinary course of business consistent with past practice.
5.7 INSURANCE. Seller shall maintain at all times between the
date hereof and the Closing Date all policies listed in Section3.17 of
the Disclosure Schedule or else replace such policies with comparable
policies.
5.8 NEGOTIATIONS WITH THIRD PARTIES. Seller shall not, before
Closing or the termination of this Agreement, enter into discussions with
respect to any sale or offer of the Station, any Station Assets or any
stock of Seller to any third party, nor shall Seller offer the Station,
any Station Assets or any stock of Seller to any third party.
ARTICLE VI
JOINT COVENANTS OF BUYER AND SELLER
Buyer and Seller covenant and agree that between the date
hereof and the Closing Date, they shall act in accordance with the
following:
6.1 ASSIGNMENT APPLICATION. As promptly as practicable after
the date of this Agreement, and in no event later than ten (10) days
after execution of this Agreement, Seller and Buyer shall join in and
file an application on FCC Form314 with the Commission requesting its
consent to the assignment of the Licenses from Seller to Buyer (the
"Assignment Application"). Seller and Buyer agree to prosecute the
Assignment Application with all reasonable diligence and to use their
best efforts to obtain prompt Commission grant of the Assignment
Application filed at the Commission.
6.2 PERFORMANCE. Buyer and Seller shall perform all acts
required of them under this Agreement and refrain from taking or omitting
to take any action that would violate their representations and
warranties hereunder or render same inaccurate as of the Closing Date.
6.3 CONDITIONS. If any event should occur, either within or
without the control of any party hereto, which would prevent fulfillment
of the conditions placed upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, the parties
hereto shall use their best efforts to cure the event as expeditiously as
possible.
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6.4 CONFIDENTIALITY. Buyer and Seller shall each keep
confidential all information they obtain with respect to any other party
hereto in connection with this Agreement and the negotiations preceding
this Agreement, and will use such information solely in connection with
the transactions contemplated by this Agreement. If the transactions
contemplated hereby are not consummated for any reason, each party hereto
shall return to the party so providing, without retaining a copy thereof,
any schedules, documents or other written information obtained from the
party so providing such information in connection with this Agreement and
the transactions contemplated hereby. Notwithstanding the foregoing, no
party shall be required to keep confidential or return any information
which (i)is known or available through other lawful sources, (ii)is or
becomes publicly known through no fault of the receiving party or its
agents, (iii)is required to be disclosed pursuant to an order or request
of a judicial or governmental authority (provided the disclosing party is
given reasonable prior notice), or (iv)is developed by the receiving
party independently of the disclosure by the disclosing party.
6.5 COOPERATION. Buyer and Seller shall cooperate fully and
with each other in taking any actions to obtain the required consent of
any governmental instrumentality or any third party necessary or helpful
to accomplish the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that no party shall be required to take any action which would
have a material adverse effect upon it or any entity affiliated with it.
6.6 CONSENTS TO ASSIGNMENT. To the extent that any Assumed
Contract or other contract identified in the Disclosure Schedule that is
to be assigned under this Agreement is not capable of being sold,
assigned, transferred, delivered or subleased without the waiver or
consent of any third person withholding same (including a government or
governmental unit), or if such sale, assignment, transfer, delivery or
sublease or attempted sale, transfer, delivery or sublease would
constitute a breach thereof or a violation of any law or regulation, this
Agreement and any assignment executed pursuant hereto shall not
constitute a sale, assignment, transfer, delivery or sublease or an
attempted sale, assignment, transfer, delivery or sublease thereof. In
those cases where consents, assignments, releases and/or waivers have not
been obtained at or prior to the Closing Date to the transfer and
assignment to Buyer of such contracts, Buyer may in its sole discretion
elect to have this Agreement and any assignments executed pursuant
hereto, to the extent permitted by law, constitute an equitable
assignment by Seller to Buyer of all of Seller's rights, benefits, title
and interest in and to such contracts, and where necessary
<PAGE>
Page 25
or appropriate, Buyer shall be deemed to be Seller's agent for the purpose
of completing, fulfilling and discharging all of Seller's rights and
liabilities arising after the Closing Date under such contracts. Seller
shall use its reasonable best efforts to provide Buyer with the benefits
of such contracts (including, without limitation, permitting Buyer to
enforce any rights of Seller arising under such contracts), and Buyer
shall, to the extent Buyer is provided with the benefits of such
contracts, assume, perform and in due course pay and discharge all debts,
obligations and liabilities of Seller under such contracts.
6.7 BULK SALES LAWS. Buyer hereby waives compliance by Seller
with the provisions of the "bulk sales" or similar laws of any state.
Seller agrees to indemnify Buyer and hold it harmless against any and all
claims, losses, damages, liabilities, costs and expenses incurred by
Buyer or any affiliate as a result of any failure to comply with any
"bulk sales" or similar laws.
6.8 EMPLOYEE MATTERS. While under no obligation to hire any
employees of the Station, Buyer shall make reasonable efforts to offer
employment at will to certain employees of the Station. Upon review of a
full list of employees and salaries, Buyer shall notify Seller of those
employees to whom it will so offer employment as soon as practicable.
Seller shall be responsible for all salary and benefits of the employees
of the Station who do not accept, or are not offered, employment with
Buyer. Seller shall be responsible for all salary and other compensation
due to be paid for work for Seller for employees of the Station who
become employees of Buyer and Buyer shall be responsible for the salary
and other compensation due to be paid for work for Buyer on or after the
date of hire by Buyer for such employees. Seller shall be responsible
for severance payments which may be applicable under its employee benefit
plans to any employees not so offered employment and hired by Buyer.
6.9 COLLECTION OF RECEIVABLES. Buyer and Seller agree that
Buyer shall collect all accounts receivable (the "Receivable Amounts") of
the Seller with regard to the operation of the Station prior to the
Commencement Date of the LMA (as such term is defined therein) and which
remain outstanding as of the date hereof, and Buyer and Seller further
agree that Buyer shall remit such Receivable Amounts to Seller on a
monthly basis within ten (10) days after the end of any month in which
such Receivable Amounts are collected. Buyer shall provide Seller with
monthly reports in respect of the collection of such Receivable Amounts
for up to six (6) months following the Closing Date.
<PAGE>
Page 26
6.10 LMA. Buyer and Seller shall enter into a definitive LMA
as of the date hereof pursuant to which Buyer shall provide program and
other services to the Station as of the Commencement Date (as such term
is defined in the LMA) until Closing unless earlier terminated in
accordance with the terms of this Agreement or the LMA.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The performance of the obligations of the Buyer hereunder is
subject, at the election of the Buyer, to the following conditions
precedent:
7.1 COMMISSION APPROVALS. Notwithstanding anything herein to
the contrary, the consummation of this Agreement is conditioned upon
(a)a grant by the Commission of the Assignment Application, and
(b)compliance by the parties with the conditions, if any, imposed by the
Commission in connection with the grant of the Assignment Application
(provided that neither party shall be required to accept or comply with
any condition which would be unreasonably burdensome or which would have
a materially adverse effect upon it). All required governmental filings
shall have been made, and all requisite governmental approvals for the
consummation of the transactions contemplated hereby shall have been
granted. The Licenses shall be in unconditional full force and effect,
shall be valid for the balance of the current license term applicable
generally to radio stations licensed to communities located in the State
of Florida, and shall be unimpaired by any acts or omissions of Seller's
employees or agents, or Seller.
7.2 PERFORMANCE. The Station Assets shall have been
transferred to Buyer by Seller, and all of the terms, conditions and
covenants to be complied with or performed by Seller on or before the
Closing Date shall have been duly complied with and performed in all
material respects, and Buyer shall have received from Seller a
certificate or certificates to such effect, in form and substance
reasonably satisfactory to Buyer.
7.3 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller to Buyer shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect
as if then made, and Buyer shall have received from Seller a certificate
or certificates to such effect, in form and substance reasonably
satisfactory to Buyer.
<PAGE>
Page 27
7.4 CONSENTS. Seller shall have received all consents
(including landlords' consents for the studio and tower sites) specified
in Section3.9 of the Disclosure Schedule.
7.5 NO LITIGATION. No litigation, proceeding, or
investigation of any kind shall have been instituted or, to Seller's
knowledge, threatened which would materially adversely affect the ability
of Seller to comply with the provisions of this Agreement or would
materially adversely affect the operation of the Station.
7.6 DOCUMENTS. Seller shall have obtained, executed, where
necessary, and delivered to Buyer, where applicable, all of the
documents, reports, orders and statements required of it herein, as well
as any other documents (including collateral assignments) required by any
entity providing financing for the transactions contemplated by this
Agreement and the Ancillary Agreements.
7.7 OPINIONS OF COUNSEL. Seller shall have delivered to Buyer
an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to
Seller, substantially in the form attached hereto as ExhibitA. In
addition, Seller shall have delivered to Buyer a written opinion of
Haley, Bader & Potts, Seller's FCC counsel, dated as of the Closing Date
substantially in the form attached hereto as ExhibitB.
7.8 ANCILLARY AGREEMENTS. Buyer and Seller shall have entered
into the Ancillary Agreements on terms and conditions satisfactory to
Buyer.
7.9 LMA. The LMA has not been terminated by the Buyer in
accordance with the terms thereof.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The performance of the obligations of Seller hereunder is
subject, at the election of Seller, to the following conditions
precedent:
8.1 PERFORMANCE. All of the terms, conditions and covenants
to be complied with or performed by Buyer on or before the Closing Date
shall have been duly complied with and performed in all material
respects, and Seller shall have received from Buyer a certificate or
certificates to such effect, in form and substance reasonably
satisfactory to Seller.
<PAGE>
Page 28
8.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer to Seller shall be true, complete and correct in all
material respects as of the Closing Date with the same force and effect
as if then made, and Seller shall have received from Buyer a certificate
or certificates to such effect, in form and substance reasonably
satisfactory to Seller.
8.3 GOVERNMENT APPROVALS. All required governmental filings
shall have been made and all requisite governmental approvals for the
consummation of the transactions contemplated hereby shall have been
granted.
8.4 DOCUMENTS. Buyer shall have obtained, executed, where
necessary, and delivered to Seller, where applicable, all of the
documents, reports, orders and statements required of it herein.
8.5 OPINION OF COUNSEL. Buyer shall have delivered to Seller
an opinion of counsel to Buyer substantially in the form attached hereto
as ExhibitC addressed to and reasonably satisfactory to Seller.
8.6 ESCROW AGREEMENT. Seller and Buyer shall have entered
into an Escrow Agreement substantially in the form attached hereto as
ExhibitD.
8.7 LMA. The LMA has not been terminated by the Seller in
accordance with the terms thereof.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 SURVIVAL. The representations and warranties provided for
in this Agreement shall survive the Closing for 9 months from the Closing
Date (such 9-month period being the "Indemnification Period") for the
benefit of the parties hereto and their successors and assigns. The
covenants and agreements of the parties hereto shall survive the Closing
in accordance with their terms.
9.2 INDEMNIFICATION BY SELLER. From and after the Closing
Date, Seller and OCC agree to and shall jointly and severally indemnify,
defend and hold Buyer harmless, and shall reimburse Buyer for and against
any and all actions, losses, expenses, damages, liabilities, penalties or
assessments, judgments and costs (including reasonable legal expenses
related thereto) resulting from or arising out of:
(a) Any breach by Seller of any representation or
warranty contained in this Agreement, any
<PAGE>
Page 29
Ancillary Agreement or in any certificate furnished to or to be furnished
pursuant hereto or in connection with the transactions contemplated hereby;
(b) Any failure to comply with any covenant of Seller
contained in this Agreement, any Ancillary Agreement or in any
certificate furnished or to be furnished pursuant hereto or in connection
with the transactions contemplated hereby; and
(c) Any liabilities of any kind or nature, absolute or
contingent, not assumed by Buyer, including, without limitation, any
liabilities relating to or arising from the business and operation of the
Station by Seller prior to the Closing Date and not assumed by the Buyer
pursuant to the LMA.
9.3 INDEMNIFICATION BY BUYER. From and after the Closing
Date, Buyer agrees to and shall indemnify, defend and hold Seller
harmless, and shall reimburse Seller for and against any and all actions,
losses, expenses, damages, liabilities, penalties or assessments,
judgments and costs (including reasonable legal expenses related thereto)
resulting from or arising out of:
(a) Any breach by Buyer of any representation or warranty
contained in this Agreement, any Ancillary Agreement or in any
certificate furnished or to be furnished pursuant hereto or in connection
with the transactions contemplated hereby;
(b) Any failure to comply with any covenant of Buyer
contained in this Agreement, any Ancillary Agreement or in any
certificate furnished or to be furnished pursuant hereto or in connection
with the transactions contemplated hereby; and
(c) Any liabilities of any kind or nature, absolute or
contingent, relating to or arising from the business and operation of the
Station (i)subsequent to the Commencement Date of the LMA, as defined in
the LMA and assumed by the Buyer pursuant thereto, and (ii)subsequent to
the Closing Date.
9.4 NOTIFICATION OF CLAIMS.
(a)A party entitled to be indemnified pursuant to
Sections9.2 or 9.3 (the "Indemnified Party") shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing of
any claim or demand which the Indemnified Party has determined has given
or could give rise to a right of indemnification under this Agreement.
Subject to the Indemnifying Party's right to defend in good faith third
party claims as hereinafter
<PAGE>
Page 30
provided, the Indemnifying Party shall satisfy its obligations under this
ArticleIX within thirty (30) days after the receipt of a written notice
thereof from the Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section9.4(a), and
if such claim or demand relates to a claim or demand asserted by a third
party against the Indemnified Party which the Indemnifying Party
acknowledges is a claim or demand for which it must indemnify or hold
harmless the Indemnified Party under Sections9.2 or 9.3, the
Indemnifying Party shall have the right to employ counsel acceptable to
the Indemnified Party to defend any such claim or demand asserted against
the Indemnified Party. The Indemnified Party shall have the right to
participate in the defense of any such claim or demand. The Indemnifying
Party shall notify the Indemnified Party in writing, as promptly as
possible (but in any case before the due date for the answer or response
to a claim) after the date of the notice of claim given by the
Indemnified Party to the Indemnifying Party under Section9.4(a) of its
election to defend in good faith any such third party claim or demand.
So long as the Indemnifying Party is defending in good faith any such
claim or demand asserted by a third party against the Indemnified Party,
the Indemnified Party shall not settle or compromise such claim or
demand. The Indemnified Party shall make available to the Indemnifying
Party or its agents all records and other materials in the Indemnified
Party's possession reasonably required by it for its use in contesting
any third party claim or demand. Whether or not the Indemnifying Party
elects to defend any such claim or demand, the Indemnified Party shall
have no obligations to do so. Upon payment of any claim or demand
pursuant to this ArticleIX, the Indemnifying Party shall, to the extent
of payment, be subrogated to all rights of the Indemnified Party.
9.5 LIMITATION ON INDEMNIFICATION. Notwithstanding any
provision contained herein, (a) if Buyer has actual knowledge of a breach
by Seller of any representation, warranty, covenant or agreement
hereunder and Buyer closes notwithstanding such breach, Seller shall not
be responsible for any claim arising from such breach and Buyer shall not
be indemnified for such breach hereunder, and (b) if Seller has actual
knowledge of a breach by Buyer of any representation, warranty, covenant
or agreement hereunder and Seller closes notwithstanding such breach,
Buyer shall not be responsible for any claim arising from such breach and
Seller shall not be indemnified for such breach hereunder.
<PAGE>
Page 31
ARTICLE X
MISCELLANEOUS
10.1 ASSIGNMENT.
(a)This Agreement shall not be assigned or conveyed by
either party hereto to any other person or entity without the prior
written consent of the other parties hereto; PROVIDED, HOWEVER, that
Buyer may assign this Agreement without Seller's prior consent to one or
more corporations or other entities controlled by Buyer. Subject to the
foregoing, this Agreement shall be binding and shall inure to the benefit
of the parties hereto, their successors and assigns.
(b) Notwithstanding anything to the contrary set forth
herein, Buyer may assign and transfer to any entity providing financing
for the transactions contemplated by this Agreement (or any refinancing
of such financing) as security for such financing all of the interest,
rights and remedies of Buyer with respect to this Agreement and the
Ancillary Agreements to the extent required by law, and Seller shall
expressly consent to such assignment. Any such assignment will be made
for collateral security purposes only and will not release or discharge
Buyer from any obligations it may have pursuant to this Agreement.
Notwithstanding anything to the contrary set forth herein, Buyer may
(i)authorize and empower such financing sources to assert, either
directly or on behalf of Buyer, any claims Buyer may have against Seller
under this Agreement and (ii)make, constitute and appoint one agent bank
in respect of such financing (and all officers, employees and agents
designated by such agent) as the true and lawful attorney and agent-in-
fact of Buyer for the purpose of enabling the financing sources to assert
and collect any such claims.
10.2 BROKERAGE. Seller and Buyer warrant and represent to one
another that, with the exception of Mark Hubbard, broker for the Seller,
there has been no broker in any way involved in the transactions
contemplated hereby and that no one other than Mark Hubbard is or will be
entitled to any fee or other compensation in the nature of a brokerage
fee or finder's fee as a result of the Closing hereunder. Seller shall
be wholly responsible for any brokerage or other fee due to Mark Hubbard.
10.3 EXPENSES OF THE PARTIES. It is expressly understood and
agreed that all expenses of preparing this Agreement and of preparing and
prosecuting the Assignment Application with the Commission, and all other
expenses, whether or not the transactions contemplated hereby are
<PAGE>
Page 32
consummated, shall be borne solely by the party who shall have incurred
the same and the other party shall have no liability in respect thereto,
except as otherwise provided herein. All costs of transferring the
Station Assets in accordance with this Agreement, including recordation,
transfer and documentary taxes and fees, and any excise, sales or use
taxes, shall be borne equally by Seller and Buyer. Any filing or grant
fees imposed by any governmental authority the consent of which is
required for the transactions contemplated hereby shall be borne equally
by Seller and Buyer.
10.4 ENTIRE AGREEMENT. This Agreement, together with any
related Schedules or Exhibits, contains all the terms agreed upon by the
parties with respect to the subject matter herein, and supersedes all
prior agreements and understandings among the parties and may not be
changed or terminated orally. No attempted change, termination or waiver
of any of the provisions hereof shall be binding unless in writing and
signed by the party against whom the same is sought to be enforced.
10.5 HEADINGS. The headings set forth in this Agreement have
been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any manner, or be deemed to interpret in whole or in
part, any of the terms or provisions of this Agreement. Unless otherwise
specified herein, the section references contained herein refer to
sections of this Agreement.
10.6 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of NewYork.
10.7 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be
deemed an original, but all of such shall constitute one and the same
instrument.
10.8 NOTICES. Any notices or other communications shall be in
writing and shall be considered to have been duly given when deposited
into first class, certified mail, postage prepaid, return receipt
requested, delivered personally (which shall include delivery by Federal
Express or other recognized overnight courier service that issues a
receipt or other confirmation of delivery) or delivered via facsimile
machine;
<PAGE>
Page 33
IF TO SELLER:
Mr. Frank D. Osborn
Osborn Communications Corp.
130 Mason Street
Greenwich, CT 06830
Fax: (203) 629-1749
Phone: (203) 629-0905
With a copy to:
Robert M. Hirsh
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
IF TO BUYER:
Anthony F. Renda
Renda Broadcasting Corporation
Broadcast Plaza
Crane Avenue
Pittsburgh, PA 15220-4098
Fax: (412) 531-7259
Phone: (412) 531-9500
With a copy to:
Henry S. Pool
Tucker Arensberg, P.C.
1500 One PPG Place
Pittsburgh, PA 15222
Any party may at any time change the place of receiving notice
by giving notice of such change to the other as provided herein.
10.9 SPECIFIC PERFORMANCE. Seller acknowledges that the
Station is of a special, unique and extraordinary character and that
damages are inadequate to compensate Buyer for Seller's breach of this
Agreement. Accordingly, in the event of a material breach by Seller of
its representations, warranties, covenants and agreements under this
Agreement, Buyer may sue at law for damages or, at Buyer's sole election,
Buyer may seek a decree of specific performance requiring Seller to
fulfill its obligations under this Agreement, and Seller agrees to waive
its defense that an adequate remedy at law exists; PROVIDED, HOWEVER,
that if Buyer chooses to pursue a remedy at law for damages, Buyer shall
not also pursue a decree of specific performance and recoverable damages
shall not exceed ten percent (10%)of the Purchase Price.
<PAGE>
Page 34
10.10 CONSENT TO JURISDICTION. Seller and Buyer hereby submit
to the nonexclusive jurisdiction of the courts of the State of NewYork
and the federal courts of the United States of America located in such
state solely in respect of the interpretation and enforcement of the
provisions hereof and of the documents referred to herein, and hereby
waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such
document, that they are not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or
that this Agreement or any of such documents may not be enforced in or by
said courts or that the Station property is exempt or immune from
execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or proceeding
is improper.
10.11 FURTHER ASSURANCES. Seller and Buyer agree to execute
all such documents and take all such actions after the Closing Date as
any other party shall reasonably request in connection with carrying out
and effectuating the intent and purpose hereof and all transactions and
things contemplated by this Agreement, including, without limitation, the
execution and delivery of any and all confirmatory and other documents in
addition to those to be delivered on the Closing Date and all actions
which may reasonably be necessary or desirable to complete the
transactions contemplated hereby.
10.12 PUBLIC ANNOUNCEMENTS. No public announcement (including
an announcement to employees) or press release concerning the
transactions provided for herein and in the LMA shall be made by either
party without the prior approval of the other party, except as required
by law.
10.13 EXHIBITS AND SCHEDULES. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references
herein to Sections, subsections, clauses, Exhibits and Schedules shall be
deemed references to such parts of this Agreement, unless the context
shall otherwise require.
<PAGE>
Page 35
IN WITNESS WHEREOF, the parties hereto have executed or have
caused this Agreement to be executed by a duly authorized officer on the
day and year first above written.
SELLER
DAYTONA BEACH BROADCASTING CORPORATION
By:
Name: Frank D. Osborn
Title: President
BUYER
RENDA BROADCASTING CORPORATION
By:
Name: Anthony F. Renda
Title: President
IN WITNESS WHEREOF, Osborn Communications Corporation has
caused this Agreement to be executed by a duly authorized officer on the
day and year first above written for the sole purpose of being bound by
the provisions of ArticleIX hereof.
OSBORN COMMUNICATIONS CORPORATION
By:
Name: Frank D. Osborn
Title: President
STOCK PURCHASE AGREEMENT
between
RENDA BROADCASTING
CORPORATION
and
SNG HOLDINGS, INC.
the sole stockholder of
NELSON TOWER CORPORATION
___________________
August 31, 1995
___________________
<PAGE>
Page i
TABLE OF CONTENTS
Page 1.Sale and Purchase of
Shares..............................1
1.1 Sale of
Shares...................................1
1.2 Purchase Price and Payment for
Shares............1
1.2.1 Purchase
Price............................1 1.2.2
Payment of Purchase Price.................1
1.3 Delivery of
Shares...............................1
1.4 Escrow
Deposit...................................1
1.5 Closing; Closing
Date............................2
1.6 Transactions at the
Closing......................2
2. Representations and Warranties of
Seller..............3
2.1 Title to
Shares..................................3
2.2 Due Incorporation and
Qualification..............4
2.3 Authority to Execute
Agreements..................4
2.4 Outstanding Capital
Stock........................4
2.5 Options or Other
Rights..........................4
2.6 Governing
Documents..............................4
2.7
Liabilities......................................5
2.8 Compliance with Laws.............................5
2.9 Litigation.......................................5
2.10 Contracts and Other Agreements..................6
2.11 Real Property...................................6
2.12 Insurance.......................................7
2.13 Indebtedness and Guaranties.....................7
2.14 Environmental...................................7
2.15 Personal Property...............................8
2.16 Consents........................................8
2.17 Insolvency Proceedings..........................8
2.18 Partnership Agreement...........................9
2.19 License Agreements..............................9
2.20 Financial Statements............................9
2.21 Taxes..........................................10
2.22 Undisclosed Liabilities........................10
3. Representations and Warranties of Buyer..............10
3.1 Due Incorporation...............................10
3.2 Corporate Power of Buyer........................10
3.3 Purchase for Investment.........................11
4. Covenants and Agreements.............................11
4.1 Expenses........................................11
4.2 Further Assurances..............................11
5. Covenants of Seller..................................11
5.1 Continued Operation of Company..................11
5.2 Third Party Consents............................11
5.3 Encumbrances....................................12
5.4 Assignment of Assets............................12
5.5 Insurance.......................................12
<PAGE>
Page ii
6. Conditions Precedent to the Obligation of Buyer to
Close12
6.1 Representations and Covenants...................12
6.2 Governmental Permits and Approvals..............12
6.3 Third Party Consents............................12
6.4 Litigation......................................13
6.5 Delivery of Stock Certificates;
Transfer Taxes.................................13
6.6 Delivery of Charter Documents....................13
6.7 Delivery of Books and Records....................13
6.8 Delivery of Resolutions........................13
6.9 Opinion of Counsel...............................13
6.10 Title Commitment...............................13
6.11 Survey.........................................14
6.12 Inspection of Property.........................14
6.13 Simultaneous Closing...........................14
7. Conditions Precedent to the Obligation of Seller to
Close14
7.1 Representations and Covenants...................14
7.2 Litigation......................................14
7.3 Opinion of Counsel..............................15
7.4 Escrow Agreement................................15
8. Survival of Representations and
Warranties of Seller.................................15
9. Indemnification......................................15
9.1 Indemnification by Seller.......................15
9.2 Indemnification by Buyer........................15
9.3 Notification of Claims..........................16
9.4 Limitation on Indemnification...................17
10. Termination of Agreement.............................17
10.1
Termination....................................17
10.2
Survival.......................................19
11.
Miscellaneous........................................19
11.1
Assignment...................................20
11.2
Brokerage....................................20
11.3 Entire
Agreement.............................20
11.4
Headings.....................................21
11.5 Governing
Law................................21
11.6
Notices......................................21
11.7 Consent to
Jurisdiction......................22
11.8 Public
Announcements.........................22
11.9 No Third Party
Beneficiaries.................22
11.10 Variations in
Pronouns.......................22
11.11
Counterparts.................................22
<PAGE>
Page iii
11.12 Exhibits and
Schedules........................23
11.13 Bulldog License
Agreements....................23
<PAGE>
Page 1
STOCK PURCHASE AGREEMENT
AGREEMENT dated August 31, 1995, between RENDA BROADCASTING
CORPORATION, a Pennsylvania corporation (the "Buyer" or "Renda"), and
SNG HOLDINGS, INC., a Delaware corporation (the "Seller"), the sole
holder of all of the issued and outstanding shares of capital stock of
NELSON TOWER CORPORATION, a Delaware corporation (the "Company").
The Company has no business other than its undivided one-half
interest in Bulldog Tower Partners, a partnership organized under the
laws of the State of Georgia (the "Partnership"), and its license with
the Partnership (the "License Agreement"). Seller is the beneficial
and record owner of all of the issued and outstanding shares (the
"Shares") of capital stock of the Company. Seller wishes to sell and
Buyer wishes to purchase the Shares upon the terms and subject to the
conditions of this Agreement.
Accordingly, the parties agree as follows:
1. SALE AND PURCHASE OF SHARES.
1.1 SALE OF SHARES. At the Closing (as defined in
Section 1.5), Seller shall sell the Shares to Buyer and Buyer shall
purchase the Shares for the purchase price provided in Section 1.2.
1.2 PURCHASE PRICE AND PAYMENT FOR SHARES.
1.2.1 PURCHASE PRICE. The aggregate purchase
price for the Shares (the "Purchase Price"), is SIX HUNDRED THOUSAND
DOLLARS (US$600,000.00) to be paid in cash at the Closing.
1.2.2 PAYMENT OF PURCHASE PRICE. At the Closing,
the Purchase Price shall be paid by Buyer to Seller in cash by wire
transfer
of immediately available funds in dollars to the bank account
designated by Seller at least two days prior to the Closing.
1.3 DELIVERY OF SHARES. At the Closing, Seller shall
deliver to Buyer stock certificates representing all of the Shares,
duly endorsed in blank or accompanied by stock powers duly executed in
blank, in proper form for transfer.
1.4 ESCROW DEPOSIT. As security for Buyer's failure
to Close (as defined below) and as an inducement for
<PAGE>
Page 2
Seller to perform its obligations hereunder, Buyer shall deposit with Paul,
Weiss, Rifkind, Wharton & Garrison (the "Escrow Agent") in a separate
account maintained for such purpose an amount equal to Twenty Six Thousand
Seven Hundred Seventy Dollars (US$26,770.00) (the "Escrow Deposit"), which
Escrow Deposit shall be held and disbursed by the Escrow Agent, in the
event of
a termination of this Agreement, pursuant to Section 10.1(c), (d) or
(e) herein and, upon Closing, disbursed to Seller in partial
satisfaction of the Purchase Price. Buyer and Seller agree that the
rate of interest in respect of the Escrow Deposit shall be determined
by Buyer and Seller, and further agree that such interest shall accrue,
and be payable, to Buyer.
1.5 CLOSING; CLOSING DATE. The closing of the sale and
purchase of the Shares contemplated hereby (the "Closing") shall take
place at 10:00a.m. on a mutually agreed upon date and place within five
(5) days after the Commission's approval of the Assignment Application
for Nelson Broadcasting Corporation's ("Nelson") Assignment of radio
station WWRD to Renda as contemplated by that certain Asset Purchase
Agreement of even date herewith (the "Jacksonville Agreement"), becomes
a Final Order, or such other time and place as shall be mutually agreed
upon by the parties. The date upon which the Closing occurs is herein
called the "Closing Date."
1.6 TRANSACTIONS AT THE CLOSING.
(a) At the Closing, Seller shall deliver to Buyer
the following:
(i) the certificate contemplated by
Section 6.1;
(ii) a copy of the resolutions of the board
of directors of Seller authorizing the execution, delivery and
performance of this Agreement and the agreements and documents
listed in Section 1.6 of the Disclosure Schedule (the
"Ancillary Agreements"), if any, and the consummation of the
transactions contemplated hereby and thereby, together with a
certificate of the Secretary of Seller, dated as of the
Closing Date, that such resolutions were duly adopted and are
in full force and effect;
(iii)the certificates for the Shares as
described in Section 6.5;
(iv) all books, records and tax returns relating to the
Company;
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(v) a copy of the resolution of the board
of directors of Osborn Communications Corporation ("OCC")
authorizing the execution, delivery and performance by OCC of
an indemnification agreement contained in Section 9 hereof,
together with a certificate of OCC dated as of the Closing
Date, that such resolutions were duly adopted and are in full
force and effect;
(vi) the opinion of counsel for Seller,
dated the Closing Date, as described in Section 6.9; and
(vii) such other documents and instruments as Buyer may
reasonably request to consummate the transactions
contemplated hereby.
(b) At the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i) the Purchase Price;
(ii) a copy of the resolutions of the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement, and the consummation of the
transactions contemplated hereby and thereby, together with a
certificate of the Secretary of Buyer dated as of Closing Date,
that such resolutions were duly adopted and are in full force and
effect;
(iii) the certificate contemplated by Section 7.1;
(iv) the opinion of counsel for Buyer, dated the
Closing Date, as described in Section 7.3; and
(v) such other documents and instruments as Seller
may reasonably request to consummate the transactions contemplated
hereby.
2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Buyer as follows:
2.1 TITLE TO SHARES. Seller owns beneficially and of
record, free and clear of any lien or other encumbrance, the Shares
and, upon delivery of and payment for the Shares as herein provided,
Buyer will acquire good and valid title thereto, free and clear of any
lien or other encumbrance.
<PAGE>
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2.2 DUE INCORPORATION AND QUALIFICATION. Each of
Seller and the Company is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
corporate power and authority to own and operate its assets, properties
and business. The Company is duly qualified or otherwise authorized as
a foreign organization to transact business and is in good standing in
each jurisdiction set forth next to its name in Section 2.2 of the
Disclosure Schedule.
2.3 AUTHORITY TO EXECUTE AGREEMENTS. The execution and
delivery of this Agreement has been duly and validly authorized and
approved by the board of directors of Seller, and Seller has the
corporate power and authority to enter into, execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller and is the
valid and binding obligation of Seller enforceable against Seller in
accordance with its terms. None of the execution, delivery or
performance of this Agreement or compliance by Seller with the terms
and provisions hereof will (i) conflict with or violate any provision
of the Certificate of Incorporation or By-laws (or comparable governing
or organizational documents) of Seller or the Company; (ii) violate any
order, judgment, injunction, decree, regulation or ruling of any court
or other governmental authority, to which Seller, the Company or the
Shares is subject; or (iii) violate any material agreement, lease or
contract, written or oral, to which Seller or the Company is subject.
This
Agreement shall constitute the valid and binding obligation of Seller
with respect to the terms hereof.
2.4 OUTSTANDING CAPITAL STOCK. The Company is
authorized to issue 1,000 shares of common stock, par value $0.01 per
share, all of which are issued and outstanding.
2.5 OPTIONS OR OTHER RIGHTS. There is no outstanding
right, subscription, warrant, call, unsatisfied preemptive right,
option or other agreement of any kind to purchase or otherwise to
receive from the Company or Seller any of the outstanding, authorized
but unissued, unauthorized or treasury shares of the capital stock or
any other security of the Company, and there is no outstanding security
of any kind convertible into such capital stock.
2.6 GOVERNING DOCUMENTS. The Company and Seller have
each heretofore delivered to Buyer true and complete copies of the
Certificate of Incorporation (certified by the Secretaries of State or
other appropriate officials of their respective jurisdictions of
<PAGE>
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incorporation) and By-laws or comparable organizational or governing
instruments (certified by the Secretaries thereof) of the Company and
Seller, respectively, as in effect on the date hereof.
2.7 LIABILITIES. Except as set forth in Schedule 2.7
of the Disclosure Schedule, the Company is not subject to any
liabilities either directly or as a partner in the Partnership.
2.8 COMPLIANCE WITH LAWS. Neither Seller, the Company
nor the Partnership has received any notice asserting any non-
compliance with any applicable statute, rule or regulation (federal,
state or local) whether or not related to the business of the Company
which would have any material adverse effect on the business of the
Company or the Partnership. Neither Seller, the Company nor the
Partnership is in default with respect to any judgment, order,
injunction or decree of any court, administrative agency or other
governmental authority or to any other tribunal duly authorized to
resolve disputes in any respect material to the transactions
contemplated hereby. Each of Seller, the Company and the Partnership
is in compliance in all material respects with all laws, permits,
regulations governmental orders and local zoning ordinances (in which
case only to the extent that such local zoning ordinances are directly
applicable to the business or Real Property of the Company or the
Partnership) and, except with respect to local zoning ordinances,
whether or not applicable to the conduct of the business of the Company
or the Partnership and any other business or operations conducted by
Seller.
2.9 LITIGATION. Except as set forth in Section 2.9 of
the Disclosure Schedule, neither Seller, the Company nor the
Partnership is subject to any judgment, award, order, writ, injunction,
arbitration decision or decree, and there is no litigation, proceeding
or investigation pending or, to the best of Seller's knowledge,
threatened against Seller, the Company, or the Partnership in any
federal, state or local court, or before any administrative agency or
arbitrator, or before any other tribunal duly authorized to resolve
disputes, which would reasonably be expected to have any material
adverse effect upon the business, property, assets or condition
(financial or otherwise) of the Company or the Partnership or which
seeks to enjoin or prohibit, or otherwise questions the validity of,
any action taken or to be taken pursuant to or in connection with this
Agreement. In particular, but without limiting the generality of the
foregoing, except as set forth in Section 2.9 of the Disclosure
Schedule, there are no applications, complaints or proceedings pending
or, to the best of Seller's knowledge, threatened before the
<PAGE>
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Commission or any other governmental organization
with respect to the business or operation of the Company or the
Partnership which would reasonably be expected to have any material
adverse effect upon the Company or the Partnership other than
applications, complaints or proceedings which affect the broadcast
industry generally.
2.10 CONTRACTS AND OTHER AGREEMENTS. Section 2.10 of
the Disclosure Schedule contains a true and complete list of all
contracts including all license agreements entered into by the Company
and the Partnership (the "Contracts"). Seller has delivered to Buyer
true and complete copies of all such Contracts in the possession of
Seller, which are in writing, including any and all amendments and
other modifications to same. All such Contracts are valid, binding and
enforceable by Seller, the Company or the Partnership (as the case may
be) in accordance with their respective terms, except as limited by
laws affecting creditors' rights or equitable principles generally.
Neither Seller nor the Company has notice of any claim by any third
party that any such Contract is unenforceable. Seller, the Company or
the Partnership (as the case may be) has complied in all material
respects with all such Contracts to which it is a party, and neither
Seller, the Company nor the Partnership is in default beyond any
applicable grace periods under any of same, and to the knowledge of
Seller no other contracting party is in material default under any of
same. The execution of this Agreement and the transfer of the Shares
will not materially affect the validity, enforceability and continuity
of any such Contracts.
2.11 REAL PROPERTY.
(a) The land as set forth in Section 2.11(a) of
the Disclosure Schedule (the "Land") together with the improvements
located on the Land constitute the real property owned by the Company
or the Partnership (the "Real Property"). Except as set forth in
Section 2.11(b) of the Disclosure Schedule, neither the Company nor the
Partnership owns any Real Property or holds any options or contractual
obligations to purchase or acquire any Real Property, or is a party to
any lease agreement with respect to any Real Property. All
improvements, structures and fixtures on the Real Property, or subject
to leases, are in good operating condition and repair, and fit for
their current use, subject only to normal wear and tear.
(b) To the knowledge of Seller, there does not
exist any actual or threatened or contemplated
<PAGE>
Page 7
condemnation or eminent
domain proceedings that affect any Real Property or any part thereof.
(c) To the knowledge of Seller, there is no
actual or pending imposition of any assessments for public improvements
with respect to any Real Property.
(d) To the knowledge of Seller, no Real Property
or portion thereof has suffered any damage by fire or other casualty
that has not heretofore been completely restored to its original
condition.
2.12 INSURANCE. Section 2.12 of the Disclosure Schedule
contains a true and complete list of all of the insurance policies of
the Company and the Partnership, respectively. All such policies are
in full force and effect and Seller has received no notice of
cancellation with respect thereto.
2.13 INDEBTEDNESS AND GUARANTIES. Section 2.13 of the
Disclosure Schedule sets forth a complete list and description of all
contracts and other agreements relating to indebtedness or guaranties
of
indebtedness by which the Company or the Partnership is bound or to
which any of their respective properties or assets are subject.
2.14 ENVIRONMENTAL. As of the date hereof, neither
Seller, the Company nor the Partnership has unlawfully disposed of any
Hazardous Waste, including any Polychlorinated Biphenyls ("PCBs"), in a
manner which has caused, or could cause, Buyer to incur a material
liability under applicable law in connection therewith; and Seller
warrants that the technical equipment included in the Personal Property
does not contain any Hazardous Waste that is required by law to be
removed, or, if any equipment does contain Hazardous Waste, that such
equipment is stored and maintained in compliance with applicable law.
As of the date hereof, Seller, the Company and the Partnership have
complied in all material respects with all federal, state and local
environmental laws, rules and regulations applicable to the Company and
its operations, including but not limited to the Commission's
guidelines regarding RF radiation. No Hazardous Waste has been
disposed of by Seller, the Company or the Partnership, and, to the best
of Seller's knowledge, no Hazardous Waste has been disposed of by any
other person, on the Real Property in a condition which requires
investigation or remediation pursuant to Environmental Laws. As used
herein, the term "Hazardous Waste" shall mean all materials regulated
by any federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including,
<PAGE>
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without limitation, ambient air, surface water,
ground water, land surface or subsurface strata). If Seller learns
between the date of this Agreement and the Closing Date that Seller is
in breach of the representation and warranty set forth in this Section
2.14 and such breach is attributable to Seller's action or failure to
act prior to the Commencement Date (as defined in that certain Local
Marketing Agreement, dated August 31, 1995, between Nelson Broadcasting
Corporation and Buyer), Seller shall begin remedial action promptly, if
such is required by Environmental Laws, and shall use reasonable best
efforts to complete such remedial action to the satisfaction of Buyer
before the Closing Date.
2.15 PERSONAL PROPERTY. Section 2.15 of the Disclosure
Schedule contains a true and complete list of the Personal Property.
Except for those assets designated on Section 2.15 of the Disclosure
Schedule as being subject to lease agreements, the Company or the
Partnership owns and has, and will have on the Closing Date, good and
marketable title to such Personal Property, and none of such Personal
Property on the Closing Date will be subject to any security interest,
mortgage, pledge, conditional sales agreement or other lien or
encumbrance. The Personal Property is in all material respects in good
operating condition, ordinary wear and tear excepted, and is available
for immediate use in the conduct of the business of the Company and the
Partnership. The Personal Property includes such items and equipment
necessary to conduct in all material respects the business of the
Company and the Partnership as now conducted.
2.16 CONSENTS. No consent, approval, authorization or
order of, or registration, qualification or filing with, any court,
regulatory authority or other governmental body is required for the
execution, delivery and performance by Seller of this Agreement.
Except as set forth in Section 2.16 of the Disclosure Schedule, no
consent of any other party (including, without limitation, any party to
any lease of Real Property or Contract) is required for the execution,
delivery and performance by Seller of this Agreement or the Escrow
Agreement.
2.17 INSOLVENCY PROCEEDINGS. No insolvency proceedings
of any character including, without limitation, bankruptcy,
receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, affecting Seller, the Company or
the Partnership are pending
or, to Seller's knowledge, threatened, and neither Seller, the Company
nor the Partnership has made any assignment for the benefit of
creditors, or taken any action with a view to, or which would
constitute the basis for, the institution of any such insolvency
proceedings.
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2.18 PARTNERSHIP AGREEMENT. The Partnership
Agreement dated June 10, 1988 between the Company and Suburban Tower
Company constitutes the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms,
subject in the case of enforcement to bankruptcy, insolvency,
reorganization, fraudulent conveyance, transfer, moratorium or other
laws relating to or affecting creditors' rights generally and to
general principles of equity. To the knowledge of Seller, there exists
no obligation of the Company to contribute additional capital
contributions to the Partnership at the date hereof, and the partners
of the Partnership have made no claim on the Company for additional
capital contributions. ExhibitA is a true and complete copy of the
Partnership Agreement.
2.19 LICENSE AGREEMENTS.
(a) The License Agreement dated as of August1,
1989 between the Company and the Partnership (the "Nelson License")
constitutes the legal, valid and binding obligations of the Company and
the Partnership, enforceable against each of the Company and the
Partnership in accordance with its terms, subject in the case of
enforcement to bankruptcy, insolvency, reorganization, fraudulent
conveyance, transfer, moratorium or other laws relating to or affecting
creditors' rights generally and to general principles of equity. The
execution, delivery or performance of this Agreement or compliance by
Seller with the terms and provisions hereof will not violate the terms
of the Nelson License. WWRD and WIOI are successor call letters to
WGIG.
(b) The License Agreement dated as of August 1,
1989 between the Partnership and Suburban Tower Corporation
("Suburban") (the "Suburban License") constitutes the legal, valid and
binding obligations of the Partnership, enforceable against the
Partnership in accordance with its terms, subject in the case of
enforcement to bankruptcy, insolvency, reorganization, fraudulent
conveyance, transfer, moratorium or other laws relating to or affecting
creditors' rights generally and to general principles of equity. The
execution, delivery or performance of this Agreement or compliance by
Seller with the terms and provisions hereof will not violate the terms
of the Suburban License.
2.20 FINANCIAL STATEMENTS. Section 2.20 of the
Disclosure Schedule contains a copy of the unaudited statement of
income, and the related balance sheet for the Company and the
Partnership, respectively, for the year ending December 31, 1994 and
the six-month period ending
<PAGE>
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June 30, 1995 (the "Financial Statements"). The financial
Statements have been prepared in all material respects in accordance
with generally accepted accounting principles and in accordance with
policies and procedures of the Corporation applied thereto,
consistently applied. The Financial Statements present fairly the
financial condition and results of operations of the Company and the
Partnership (as the case may be) for the periods indicated in all
material respects.
2.21 TAXES. To Seller's knowledge, each of Seller, the
Company and the Partnership has (i)duly and timely filed, or has
received extensions in respect thereof of, all federal, state or local
income, sales, property, payroll and other tax returns and forms
required to be filed, which, if not filed, could reasonably be expected
to have a material adverse effect on the business of the Company or the
Partnership, and (b),other than these taxes, assessments, excises,
interest, penalties, deficiencies and levies payable by the landlords
under any real property leases, has or will have paid in full or
discharged all taxes, assessments, excises, interest, penalties,
deficiencies and levies required to be paid prior to the Closing Date.
2.22 UNDISCLOSED LIABILITIES. To the knowledge of
Seller, there has been no failure to disclose any material obligations
of Seller, the Company or the Partnership, except obligations incurred
in the ordinary and usual course of business.
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer
represents and warrants to Seller as follows:
3.1 DUE INCORPORATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the corporate power and lawful
authority to own, lease and operate its assets, properties and business
and to carry on its business as now being and as heretofore conducted.
As of the Closing Date, Buyer is in good standing under the laws of the
Commonwealth of Pennsylvania and is qualified to do business in the
States of Georgia, Florida and Oklahoma.
3.2 CORPORATE POWER OF BUYER. The execution and
delivery of this Agreement has been duly and validly authorized and
approved by the board of directors of Buyer, and Buyer has the
corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, performance hereof, and compliance by Buyer with
the terms <PAGE>
Page 11
and provisions hereof, will not conflict with or result in a breach of
any of the terms, conditions or provisions of (a) the Certificate of
Incorporation or Bylaws of Buyer, (b) any judgment, order, injunction,
decree, regulation or ruling of any court or other governmental
authority to which Buyer is subject, or (c) any material agreement,
lease or contract, written or oral, to which Buyer is subject. This
Agreement will constitute the valid and binding obligation of Buyer
with respect to the terms hereof.
3.3 PURCHASE FOR INVESTMENT. Buyer is purchasing the
Shares for investment and not for resale or distribution, other than
resale by Buyer to a direct or indirect subsidiary thereof.
4. COVENANTS AND AGREEMENTS. The parties covenant and
agree as follows:
4.1 EXPENSES. Except as separately agreed by Buyer and
Seller in writing and except as otherwise specifically provided herein,
Buyer and Seller shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, counsel
and accountants.
4.2 FURTHER ASSURANCES. Each of the parties shall
execute such documents and other papers and take such further actions
as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby. Each such party shall
use its best efforts to fulfill or obtain the fulfillment of the
conditions to the Closing.
5. COVENANTS OF SELLER.
5.1 CONTINUED OPERATION OF COMPANY. Seller shall
continue to operate the Company and shall cause the Company to operate
the Partnership in the manner in which the Company or the Partnership
has been operated heretofore, in the usual and ordinary course of
business, in conformity with all material applicable laws, ordinances,
regulations, rules and orders, and in accordance with the License
Agreement. Neither Seller nor the Company shall enter into or amend,
nor consent to the Partnership entering into or amending, any contracts
or commitments involving expenditures by Seller or the Company or the
Partnership in an aggregate amount in excess of $2,500.
5.2 THIRD PARTY CONSENTS. Seller shall use
commercially
reasonable efforts to obtain from any third
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party waivers, permits, licenses, approvals, authorizations,
qualifications, orders and consents necessary for the consummation of the
transactions contemplated by this Agreement.
5.3 ENCUMBRANCES. Seller shall not suffer or permit the
creation of any mortgage, conditional sales agreement, security interest,
lease, lien, hypothecation, deed of trust or pledge, encumbrance,
restriction, liability, charge, or imperfection of title with respect to
the Company.
5.4 ASSIGNMENT OF ASSETS. Seller shall not sell, assign,
lease or otherwise transfer or dispose of any of the assets of the
Company or the Partnership, whether now owned or hereafter acquired,
except for retirements in the normal and usual course of business or in
connection with the acquisition of similar property or assets.
5.5 INSURANCE. Seller shall maintain at all times
between the date hereof and the Closing Date all policies listed in
Section 2.12 of the Disclosure Schedule or else replace such policies
with comparable policies.
6. CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO
CLOSE. The obligation of Buyer to enter into and complete the Closing
is subject, at its option, to the fulfillment on or prior to the
Closing Date of the following conditions, any one or more of which may
be waived by it:
6.1 REPRESENTATIONS AND COVENANTS. The representations
and warranties of Seller contained in this Agreement shall be true on
and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date in all material respects. Seller
shall have performed and complied with all covenants and agreements
required by this Agreement to be performed or complied with by Seller
on or prior to the Closing Date. Seller shall have delivered to Buyer
a certificate, dated the Closing Date and signed by an authorized
officer of Seller, to the foregoing effect and stating that all
conditions to Buyer's obligations hereunder have been satisfied.
6.2 GOVERNMENTAL PERMITS AND APPROVALS. All permits
required for the lawful consummation of the Closing shall have been
obtained.
6.3 THIRD PARTY CONSENTS. All consents, permits and
approvals from parties to contracts or other agreements with the
Company or with Seller that may be required in connection with the
performance by Seller of its obligations under this Agreement or the
continuance of such <PAGE>
Page 13
contracts or other agreements with the Company after the Closing shall
have been obtained.
6.4 LITIGATION. No action, suit or proceeding shall
have
been instituted before any court or governmental or regulatory body, or
instituted or threatened by any governmental or regulatory body or any
other person, to restrain, modify or prevent the carrying out of the
transactions contemplated hereby, or to seek damages or a discovery
order in connection with such transactions, or that has or may have, in
the reasonable opinion of Buyer, a material adverse effect on the
business of the Company.
6.5 DELIVERY OF STOCK CERTIFICATES; TRANSFER TAXES.
Seller shall have delivered to Buyer at the Closing stock certificates
representing all of the Shares duly endorsed in blank or accompanied by
stock powers duly executed in blank, in proper form for transfer.
Seller shall have paid, or caused to be paid, all stock transfer and
other taxes required to be paid in connection with the sale and
delivery to Buyer of the Shares, and shall have caused all appropriate
stock transfer tax stamps to be affixed to the certificate or
certificates representing the Shares.
6.6 DELIVERY OF CHARTER DOCUMENTS. Seller shall have
delivered to Buyer true and complete copies of the Certificate of
Incorporation (certified by the Secretaries of State or other
appropriate officials of their respective jurisdictions of
incorporation) and By-laws or comparable organizational or governing
instruments (certified by the Secretaries thereof) of Seller and the
Company, respectively.
6.7 DELIVERY OF BOOKS AND RECORDS. Seller shall have
delivered to Buyer the books, records and tax returns of the Company,
including records related to the Partnership in the possession of
Seller.
6.8 DELIVERY OF RESOLUTIONS. Seller shall have
delivered to Buyer a copy of the resolutions of the board of directors
of Seller authorizing the execution, delivery and performance of this
Agreement.
6.9 OPINION OF COUNSEL. Seller shall have delivered to
Buyer an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel
to Seller, substantially in the form attached hereto as ExhibitB.
6.10 TITLE COMMITMENT. Seller shall have obtained a
title commitment for an ALTA 92 Owner's Policy of title insurance in
favor of Buyer with respect to the Real
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Property issued by a title insurer reasonably acceptable to both Buyer and
Seller in the amount of the reasonably estimated fair market value of the
Real Property, which title commitment may be subject to the permitted
liens and encumbrances set forth in Schedule 2.11(c)(the "Permitted Liens"
)(the "Title Commitment"). The reasonable cost of the Title Commitment
shall be paid by Buyer.
6.11 SURVEY. Seller shall at its own expense order a
current survey reasonably acceptable to Buyer of the Real Property
prepared by a surveyor licensed by the State of Georgia, which survey
shall include (a) any encroachments from adjoining parcels onto the Real
Property; (b) the distances and bearings of all boundaries of the Real
Property and whether any improvements of Seller encroach on any real
property not part of the Real Property; and (c) any special flood hazard
area as designated by any governmental body affecting the Real Property
(the "Survey").
6.12 INSPECTION OF PROPERTY. Buyer shall have inspected
the Real Property.
6.13 SIMULTANEOUS CLOSING. The Closing between Buyer and
Nelson in respect of the Jacksonville Agreement shall occur
simultaneously with the Closing hereunder.
7. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO
CLOSE. The obligation of Seller to enter into and complete the Closing
is subject, at its option, to the fulfillment on or prior to the
Closing Date of the following conditions, any one or more of which may
be waived by it:
7.1 REPRESENTATIONS AND COVENANTS. The representations
and warranties of Buyer contained in this Agreement shall be true on
and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. Buyer shall have performed and
complied with all covenants and agreements required by this Agreement
to be performed or complied with by it on or prior to the Closing Date.
Buyer shall have delivered to Seller a certificate, dated the Closing
Date and signed by an officer of Buyer, to the foregoing effect and
stating that all conditions to Seller's obligations hereunder, have
been satisfied.
7.2 LITIGATION. No action, suit or proceeding shall
have
been instituted before any court or governmental or regulatory body, or
instituted or threatened by any governmental or regulatory body or any
person, to restrain, modify or prevent the carrying out of the
transactions
<PAGE>
Page 15
contemplated hereby, or to seek damages or a discovery order
in connection with such transactions.
7.3 OPINION OF COUNSEL. Buyer shall have delivered to
Seller an opinion of counsel to Buyer substantially in the form of
Exhibit C addressed to and reasonably satisfactory to Seller.
7.4 ESCROW AGREEMENT. Seller and Buyer shall have
entered into an Escrow Agreement substantially in the form attached
hereto as Exhibit D.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF SELLER.
All representations and warranties shall survive the Closing hereunder
for a period of nine (9) months after the Closing Date (such 9-month
period being the "Indemnification Period") for the benefit of the
parties hereto and their successors and assigns. The covenants and
agreements of the parties hereto shall survive the Closing in accordance
with their terms.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY SELLER. From and after the
Closing Date, Seller and OCC agree to and shall jointly and severally
indemnify, defend and hold Buyer harmless, and shall reimburse Buyer for
and against any and all actions, losses, expenses, damages, liabilities,
penalties or assessments, judgments and costs (including reasonable
legal expenses related thereto) resulting from or arising out of:
(a) Any breach by Seller of any representation or
warranty contained in this Agreement or in any certificate furnished to
or to be furnished pursuant hereto or in connection with the
transactions contemplated hereby;
(b) Any failure to comply with any covenant of
Seller contained in this Agreement or in any certificate furnished or to
be furnished pursuant hereto or in connection with the transactions
contemplated hereby; and
(c) Any liabilities of any kind or nature,
absolute or contingent of the Company, including, without limitation,
any liabilities relating to the business of the Company and the
Partnership prior to the Closing Date other than the liabilities set
forth on Schedule 2.7.
9.2 INDEMNIFICATION BY BUYER. From and after the Closing
Date, Buyer agrees to and shall indemnify, defend and hold Seller
harmless, and shall reimburse Seller
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Page 16
for and against any and all actions, losses, expenses, damages,
liabilities, penalties or assessments, judgments and costs (including
reasonable legal expenses related thereto) resulting from or arising out
of:
(a) Any breach by Buyer of any representation or
warranty contained in this Agreement or in any certificate furnished or
to be furnished pursuant hereto or in connection with the transactions
contemplated hereby;
(b) Any failure to comply with any covenant of
Buyer contained in this Agreement or in any certificate furnished or to
be furnished pursuant hereto or in connection with the transactions
contemplated hereby; and
(c) Any liabilities of any kind or nature,
absolute or contingent, relating to or arising from the business of the
Company subsequent to the Closing Date.
9.3 NOTIFICATION OF CLAIMS.
(a)A party entitled to be indemnified pursuant to
Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing
of any claim or demand which the Indemnified Party has determined has
given or could give rise to a right of indemnification under this
Agreement. Subject to the Indemnifying Party's right to defend in good
faith third party claims as hereinafter provided, the Indemnifying
Party shall satisfy its obligations under this Section 9 within thirty
(30) days after the receipt of a written notice thereof from the
Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section 9.3(a),
and if such claim or demand relates to a claim or demand asserted by a
third party against the Indemnified Party which the Indemnifying Party
acknowledges is a claim or demand for which it must indemnify or hold
harmless the Indemnified Party under Sections 9.1 or 9.2, the
Indemnifying Party shall have the right to employ counsel acceptable to
the Indemnified Party to defend any such claim or demand asserted
against the Indemnified Party. The Indemnified Party shall have the
right to participate in the defense of any such claim or demand. The
Indemnifying Party shall notify the Indemnified Party in writing, as
promptly as possible (but in any case before the due date for the
answer or response to a claim) after the date of the notice of claim
given by the Indemnified Party to the Indemnifying Party under Section
9.3(a) of its election to defend in good faith any
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Page 17
such third party claim or demand.
So long as the Indemnifying Party is defending in good faith any such
claim or demand asserted by a third party against the Indemnified
Party, the Indemnified Party shall not settle or compromise such claim
or demand. The Indemnified Party shall make available to the
Indemnifying Party or its agents all records and other materials in the
Indemnified Party's possession reasonably required by it for its use in
contesting any third party claim or demand. Whether or not the
Indemnifying Party elects to defend any such claim or demand, the
Indemnified Party shall have no obligations to do so. Upon payment of
any claim or demand pursuant to this Section 9, the Indemnifying Party
shall, to the extent of payment, be subrogated to all rights of the
Indemnified Party.
9.4 LIMITATION ON INDEMNIFICATION. Notwithstanding any
provision contained herein, (a)if Buyer has actual knowledge of a
breach by Seller of any representation, warranty, covenant or agreement
hereunder and Buyer closes notwithstanding such breach, Seller shall
not be responsible for any claim arising from such breach and Buyer
shall not be indemnified for such breach hereunder, and (b)if Seller
has actual knowledge of a breach by Buyer of any representation,
warranty, covenant or agreement hereunder and Seller closes
notwithstanding such breach, Buyer shall not be responsible for any
claim arising from such breach and Seller shall not be indemnified for
such breach hereunder.
10. TERMINATION OF AGREEMENT.
10.1 TERMINATION.
(a) Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may be terminated at any
time by:
(i)the mutual written consent of the parties
hereto;
(ii) either Buyer or Seller if the
Closing in respect of the Jacksonville Agreement does
not occur before June 30, 1996, PROVIDED, HOWEVER, that the party
seeking termination under this Section 10.1(a)(ii) shall not have
prevented the Closing from occurring;
(iii) either Buyer or Seller if the
Assignment Application in respect of the Jacksonville Agreement is not
granted within nine (9) months from the date the FCC Form 314 is placed on
Commission public notice (through no fault of the terminating
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Page 18
party) or is denied by the Commission by a Final Order or is
designated for hearing by the Commission, PROVIDED, HOWEVER, that, in
the event the Assignment Application is designated for hearing by the
Commission, the provisions of Section 10.1(e) shall apply;
(iv) Buyer, if any of the conditions set forth
in Section 6 shall have become incapable of fulfillment, and
shall not have been waived by Buyer, or if Seller or the Company
shall have breached in any material respect any of their
representations, warranties or obligations hereunder and
such breach shall not have been cured in all material respects or
waived prior to the Closing; or
(v) Seller, if any of the conditions set
forth in Section 7 shall have become incapable of fulfillment,
and shall not have been waived by Seller, or if Buyer shall
have breached in any material respect any of its representations,
warranties or obligations hereunder and such breach shall not have
been cured in all material respects or waived prior to the
Closing.
(b) In the event of the termination of this Agreement
by
Buyer or Seller pursuant to this Section 10.1, written notice thereof
shall promptly be given to the other party and, except as otherwise
provided herein, the transactions contemplated by this Agreement shall
be terminated, without further action by any party.
(c) In the event Seller terminates this Agreement
under
Section 10.1(a)(ii), (iii) or (v) Buyer shall forfeit the Escrow
Deposit to Seller, except in the event Buyer also has the right to
terminate under Section 10.1(a)(ii) or (iii) the Escrow Deposit shall
be returned to Buyer.
(d) In the event Buyer terminates this Agreement under
Section 10.1(a)(ii), (iii) or (iv) the Escrow Deposit shall be returned
to Buyer.
(e) The time for Commission approval provided in
Section
10.1(a)(iii) notwithstanding, either party may terminate this Agreement
upon written notice to the other, if, for any reason, the Assignment
Application in respect of the Jacksonville Agreement is designated for
hearing by the Commission, PROVIDED, HOWEVER, that written notice of
termination must be given within twenty (20) days after release of the
Hearing Designation Order and that the party giving such notice is not
in default and has otherwise
<PAGE>
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complied with its obligations under this
Agreement. Upon termination pursuant to this Section, the parties
shall be released and discharged from any further obligation hereunder
and the Escrow Deposit shall be returned to Buyer.
(f) It is further PROVIDED, HOWEVER, that no party may
terminate this Agreement if such party is in default hereunder, or if a
delay in any decision or determination by the Commission respecting the
Assignment Application in respect of the Jacksonville Agreement has
been caused or materially contributed to (i)by any failure of such
party to furnish, file or make available to the Commission information
within its control; (ii)by the willful furnishing by such party of
incorrect, inaccurate or incomplete information to the Commission; and
(iii)by any other action taken by such party for the purpose of
delaying the Commission's decision or determination respecting the
Assignment Application. Upon such termination for failure of the
Commission to act, the parties shall be released and discharged from
any further obligation hereunder.
(g) A party shall be deemed to be in default under
this
Agreement only if such party has materially breached or failed to
perform its obligations hereunder, and non-material breaches or
failures shall not be grounds for declaring a party to be in default,
postponing the Closing, or terminating this Agreement.
(h) Neither the rights nor the remedies of either
Buyer
or Seller under Section 10.1(c), (d) or (e) shall prejudice any other
rights or remedies either Buyer or Seller may have under this
Agreement.
(i) If the Closing occurs, the Escrow Deposit shall be
applied to the Purchase Price at Closing.
If this Agreement so terminates, it shall become null and void and have
no further force or effect, except as provided in Section 10.2.
10.2 SURVIVAL. In the event this Agreement is
terminated and the transactions contemplated hereby are not consummated
as described herein, this Agreement shall become void and of no further
force and effect, except to the extent that the provisions of Sections
4.1 or 10.1(c), (d) or (e) apply.
11. MISCELLANEOUS.
11.1 ASSIGNMENT.
(a) This Agreement shall not be assigned or
conveyed by either party hereto to any other person or entity without
the prior written consent of the other parties hereto; PROVIDED,
HOWEVER, that Buyer may assign this Agreement without Seller's prior
consent to one or more corporations or other entities controlled by
Buyer. Subject to the foregoing, this Agreement shall be binding and
shall inure to the
benefit of the parties hereto, their successors and assigns.
(b) Notwithstanding anything to the contrary set
forth herein, Buyer may assign and transfer to any entity providing
financing for the transactions contemplated by this Agreement (or any
refinancing of such financing) as security for such financing all of
the interest, rights and remedies of Buyer with respect to this
Agreement and the Ancillary Agreements, and Seller shall expressly
consent to such assignment. Any such assignment will be made for
collateral security purposes only and will not release or discharge
Buyer from any obligations it may have pursuant to this Agreement.
Notwithstanding anything to the contrary set forth herein, Buyer may
(i)authorize and empower such financing sources to assert, either
directly or on behalf of Buyer, any claims Buyer may have against
Seller under this Agreement and (ii)make, constitute and appoint one
agent bank in respect of such financing (and all officers, employees
and agents designated by such agent) as the true and lawful attorney
and agent-in-fact of Buyer for the purpose of enabling the financing
sources to assert and collect any such claims.
11.2 BROKERAGE. Seller and Buyer warrant and
represent to one another that, with the exception of Mark Hubbard,
broker for Seller, there has been no broker in any way involved in the
transactions contemplated hereby and that no one other than Mark
Hubbard is or will be entitled to any fee or other compensation in the
nature of a brokerage fee or finder's fee as a result of the Closing
hereunder. Seller shall be wholly responsible for any brokerage or
other fee due to Mark Hubbard.
11.3 ENTIRE AGREEMENT. This Agreement, together with
any related Schedules or Exhibits, contains all the terms agreed upon
by the parties with respect to the subject matter herein, and
supersedes all prior agreements and understandings among the parties
and may not be changed or terminated orally. No attempted change,
termination or waiver of any of the provisions hereof shall be binding
<PAGE>
Page 21
unless in writing and signed by the party against whom the same is
sought to be enforced.
11.4 HEADINGS. The headings set forth in this
Agreement have been inserted for reference only and shall not be deemed
to limit or otherwise affect, in any manner, or be deemed to interpret
in whole or in part, any of the terms or provisions of this Agreement.
Unless otherwise specified herein, the section references contained
herein refer to sections of this Agreement.
11.5 GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the internal laws of the State of
NewYork.
11.6 NOTICES. Any notice or other communication
required or permitted hereunder shall be in writing and shall be
delivered personally, sent by facsimile transmission or sent by
certified, registered mail or overnight delivery, postage prepaid. Any
such notice shall be deemed given when so delivered personally or sent
by facsimile transmission, the next day if sent by overnight delivery
or, if mailed, two days after the date of deposit in the mails, as
follows:
(i) if to Buyer, to:
Mr. Anthony F. Renda
Renda Broadcasting Corporation
Broadcast Plaza
Crane Avenue
Pittsburgh, PA 15220-4098
Fax: (412) 531-7259
Phone: (412) 531-9500
with a copy to:
Henry S. Pool
Tucker Arensberg, P.C. 1500 One
PPG Place Pittsburgh, PA 15222
Fax:
(ii) if to Seller, to:
Mr. Frank Osborn
Osborn Communications Corporation 130 Mason Street
Greenwich, CT 06830 Fax:
(203) 629-1749 Phone: (203)
629-0905
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Page 22 with a copy
to:
Robert M. Hirsh
Paul, Weiss, Rifkind,
Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Fax: (212) 757-3990
Any party may by notice given in accordance with this Section to the
other party designate another address or person for receipt of notices
hereunder.
11.7 CONSENT TO JURISDICTION. Seller and Buyer
hereby submit to the nonexclusive jurisdiction of the courts of the
State of NewYork and the federal courts of the United States of America
located in such state solely in respect of the interpretation and
enforcement of
the provisions hereof and of the documents referred to herein, and
hereby waive, and agree not to assert, as a defense in any action, suit
or proceeding for the interpretation or enforcement hereof or of any
such document, that they are not subject thereto or that such action,
suit or proceeding may not be brought or is not maintainable in said
courts or that this Agreement or any of such documents may not be
enforced in or by said courts or that the Station property is exempt or
immune from execution, that the suit, action or proceeding is brought
in an inconvenient forum, or that the venue of the suit, action or
proceeding is improper.
11.8 PUBLIC ANNOUNCEMENTS. No public announcement
(including an announcement to employees) or press release concerning
this Agreement or the transactions provided for herein shall be made by
either party without the prior approval of the other party, except as
required by law.
11.9 NO THIRD PARTY BENEFICIARIES. Except as
specifically provided in Article 9, nothing in this Agreement, expressed
or implied, is intended or shall be construed to confer upon or give to
any person other than the parties and their successors or permitted
assigns any rights to remedies under or by reason of this Agreement.
11.10 VARIATIONS IN PRONOUNS. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular
or plural, as the context may require.
11.11 COUNTERPARTS. This Agreement may be executed by
the
parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall
together
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Page 23
constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than all, but
together signed by all of the parties hereto.
11.12 EXHIBITS AND SCHEDULES. The Exhibits and
Schedules are a part of this Agreement as if fully set forth herein.
All references herein to Sections, subsections, clauses, Exhibits and
Schedules shall be deemed references to such parts of this Agreement,
unless the context shall otherwise require.
11.13 BULLDOG LICENSE AGREEMENTS. Buyer and Seller
acknowledge that at the time this Agreement was executed signature
pages to (i) the Nelson License and the Suburban License and (ii)
sublicense agreements between Suburban and South Coast Broadcasting
Inc., and between the Company and Nelson Broadcasting Corporation (the
"Bulldog License Agreements") were not delivered to Buyer as part of
such Bulldog License Agreements. Seller agrees with Buyer that Seller
shall use its reasonable commercial efforts to deliver to Buyer such
Bulldog License Agreements fully executed by all relevant parties
within thirty (30) days of the date hereof.
<PAGE>
Page 24
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
SNG HOLDINGS, INC.
By:____________________________
Name: Frank D. Osborn
Title: President
RENDA BROADCASTING CORPORATION
By:____________________________
Name: Anthony F. Renda
Title: President
IN WITNESS WHEREOF, Osborn Communications Corporation has
caused this Agreement to be executed by a duly authorized officer on
the day and year first above written for the sole purpose of being
bound by the provisions of Section 9 hereof.
OSBORN COMMUNICATIONS CORPORATION
By:
Name: Frank D.
Osborn
Title: President
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of the 18th day of September,
1995 (this "AGREEMENT"), by and between PILOT COMMUNICATIONS OF
SYRACUSE, INC., a Delaware corporation ("BUYER"), and ORANGE
COMMUNICATIONS, INC., a Delaware corporation ("SELLER").
WITNESSETH:
WHEREAS, Seller is the licensee of radio stations WNTQ(FM) and
WNDR(AM), Syracuse, New York (each, a "STATION" and together, the
"STATIONS") pursuant to authorizations (the "FCC AUTHORIZATIONS")
issued by the Federal Communications Commission (the "FCC");
WHEREAS, on the terms and conditions described herein, Seller
desires to sell and Buyer desires to acquire substantially all of the
assets owned or leased by Seller and used or useful in connection
with the operation of the Stations; and
WHEREAS, simultaneously with the execution of this Agreement,
Seller and Buyer have entered into a time brokerage agreement (the
"TBA") pursuant to which Seller shall sell and Buyer shall purchase
substantially all of the Stations' time for the broadcast of
programming and for the sale of advertising included within that
programming pending consummation of the sale of the Stations to
Buyer.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, for themselves, their
successors and assigns, agree as follows:
ARTICLE 1.
SALE OF ASSETS AND TERMS OF PAYMENT
1.1 TRANSFER OF ASSETS. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date (as defined in
Section 2.1 hereof) Seller shall sell and deliver to Buyer, and Buyer
shall purchase and accept from Seller, all of the assets and
properties owned or leased by Seller, tangible or intangible, of
every kind and description used or useful in connection with the
business and operation of the Stations as going concerns (but
excluding the Excluded Assets described in Section 1.2), including
without limitation, the following (collectively, the "ASSETS"):
(a) All of Seller's equipment, machinery, furniture,
furnishings, fixtures, office materials and other tangible personal
property used or useful in the conduct of the business or operations
of the Stations (the "TANGIBLE PERSONAL PROPERTY"), together with
such improvements and additions thereto and replacements thereof
between
<PAGE>
Page 2
the date hereof and the Closing Date, including without
limitation, the property set forth on SCHEDULE 1 hereto;
(b) The real property, buildings, fixtures and other
improvements thereon, leasehold interests, easements, licenses,
rights of access, rights of way, improvements and other real property
interests, which are held or owned by the Seller and used or useful
in the business operations of the Stations as of the date hereof (the
"REAL PROPERTY"), as described in SCHEDULE 2 hereto;
(c) All of the licenses, permits and other
authorizations, including the FCC Authorizations (collectively, the
"LICENSES"), issued by the FCC, the Federal Aviation Administration
(the "FAA"), and any other federal, state or local governmental
authorities to Seller in connection with and necessary for the
conduct of the business and the full on-air operations of the
Stations in accordance with all applicable laws, rules and
regulations, including the rules, regulations and policies of the
FCC, including without limitation, those set forth on SCHEDULE 3
hereto;
(d) All rights of Seller under (i) the contracts,
leases and agreements in connection with the business and operations
of the Stations which are set forth on SCHEDULE 4 hereto, (ii) any
additional contracts, leases and agreements entered into by Seller in
the ordinary course of business of the Stations between the date of
this Agreement and the Closing Date which Buyer expressly agrees to
assume in writing, (iii) all cash advertising contracts of the
Stations entered into by Seller in the ordinary course of business of
the Stations together with those entered into between the date of
this Agreement and the Closing Date ("CASH SALES AGREEMENTS"), and
(iv) all contracts for the sale of time on the Stations in exchange
for goods or services which are listed on SCHEDULE 5 hereto ("TRADE
AGREEMENTS"), which schedule sets forth the value of time owed and
the value of goods and services to be received under each such Trade
Agreement (collectively, the "ASSUMED CONTRACTS").
(e) All of Seller's right, title and interest in and to
all copyrights, licenses, patents, trademarks, service marks, the
call letters WNTQ(FM) and WNDR(AM) and any variation thereof and
logotypes, trade names (including registrations and applications for
registration of any of the foregoing) and all goodwill associated
therewith, and other similar intangible rights and interests issued
to or owned by Seller and used in connection with the full on-air
broadcast operations of the Stations, including without limitation,
those set forth on SCHEDULE 6 hereto (the "INTELLECTUAL PROPERTY");
(f) All logs, books, files, data, software, equipment
manuals and warranties, and other records used or useful in the
conduct of the business and full on-air broadcast operations of the
Stations, including without limitation all electronic data processing
files and systems, advertiser lists, sales and operating plans, FCC
filings and all records required by the FCC to be kept by the
Stations; and
<PAGE>
Page 3
(g) All accounts receivable relating to or arising out
of the operation of the Stations prior to the Adjustment Date (as
defined in Section 1.5 hereof).
1.2 EXCLUDED ASSETS. The following assets relating to the
business of the Stations shall be retained by Seller and shall not be
sold, assigned or transferred to Buyer (the "EXCLUDED ASSETS"):
(a) Cash on hand and in banks (or their equivalents)
and investment securities belonging to Seller and relating to the
Station as of the Closing Date;
(b) Claims by Seller with respect to the Excluded
Assets and liabilities not assumed by Buyer, including without
limitation claims for tax refunds and counter-claims with respect to
obligations and liabilities not being assumed by Buyer hereunder;
(c) All contracts of insurance and other contracts
which are not expressly assumed by Buyer hereunder;
(d) All contracts that have terminated or expired prior
to the Closing Date in the ordinary course of business and as
permitted hereunder;
(e) Any pension, profit-sharing, retirement, stock
purchase or savings plans or trusts and any assets thereof and all
other employee benefit plans; and
(f) All prepaid expenses and taxes (which shall be
prorated as provided in Section 1.5 hereof); and
(g) The assets, if any, listed on SCHEDULE 7 hereto.
1.3 LIABILITIES.
(a) The Assets shall be sold and conveyed to Buyer free
and clear of all liabilities (absolute or contingent), obligations,
liens (including tax, mechanics' and materialmen's liens), pledges,
conditional sales agreements, charges, mortgages, security interests,
encumbrances and restrictions of any type or amount (collectively,
"LIENS") created or suffered by Seller prior to the Closing Date,
whether existing now or in the future, other than Permitted Liens (as
defined in Section 8.9(c) hereof).
(b) As part of the consideration for the above sale,
Buyer shall assume, in writing, and agree to pay, perform and
discharge Seller's obligations arising or to be performed after
midnight local time on the Adjustment Date under the Assumed
Contracts (the "ASSUMED LIABILITIES"). Except as provided in the
preceding sentence,
<PAGE>
Page 4
Buyer is not agreeing to, and shall not, assume
any other liability, obligation, undertaking, expense or agreement of
Seller of any kind, absolute or contingent, known or unknown, and the
execution and performance of this Agreement shall not render Buyer
liable for any such liability, obligation, undertaking, expense or
agreement. All of such liabilities and obligations shall be referred
to herein as the "RETAINED LIABILITIES." Without limiting the
generality of the foregoing, it is understood and agreed that Buyer
is not agreeing to, and shall not, assume (i) any liability or
obligation of Seller to Seller's employees under any existing written
or oral agreements with Seller, including any such liability or
obligation in respect of wages, salaries, bonuses, accrued vacation
or sick pay or any other matter other than liabilities and
obligations arising following the Closing, or (ii) any liability
arising out of any termination by Seller of the employment of any
employee of the Stations or any liability for any employee benefit
plan or arrangement of Seller for the Stations' employees.
1.4 CONSIDERATION.
(a) Upon the terms and subject to the conditions
contained in this Agreement, and in consideration of the sale of the
Assets, on the Closing Date Buyer shall pay to Seller, by wire
transfer of immediately available funds, an aggregate amount of
Twelve Million Five Hundred Thousand Dollars ($12,500,000) (the
"PURCHASE PRICE"). The parties agree that One Million Two Hundred
Fifty Thousand Dollars ($1,250,000) of the Purchase Price shall be
allocated to the Covenant Not to Compete (as defined in Section
1.4(c) hereof).
(b) Concurrently with the execution of this Agreement,
Buyer agrees to deliver to First Liberty National Bank, Washington,
D.C. ("ESCROW AGENT") an irrevocable standby letter of credit in the
amount of Five Hundred Thousand Dollars ($500,000) as an earnest
money deposit (the "EARNEST DEPOSIT"), which Earnest Deposit shall be
released to Buyer or otherwise be available to Seller in accordance
with the provisions of this Agreement.
(c) At Closing, Seller and Frank D. Osborn ("OSBORN")
shall execute and deliver to Buyer a Covenant Not to Compete in the
form attached hereto as EXHIBIT A (the "COVENANT NOT TO COMPETE"),
pursuant to which Seller and Osborn agree not to compete with Buyer
in the Syracuse radio market, as defined by Arbitron, for a period of
two (2) years following the Closing.
(d) The Purchase Price shall be allocated among the
Assets as mutually agreed upon by Buyer and Seller prior to Closing.
In the event that the parties shall be unable to mutually agree upon
the allocation by Closing, Buyer and Seller shall each select an
independent certified public accountant within ten (10) days after
the Closing and such independent certified public accountants shall
within ten (10) days select a third independent certified public
accountant who shall make a determination of
<PAGE>
Page 5
the allocation within
sixty (60) days after his or her selection. Buyer and Seller agree
that the allocation determined by their mutual agreement or otherwise
by the independent certified public accountant, as the case may be,
shall be conclusive and binding on Buyer and Seller for all purposes,
including without limitation, reporting and disclosure requirements
of the Internal Revenue Service (including the reporting requirements
of Section 1060(b) of the Internal Revenue Code of 1986, as amended).
Buyer and Seller agree and acknowledge that no part of the Purchase
Price shall be allocated to the leasehold interests described on
SCHEDULE 2 hereto.
1.5 ADJUSTMENTS AND PRORATIONS.
(a) To the extent not already prorated under the TBA,
the parties agree to prorate all income from the operation of the
Stations and all expenses incurred, accrued or payable, as of 11:59
p.m. local time of the day preceding the Closing (the "ADJUSTMENT
DATE"). The items to be prorated shall include, but not be limited
to, power and utilities charges, real and personal property taxes
upon the basis of the most recent tax bills and information
available, property and equipment rentals, security deposits and
similar prepaid and deferred items.
(b) On the Closing Date, the adjustments and prorations
shall, insofar as feasible, be determined and paid on the Closing
Date, with final settlement and payment to be made in accordance with
the procedures set forth in this Section 1.5. Within forty (45) days
after the Closing Date, Buyer shall prepare a closing balance
sheet/income statement of the Stations (the "CLOSING BALANCE SHEET")
as of midnight local time of the Adjustment Date. Within sixty (60)
days after the Closing Date, final adjustments pursuant to this
Section 1.5 and any required refund or payment to Seller or Buyer, as
the case may be, shall be made on the basis of the Closing Balance
Sheet. If any dispute arises over the amount to be refunded or paid,
such refund or payment shall nonetheless be promptly made to the
extent such amount is not in dispute.
(c) If any such dispute cannot be resolved by the
parties within sixty (60) days after the Closing Date, it shall be
referred to a mutually satisfactory independent public accounting
firm which has not been employed by any party hereto for the two
years preceding the date of such referral. The determination of such
firm shall be conclusive and binding on each party, and judgment upon
any such determination can be entered in any court having
jurisdiction over the matter. One-half ( 1/2 )of the fees of such
firm shall be borne by Seller, and one-half ( 1/2 ) shall be borne
by Buyer. If the parties cannot select such accounting firm, then
the selection of such accounting firm shall be made by the American
Arbitration Association located in Washington, D.C., which accounting
firm shall be empowered to resolve such dispute among the parties.
1.6 FCC FILINGS AND MUTUAL COOPERATION. At the earliest
mutually agreeable date, but not later than five (5) business days
after the date of this Agreement,
<PAGE>
Page 6
Buyer and Seller shall execute,
file and vigorously prosecute an application with the FCC (the "FCC
APPLICATION") requesting its consent to the assignment, from Seller
to Buyer, of all FCC Authorizations and applications pertaining to
the Stations (the "FCC CONSENT"). Buyer and Seller shall take all
reasonable steps to cooperate with each other and with the FCC to
secure such FCC Consent without delay, and to promptly consummate
this Agreement in full (but neither Seller nor Buyer shall have any
obligation to take any steps which would have a material adverse
effect upon it or upon any affiliated entity). Seller and Buyer
shall jointly oppose any petitions to deny, objections, requests for
reconsideration or judicial review of the FCC Consent and shall
jointly request from the FCC an extension of the effective period of
the FCC Consent if the Closing shall not have occurred prior to the
expiration of the original effective period of the FCC Consent;
PROVIDED, HOWEVER, that nothing in this Section 1.6 shall be
construed to limit Seller's or Buyer's right to terminate this
Agreement pursuant to Article 10 hereof.
ARTICLE 2.
THE CLOSING
2.1 TIME AND PLACE OF CLOSING. The closing (the "CLOSING")
of the transactions contemplated by this Agreement shall be held at
the offices of Day, Berry & Howard, City Place One, Hartford,
Connecticut 06013 at 10:00 a.m. on a date fixed by Buyer but in no
event later than ten (10) business days following the date upon which
the FCC Consent shall have become a Final Order. For purposes of
this Agreement, the term "FINAL ORDER" means action by the FCC
consenting to an application which is not reversed, stayed, enjoined,
set aside, annulled or suspended, and with respect to which action no
timely request for stay, petition for rehearing or appeal is pending,
and as to which the time for filing any such request, petition or
appeal or for reconsideration by the FCC on its own motion has
expired.
2.2 DELIVERIES BY SELLER. Prior to or at the Closing, Seller
shall deliver to Buyer the following, each of which shall be in form
and substance reasonably satisfactory to Buyer and its counsel:
(a) Bills of sale, assignments, bargain and sale deeds
with lien covenants and other instruments of transfer and conveyance
in customary form and substance so as to effectively and legally
transfer and assign to Buyer the Assets and effectively vest in Buyer
good and marketable title to the Assets;
(b) Opinion of Seller's counsel dated as of the Closing
Date, and addressed to Buyer, substantially in the form attached
hereto as EXHIBIT B;
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(c) Current estoppel certificates and consents to
assignment, in substantially the form of EXHIBIT C attached hereto,
of the lease agreements set forth on SCHEDULE 2 hereto and the
original of all necessary consents to assignments obtained by Seller
from third parties relating to the Assumed Contracts;
(d) The Covenant Not to Compete duly executed by Seller
and Osborn;
(e) Certified copies of the resolutions of the Board of
Directors and, if necessary, shareholders of Seller authorizing and
approving the execution and delivery of this Agreement and each of
the other documents to be delivered in connection herewith and
authorizing the consummation of the transactions contemplated hereby
and thereby;
(f) An incumbency certificate of the officers of
Seller;
(g) A certificate, dated the Closing Date, executed by
the President of Seller, certifying the fulfillment of the conditions
set forth in Section 8.1 hereof;
(h) All keys to and actual possession of the Assets in
the condition required under this Agreement;
(i) Such other documents, instruments and agreements
necessary to consummate the transactions contemplated by this
Agreement, each in form and substance reasonably satisfactory to
Buyer and its counsel; and
(j) Receipt for the Consideration.
2.3 DELIVERIES BY BUYER. Prior to or at the Closing, Buyer
or the Escrow Agent, as applicable, shall deliver to Seller the
following, each of which shall be in form and substance reasonably
satisfactory to Seller and its counsel:
(a) The Consideration as provided in Section 1.4
hereof;
(b) An instrument of assumption of the Assumed
Liabilities;
(c) Certified copies of the resolutions of the Board of
Directors of Buyer authorizing and approving the execution and
delivery of this Agreement and each of the other documents to be
delivered in connection herewith and authorizing the consummation of
the transactions contemplated hereby and thereby;
(d) An incumbency certificate of the officers of Buyer;
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(e) A certificate, dated the Closing Date, executed by
the President of Buyer, certifying the fulfillment of the conditions
set forth in Section 7.1 hereof;
(f) Opinion of Buyers' counsel dated as of the Closing
Date, and addressed to Buyer, substantially in the form attached
hereto as EXHIBIT D; and
(g) Such other documents, instruments and agreements
necessary to consummate the transactions contemplated by this
Agreement, each in form and substance reasonably satisfactory to
Seller and its counsel.
2.4. RISK OF LOSS. Risk of loss or damage to the Assets by
fire or other casualty up to the time of the Closing shall remain
with Seller, and after the Closing such risk of loss or damage shall
be borne by Buyer.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware. Seller is duly licensed or qualified to do
business and is in good standing and authorized to do business in
each jurisdiction where the ownership or use of the Assets and the
conduct of the business of the Stations requires such licensing or
qualification. Seller has full corporate power to carry on the
business of the Stations as it is now being conducted and to own and
operate the Assets. Seller has the power and authority to execute
and deliver this Agreement and, subject to the receipt of the
necessary consents reflected on Schedule 4 hereto, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by Seller and no other
proceedings on the part of Seller are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
Seller and constitutes the legal, valid and binding obligation of
Seller enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency or other laws affecting generally
the enforcement of creditors' rights or the application of principles
of equity.
3.2 FINANCIALS. Seller has delivered to Buyer copies of the
unaudited balance sheet and income statement of the Stations as of
and for the fiscal years ended December 31, 1993 and December 31,
1994, together with the unaudited balance sheet and income statement
of the Stations as of and for the period ending August 31, 1995, in
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each case certified by the chief financial officer of Seller. All
such financial statements are prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved. All such financial statements
fairly present in all material respects: (i) the assets and
liabilities of the Stations as at the respective dates of the balance
sheets; and (ii) the revenues and expenses of the Stations for the
fiscal periods ended on such dates. August 31, 1995 is sometimes
referred to herein as the "BALANCE SHEET DATE."
3.3 BUSINESS SINCE THE BALANCE SHEET DATE. From the Balance
Sheet Date to the date of this Agreement, the business of the
Stations has been conducted in substantially the same manner as it
was before the Balance Sheet Date. Since the Balance Sheet Date
there has been no material adverse change in the business, condition
(financial or otherwise) or results of operations of the Stations
(other than Arbitron ratings performance).
3.4 NO DEFAULTS. The execution, delivery and performance of
this Agreement by Seller will not: (a) constitute a violation of or
conflict with Seller's articles of incorporation or by-laws; (b)
result in a default (or give rise to any right of termination,
cancellation or acceleration) under or conflict with any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation
relating to the business of the Stations and to which Seller is
subject or to which any of the Assets may be subject, except for such
defaults (or rights of termination, cancellation or acceleration) as
to which requisite waivers or consents have been obtained and
delivered to Buyer; (c) violate any law, statute, rule, regulation,
order, writ, injunction or decree of any federal, state or local
governmental authority or agency and which is applicable to Seller or
any of the Assets; or (d) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever on any of the
Assets.
3.5 LICENSES.
(a) SCHEDULE 3 hereto contains a true and complete list
of the FCC Authorizations and other licenses, permits or other
authorizations from governmental or regulatory authorities which are
required for the lawful conduct of the business and operations of the
Stations in the manner and to the full extent they are presently
operated. Seller is the authorized legal holder of the FCC
Authorizations and other licenses, permits and authorizations listed
on SCHEDULE 3, none of which is subject to any restrictions or
conditions which would limit in any respect the full operation of the
Stations as now operated. All reports and filings required to be
filed with the FCC by Seller with respect to the operation of the
Stations have been timely filed, and all such reports and filings are
accurate and complete in all material respects. Seller maintains
appropriate public inspection files for the Stations in accordance
with FCC rules.
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(b) The FCC Authorizations listed on SCHEDULE 3 are in
good standing, in full force and effect and have not been revoked,
canceled or rescinded. Seller is operating the Stations in
accordance in all material respects with the FCC Authorizations, the
underlying construction permits and all rules, regulations and
policies of the FCC. There is not now pending or, to the knowledge
of Seller, threatened any action by or before the FCC to revoke,
cancel, rescind, modify or refuse to renew any of such FCC
Authorizations, and no event has occurred which permits, or after
notice or lapse of time or both would permit, the revocation,
cancellation or rescission of any of the FCC Authorizations. Seller
has no knowledge of any protests, mutually exclusive applications, or
proceedings of any kind, whether pending or threatened before the FCC
or other authority, which might adversely affect the Stations or
Seller's ability to assign all Assets to Buyer. There is not now
issued or outstanding, or to the knowledge of Seller, pending or
threatened, by or before the FCC, any order to show cause, notice of
violation, notice of apparent liability, or notice of forfeiture or
complaint against Seller with respect to the Stations. Neither
Station is short-spaced, on a grandfathered basis or otherwise, to
any existing station, outstanding construction permit or pending
application therefor, domestic or international, or to any existing
or proposed broadcast radio allotment, domestic or international. To
the knowledge of Seller, neither Station is causing interference in
violation of FCC rules to the transmissions of any other broadcast
station or communications facility or has received any complaints
with respect thereto, and no other broadcast station or
communications facility is causing interference in violation of FCC
rules to either Station's transmissions or the public's reception of
such transmissions.
3.6 CONTRACTS. SCHEDULE 4 hereto contains all contracts,
leases and agreements, written or oral (including any amendments and
other modifications thereto) relating to Seller's operation of the
Stations, other than cash advertising sales contracts and Trade
Agreements (the "CONTRACTS"). Seller has delivered to Buyer true and
complete copies of all written Contracts. All of the Contracts are
in full force and effect and are valid, binding and enforceable in
accordance with their terms. Seller is not in breach, nor to
Seller's knowledge is any other party in breach, of the terms of any
of such Contracts. SCHEDULE 4 specifies by asterisk those Contracts
the assignment of which shall require the consent of any third party,
and specifies with two asterisks those Contracts the assignment of
which shall be a condition precedent to Buyer's obligation to close
(the "REQUIRED CONTRACTS"). Except for any necessary third-party
consents as reflected on SCHEDULE 4 hereto, Seller has full legal
power and authority to assign its rights under the Assumed Contracts
to Buyer in accordance with this Agreement, and such assignment will
not affect the validity or enforceability of any of the Assumed
Contracts. Pursuant to the terms of each of the Trade Agreements set
forth in SCHEDULE 5, the scheduling of advertising thereunder is at
the Stations' discretion and is preemptible for cash advertising.
Except as disclosed on SCHEDULE 4 hereto, neither of the Stations is
subject to any joint sales agreement, joint operating agreement, time
brokerage agreement, local marketing agreement or similar arrangement
or agreement.
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3.7 CONDITION AND ADEQUACY OF THE ASSETS. The Assets used,
held for use in or required for the conduct of the business of the
Stations are all the assets and equipment required for the full on-
air broadcast operations by the Stations in accordance with all
applicable laws, rules and regulations, including the rules,
regulations and policies of the FCC. Except for the Excluded Assets,
Seller does not have any assets used, held for use in, related in any
way to, or required for, the conduct of the business of the Stations
which are not set forth in SCHEDULES 1 THROUGH 6 hereto or otherwise
described in subparagraphs (a) through (g) of Section 1.1 hereof, and
the Assets include all assets necessary for the conduct of the
business of the Stations as they are currently conducted by Seller.
3.8 TANGIBLE PERSONAL PROPERTY. SCHEDULE 1 hereto contains a
list of all material tangible personal property and assets owned or
leased by Seller for use in connection with the operation of the
Stations. Except as may be subject to lease agreements of Seller
listed on SCHEDULE 1 hereto, Seller owns and has, and will have on
the Closing Date, good and marketable title to all such property (and
to all other tangible personal property to be conveyed to Buyer
hereunder). The assets listed in SCHEDULE 1 hereto include all
material tangible personal property necessary to conduct the business
and operations of the Stations as now conducted. The Tangible
Personal Property (a) is in good condition and repair, ordinary wear
and tear excepted, (b) both individually and in the aggregate, has
been maintained in a manner consistent with generally accepted
standards of good engineering practice in all material respects, (c)
is operating in all material respects in compliance with the FCC
Authorizations and rules and regulations of the FCC and FAA, and (d)
does not contain any PCBs that are required by law to be removed and
if any equipment does contain PCBs such equipment is stored and
maintained in compliance with all applicable laws. For purposes of
this Section 3.8, material tangible property shall be such property
valued at Five Hundred Dollars ($500) or more.
3.9 REAL PROPERTY.
(a) SCHEDULE 2 contains a complete description of all
real property currently owned or leased by Seller and Seller's
interests therein, including street address (if available), legal
description (if available), name of owner (or landlord, in the case
of leased property) and use. Attached to SCHEDULE 2 are all policies
of currently existing title insurance in favor of Seller and/or its
lenders with respect to the Real Property. The Real Property is all
of the real property required to operate the Stations in the manner
in which they are presently operated. Seller has full legal and
practical access to all Real Property, provided that with respect to
the Old Stonehouse Road property, Seller represents and warrants only
that it has full practical access to such property. All utilities
necessary for Buyer's use of the Real Property are installed and in
good working order and, to the best of Seller's knowledge, are
subject to valid easements, where necessary. The Real Property, as
well as the present uses thereof, conforms in all
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material respects with all material restrictive covenants and with all
applicable zoning, environmental, and building codes, laws, rules and
regulations. To the best of Seller's knowledge, except as disclosed
on SCHEDULE 8 hereto the buildings, towers, guys, ground systems and
other fixtures used in the operation of the Stations are free of
structural defects, are suitable for their intended use, are in a
good state of maintenance and repair (ordinary wear and tear
excepted), and do not encroach upon any property; provided, however,
that Seller makes no representation and warranty regarding whether
the buildings, towers, guys, ground systems and other fixtures
located on the Old Stonehouse Road studio property are contained
entirely within the bounds of that property and do not encroach upon
any other property. There is no pending condemnation or similar
proceeding affecting the Real Property or any portion thereof, and,
to Seller's knowledge, no such action is presently contemplated or
threatened.
(b) SCHEDULE 2 accurately and completely lists, and
sets forth a description of all real property leases (collectively,
the "LEASES") used in the operation of the Stations and the same
constitute the only Leases necessary in connection with the conduct
of the operations of the Stations as presently conducted. To the
best of Seller's knowledge, all of the Leases are legal, valid,
binding, enforceable and in full force and effect. Seller is not in
default under any of such Leases, nor to the knowledge of Seller is
any other party thereto, and Seller has no knowledge of any present
disputes or claims with respect to offsets or defenses by either
landlord or tenant against the other under any of such Leases.
Seller has delivered to Buyer true and complete copies of all Leases
or other instruments pertaining to Seller's interest in the Real
Property.
(c) All of the existing towers used in the operation of
the Stations are obstruction-marked and lighted to the extent
required by, and in accordance with, the
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rules and regulations of the FAA and the FCC. Appropriate
notification to the FAA has been filed for each such tower where
required by the FCC's rules and regulations.
3.10 TRADEMARKS, ETC. SCHEDULE 6 to this Agreement sets forth
a correct and complete list of all intellectual property used in the
operation of the Stations (whether owned or licensed). Except as set
forth in SCHEDULE 6 hereto and except for standard terms and
conditions under which computer software is licensed, Seller has, and
after the Closing Buyer will have, the right to use such Intellectual
Property, free and clear of any royalty or other payment obligations.
3.11 LITIGATION AND COMPLIANCE WITH LAWS. Except as disclosed
on SCHEDULE 9 hereto: (a) Seller is not subject to any order, writ,
injunction, judgment, arbitration decision or decree having binding
effect and affecting the business of the Stations or the Assets; (b)
there is no litigation pending by or against, or to the best of
Seller's knowledge after due inquiry, threatened against Seller which
relates to the Stations or could affect any of the Assets; (c)
Seller, with respect to the Stations, has complied in all material
respects with all laws, regulations, orders or decrees applicable to
it; (d) the present uses by Seller of the Assets do not violate any
such laws, regulations, orders or decrees in any material respect,
and (e) Seller has no knowledge of any basis for any claim for
compensation or damage or other relief from any violation of the
foregoing.
3.12 LABOR MATTERS; EMPLOYEE BENEFIT PLANS.
(a) Seller has delivered to Buyers a true and complete
list of the names of all persons who are then employed by Seller at
the Stations, their job titles, compensation, benefits and the
original dates of hire. Seller has no written or oral contracts of
employment with any employee of the Stations and the employment of
all such employees are terminable at will, except as otherwise
expressly provided in SCHEDULE 10. Seller is not a party to any
collective bargaining agreement, and there is no collective
bargaining agreement that determines the terms and conditions of
employment of any employees of Seller.
(b) Except as disclosed on SCHEDULE 10:
(i) there is no labor strike, dispute, slow-down
or stoppage pending or, to the knowledge of Seller, threatened
against either of the Stations;
(ii) there are neither pending nor, to the
knowledge of Seller threatened, any suits, actions, administrative
proceedings, union organizing activities, arbitrations, grievances or
other proceedings between Seller and any employees of any of the
Stations or any union representing such employees; and there are no
existing labor or employment or other controversies or grievances
involving employees of any of
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the Stations which have had or are
reasonably likely to have an adverse effect on the financial
condition or operation of any the Stations;
(iii)with respect to the Stations: (A) Seller is
in compliance in all material respects with all laws, rules and
regulations relating to the employment of labor, including those
relating to wages, hours, collective bargaining, affirmative action,
discrimination, sexual harassment, wrongful discharge and the
withholding and payment of taxes and contributions; and (B) all
amounts required to be withheld from Seller's employees' compensation
and wages for income taxes, FICA, unemployment insurance or any other
taxes or charges have been duly collected or withheld and submitted
to the appropriate taxing authorities; and
(iv) Buyer's consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof
shall not, as a result of or in connection with the transactions
contemplated hereby, impose upon Buyer the obligation to pay any
severance or termination pay under any agreement, plan or arrangement
binding upon Seller.
(c) Buyer's consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof
shall not, as a result of or in connection with the transactions
contemplated hereby, impose upon Buyer any obligation under any
benefit plan, contract or arrangement (regardless of whether they are
written or unwritten and funded or unfunded) covering employees or
former employees of Seller in connection with their employment by
Seller. For purposes of this Agreement, the term "BENEFIT PLANS"
shall include without limitation employee benefit plans within the
meaning of Section 3(3) of the Employment Retirement Income Security
Act of 1974, as amended, vacation benefits, employment and severance
contracts, stock option plans, bonus programs and plans of deferred
compensation.
3.13 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The instruments
to be executed by Seller and delivered to Buyer at the Closing,
conveying the Assets to Buyer, will transfer good and marketable
title to the Assets (other than the Real Property) free and clear of
all liabilities (absolute or contingent), security interests,
mortgages, pledges, liens, obligations and encumbrances other than
Permitted Liens, except with respect to such Assumed Contracts as to
which consents have not been received and which are not assignable
without the written consent of the other party thereto.
3.14 ENVIRONMENTAL MATTERS. No hazardous or toxic waste,
substance or material (as those or similar terms are defined under
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. <section><section> 9601 ET SEQ.,
Toxic Substances Control Act, 15 U.S.C. <section><section> 2601 ET
SEQ., the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
<section><section> 6901 ET SEQ. or any other applicable federal,
state or local environmental law, statute, ordinance, order,
judgment,
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rule or regulation relating to the pollution or protection
of the environment ("ENVIRONMENTAL LAWS")), including without
limitation, any asbestos or asbestos-related products, oils or
petroleum-derived compounds, CFCs, or PCBs have been released,
emitted or discharged or are located at, upon or under the Real
Property in a condition, concentration or location which will require
the conduct of remedial action pursuant to the requirements of
Environmental Laws. There are no underground storage tanks located
at the Real Property. The Assets and Seller's use thereof are not in
violation of any Environmental Laws now in effect, the effect of
which violation, in any case or in the aggregate, could have a
material adverse effect on the Assets or require remedial action
under any Environmental Laws.
3.15 CHANGES. Except as shown on SCHEDULE 11 to this
Agreement, since the Balance Sheet Date, Seller has not, with respect
to the Stations:
(i) mortgaged, pledged or subjected to lien or any
other encumbrance, any of the Assets other than mortgages in favor of
Society National Bank ("SNB") encumbering the Real Property;
(ii) sold or transferred any of the Assets other than in
the ordinary course of business;
(iii) increased the compensation payable or to become
payable to the Stations' employees or agents except in the ordinary
course of business and except as disclosed to Buyer in writing;
(iv) suffered any material damage, destruction or loss
(whether or not covered by insurance) or the acquisition or taking of
property by any governmental authority; or
(v) experienced any work stoppage.
3.16 ACCOUNTS RECEIVABLE. Seller's accounts receivable are on
the date hereof bona fide claims against debtors for sales, services
or other charges, free from counterclaims or rights of set-off other
than claims for returns in the ordinary course of business. Subject
to Seller's normal reserves for bad debt, to the best of Seller's
knowledge each of its accounts receivable are on the date hereof
collectible in the book amounts thereof.
3.17 BROKERS. There is no broker or finder or other person
who would have any valid claim against Buyer for a commission or
brokerage in connection with this Agreement or the transaction
contemplated hereby as a result of any agreement, understanding or
action by Seller.
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3.18 CONSENTS. No consent, approval, authorization or order
of (or registration or filing with) any governmental authority,
lending institution or other third party is required in connection
with the execution, delivery or performance by Seller of this
Agreement or in connection with the transactions contemplated hereby
(including transfer of any or all of the Assets), except for the FCC
Consent, the consent of SNB, and the consent of third parties to the
assignment of those contracts designated with an asterisk on SCHEDULE
4 hereto.
3.19 FULL DISCLOSURE. No representation or warranty made by
Seller in this Agreement, and no statement made in any certificate,
document, exhibit or schedule furnished or to be furnished in
connection with the transactions herein contemplated, contains or
will contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary to make such representation
or warranty or any such statement not misleading to Buyer.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has the requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted.
4.2 AUTHORITY. Buyer has the power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have
been duly and validly authorized by Buyer and no other proceedings on
the part of Buyer are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Buyer and constitutes
the legal, valid and binding agreement of Buyer enforceable in
accordance with its terms, except as may be limited by bankruptcy,
insolvency or other laws affecting generally the enforcement of
creditors' rights or the application of principles of equity.
4.3 NO DEFAULTS. The execution, delivery and performance of
this Agreement by Buyer will not: (a) constitute a violation of or
conflict with Buyer's articles of incorporation or by-laws; or (b)
violate any law, statute, rule, regulation, order, writ, injunction
or decree of any federal, state or local governmental authority or
agency and which is applicable to Buyer.
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4.4 LITIGATION. There are no lawsuits, actions,
administrative or arbitration or other proceedings pending or, to the
best knowledge of Buyer, threatened against Buyer which question the
validity of this Agreement or any action taken or to be taken in
connection herewith.
4.5 QUALIFICATION. To the best knowledge of Buyer, there are
no facts which, under the Communications Act of 1934, as amended, or
the existing rules and regulations of the FCC, would disqualify Buyer
as an assignee of the FCC Authorizations.
4.6 CONSENTS. No consent, approval, authorization or order
of (or registration or filing with) any governmental authority,
lending institution or other third party is required in connection
with the execution, delivery or performance by Buyer of this
Agreement or in connection with the transactions contemplated hereby,
except for the FCC Consent.
4.7 BROKERS. There is no broker or finder or other person
who would have any valid claim against Seller for a commission or
brokerage in connection with this Agreement or the transactions
contemplated hereby as a result of any agreement, understanding or
action by Buyer.
4.8 FULL DISCLOSURE. No representation or warranty made by
Buyer in this Agreement, and no statement made in any certificate,
document, exhibit or schedule furnished or to be furnished in
connection with the transactions herein contemplated, contains or
will contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary to make such representation
or warranty or any such statement not misleading to Seller.
ARTICLE 5.
COVENANTS OF SELLER
Seller covenants and agrees with Buyer that from the date hereof
to and including the Closing Date:
5.1 MAINTENANCE OF BUSINESS AND ASSETS. Seller shall not:
(a) make any material change in the Stations' buildings, leasehold
improvements or fixtures except in the ordinary course of business;
(b) sell, lease, transfer or agree to sell, lease or transfer any of
the Assets without replacement thereof with an equivalent asset of
equivalent kind, condition and value that satisfies industry
standards for such assets; (c) create any Lien on the Assets other
than in the ordinary course of business; or (d) solicit, initiate or
encourage submission of any proposal of offer from any person or
entity relating to the
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purchase of the Stations or any of the Assets
of any equity interest in Seller, or to any merger, consolidation or
other business combination with Seller. Seller shall maintain the
Stations' facilities and equipment in good condition (ordinary wear
and tear excepted), keep the Stations' books of account, records and
files in the same manner as heretofore maintained by Seller and in a
manner which satisfies all requirements for the lawful full power on-
air broadcasting by the Stations in accordance with the rules,
regulations and policies of the FCC, and maintain in full force and
effect through the Closing Date adequate property damage, liability
and other insurance with respect to the Assets. Subject to the
actions contemplated by the TBA, Seller shall: (a) continue to carry
on the business of the Stations; (b) maintain the Stations' supply of
programming, advertising and technical materials and supplies; (d)
continue all promotional and marketing efforts and campaigns
currently in effect, and shall promote the Stations between the date
hereof and the Closing Date in the same manner as it has done prior
to the execution of this Agreement; and (e) give prompt written
notice to Buyer if any significant problems or developments occur
with respect to the Stations or the Assets, or if any of the Assets
suffer damage on account of fire, explosion or other cause of any
nature which is sufficient to prevent operation of the Stations.
5.2 ORGANIZATION; GOOD WILL. Subject to the actions
contemplated by the TBA, Seller shall use all reasonable efforts to
preserve the business organization of the Stations intact and
preserve the goodwill of each of the Station's suppliers, customers
and others having business relations with it.
5.3 FCC MATTERS. Seller shall operate and maintain the
Stations in accordance with the terms of the FCC Authorizations and
in material compliance with all applicable laws and FCC rules and
regulations. Seller shall deliver to Buyer, promptly after filing,
copies of any material reports, applications or responses to the FCC
or any communications from the FCC or any other party directed to the
FCC related to the Stations which are filed between the date of this
Agreement and the Closing Date. Seller shall not apply to the FCC
for any construction permit with respect to the Stations except as
may be required in order to maintain the Stations in accordance with
the terms of the FCC Authorizations and in compliance with all
applicable laws and FCC rules and regulations. Seller shall promptly
and fully cure all violations of Commission rules and regulations
which come to its attention and shall pay any fines which may be
assessed by the FCC for any such violation when such fines are
ultimately due.
5.4 BROADCAST TRANSMISSION INTERRUPTION. Seller shall give
prompt written notice to Buyer if (i) the transmission of the regular
broadcast programming of either the Stations in the normal and usual
manner is interrupted or discontinued other than as a result of
weekly routine maintenance or public utility company activity, or
(ii) either of the Stations is operated at less than seventy-five
percent (75%) of its licensed operating power, in either event for a
period in excess of (A) twenty-four (24)
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consecutive hours or (B) an aggregate of seventy-two (72) hours in
any thirty (30) day period.
5.5 CONTRACTS. Subject to Buyer's full performance of its
obligations under the TBA, Seller shall perform on a timely basis all
obligations required to be performed by it under all Contracts
according to their respective terms and, in consultation with Buyer,
renew the Assumed Contracts if necessary, and, at Buyer's request,
give protective notices of cancellation with respect to any Contracts
which are not Assumed Contracts. Seller shall not renegotiate,
modify, amend or terminate any existing Contracts except in the
ordinary and usual course of business, or waive any right under any
of the Contracts. Without limiting the generality of the foregoing,
in consultation with Buyer, Seller shall renew in a timely fashion
that certain Lease, dated August 27, 1991, by and between Seller and
Charles Andrews, Jr. (the "AM TOWER LEASE").
5.6 CONSENTS. Seller shall use reasonable efforts to obtain
prior to the Closing Date consents to the assignment to or assumption
by Buyer of all Assumed Contracts which require the consent of any
third party by reason of the transactions provided for in this
Agreement.
5.7 EMPLOYEE MATTERS. Seller shall cause its employees to
use, or shall pay its employees for, vacation or other compensation
days. Seller shall not enter into any contract of employment or
collective bargaining agreement, or permit any increases or changes
in the compensation (including bonuses) of any of the Stations'
employees, except in accordance with past practices.
5.8 ACCESS TO FACILITIES, FILES AND RECORDS. At the
reasonable request of Buyer, Seller shall from time to time give or
cause to be given to the officers, employees, accountants, counsel
and accredited representatives of Buyer (i) full access during normal
business hours to all facilities, property, accounts, books, deeds,
title papers, insurance policies, licenses, agreements, contracts,
commitments, records and files of every character, equipment,
machinery, fixtures, furniture, vehicles, notes and accounts payable
and receivable and inventories related to the Stations, and (ii) all
such other information concerning the affairs of the Stations as
Buyer may reasonably request.
5.9 CONFIDENTIAL INFORMATION. If for any reason the
transactions contemplated in this Agreement are not consummated,
Seller shall not disclose to third parties any information designated
as confidential and received from Buyer or its agents in the course
of investigating, negotiating and completing the transactions
contemplated by this Agreement. Nothing shall be deemed to be
confidential information which: (i) is or becomes publicly known or
available other than through disclosure by Seller; (ii) is rightfully
received by Seller from a third party; or (iii) is independently
developed by Seller.
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5.11 ENVIRONMENTAL SITE ASSESSMENT. Buyer shall be entitled
to obtain a Phase I environmental audit of the Real Property ("PHASE
I AUDIT REPORT"). In the event that such Phase I Audit Report
discloses any noncompliance with any Environmental Laws, then Buyer
shall be entitled to elect, upon written notice to Seller within
thirty (30) days after receipt of such Phase I Audit Report, either
to require Seller to undertake remedial action to correct such
noncompliance up to but not exceeding an aggregate amount of Five
Hundred Thousand Dollars ($500,000), or to terminate this Agreement.
5.12 [INTENTIONALLY OMITTED].
5.13 REAL PROPERTY MATTERS. Seller shall execute, and agrees
to use all reasonable efforts to cause Charles Andrews, Jr.
("ANDREWS") to execute, and record in the Onondaga County Clerk's
Office a memorandum of lease with respect to the AM Tower Lease,
which memorandum shall include a revised legal description for the
leased property which conforms to the survey previously delivered to
Buyer (the "AM MEMORANDUM OF LEASE").
5.14 RISK OF LOSS. The risk of loss or damage to any item of
Tangible Personal Property prior to the Closing shall be upon Seller
and subsequent to the Closing shall be upon Buyer. In the event of
loss or damage to any item of Tangible Personal Property prior to the
Closing, at Buyer's election, (i) Seller shall repair, replace and
restore such damaged or lost item to its prior condition as soon as
possible and in no event later than the Closing Date, or (ii) Buyer
shall be entitled to a reduction in the Purchase Price equal to the
fair market value of such damaged or lost item in which event Seller
shall be entitled to any insurance proceeds.
5.15 CONSUMMATION OF AGREEMENT. Seller shall use its best
efforts to fulfill and perform all conditions and obligations on its
part to be fulfilled and performed under this Agreement, to cause the
transactions contemplated by this Agreement to be fully carried out.
5.16 REPRESENTATIONS AND WARRANTIES. Seller shall give prompt
written notice to Buyer if Seller shall become aware of the impending
or threatened occurrence of any event which would cause or constitute
a breach, or would have caused a breach had such event occurred or
been known to Seller prior to the date hereof, of any of Seller's
representations or warranties contained in this Agreement or in any
Schedule.
5.17 SNB CONSENT. Seller agrees to use all reasonable efforts
to obtain the consent of SNB to the transactions contemplated hereby.
ARTICLE 6.
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COVENANTS OF BUYER
Buyer covenants and agrees that from the date thereof to and
including the Closing Date:
6.1 CONFIDENTIAL INFORMATION. If for any reason the
transactions contemplated in this Agreement are not consummated,
Buyer shall not disclose to third parties any information received
from Seller or its agents in the course of investigating, negotiating
and completing the transactions contemplated by this Agreement,
except as may otherwise be required by law. Nothing shall be deemed
to be confidential information which: (i) is or becomes publicly
known or available other than through disclosure by Buyer; (ii) is
rightfully received by Buyer from a third party; or (ii) is
independently developed by Buyer.
6.2 CONSUMMATION OF AGREEMENT. Buyer shall use all
reasonable efforts to fulfill and perform all conditions and
obligations on its part to be fulfilled and performed under this
Agreement, to cause the transactions contemplated by this Agreement
to be fully carried out.
6.3 REPRESENTATIONS AND WARRANTIES. Buyer shall give
detailed written notice to Seller promptly upon the occurrence of or
becoming aware of the impending or threatened occurrence of, any
event which would cause or constitute a breach or would have caused a
breach had such event occurred or been known to Buyer prior to the
date hereof, of any of Buyer's representations or warranties
contained in this Agreement.
ARTICLE 7.
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at its
option, subject to the fulfillment of the following conditions prior
to or at the Closing Date:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Each of the representations and warranties of Buyer
contained in this Agreement and in any statement, certificate,
schedule or other document delivered by Buyer pursuant hereto or in
connection with the transactions contemplated hereby, shall have been
true and accurate in all material respects as of the date when made
and shall be true and accurate in all material respects as of the
Closing Date.
(b) Buyer shall have performed and complied in all
material respects with each and every covenant and agreement required
by this Agreement to be
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performed or complied with by it prior to or at the Closing Date,
other than payment of the Purchase Price to Seller.
7.2 NO VIOLATION. The transaction contemplated by this
Agreement shall not be in violation of any law, rule or regulation
and shall not be subject to any injunction, restraining order,
litigation or other proceeding before any court or government
authority.
7.3 FCC CONSENT. The FCC Consent shall have been issued
without any condition that would have a material adverse effect upon
Seller or any affiliated entity.
7.4 CLOSING DOCUMENTS. Buyer shall have delivered the
documents required by Section 2.3 hereof.
7.5 SNB CONSENT. SNB shall have granted its consent to the
consummation of the transactions contemplated hereby.
ARTICLE 8.
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at its
option, subject to the fulfillment of the following conditions prior
to or at the Closing Date:
8.1 REPRESENTATIONS, WARRANTIES, COVENANTS.
(a) Each of the representations, warranties and
covenants of Seller contained in this Agreement and in any statement,
deed, certificate, schedule or other document delivered pursuant to
this Agreement or in connection with the transactions contemplated
hereby, shall have been true and accurate in all material respects as
of the date when made and shall be true and accurate in all material
respects as of the Closing Date; and
(b) Seller shall have performed and complied in all
material respects with each and every covenant and agreement required
by this Agreement to be performed or complied with by it prior to or
at the Closing Date, other than delivery to Buyer of the instruments
conveying the Assets to Buyer.
8.2 NO VIOLATION. The transaction contemplated by this
Agreement shall not be in violation of any law, rule or regulation
and shall not be subject to any injunction, restraining order,
litigation or other proceeding before any court or government
authority.
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8.3 NO MATERIAL ADVERSE CHANGE. Since the date of this
Agreement, there shall not have occurred any material adverse change
in the Assets (other than accounts receivable) to the extent not
caused by Buyer or attributable to any act or omission of Buyer.
8.6 FCC CONSENT. The FCC Consent shall have been issued
without any condition that would have a material adverse effect upon
Buyer or any affiliated entity, and shall have become a Final Order.
g20
8.7 CONTRACT CONSENTS. Seller shall have obtained and shall
have delivered to Buyer all necessary third-party consents to
assignment of the Required Contracts to Buyer.
8.8 CLOSING DOCUMENTS. Seller shall have delivered the
documents required by Section 2.2 hereof.
8.9 REAL PROPERTY MATTERS.
(a) The AM Memorandum of Lease shall have been recorded
as contemplated by Section 5.13, and Seller shall have caused Andrews
to execute and deliver to Buyer's title insurance company a
Unilateral Declaration of Termination, in form and substance
satisfactory to Buyer's title company, with respect to the expiration
of the lease between Charles Andrews, Sr. and Syracuse Broadcasting
Company and the title company shall have agreed to remove from
Buyer's title insurance policy the exceptions specified in items 11
and 12 of the Schedule B from the commitment previously delivered to
Buyer.
(b) The survey of the Old Stonehouse Road studio
property delivered by Seller shall show that: (i) the buildings,
towers, guys, ground systems and other fixtures located on the Old
Stonehouse Road studio property are contained entirely within the
bounds of that property and do not encroach upon any other property;
and (ii) all easements and other matters affecting the Old Stonehouse
Road property, including those disclosed on Schedule 8 hereto, do not
materially impair the value of the property and could not interfere
in any material respect with Buyer's use or enjoyment of the property
in the operation of the Stations.
(c) Seller shall have delivered to Buyer, at Buyer's
expense, (i) new and current title commitments relating to all of its
owned and leased Real Property (the "TITLE COMMITMENTS"), (ii) copies
of all documents, filings and information disclosed in the Title
Commitments, and (iii) a current survey of the Old Stonehouse Road
studio property in form satisfactory to the title companies to delete
the standard current survey exception in the Title Commitments and
showing all easements and other matters
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affecting the owned Real
Property which are disclosed in the Title Commitments. Each Title
Commitment shall insure Buyer's ownership of good and marketable fee
title without any of the Schedule B standard preprinted exceptions
(other than taxes not yet due and payable) and free and clear of all
title defects or exclusions from coverage other than Permitted Liens.
For the purposes of this Agreement, the term "PERMITTED LIENS" means:
(i) matters listed on SCHEDULE 8 hereto; and (ii) encumbrances that
do not individually or in the aggregate interfere in any material
respect with the use of the Real Property. Seller shall cause the
title companies issuing the Title Commitments to issue to Buyer at
Closing, at Buyer's expense, title insurance policies with respect to
the owned Real Property insuring good, indefeasible fee simple title
in Buyer to such owned Real Property subject only to Permitted Liens.
ARTICLE 9.
INDEMNIFICATION
9.1 SURVIVAL. The several representations and warranties of
Seller and Buyer contained in or made pursuant to this Agreement
shall be deemed to have been made on the date of this Agreement and
on the Closing Date, shall survive the Closing Date and shall remain
operative and in full force and effect for a period of nine months
following the Closing Date; PROVIDED, HOWEVER, that the
representations and warranties contained in Section 3.14 hereof
relating to environmental matters and Section 3.13 hereof relating to
title shall survive indefinitely.
9.2 INDEMNIFICATION OF BUYER. Seller shall indemnify and
hold Buyer and its officers and directors harmless from and against
any and all damages, claims, losses, expenses, costs, obligations,
and liabilities including, without limiting the generality of the
foregoing, liabilities for reasonable attorneys' fees and
disbursements ("LOSS AND EXPENSE"), suffered, directly or indirectly,
by Buyer by reason of, or arising out of: (i) any breach of
representation or warranty made by Seller in this Agreement; (ii) any
failure by Seller to perform or fulfill any of its covenants or
agreements set forth in this Agreement; (iii) the Retained
Liabilities; (iv) any non-compliance by Seller with any bulk transfer
law; and (v) any compensation or other fee due to a broker or finder
separately and independently retained by Seller.
9.3 INDEMNIFICATION OF SELLER. Buyer shall indemnify and
hold Seller and its officers and directors harmless from and against
any and all Loss and Expense suffered, directly or indirectly, by
Seller by reason of, or arising out of: (i) any breach of
representation or warranty made by Buyer in this Agreement; (ii) any
failure by Buyer to perform or fulfill any of its covenants or
agreements set forth in this Agreement; (iii) the Assumed
Liabilities; and (iv) any compensation or other fee due to a broker
or finder separately and independently retained by Buyer.
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9.4 NOTICE OF CLAIMS. If Seller or Buyer believes that it
has suffered or incurred any Loss and Expense, such party shall
notify the other promptly in writing describing such Loss and
Expense, the amount thereof, if known, and the method of computation
of such Loss and Expense, all with reasonable particularity and
containing a reference to the provisions of this Agreement in respect
of which such Loss and Expense shall have occurred; PROVIDED,
HOWEVER, that the amount of the Loss and Expense set forth in the
notice shall not be a limitation on any claim for the actual amount
of such Loss and Expense. If any action at law or suit in equity is
instituted by a third party with respect to which any of the parties
intends to claim any liability or expense as Loss and Expense under
this Article 9, such party shall promptly notify the indemnifying
party of such action or suit.
9.5 DEFENSE OF THIRD PARTY CLAIMS. The indemnifying party
under this Article 9 shall have the right to conduct and control,
through counsel of its own choosing, the defense of any third party
claim, action, or suit, but the indemnified party may, at its
election, participate in the defense of any such claim, action, or
suit at its sole cost and expense. If the indemnifying party does
not notify the indemnified party within twenty (20) days after
receipt of the notice specified in Section 9.4 hereof that it is
defending any such claim, action, or suit, then the indemnified party
may defend, through counsel of its own choosing, such claim, action,
or suit and settle such claim, action, or suit, and recover from the
indemnifying party the amount of such settlement or of any judgment
and the costs and expenses of such defense, including, but not
limited to reasonable attorneys' fees and disbursements.
Notwithstanding the foregoing, the failure by a party to abide by
these terms and conditions shall not affect the other party's
obligations to indemnify such party against Loss and Expense under
this Article 9 except to the extent that the other party is
prejudiced thereby.
ARTICLE 10.
TERMINATION
10.1 TERMINATION.
(a) This Agreement may be terminated by either Buyer or
Seller, if the party seeking to terminate is not in breach of any of
its material obligations under this Agreement, upon written notice to
the other upon the occurrence of any of the following:
(i) if, on or prior to the Closing Date, the
other party breaches any of its material obligations contained
herein, and such breach is not cured by the earlier of the Closing
Date or twenty (20) business days after receipt of the notice of
breach from the non-breaching party; or
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(ii) if the FCC Application is designated for
hearing or denied by Final Order; or
(iii) if there shall be in effect any judgment,
final decree or order that would prevent or make unlawful the Closing
of this Agreement; or
(iv) if the Closing has not occurred within one
(1) year after the date on which the FCC Application is accepted for
filing.
(b) This Agreement may be terminated by Buyer if (i)
the transmission of the regular broadcast programming of either
Station in the normal and usual manner is interrupted or discontinued
other than as a result of weekly routine maintenance or public
utility company activity or (ii) either Station is operated at less
than seventy-five percent (75%) of its licensed operating power, in
either event for a period in excess of (A) twenty-four (24)
consecutive hours or (B) an aggregate of seventy-two (72) hours in
any thirty (30) day period.
(c) This Agreement may be terminated by Buyer pursuant
to Section 5.11 hereof.
(d) Either party may terminate this Agreement if the
other party defaults in the performance of its obligations under the
TBA and fails to cure such default within the applicable cure period,
in which case such default shall be deemed a material default of such
party hereunder.
10.2 EFFECT OF TERMINATION.
(a) Upon a termination of this Agreement by Seller due
to a breach by Buyer of any of its material obligations under this
Agreement, Seller shall be entitled to draw upon the Earnest Deposit
as liquidated damages and not as a penalty, provided that if Seller
terminates this Agreement due to Buyer's default under the TBA,
Seller shall be entitled to receive the Earnest Deposit in addition
to any other remedies Seller may have at law or in equity under the
TBA. Seller and Buyer each acknowledge and agree that these
liquidated damages are reasonable in light of the anticipated harm
which will be caused by Buyer's breach of any of its material
obligations under this Agreement and the difficulty of ascertaining
damages and proof of loss. In placing their initials below, Buyer
and Seller each specifically confirm the accuracy of these statements
and the fact that each was independently represented by counsel who
explained the consequence of this liquidated damages provision at the
time this Agreement was made.
Seller initial here _________
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Buyer initial here _________
(b) Upon a termination of this Agreement due to a
breach by Seller of any of its material obligations under this
Agreement, Buyer shall be entitled to the release of the Earnest
Deposit and to seek all rights and remedies that it may have in
equity or at law.
(c) Upon a termination of this Agreement other than due
to a breach by either party of any of its material obligations under
this Agreement, Buyer shall be entitled to the release of the Earnest
Deposit, and neither party shall have any further obligation to the
other under this Agreement.
ARTICLE 11.
POST-CLOSING COVENANTS
11.1 FURTHER CONSENTS. Following the Closing, Seller shall
use reasonable efforts to obtain any necessary third party consents
to the assignment to Buyer of the Assumed Contracts for which Seller
did not deliver third party consents on or prior to the Closing Date.
11.2 EMPLOYEE AND EMPLOYEE BENEFITS.
(a) The parties acknowledge and agree that Buyer shall
have the right to elect which of the Stations' employees it shall
hire. Seller shall be responsible for payment of all compensation,
liabilities and obligations (including accrued vacation and sick pay
and severance pay) payable to all employees through the Closing Date.
Seller shall indemnify, defend and hold Buyer harmless from and
against all direct or indirect costs, expenses and liabilities
arising from or relating to claims made by the Stations' employees in
respect of termination of employment by Seller with the Stations by
reason of the transactions contemplated by this Agreement.
(b) For purposes of employee benefits under Seller's
employee benefit plans, all of Seller's employees who accept
employment with Buyer shall be considered terminated employees and
Seller acknowledges and agrees that it, and not Buyer, is and shall
after the Closing remain solely responsible for any and all
insurance, supplemental pension, deferred compensation, retirement
and any other benefits, and related costs, premiums and claims, due,
to become due, committed or otherwise promised to any person who, as
of the Closing Date, is a retiree, former employee, or current
employee of Seller, relating to the period up to and including the
Closing Date.
11.3 FURTHER ASSURANCES. From time to time after the Closing
Date, without further consideration, Seller shall, at its expense,
execute and deliver, or cause to
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be executed and delivered, such
documents to Buyer as Buyer may reasonably request in order to more
effectively consummate the transactions contemplated hereby.
ARTICLE 12.
MISCELLANEOUS PROVISIONS
12.1 CONTROL OF STATIONS. Nothing contained in this Agreement
shall give Buyer any right to control the programming or operations
of the Stations prior to the Closing Date, and Seller shall have
complete control of the programming and operations of the Stations up
to the Closing Date.
12.2 EXPENSES. Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring
such costs and expenses. Each of Buyer and Seller shall be solely
responsible (without recourse to the other) for any compensation or
other fee due to any broker or finder separately and independently
retained by such party in connection with the transactions
contemplated hereby. Buyer and Seller shall each pay one-half
( 1/2 ) of the FCC filing fees and any sales, use, transfer,
recording, documentary taxes or other similar fees imposed in
connection with the sale and delivery of the Assets to Buyer pursuant
to this Agreement; PROVIDED, HOWEVER, that Seller shall be solely
responsible for any property gains taxes imposed in connection with
the sale and delivery of the Assets to Buyer pursuant to this
Agreement.
12.3 WAIVER OF COMPLIANCE. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement or
condition herein may be waived by the party entitled to the benefits
thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
12.4 NOTICES.All notices, elections and other communications
permitted or required under this Agreement shall be in writing and
shall be deemed effectively given or delivered upon personal delivery
or twenty-four (24) hours after delivery to a courier service which
guarantees overnight delivery or five (5) days after deposit with the
U.S. Post Office, by registered or certified mail, postage prepaid,
and, in the case of courier or mail delivery, addressed as follows
(or at such other address for a party as shall be specified by like
notice):
If to Seller, to:
Orange Communications, Inc.
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130 Mason Street
Greenwich, CT 06830
Attn: Frank D. Osborn, President
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Attn: Robert M. Hirsh, Esq.
If to Buyer, to:
Pilot Communications of Syracuse, Inc.
1054 James Street
Syracuse, NY 13202
Attn: James L. Leven, President
With a copy to:
Robert C. Fisher, Esq.
Fisher Wayland Cooper Leader & Zaragoza L.L.P.
2001 Pennsylvania Avenue, N.W., Suite 400
Washington, D.C. 20006
12.5 SPECIFIC PERFORMANCE. Notwithstanding anything to the
contrary in this Agreement, Seller agrees that the Assets include
unique property that cannot be readily obtained on the open market
and that Buyer will be irreparably injured if this Agreement is not
specifically enforced. Therefore, in the event that Seller defaults
in the performance of any of its obligations hereunder (it being
understood that the failure of a condition precedent to closing shall
not be construed to be any such default by Seller), and provided that
Buyer is willing and able to perform its obligations hereunder and is
not otherwise in breach of the terms of this Agreement, Buyer shall
have the right, in addition to and not in limitation of any other
remedies available to Buyer at law or in equity, specifically to
enforce Seller's performance under this Agreement. Seller agrees to
waive any defense in any such suit that Buyer has an adequate remedy
at law and to interpose no opposition, legal or otherwise, as to the
propriety of specific performance as a remedy.
12.6 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Notwithstanding the foregoing, neither party may assign its rights or
delegate its duties under this Agreement without the prior written
consent of the other,
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except that Buyer may assign its rights or
delegate its duties under this Agreement to any affiliate or
subsidiary of Buyer, provided that the FCC would consider such
transfer or assignment eligible for PRO FORMA treatment and provided
that any such transfer or assignment shall not delay the Closing.
12.7 GOVERNING LAW. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of
New York, without regard to the choice of law provisions thereof.
12.8 COUNTERPARTS. This Agreement may be executed in
counterpart originals, which collectively shall have the same legal
effect as if all signatures had appeared on the same physical
document. This Agreement may be executed and exchanged by facsimile
transmission, with the same legal effect as if the signatures had
appeared in original handwriting on the same physical document.
12.9 CAPTIONS. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part
of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement.
12.10 NO THIRD PARTY BENEFICIARIES. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give
to any person or entity other than the parties hereto and their
successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
12.11 PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and
valid under applicable law, but in case any provision contained
herein shall, for any reason, be held to be invalid or unenforceable,
such provision shall be ineffective to the extent of such invalidity
or unenforceability without invalidating the remainder of such
provision or any other provisions hereof, unless such a construction
would be unreasonable; PROVIDED, HOWEVER, that if the removal of such
offending provision materially alters the burdens or benefits of
either party, the parties agree to negotiate in good faith such
modifications to this Agreement as are appropriate to insure the
burdens and benefits of each party are reasonably comparable to those
originally contemplated and expected.
12.12 ATTORNEYS' FEES. If any suit, appeal, or other action is
commenced by a party to establish, maintain, or enforce any right or
remedy arising from this Agreement, the losing party shall pay all
reasonable attorneys' fees and litigation or appeal expenses incurred
therein by the prevailing party, to the extent awarded by the court
or other decision-maker.
12.13 ENTIRE AGREEMENT. This Agreement, including the Exhibits
and Schedules hereto and documents delivered pursuant to this
Agreement, embodies the
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entire agreement and understanding of the
parties hereto in respect of the subject matter hereof. This
Agreement supersedes all prior agreements and understandings between
the parties with respect to the transactions contemplated by this
Agreement, and may not be amended except in a writing signed by both
parties.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement
to be executed as of the date first above written.
ORANGE COMMUNICATIONS, INC.
By:____________________________
Thomas S. Douglas
Senior Vice President
PILOT COMMUNICATIONS OF
SYRACUSE, INC.
By:_____________________________
James L. Leven
President
_______________________________________________________
__ __
ASSETS PURCHASE AGREEMENT
dated as of August 31, 1995
by and between
KNELLER BROADCASTING OF CHARLOTTE COUNTY, INC.
(Seller)
and
OSBORN COMMUNICATIONS CORPORATION
(Buyer)
________________________________________________________
__ _
<PAGE>
Page i
TABLE OF CONTENTS
Page
ARTICLE I - PURCHASE AND SALE OF ASSETS
1.1 Transfer of
Assets...........................
1
1.2 Excluded
Assets..............................
4
1.3 Liabilities to be
Assumed....................
5
1.4
Consideration................................
5
1.5 WKII (AM)
Liability..........................
5
1.6 Proration of Income and
Expenses.............
5
1.7 Allocation of Purchase
Price.................
7
1.8 Escrow
Deposit...............................
7
ARTICLE II - CLOSING, TERMINATION, RISK OF LOSS AND LMA
OPERATION
2.1
Closing......................................
7
2.2 Transactions at the
Closing..................
8
2.3
Termination..................................
10
2.4 Operation of Station pursuant to the
LMA.....
12
2.5 Risk of
Loss.................................
12
2.6 Interruption of Broadcast
Transmissions......
13
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due
Incorporation............................
13
3.2 Authority; No
Conflict.......................
13
3.3 Government
Authorizations....................
14
3.4 Compliance with
Regulations..................
15
3.5
Taxes........................................
15
3.6 Personal
Property............................
16
3.7 Real
Property................................
16
3.8
Consents.....................................
18
3.9
Contracts....................................
18
3.10
Environmental................................
19
3.11 Intellectual
Property........................
19
3.12 Financial
Statements.........................
20
3.13 Personnel Information; Labor
Contracts.......
20
3.14 Employee Benefit
Plans.......................
21
3.15
Litigation...................................
21
3.16 Compliance with
Laws.........................
21
3.17
Insurance....................................
22
3.18 Undisclosed
Liabilities......................
22
3.19 Instruments of Conveyance; Good
Title........
22
3.20 Absence of Certain
Changes...................
23
3.21 Insolvency
Proceedings.......................
24
<PAGE>
Page ii
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due
Incorporation............................
24
4.2 Authority; No
Conflict.......................
24
4.3
Consents.....................................
25
4.4
Litigation...................................
25
4.5 Compliance with
Laws.........................
25
4.6
Qualification................................
25
ARTICLE V - COVENANTS OF SELLER
5.1 Continued Operation of
Station...............
26
5.2 Financial
Obligations........................
26
5.3 Reasonable
Access............................
26
5.4 Maintenance of
Assets........................
26
5.5 Notification of
Developments.................
27
5.6 Payment of
Taxes.............................
27
5.7 Third Party
Consents.........................
27
5.8
Encumbrances.................................
27
5.9 Assignment of
Assets.........................
27
5.10 Commission Licenses and
Authorizations.......
27
5.11 Technical
Equipment..........................
28
5.12 Compensation
Increases.......................
28
5.13 Sale of Broadcast
Time.......................
28
5.14
Insurance....................................
28
5.15 Negotiations with Third
Parties..............
28
5.16 Covenant Not to
Compete......................
28
ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment
Application.......................
29
6.2
Performance..................................
29
6.3
Conditions...................................
29
6.4
Confidentiality..............................
30
6.5
Cooperation..................................
30
6.6 Environmental
Reports........................
30
6.7 Consents to
Assignment.......................
31
6.8 Employee
Matters.............................
31
6.9
Survey.......................................
32
6.10 Relocation
Application.......................
32
6.11 Escrow
Agreement.............................
33
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission
Approvals.........................
33
7.2
Performance..................................
33
7.3 Representations and
Warranties...............
33
7.4
Consents.....................................
34
7.5 No
Litigation................................
34
7.6 No Adverse
Change............................
34
7.7
Documents....................................
34
<PAGE>
Page iii
7.8 Opinions of
Counsel..........................
34
7.9
Financing....................................
34
7.10
Survey.......................................
34
7.11 Ancillary
Agreements.........................
34
7.12
Guarantee....................................
34
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER
8.1
Performance..................................
35
8.2 Representations and
Warranties...............
35
8.3 Government
Approvals.........................
35
8.4
Documents....................................
35
8.5 Opinion of
Counsel...........................
35
8.6 Consulting
Agreement.........................
35
ARTICLE IX - INDEMNIFICATION
9.1 Indemnification by
Seller....................
35
9.2 Indemnification by
Buyer.....................
36
9.3 Notification of
Claims.......................
37
ARTICLE X - MISCELLANEOUS
10.1
Assignment...................................
38
10.2 Survival of Indemnification..................
38
10.3 Brokerage....................................
39
10.4 Expenses of the Parties......................
39
10.5 Entire Agreement.............................
39
10.6 Headings.....................................
39
10.7 Governing Law................................
39
10.8 Counterparts.................................
40
10.9 Notices......................................
40
10.10 Specific Performance.........................
41
10.11 Consent to Jurisdiction......................
41
10.12 Further Assurances...........................
41
10.13 Public Announcements.........................
41
<PAGE>
ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT is entered into this 31st
day of August, 1995 by and between KNELLER BROADCASTING OF CHARLOTTE
COUNTY, INC., a corporation formed under the laws of the State of
Florida ("Seller"), and OSBORN COMMUNICATIONS CORPORATION, a
corporation formed under the laws of the State of Delaware
("Buyer").
R E C I T A L S
WHEREAS, Seller owns and operates and has been duly
licensed by the Federal Communications Commission (the "FCC" or the
"Commission") to operate radio station WEEJ(FM)/WKII(AM), Port
Charlotte, Florida (the "Station");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires
to purchase, the assets utilized in connection with the operation of
the Station, and Seller and Buyer further desire that Seller assign
to Buyer the licenses and other authorizations issued to Seller by
the Commission for the purpose of operating the Station; and
WHEREAS, simultaneously with the execution of this
Agreement, Seller and Buyer have entered into a Lease Management
Agreement ("LMA") effective as of the 1st day of September 1995;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE
I
PURCHASE AND SALE OF ASSETS
1.1 TRANSFER OF ASSETS. Seller agrees to assign,
transfer, convey and deliver to Buyer and Buyer agrees to acquire,
accept and receive from Seller, on the Closing Date, all of Seller's
right, title and interest in and to the following assets relating to
the Station (the "Station Assets") free and clear of all liens and
encumbrances; PROVIDED, HOWEVER, that notwithstanding anything to the
contrary in this Agreement, Buyer shall take the Station Assets
subject to (i) that certain Secured Term Loan Note dated December 29,
1992 (as amended on January 1, 1995) in favor of Chambersburg
Broadcasting Co. and executed by Seller and
(ii) that certain Equipment Lease Agreement
<PAGE>
Page 2
between Seller and Priority Leasing Corporation dated August 14,
1994.
(a) LICENSES AND AUTHORIZATIONS. All licenses,
permits and other authorizations issued by the FCC or any other state
or federal regulatory agency pertaining to the Station, including,
without limitation, those licenses, permits or authorizations listed
in Section 1.1(a) of the disclosure schedule delivered by Seller to
Buyer and dated of even date herewith (the "Disclosure Schedule"),
together with any renewals, extensions or modifications thereof and
additions thereto made between the date of this Agreement and the
Closing Date (the "Licenses").
The Licenses include the right to use the call letters of the
Station, including but not limited to the call letters WKII(AM) and
WEEJ(FM).
(b) TANGIBLE PERSONAL PROPERTY. All of the tangible
personal property owned by Seller and used or useable in the
operation of the Station, including but not limited to the items of
personal property listed in Section 1.1(b) of the Disclosure
Schedule, together with all additions, modifications or replacements
thereto made in the ordinary course of business between the date of
this Agreement and the Closing Date, as hereafter defined (the
"Personal Property").
(c) REAL ESTATE CONTRACTS. All of the leasehold
interests in real property leased by Seller and used by the Station,
including all agreements, leases, and contracts of Seller relating to
the tower, transmitter, studio site, and offices of the Station (the
"Real Estate Contracts"), including all security or other deposits
made with respect to such Real Estate Contracts, all as described in
Section 1.1(d) of the Disclosure Schedule (the land, buildings and
other improvements covered by the Real Property Contracts being
herein called the "Leased Real Property." The Buyer shall assume,
pay and perform all obligations under such Real Estate Contracts
accruing after the Closing Date to the extent such obligations relate
to the period after the Closing Date.
(d) REAL ESTATE ASSETS. All of Seller's interest in
the real property owned by Seller and listed in Section 1.1(d) of the
Disclosure Schedule and all of the buildings, structures and other
improvements located thereon (collectively, the "Owned Real
Property"). The Owned Real Property and the Leased Real Property are
collectively referred to herein as the Real Property.
(e) INTELLECTUAL PROPERTY. All of Seller's trade
names, copyrights, trademarks, service marks, patents, patent
applications or other similar rights relating to the
<PAGE>
Page 3
operation of the Station including, but not limited to, those listed
in Section 1.1(e) of the Disclosure Schedule, together with any
necessary additions or modifications thereto between the date hereof
and the Closing Date (the "Intellectual Property").
(f) LEASES AND CONTRACTS. All leases, contracts,
agreements and franchises relating to the operation of the Station
(other than contracts for the sale of broadcast time and leases for
real property) listed and identified in Section 1.1(f) of the
Disclosure Schedule and those leases, contracts, agreements and
franchises described in Section 1.1(i) of this Agreement (the
"Contracts"). Buyer shall assume, pay and perform all obligations
under such Contracts accruing after the Closing Date.
(g) CONTRACTS FOR SALE OF BROADCAST TIME. All
contracts for sale of broadcast time on the Station that provide for
payment by the customer solely on a cash basis and that are to be in
effect on the Closing Date listed and identified in Section 1.1(g) of
the Disclosure Schedule (the "Broadcast Agreements"). Buyer shall
assume, pay and perform all obligations under the Broadcast
Agreements arising after the Closing Date, PROVIDED, HOWEVER, Buyer
will not assume any contract for the sale of time entered into prior
to the date of this Agreement pursuant to which payment is to be
received in whole or in part in services, merchandise or other non-
cash considerations ("Trade Agreements"), except as agreed to by
Buyer and set forth in Section 1.1(g) of the Disclosure Schedule, and
Buyer will not assume any contract for the sale of time pursuant to
such a Trade Agreement entered into subsequent to the date of this
Agreement unless Buyer has consented in writing to the execution of
such contract.
(h) OPERATING AND BUSINESS RECORDS. All files,
records,
logs and program materials pertaining to the operation of the Station
required to be maintained and kept under the rules of the Commission
and such other files and records as Buyer shall reasonably require
for the continuing business and operation of the Station. Seller
shall have the right to reasonable access to such business records
that Seller delivers to Buyer under this Section 1.1(h) upon Seller's
request for five years after the Closing Date.
(i) FUTURE CONTRACTS. All leases, contracts,
agreements and franchises entered into between the date hereof and
the Closing Date in the usual and ordinary course of business, except
that those exceeding two months in duration or $5,000.00 in amount
will not be assumed by Buyer unless consented to by Buyer in advance
in writing and set forth in Section 1.1(i) of the Disclosure
Schedule.
<PAGE>
Page 4
(j) INVENTORY AND COMPUTER SOFTWARE. All of Seller's
items of inventory related to the business of the Station, including,
without limitation, broadcast programs, as well as all computer
software used or useable by the Station.
(k) OTHER RIGHTS AND PRIVILEGES. Any and all other
franchises, materials, supplies, easements, rights-of-way, licenses,
and other rights and privileges of Seller relating to and used,
useable or necessary in the operation of the Station.
1.2 EXCLUDED ASSETS. There shall be excluded from the
sale transaction described herein the following assets relating to
the Station:
(a) CASH AND DEPOSITS. Cash-on-hand or in banks (or
their equivalents) and other investments belonging to Seller and
relating to the operation of the Station as of the Closing Date.
(b) ACCOUNTS RECEIVABLE. All accounts receivable of
the Seller with regard to the operation of the Station prior to the
Commencement date of the LMA (as that term is defined therein).
(c) PROPERTY CONSUMED. All property of the Station
disposed of or consumed (including ordinary wear and tear) in the
ordinary course of business between the date hereof and the Closing
Date.
(d) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All
contracts described in Sections 1.1(f), (g) and (i) to the Disclosure
Schedule that are terminated or will have expired prior to the
Closing Date in the ordinary course of business.
(e) PENSION AND PROFIT-SHARING PLANS. All pension
and profit-sharing plans, trusts established thereunder and assets
thereof, if any, of Seller.
(f) OTHER EMPLOYEE BENEFIT PLANS. All other employee
benefit plans (including health insurance) of Seller and the assets
thereof.
(g) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS.
All employment agreements and collective bargaining agreements of
Seller.
(h) OTHER ASSETS. Those assets, if any, listed in
Section 1.2(h) of the Disclosure Schedule.
<PAGE>
Page 5
1.3 LIABILITIES TO BE ASSUMED. (a) Except as otherwise
provided herein, Buyer assumes no liabilities or obligations of
Seller of any nature whatsoever, contingent or otherwise, except for
postclosing obligations related to Real Estate Contracts, Contracts,
Broadcasting
Agreements and Trade Agreements (the "Assumed Contracts") assigned to
and specifically assumed by Buyer.
(b) Buyer shall assume as of the Closing Date, all of
Seller's outstanding obligations to Chambersburg Broadcasting Co. as
of the Closing Date and as set forth in Section 1.3(b) of the
Disclosure Schedule.
1.4 CONSIDERATION. In consideration of Seller's
performance of this Agreement and the sale, assignment, transfer,
conveyance and delivery of the Station Assets to Buyer free and clear
of all liens and encumbrances, Buyer shall:
(a) pay to Seller on the Closing Date, by wire
transfer, the sum of One Million Four Hundred Thousand Dollars
($1,400,000.00) (the "Cash Payment");
(b) assume the liabilities specified in Section
1.3(b); (c) subject to the successful filing of a
License
Application Form 302 with the Commission in respect of the relocation
of the Station to a tower located in Pine Island, Florida, within
five (5) days of such filing pay an amount equal to Seven Hundred
Fifty Thousand Dollars ($750,000.00).
1.5 WKII (AM) LIABILITY. Buyer and Seller agree that in
the event the License for WKII (AM) suffers an adverse condition
including, without limitation, revocation, modification, Commission
order to reduce power, Commission order to change WKII (AM)'s
frequency or any costs associated therewith, Seller shall be liable
for up to Four Hundred Thousand Dollars ($400,000.00) of any costs,
damages or claims associated with such adverse change for the four-
year period immediately following the Closing; PROVIDED, HOWEVER,
that such liability shall be reduced at a rate of One Hundred
Thousand Dollars per year ($100,000.00) beginning in the fifth year
following the Closing so that at the end of the eighth year following
the Closing, Seller's potential liability shall be reduced to zero.
Notwithstanding the provisions of this paragraph 1.5, Seller shall
have no liability hereunder (i) in the event WKII(AM) suffers an
adverse condition due solely to the failure of Buyer to timely file
with the Commission or any other applicable governmental authority
any material application or other document required to be filed by
Buyer in <PAGE>
Page 6
connection with WKII(AM)'s License and (ii) unless Seller has
received or is entitled to receive the $750,000.00 referenced in
paragraph 1.4(c) above.
1.6 PRORATION OF INCOME AND EXPENSES. Except as otherwise
provided herein or in the LMA, all income and expenses arising from
the conduct of the business and operations of the Station shall be
prorated between Buyer and Seller in accordance with generally
accepted accounting principles as of 11:59 p.m., Eastern time, on the
date immediately preceding the Closing Date. Such prorations shall
include, without limitation, all AD VALOREM and other property taxes
(but excluding taxes arising by reason of the transfer of Station
Assets as contemplated hereby, which shall be paid as set forth in
Section 10.4 of this Agreement), business and license fees, music and
other license fees (including any retroactive adjustments thereof,
which retroactive adjustments shall not be subject to the ninety day
limitation set forth in Section 1.5(b)), wages and salaries of
employees hired by Buyer, including accruals up to the Closing Date
for bonuses, commissions, vacation and sick pay, and related payroll
taxes, utility expenses, time sales agreements, Trade Agreements to
the extent provided in Section 1.5(a) hereof, rents and similar
prepaid deferred items attributable to the ownership and operation of
the Station.
(a) TRADE AGREEMENTS. To the extent that the
aggregate value by which the Station's obligations as of the
Commencement Date of the LMA are reflected on Seller's monthly
Station Trade Report under Trade Agreements assumed by Buyer for the
sale of advertising time is greater or less than the aggregate value
as reflected on Seller's monthly Station Trade Report of the goods,
services or other items to be received by the Station after the
Commencement Date of the LMA, Buyer or Seller, as the case may be,
shall be entitled to receive the difference.
(b) TIME FOR PAYMENT. The prorations and adjustments
contemplated by this Section 1.5, to the extent practicable, shall be
made on the Closing Date. As to those prorations and adjustments not
capable of being ascertained on the Closing Date, an adjustment and
proration shall be made within 90 days of the Closing Date.
(c) DISPUTE RESOLUTION. In the event of any disputes
between the parties as to such adjustments, the amounts not in
dispute shall nonetheless be paid at the time provided in Section
1.5(b) and such disputes shall be determined by an independent
certified public accountant mutually acceptable to the parties whose
determination shall be final, and the fees and expenses of such
accountant shall be paid onehalf by Seller and one-half by Buyer.
<PAGE>
Page 7
1.7 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree
that the Purchase Price shall be allocated among the Station Assets
in a manner to be determined by Buyer. Buyer and Seller agree to use
such allocation in completing and filing Internal Revenue Service
Form 8594 for federal income tax purposes. Buyer and Seller further
agree that they shall not take any position inconsistent with such
allocation upon examination of any return, in any refund claim, in
any litigation, or otherwise.
1.8 ESCROW DEPOSIT. (a) As security for any amounts which
may become payable by Seller pursuant to Section 1.5 herein, and (b)
as security for Buyer's failure to Close and for Seller to perform
its obligations hereunder, Buyer shall deposit with Doyle Hadden,
Hadden & Associates, 1385 Ayerswood Ct., Winter Springs, FL 32708
(the "Escrow Agent"), a sum equal to five percent (5%) of the
Purchase Price (the "Escrow Deposit"). The Escrow Deposit shall be
held and disbursed by the Escrow Agent as follows: (i) in the event
prior to the Release Date (defined below) any amounts become payable
by Seller pursuant to clause (a) above, the Escrow Agent shall
disburse such amounts to the extent required to fulfill Seller's
obligations thereunder; (ii) six (6) months following the Closing
(the "Release Date"), the Escrow Deposit shall be delivered to Seller
in partial satisfaction of the Purchase Price; PROVIDED, HOWEVER,
that (iii) in the event this Agreement is terminated pursuant to
Sections 2.3(a)(ii), (iii) or (iv)
(other than with respect to Section 7.9 hereof which shall not apply
in this case) of this Agreement and in each such case Buyer is not in
default hereunder, the Escrow Deposit shall be returned to Buyer;
(iv) in the event this Agreement is terminated pursuant to Sections
2.3(a)(ii), (iii) or (v) and in each such case Seller is not in
default hereunder, the Escrow Deposit shall be delivered to Seller;
and (v) in the event the Closing does not occur before June 30, 1996
and neither Buyer nor Seller is at fault, the Escrow Deposit shall be
returned to Buyer. If the Closing occurs, all accrued interest on
the Escrow Deposit up to and including the Closing Date shall be
payable to Buyer and all accrued interest on the Escrow Deposit up to
and including the Release Date shall be payable to Seller.
ARTICLE II
CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION
2.1 CLOSING. The purchase and sale of the Station Assets
contemplated by this Agreement (the "Closing") shall take place at
10:00 a.m. on a mutually agreed
<PAGE>
Page 8
upon day five (5) days after the latter of (a) the Commission's
approval of the Assignment Application, as defined in Section
6.1 below, becomes a Final Order, or (b) the grant of Seller's
renewal application in respect of the Licenses or such other time and
place as shall be mutually agreed upon by the parties (the "Closing
Date"). For purposes of this Agreement, a "Final Order" shall mean
any action of the Commission which has not been reversed, stayed,
enjoined, set aside, annulled or suspended and with respect to which
no requests are pending for administrative or judicial review,
reconsideration, appeal or stay, and the time for filing any such
requests and the time for the Commission to set aside the action on
its own motion shall have expired. Buyer may, at its sole election,
waive the requirement that the Commission's approval of the Assignment
Application shall have become a Final Order.
2.2 TRANSACTIONS AT THE CLOSING.
(a) At the Closing, Seller shall deliver to Buyer the
following:
(i) assignments of the Licenses and other
pertinent authorizations transferring the same to the Buyer in
customary form and substance;
(ii) the certificates contemplated by Sections 7.2
and 7.3;
(iii) a copy of the resolutions of the board of
directors of Seller authorizing the execution, delivery and
performance of this Agreement and the agreements and documents
listed in Section 2.2 of the Disclosure Schedule (the "Ancillary
Agreements"), and the consummation of the transactions
contemplated hereby and thereby, together with a certificate of
the Secretary of Seller, dated as of the Closing Date, that such
resolutions were duly adopted and are in full force and effect;
(iv) A special warranty deed (or its equivalent in
the State of Florida), in proper statutory form for recording,
conveying each parcel of Owned Real Property;
(v) An owner's extended coverage policy of title
insurance with respect to each parcel of Real Property, in each
case issued on the date of Closing by a title insurance company
acceptable to counsel for Buyer (the "Title Company"). Each such
title insurance policy shall be in an amount designated by Buyer
and shall insure Buyer's ownership of fee title with respect to
the Owned Real Property without any of the Scheduled B standard
pre printed exceptions (other
<PAGE>
Page 9
than taxes not yet due and payable) and free and clear
of title defects and other exceptions to or
exclusions from coverage other than Permitted Owned Real Property
Exceptions (as hereinafter defined in Section 3.7(a)).
(vi) All real property transfer tax returns and
other similar filings required by law in connection with the
transactions contemplated hereby, all duly executed and
acknowledged by Seller. Seller shall also have executed such
affidavits in connection with such filings as shall have been
required by law or reasonably requested by Buyer.
(vii) Affidavit of an officer of Seller, sworn to
under penalty of perjury, setting forth Seller's name, address
and Federal tax identification number and stating that Seller is
not a "foreign person" within the meaning of Section 1445 of the
Internal Revenue Code of 1986 (the "Code"). If, on or before the
Closing Date, Buyer shall not have received such affidavit, Buyer
may withhold from the Purchase Price payable at Closing to Seller
pursuant hereto such sums as are required to be withheld
therefrom under Section 1445 of the Code.
(viii) a bill of sale and all other appropriate
documents and instruments assigning to Buyer good and marketable
title to the Station Assets free and clear of any security
interests, mortgages, liens, pledges, attachments, conditional
sales contracts, claims, charges or encumbrances of any kind
whatsoever;
(ix) the Ancillary Agreements, duly executed by
Seller as appropriate;
(x) written consents of the respective lessors,
landowners, and any other persons or entities whose consents may
be required to permit Buyer to assume the liabilities, contracts,
leases, licenses, understandings and agreements constituting the
Real Estate Contracts and the Contracts;
(xi) evidence satisfactory to Buyer's counsel that
no financing statements are outstanding on the Station Assets;
(xii) all files, records, logs, and program
materials relating to the Station;
(xiii) the opinion of counsel for Seller, dated the
Closing Date, as described in Section 7.8;
<PAGE>
Page 10
(xiv) assignments to Buyer of all the Contracts and
Real Estate Contracts in form satisfactory to Buyer; and
(xv) a current estoppel certificate from the
Landlord under each Real Property Contract in form satisfactory
to counsel to Buyer.
(xvi) such other documents and instruments as Buyer
may
reasonably request to consummate the transactions contemplated hereby.
(b) At the Closing, Buyer shall deliver or cause to
be delivered to Seller the following:
(i) the Purchase Price less the Escrow Deposit;
(ii) a copy of the resolutions of the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby,
together with a certificate of the Secretary of Buyer dated as of
Closing Date, that such resolutions were duly adopted and are in
full force and effect;
(iii) the certificates contemplated by Sections 8.1
and 8.2;
(iv) the Ancillary Agreements, duly executed by Buyer
as appropriate;
(v) the opinion of counsel for Buyer, dated the
Closing Date, as described in Section 8.5; and
(vi) such other documents and instruments as Seller
may reasonably request to consummate the transactions contemplated
hereby.
2.3 TERMINATION.
(a) Notwithstanding anything to the contrary contained
in this Agreement, this Agreement may be terminated at any time by:
(i) the mutual written consent of the parties
hereto;
(ii) either Buyer or Seller if the Closing does not
occur before June 30, 1996, provided, however, that the party
seeking termination under this
<PAGE>
Page 11
Section 2.3(a)(ii) shall not have prevented the Closing from
occurring;
(iii) either Buyer or Seller if the Assignment
Application is not granted within nine (9) months from the date the
Form 314 is placed on Commission's public notice (through no fault
of the terminating party) or is denied by the Commission by a Final
Order or is at any time set by the Commission for a formal hearing;
PROVIDED, HOWEVER, that in the event of termination due solely to
the Commission's designation of the Assignment Application for a
formal hearing, the provisions of Section 2.3(c) shall apply;
(iv) Buyer, if any of the conditions set forth in
Article VII shall have become incapable of fulfillment, and shall
not have been waived by Buyer, or if Seller shall have breached in
any material respect any of its representations, warranties or
obligations hereunder and such breach shall not have been cured in
all material respects or waived prior to the Closing; or
(v) Seller, if any of the conditions set forth in
Article VIII shall have become incapable of fulfillment, and shall
not have been waived by Seller, or if Buyer shall have breached in
any material respect any of its representations, warranties or
obligations hereunder and such breach shall not have been cured in
all material respects or waived prior to the Closing.
(b) In the event of the termination of this Agreement
by Buyer or Seller pursuant to this Section 2.3, written notice
thereof shall promptly be given to the other party and, except as
otherwise
provided herein, the transactions contemplated by this Agreement shall
be terminated, without further action by any party. Nothing in this
Section
2.3 shall be deemed to release any party from any liability for any breach
by such party of the terms and provisions of this Agreement or to impair
the right of Buyer to compel specific performance of Seller of its
obligations under this Agreement.
(c) The time for Commission approval provided in
Section 2.3(a)(iii) notwithstanding, either party may terminate this
Agreement upon written notice to the other, if, for any reason, the
Assignment Application is designated for hearing by the Commission,
PROVIDED, HOWEVER, that written notice of termination must be given
within
twenty (20) days after release of the Hearing Designation Order and
that the party giving such notice is not in default and has otherwise
complied with its obligations under this Agreement. Upon termination
<PAGE>
Page 12
pursuant to this Section, the parties shall be released and
discharged from any further obligation hereunder and the Escrow
Deposit shall be
returned to the Buyer.
(d) It is further PROVIDED, HOWEVER, that no party
may terminate this Agreement if such party is in default hereunder,
or if a delay in any decision or determination by the Commission
respecting the Assignment Application has been caused or materially
contributed to (i) by any failure of such party to furnish, file or
make available to the Commission information within its control; (ii)
by the willful furnishing by such party of incorrect, inaccurate or
incomplete information to the Commission; and (iii) by any other
action taken by such party for the purpose of delaying the
Commission's decision or determination respecting the Assignment
Application. Upon such termination for failure of the Commission to
act, the parties shall be released and discharged from any further
obligation hereunder.
(e) A party shall be deemed to be in default under
this Agreement only if such party has materially breached or failed
to perform its obligations hereunder, and non-material breaches or
failures shall not be grounds for declaring a party to be in default,
postponing the Closing, or terminating this Agreement.
(f) If the Closing occurs, the Escrow Deposit shall
be applied to the Purchase Price at Closing.
2.4 OPERATION OF STATION PURSUANT TO THE LMA.
Notwithstanding any provision to the contrary in this Agreement:
(a) As of September 1, 1995 (the "Commencement
Date"), the business and operation of the Station shall be conducted
pursuant to the terms of the LMA;
(b) All LMA Liabilities shall be assumed by Buyer as
of the Commencement Date.
2.5 RISK OF LOSS. The risk of any loss, damage or
destruction to any of the Station Assets from fire or other casualty
or cause shall be borne by Seller at all times prior to the Closing
Date hereunder. Upon the occurrence of any loss or damage to any of
the Station Assets as a result of fire, casualty, accident or other
causes prior to the Closing Date, Seller shall notify Buyer of same
in writing immediately stating with particularity the extent of loss
or damage incurred, the cause thereof if known and the extent to
which restoration, replacement and repair of the Station Assets lost
or destroyed will be
<PAGE>
Page 13
reimbursed under any insurance policy with respect thereto. In the
event the loss exceeds $50,000 and the Station Assets cannot
be substantially repaired or restored within forty-five (45) days
after such loss, Buyer shall have the option, exercisable within ten
(10) days after receipt of written notice from Seller, to: (i)
terminate this Agreement; (ii) postpone the
Closing until such time as the property has been completely repaired,
replaced or restored to the satisfaction of Buyer, unless the same
cannot be reasonably effected within thirty (30) days of
notification; or (iii) elect to consummate the Closing and accept the
property in its damaged condition, in which event Seller shall assign
to Buyer all rights under any insurance claim covering the loss and
pay over to Buyer any proceeds under any such insurance policy
thereto received by
Seller with respect thereto.
2.6 INTERRUPTION OF BROADCAST TRANSMISSIONS.
Notwithstanding any other provision hereof, if prior to the Closing
any event occurs which prevents the broadcast transmission by the
Station with substantially full licensed power and antenna height as
described in the applicable FCC Licenses and in the manner it has
heretofore been operating for periods of time in excess of six (6)
hours, the Seller will
give prompt written notice thereof to Buyer. If such facilities are
not restored so that operation is resumed with substantially full
licensed power within three (3) days of such event, or, in the case
of more than one event, the aggregate number of days preceding such
restorations from all such events is more than six (6) days, or if
the Station is off the air more than three (3) times for a period in
each case exceeding six (6) hours, Buyer shall have the right, by
giving written notice to Seller of its election to do so, to
terminate this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 DUE INCORPORATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Florida, and is duly qualified to do business in and is
in good standing in the State of Florida. Seller has the corporate
power and authority to own and to operate the Station and the Station
Assets.
3.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements
<PAGE>
Page 14
have been duly and validly authorized and approved by
the board of directors of Seller, and Seller has the corporate
power and authority to execute, deliver and perform
this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. Neither such
execution, delivery or performance nor compliance by Seller with the
terms and provisions hereof, or with respect to the Ancillary
Agreements, will (assuming receipt of all necessary approvals from
the Commission) conflict with or result in a breach of any of the
terms, conditions or provisions of (a) the Certificate of
Incorporation or Bylaws of Seller, (b) any judgment, order,
injunction, decree, regulation or ruling of any court or other
governmental authority to which Seller is subject, or (c) any
material agreement, lease or contract, written or oral, to which
Seller is subject. This Agreement shall constitute the valid and
binding obligation of Seller with respect to the terms hereof,
subject to Commission approval of the transactions contemplated
hereby.
3.3 GOVERNMENT AUTHORIZATIONS.
(a) Section 1.1(a) of the Disclosure Schedule contains
a true and complete list of all the Licenses, which Licenses are
sufficient for the lawful conduct of the business and operation of
the Station in the manner and to the full extent they are currently
conducted. Seller is the authorized legal holder of the Licenses,
none of which is subject to any restriction or condition which would
limit in any material respect the full operation of the Station as
now operated. There are no applications, complaints or proceedings
pending or, to the best of Seller's knowledge, threatened as of the
date hereof before the Commission or any other governmental authority
relating to the business or operations of the Station, other than
applications, complaints or proceedings which generally affect the
broadcasting
industry as a whole, and other than reports and forms filed in the
ordinary course of the Station's business. Seller has delivered to
Buyer true and complete copies of the Licenses, including any and all
additions, amendments and other modifications thereto. The Licenses
are in good standing, are in full force and effect and are unimpaired
by any act or omission of Seller or its officers, directors or
employees; and the operation of the Station is in accordance with the
Licenses and the underlying construction permits. No proceedings are
pending or, to the knowledge of Seller, are threatened which may
result in the revocation, modification, non-renewal
or suspension of any of the Licenses, the denial of any pending
applications, the issuance of any cease and desist order, the
imposition of any administrative actions by the Commission with
respect to the Licenses or which may affect Buyer's ability to
continue to operate the Station
<PAGE>
Page 15
as it is currently operated. Seller has taken no action which,
to its knowledge, could lead to revocation or non-renewal of the
Licenses, nor omitted to take any action which, by reason of its
omission, could lead to revocation of the Licenses. All material
reports, forms and statements required to be filed with the
Commission with respect to the Station since the grant of the last
renewal of the Licenses have been filed and are complete and
accurate. To the knowledge of Seller, there are no facts which,
under the Communications Act of 1934, as amended, or the existing
rules and regulations of the Commission, would disqualify Seller as
assignor, and Buyer as assignee, in connection with the Assignment
Application.
(b) The Seller has disclosed and the Buyer
acknowledges and agrees that WKII(AM) is not operating under a
Federal Communications Commission License, but rather a Special
Temporary Authority (the "STA") granted initially on August5, 1991,
and subsequently extended through November 10, 1995, in increments of
six months or one year (at the Commission's discretion). This STA
permits WKII(AM) to operate as if licensed, but is subject to
revision, suspension or termination at the sole discretion of the
Commission. Therefore, Buyer understands and agrees that,
notwithstanding anything to the contrary contained in this Agreement,
Seller makes no representations that said STA shall remain in effect
beyond the date of closing.
3.4 COMPLIANCE WITH REGULATIONS. The operation of the
Station is in compliance in all material respects with (i) all
applicable engineering standards required to be met under Commission
rules, and (ii) all other applicable rules, regulations, requirements
and policies of the Commission and all other applicable governmental
authorities, including, but not limited to, ANSI Radiation Standards,
to the extent required to be met under applicable Commission rules
and regulations; and there are no existing claims known to Seller to
the contrary.
3.5 TAXES. Seller has timely filed all federal, state,
local and foreign income, franchise, sales, use, property, excise,
payroll and other tax returns required by law and has paid in full
all taxes, estimated taxes, interest, assessments, and penalties due
and payable as shown thereon. All returns and forms which have been
filed have been true and correct in all material respects and no tax
or other payment in a material amount other than as shown on such
returns and forms are required to be paid or have been paid by
Seller. There are no present disputes as to taxes of any nature
payable by Seller which in any event could materially adversely
affect the Station Assets or operation of the Station. Each of the
parcels included in
<PAGE>
Page 16
the Owned Real Property is assured for real estate purposes as a
wholly
independent tax lot, separate from any adjoining load or improvements
not constituting a part of such parcel.
3.6 PERSONAL PROPERTY. Section 1.1(b) of the Disclosure
Schedule contains a true and complete list of all the Personal
Property. Except for those assets designated on Section 1.1(b) of the
Disclosure Schedule as being subject to lease agreements, Seller owns
and has, and will have on the Closing Date, good and marketable title
to such Personal Property, and none of such Personal Property on the
Closing Date will be subject to any security interest, mortgage,
pledge, conditional sales agreement or other lien or encumbrance.
All items of Personal Property are in all material respects in good
operating condition, ordinary wear
and tear excepted, and are available for immediate use in the conduct
of the business and operation of the Station. The technical
equipment, including, without limitation, all transmitters and studio
equipment, constituting part of the Personal Property, has been
maintained in accordance with industry practice and is in good
operating condition, ordinary wear and tear excepted, (except as
noted in Section 1.1(b) of the Disclosure Schedule) and complies in
all material respects with all applicable rules and regulations of
the Commission and the terms of the Licenses. The Personal Property
includes all such items and equipment necessary to conduct in all
material respects the business and operations of the Station as now
conducted.
3.7 REAL PROPERTY.
(a) Seller is the owner of good, marketable and
insurable fee title to the real property described on Section 1.1(d)
of the Disclosed Schedule and to all of the buildings, structures and
other improvements located thereon (collectively, the "Owned Real
Property") free and clear of all Title Defects (as hereinafter
defined) except for the matters listed on Section 3.7 of the
Disclosure Schedule and encumbrances of a minor nature that do not,
in the reasonable opinion of Buyer's counsel, individually or in the
aggregate (i) interfere in any material respect with the use,
occupancy or operation of the Owned Real Property or (ii) materially
reduce the fair market value of the Owned Real Property below the
fair market value the Owned Real Property would have had but for such
encumbrances (collectively, the "Permitted Owned Real Property
Exceptions"). The Owned Real Property constitutes all of the real
property owned by Seller on the date hereof in connection with the
operation of the Station. There are no leases/subleases or other
agreements granting to any person other than Seller any right to the
possession, use or
<PAGE>
Page 17
occupancy of the Owned Real Property. As used in this
Agreement, "Title Defects" shall mean and include any mortgage, deed
of trust, lien, pledge, security interest, claim, lease, charge,
option, right of first refusal, easement, restrictive covenant,
encroachment or other survey defect, encumbrance or other restriction
or limitation whatsoever.
(b) Section 1.1(d) of the Disclosure Schedule
contains a true and complete list and summary of all the Real Estate
Contracts. Seller holds the leasehold interest under each Real
Property Contract free and clear of all Title Defects. The Real
Estate Contracts constitute valid and binding obligations of Seller
and, to the best of Seller's knowledge, of all other persons
purported to be parties thereto, and are in full force and effect as
of the date hereof, and will on the Closing Date constitute valid and
binding obligations of Buyer and, to the best of Seller's knowledge,
of all other persons purported to be parties thereto. As of the date
hereof, Seller is not in default under any of the Real Estate
Contracts and has not received or given written notice of any default
thereunder from or to any of the other parties thereto and will not
have received any such notice at or
prior to the Closing Date. Seller shall use reasonable efforts to
obtain valid and binding third-party consents, if any are necessary,
from all required third parties to the Real Estate Contracts to be
conveyed and assigned to Buyer as part of the Station Assets.
Subject to any required third-party consents, Seller will have full
legal power and authority to assign its rights under the Real Estate
Contracts of Buyer in accordance with this Agreement on terms and
conditions no less favorable than those in effect on the date hereof,
and such assignment shall not affect the validity, enforce ability
and continuity of any of the Real Estate Contracts.
(c) Entire Premise. All of the land, buildings,
structures and other improvements used by Seller in the conduct of
the Business or involved in the Real Property.
(d) No Options. Seller does not own or hold, and is
not obligated under or a party to, any option, right of first refusal
or other contractual right to purchase, acquire, sell or dispose of
the Real Property or any portion thereof or interest therein.
(e) Condition and Operation of Improvements. All
components of all buildings, structures and other improvements
included within the Real Property (the "Improvements") are in good
working order and repair. All water, gas, electrical, steam,
compressed air, <PAGE>
Page 18
telecommunication, sanitary and storm sewage lines and systems and
other similar systems serving the Real Property are installed and
operating and are sufficient to enable the Real Property to continue
to be used and operated in the manner currently being used and
operated, and any socalled hook-up fees or other associated charges
have been fully paid.
(f) Real Property Permits and Insurance. All
certificates of occupancy, permits, licenses, franchises, approvals
and authorizations (collectively, "Real Property Permits") of all
governmental authorities having jurisdiction over the Real Property,
required or appropriate to have been issued to Seller to enable the
Real Property to be lawfully occupied and used for all of the
purposes for which it is currently occupied and used have been
lawfully issued and are, as of the date hereof, in full force and
effect.
(g) Condemnation. Seller has not received notice
and has no knowledge of any pending, threatened or contemplated
condemnation proceeding affecting the Real Property or any part
thereof or of any sale or other disposition of the Owned Real
Property or any part thereof in lieu of condemnation.
(h) Casualty. No portion of the Real Property has
suffered any material damage by fire or other casualty which has not
heretofore been completely repaired and restored to its original
condition. No portion of the Real Property is located in a special
flood hazard area as designated by Federal governmental authorities.
3.8 CONSENTS. No consent, approval, authorization or
order of, or registration, qualification or filing with, any court,
regulatory authority or other governmental body is required for the
execution, delivery and performance by Seller of this Agreement or
the Ancillary Agreements to which it is a party, other than approval
by the Commission of the Assignment Application as contemplated
hereby. Except as set forth in Section 3.8 of the Disclosure
Schedule, no consent of any other party (including, without
limitation, any party to any Real Estate Contract or Contract) is
required for the execution, delivery and performance by Seller of
this Agreement or the Ancillary Agreements to which it is a party.
3.9 CONTRACTS. Section 1.1(f) of the Disclosure Schedule
contains a true and complete list of all Contracts, and Section
1.1(g) contains a true and complete list of all Broadcast Agreements
and Trade Agreements. Seller has delivered to Buyer true and
complete copies of all written Contracts, Broadcast Agreements and
Trade
<PAGE>
Page 19
agreements in the, possession of Seller, including any
and all amendments and other modifications to same. All such
Contracts, Broadcast Agreements and Trade Agreements are valid,
binding and enforceable by Seller in
accordance with their respective terms, except as limited by laws
affecting creditors' rights or equitable principles generally.
Seller has complied in all material respects with all such Contracts,
Broadcast Agreements and Trade Agreements, and Seller is not in
default beyond any
applicable grace periods under any of same, and no other contracting
party is in material default under any of same. Seller has full
legal power and authority to assign its respective rights under such
Contracts, Broadcast Agreements and Trade Agreements 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 materially affect the validity, enforceability
and continuity of any such Contracts, Broadcast Agreements and Trade
Agreements.
3.10 ENVIRONMENTAL. Seller has not unlawfully disposed of
any Hazardous Waste in a manner which has caused, or could cause,
Buyer to incur a material liability under applicable law in
connection therewith; and Seller warrants that the technical
equipment included in the Personal Property does not contain any
Hazardous Waste, including any Polychlorinated Biphenyls ("PCBs")
that are required by law to be removed, or if any equipment does
contain Hazardous Waste, including any PCBs, that such equipment is
stored and maintained in compliance with applicable law. Seller has
complied in all material respects with all federal, state and local
environmental laws, rules and regulations applicable to the Station
and its operations, including but not limited to the Commission's
guidelines regarding RF radiation. No Hazardous Waste has been
disposed of by Seller, and to the best of Seller's knowledge, no
Hazardous Waste has been disposed of by any other person on the
property subject to Real Estate Contracts. As used herein, the term
"Hazardous Waste" shall mean all materials regulated by any federal,
state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata). If Seller learns between the date of this Agreement and the
Closing Date that Seller is in breach of the representation and
warranty set forth in this Section 3.10, Seller shall begin remedial
action promptly and shall use reasonable best efforts to complete
such remedial action to the satisfaction of Buyer before the Closing
Date.
3.11 INTELLECTUAL PROPERTY. Section 3.11 of the
Disclosure Schedule is a true and complete list of all the
Intellectual Property. The Intellectual Property has been
<PAGE>
Page 20
duly registered in, filed with, or
issued by the appropriate offices within all jurisdictions where such
registration, filing or issuance is necessary to protect such
Intellectual Property from infringement, including, without
limitation, the United States Copyright Office and the United States
Patent and Trademark Office. Seller has not granted any license or
other rights with respect to the Intellectual Property. Seller has
not received any written notice of any infringement or unlawful use
of the Intellectual Property and Seller has not violated or infringed
any patent, trademark, trade secret or copyright held by others or
any license,
authorization or permit held by it.
3.12 FINANCIAL STATEMENTS. Section 3.12 of the Disclosure
Schedule contains complete unaudited copies of the statements of
income, and the related balance sheets for Seller for the period
after Seller acquired the Station (the "Financial Statements"). The
Financial Statements have been prepared in accordance with generally
accepted accounting principles and in accordance with the policies
and procedures of the Corporation applicable thereto, consistently
applied. The Financial Statements present fairly the financial
condition and results of operations of the Station for the periods
indicated.
3.13 PERSONNEL INFORMATION; LABOR CONTRACTS.
(a)Section 3.13 of the Disclosure Schedule contains a
true and complete list of all persons employed at the Station,
including the date of hire, a description of material compensation
arrangements
(other than employee benefit plans set forth in Section 3.15 of the
Disclosure Schedule) and a list of other terms of any and all
material agreements affecting such persons.
(b) Seller is not a party to any contract with any
labor organization, nor has Seller agreed to recognize any union or
other collective bargaining unit, nor has any union or other
collective bargaining unit been certified as representing any of
Seller's employees. Seller has no knowledge of any organizational
effort currently being made or threatened by or on behalf of any
labor union with respect to employees of the Station. During the
past two years, Seller has not experienced any strikes, work
stoppages, grievance proceedings, claims of unfair labor practices
filed, or other significant labor difficulties of any nature.
(c) Seller has complied in all material respects
with all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and
<PAGE>
Page 21
those laws relating to wages, hours, collective
bargaining, unemployment insurance, workers' compensation, equal
employment opportunity and the payment and withholding of taxes.
3.14 EMPLOYEE BENEFIT PLANS. Section 3.14 of the
Disclosure Schedule contains a true and complete list and summary, as
of the date of this Agreement, of all employee benefit plans (as that
term is defined in Section 3(3) of ERISA) applicable to the employees
of Seller. Seller maintains no other employee benefit plan. Each of
Seller's employee benefit plans has been operated and administered in
all material respects in accordance with its terms and applicable
law, including, without limitation, ERISA and the Internal Revenue
Code.
3.15 LITIGATION. Except as set forth in Section 3.15 of
the Disclosure Schedule, Seller is not subject to any judgment,
award, order, writ, injunction, arbitration decision or decree, and
there is no litigation, proceeding or investigation pending or, to
the best of Seller's knowledge, threatened against Seller or the
Station in any federal, state or local court, or before any
administrative agency or arbitrator (including, without limitation,
any proceeding which seeks the forfeiture of, or opposes the renewal
of, any of the Licenses), or before any other tribunal duly
authorized to resolve disputes, which would reasonably be expected to
have any material adverse effect upon the business, property, assets
or condition (financial or otherwise) of the Station or which seeks
to enjoin or prohibit, or otherwise questions the validity of, any
action taken or to be taken pursuant to or in connection with this
Agreement. In particular, but without
limiting the generality of the foregoing, except as set forth in
Section 3.15 of the Disclosure Schedule, there are no applications,
complaints or proceedings pending or, to the best of Seller's
knowledge, threatened before the Commission or any other governmental
organization with respect to the business or operation of the
Station, other than applications, complaints or proceedings which
affect the broadcast industry generally.
3.16 COMPLIANCE WITH LAWS. Seller has not received any
notice asserting any non-compliance with any applicable statute, rule
or regulation (federal, state or local) whether or not related to the
business or operation of the Station or the Real Property. Seller is
not in default with respect to any judgment, order, injunction or
decree of any court, administrative agency or other governmental
authority or to any other tribunal duly authorized to resolve
disputes in any respect material to the transactions contemplated
hereby. Seller is in compliance in all material respects with all
laws, <PAGE>
Page 22
regulations and governmental orders whether or not applicable to the
conduct of the business and operation of the Station and any other
business or operations conducted by Seller. The Owned Real Property
is in full compliance with all applicable building, zoning,
subdivision, environmental and other
land use and similar laws, codes, ordinances, rules, regulations and
orders of governmental authorities (collectively, "Real Property
Laws"), and Seller has not received any notice of
violation or claimed violation of any Real Property Law. Seller has
no knowledge of any pending change in any Real Property Law which
would have a material adverse effect upon the ownership or use of the
Owned Real Property.
3.17 INSURANCE. Seller has in full force and effect
insurance on all of the Real Property, Personal Property, and all
other Station Assets pursuant to insurance policies, a true and
complete copy of which is contained in Section 3.17 of the Disclosure
Schedule. Seller shall continue to maintain such insurance in full
force and effect up to the Closing Date or shall have obtained prior
to the Closing Date other insurance policies with limits and coverage
comparable to the current policies after prior notice to, and upon
written consent of the Buyer, which consent shall not be unreasonably
withheld.
3.18 UNDISCLOSED LIABILITIES. Except as to, and to the
extent of, the amounts specifically reflected or reserved against in
Seller's balance sheets for the period ending December 31, 1994 (the
"Balance Sheet Date"), and except for liabilities and obligations
incurred since the Balance Sheet Date in the ordinary and usual
course of business, Seller has no material liabilities or obligations
of any nature whether accrued, absolute, contingent or otherwise and
whether due or to become due, and, to the best of Seller's knowledge,
there is no basis for the assertion against Seller of any such
liability or obligations. No representation or warranty made by
Seller in this Agreement, and no statement made in any exhibit or
schedule hereto or any certificate or document delivered by Seller
pursuant to the terms of this Agreement, contain or will contain any
untrue statement of a material fact or omit or will omit to state any
material fact necessary to make such representation or warranty or
any such statement not misleading.
3.19 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The
instruments to be executed by Seller and delivered to Buyer at
Closing, conveying the Station Assets, including without limitation
the Owned Real Property, to Buyer, will be in a form sufficient to
transfer good and marketable title to the Station Assets, including
without limitation the Owned
<PAGE>
Page 23
Real Property, free and clear of all liabilities, obligations and
encumbrances, except as provided herein.
3.20 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.20 of the Disclosure Schedule, between the Balance Sheet
Date and the date of this Agreement there has not been:
(a) Any material adverse change in the working
capital, financial condition, business, results of operations, assets
or liabilities of Seller;
(b) Any change in the manner in which Seller
conducts
its business and operations other than changes in the ordinary and
usual course of business consistent with past practice;
(c) Any amendment to the Certificate of
Incorporation
or Bylaws of Seller;
(d) Any contract or commitment, to which Seller is a
party, entered into, modified or terminated, except in the ordinary
and usual course of business;
(e) Any creation or assumption of any mortgage,
pledge
or other lien or encumbrance upon any of the Station Assets except in
the ordinary and usual course of business;
(f) Any sale, assignment, lease, transfer, or other
disposition of any of the Station Assets, except in the ordinary and
usual course of business;
(g) The incurring of any liabilities or obligations,
except items incurred in the ordinary and usual course of business;
(h) The write-off or determination to write off as
uncollectible any accounts receivable or portion thereof, except for
write-offs in the ordinary course of business consistent with past
practice at a rate no greater than during the twelve months prior to
the Balance Sheet Date;
(i) The cancellation of any debts or claims, or
waiver
of any rights, having an aggregate value in excess of $10,000;
(j) The disposition, lapse or termination of any
Intellectual Property;
(k) The increase or promise to increase the rate of
commissions, fixed salary or wages, draw, bonus or
<PAGE>
Page 24
other compensation payable to any employee of Seller, except in the
ordinary and usual course of business consistent with past practice;
(l) The issuance of, or authorization to issue, any
additional shares of capital stock of Seller, or rights, warrants or
options to acquire, any such shares, or convertible securities;
(m) Any default under any contract or lease to which
Seller is a party;
(n) Any change in any method of accounting or
accounting
practice used by Seller; or
(o) Any other event or condition of any character
materially and adversely affecting the business or properties of
Seller
or the Station.
3.21 INSOLVENCY PROCEEDINGS. No insolvency proceedings of
any character including, without limitation, bankruptcy,
receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, affecting Seller or the Station
Assets are pending or, to Seller's knowledge, threatened, and Seller
has made no assignment for the benefit of creditors, nor taken any
action with a view to, or which would constitute the basis for, the
institution of any such insolvency proceedings.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 DUE INCORPORATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, and as of the Closing Date shall be duly
qualified to do business in and be in good standing in the State of
Florida.
4.2 AUTHORITY; NO CONFLICT. The execution and delivery of
this Agreement and the Ancillary Agreements have been duly and
validly authorized and approved by the board of directors of Buyer,
and Buyer has the corporate power and authority to execute, deliver
and perform this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby. The
execution, delivery, performance hereof, and compliance by Buyer with
the terms and provisions hereof, or with respect to the Ancillary
Agreements, thereof, will not (assuming <PAGE>
Page 25
receipt of all necessary approvals from the Commission) conflict with
or result in a breach of any of the terms, conditions or provisions
of (a) the Certificate of Incorporation or Bylaws of Buyer, (b) any
judgment, order, injunction, decree, regulation or ruling of any
court or other governmental authority to which Buyer is subject, or
(c) any material agreement, lease or contract, written or oral, to
which Buyer is subject. This Agreement will constitute the valid and
binding obligation of Buyer with respect to the terms hereof, subject
to Commission approval of the transactions contemplated hereby.
4.3 CONSENTS. No consent, approval, authorization or
order of, or registration, qualification or filing with, any court,
regulatory authority or other governmental body is required for the
execution, delivery and performance by Buyer of this Agreement or the
Ancillary Agreements to which it is a party, other than the approval
by the Commission of the Assignment Application as contemplated
hereby. Except as set forth in Section 4.3 of the Disclosure
Schedule, no
consent of any
other party is required for the execution, delivery and performance
by Buyer of this Agreement or the Ancillary Agreements to which it is
a party.
4.4 LITIGATION. There is no litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge,
threatened against Buyer in any federal, state or local court, or
before any administrative agency or arbitrator, or before any other
tribunal duly authorized to resolve disputes, that would reasonably
be expected to have any material adverse effect upon the ability of
Buyer to perform its obligations hereunder, or that seeks to enjoin
or prohibit, or otherwise questions the validity of, any action taken
or to be taken pursuant to or in connection with this Agreement.
4.5 COMPLIANCE WITH LAWS. Buyer is not in default with
respect to any judgment, order, injunction or decree of any court,
administrative agency or other governmental authority or of any other
tribunal duly authorized to resolve disputes in any respect material
to the transactions contemplated hereby. Buyer is not in violation
of any law, regulation or governmental order, the violation of which
would have a material adverse effect on Buyer or its ability to
perform its obligations pursuant to this Agreement.
4.6 QUALIFICATION. To the best of Buyer's knowledge,
Buyer is legally, technically and financially qualified to be the
assignee of the Licenses and the other Station Assets, and, prior to
the Closing Date, Buyer will exercise its best efforts to refrain
from doing any act <PAGE>
Page 26
which would disqualify Buyer from being the assignee of the Licenses
and the other Station Assets.
ARTICLE V
COVENANTS OF SELLER
Between the date of this Agreement and the Closing Date,
Seller
shall have complete control of the Station and its operations, and
Seller covenants as follows with respect to such period:
5.1 CONTINUED OPERATION OF STATION. Subject to the LMA,
Seller shall continue to operate the Station under the terms of the
Licenses in the manner in which the Station has been operated
heretofore, in the usual and ordinary course of business, in
conformity with all material applicable laws, ordinances,
regulations, rules and orders, and in a manner so as to preserve and
foster the goodwill and business relationships of the Station and
Seller, including, without limitation, relationships with
advertisers, suppliers, customers, and employees. Seller shall file
with the Commission and any other applicable governmental authority
all applications and other documents required to be filed in
connection with the continued operation of the Station.
5.2 FINANCIAL OBLIGATIONS. Subject to the LMA, Seller
shall continue to conduct the financial operations of the Station,
including its credit and collection policies, in the ordinary course
of business with the same effort, to the same extent, and in the same
manner, as in the prior conduct of the business of the Station; and
shall continue to pay and satisfy all expenses, liabilities and
obligations arising in the ordinary course of business in accordance
with past accounting practices. Seller shall not enter into or amend
any contracts or commitments involving expenditures by Seller in an
aggregate amount in excess of $10,000 without the prior written
consent of Buyer.
5.3 REASONABLE ACCESS. Seller shall provide Buyer, and
representatives of Buyer, with reasonable access during normal
business hours to the Station and shall furnish such additional
information concerning the Station as Buyer from time to time may
reasonably request.
5.4 MAINTENANCE OF ASSETS. Seller shall maintain the Real
Property, the Personal Property and all other tangible assets in
their present good operating condition, repair and order, reasonable
wear and tear in ordinary usage excepted. Seller shall not waive or
cancel any <PAGE>
Page 27
claims or rights of substantial value, transfer or otherwise dispose
of the Real Property, any Personal Property, or permit to lapse or
dispose of any right to the use of any Intellectual Property.
5.5 NOTIFICATION OF DEVELOPMENTS. Seller shall notify
Buyer
of any problems or developments with respect to the Station Assets or
operation of the Station; and provide Buyer with prompt written
notice of any change in any of the information contained in the
representations and warranties made herein or in the Disclosure
Schedule or any other documents delivered in connection with this
Agreement.
5.6 PAYMENT OF TAXES. Seller shall pay or cause to be
paid
all property and all other taxes relating to the Station, the Real
Property and the assets and employees of the Station required to be
paid to city, county, state, federal and other governmental units
through the Closing Date.
5.7 THIRD PARTY CONSENTS. Seller shall use commercially
reasonable efforts to obtain from any third party waivers, permits,
licenses, approvals, authorizations, qualifications, orders and
consents necessary for the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements,
including, without limitation, approval from the Commission of the
Assignment Application contemplated hereby.
5.8 ENCUMBRANCES. Seller shall not suffer or permit the
creation of any mortgage, conditional sales agreement, security
interest, lease, lien, hypothecation, deed of trust or pledge,
encumbrance, restriction, liability, charge, or imperfection of title
with respect to
the Station Assets.
5.9 ASSIGNMENT OF ASSETS. Seller shall not sell, assign,
lease or otherwise transfer or dispose of any Station Assets, whether
now owned or hereafter acquired, except for retirements in the normal
and usual course of business or in connection with the acquisition of
similar property or assets, as provided for herein.
5.10 COMMISSION LICENSES AND AUTHORIZATIONS. Seller shall
not
by any act or omission surrender, modify adversely, forfeit or fail
to renew under regular terms the Licenses, cause the Commission or
any other governmental authority to institute any proceeding for the
revocation, suspension or modification of any such License, or fail
to prosecute with due diligence any pending applications with
<PAGE>
Page 28
respect to the Licenses at the Commission or any other applicable
governmental authority.
5.11 TECHNICAL EQUIPMENT. Seller shall not fail to
repair,
maintain or replace the technical equipment transferred hereunder in
accordance with the normal standards of maintenance applicable in the
broadcast industry.
5.12 COMPENSATION INCREASES. Seller shall not permit any
increase in the rate of commissions, fixed salary or wages, draw or
other compensation payable to any employees of Seller.
5.13 SALE OF BROADCAST TIME. Seller shall not enter into,
extend or renew any Broadcast Agreement not consistent with the usual
and ordinary course of business, provided, however, that Seller shall
not enter into, extend or renew any Broadcast Agreement exceeding
$10,000 in amount unless such Broadcast Agreement is terminable on
30days' notice. Seller shall not enter into any Trade Agreement
without the prior written consent of Buyer.
5.14 INSURANCE. Seller shall maintain at all times
between
the date hereof and the Closing Date, those insurance policies listed
in Section 3.17 of the Disclosure Schedule.
5.15 NEGOTIATIONS WITH THIRD PARTIES. Seller shall not,
before Closing or the termination of this Agreement, enter into
discussions with respect to any sale or offer of the Station, any
Station Assets or any stock of Seller to any third party, nor shall
Seller offer the Station, any Station Assets or any stock of Seller
to any third party.
6.16 COVENANT NOT TO COMPETE.
(a) Seller agrees not to compete with Buyer for a
period of five (5) years from the Closing Date. Seller shall not
directly or indirectly own, manage, operate, control or be employed
by any radio station with a transmission tower or City of License
within the Fort Myers/Naples Total Survey Area as defined by
Arbitron Company (the "NonCompete Area"). For the purposes of this
Section 5.16, the term "Seller" shall include Kneller Broadcasting
Corporation and its principal shareholders, HaroldM. Kneller, Jr.
and JanetG. Kneller.
(b) Technical projects for stations within the
scope
of the Non-Compete Area will be permitted under this Agreement provided
that such projects do not create a competitive improvement (determined
in Buyer's reasonable
<PAGE>
Page 29
discretion) of the broadcast facility (i.e. a power or class increase).
(c) Such technical projects shall not create an
employment relationship or be of duration beyond thirty (30) days per
each such project.
(d) Seller's project of a non-commercial, educational
nature for radio stations within the Non-Compete Area will be permitted
hereunder.
(e) Any project which could be considered to be in a
"grey" area within this covenant, shall be submitted in writing via
letter or facsimile, to the Buyer for authorization and written approval
at Buyer's sole discretion prior to the commencement of such project.
Such approval or denial will be timely given via letter or facsimile.
(f) The consideration for this covenant not to compete
shall be $50,000 payable at Closing.
ARTICLE VI
JOINT COVENANTS OF BUYER AND SELLER
Buyer and Seller covenant and agree that between the date
hereof and the Closing Date, they shall act in accordance with the
following:
6.1 ASSIGNMENT APPLICATION. As promptly as practicable after
the date of this Agreement, and in no event later than ten (10) days
after execution of this Agreement, Seller and Buyer shall join in and
file an application on FCC Form 314 with the Commission requesting its
consent to the assignment of the Licenses from Seller to Buyer (the
"Assignment Application"). Seller and Buyer agree to prosecute the
Assignment Application with all reasonable diligence and to use their
best efforts to obtain prompt Commission grant of the Assignment
Application filed at the Commission.
6.2 PERFORMANCE. Buyer and Seller shall perform all acts
required of them under this Agreement and refrain from taking or
omitting to take any action that would violate their representations and
warranties hereunder or render same inaccurate as of the Closing Date.
6.3 CONDITIONS. If any event should occur, either within or
without the control of any party hereto, which would prevent fulfillment
of the conditions placed upon the obligations of any party hereto to
consummate the
<PAGE>
Page 30
transactions contemplated by this Agreement, the parties
hereto shall use their best efforts to cure the event as expeditiously
as possible.
6.4 CONFIDENTIALITY. Buyer and Seller shall each keep
confidential all information they obtain with respect to any other party
hereto in connection with this Agreement and the negotiations preceding
this Agreement, and will use such information solely in connection with
the transactions contemplated by this Agreement. If the transactions
contemplated hereby are not consummated for any reason, each party
hereto shall return to the party so providing, without retaining a copy
thereof, any schedules, documents or other written information obtained
from the party so providing such information in connection with this
Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, no party shall be required to keep confidential or return any
information which (i) is known or available through other lawful
sources, (ii) is or becomes publicly known through no fault of the
receiving party or its agents, (iii) is required to be disclosed
pursuant to an order or request of a judicial or governmental authority
(provided the disclosing party is given reasonable prior notice), or
(iv) is developed by the receiving party independently of the disclosure
by the disclosing party.
6.5 COOPERATION. Buyer and Seller shall cooperate fully and
with each other in taking any actions to obtain the required consent of
any governmental instrumentality or any third party necessary or helpful
to accomplish the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that no party shall be required to take any action which would
have a material adverse effect upon it or any entity affiliated with it.
6.6 ENVIRONMENTAL REPORTS. If desired by Buyer, Seller and
Buyer agree to arrange for the preparation of, at the expense of Buyer,
appropriate environmental reports for the real property subject to Real
Estate Contracts. Such environmental reports shall conclude that:
(i) the real property subject to Real Estate Contracts is not in any way
contaminated with any Hazardous Waste requiring remediation, clean-up or
removal under applicable laws relating to Hazardous Waste; (ii) the real
property subject to Real Estate Contracts is not subject to any federal,
state or local "superfund" or "Act307" lien, proceeding, claim,
liability or action, or the threat or likelihood thereof, for the clean
up, removal or remediation of any Hazardous Waste from same; (iii) there
is no asbestos located in the buildings situated on the real property
subject to Real Estate Contracts requiring remediation, encapsulation or
removal under applicable laws relating to
<PAGE>
Page 31
asbestos clean-up; and (iv) there are no underground storage tanks
located at the real property subject to Real Estate Contracts requiring
remediation, clean-up or removal under applicable laws relating to
Hazardous Waste, and if any have previously been removed, such removal
was done in accordance with all applicable laws, rules and regulations.
The environmental review to be conducted shall initially be a PhaseI
review. Any further investigations recommended in the environmental
reports obtained pursuant to this Section 6.6 shall be conducted with
the cost to
be shared equally by Seller and Buyer.
6.7 CONSENTS TO ASSIGNMENT. To the extent that any Contract,
Broadcast Agreement, Trade Agreement, Real Estate Contract or other
contract identified in the Disclosure Schedule that is to be assigned
under this Agreement is not capable of being sold, assigned,
transferred, delivered or subleased without the waiver or consent of any
third person withholding same (including a government or governmental
unit), or if such sale, assignment, transfer, delivery or sublease or
attempted sale, transfer, delivery or sublease would constitute a breach
thereof or a violation of any law or regulation, this Agreement and any
assignment executed pursuant hereto shall not constitute a sale,
assignment, transfer, delivery or sublease or an attempted sale,
assignment, transfer, delivery or sublease thereof. In those cases
where consents, assignments, releases and/or waivers have not been
obtained at or prior to the Closing Date to the transfer and assignment
to Buyer of such contracts, Buyer may in its sole discretion elect to
have this Agreement and any assignments executed pursuant hereto, to the
extent permitted by law, constitute an equitable assignment by Seller to
Buyer of all of Seller's rights, benefits, title and interest in and to
such contracts, and where necessary or appropriate, Buyer shall be
deemed to be Seller's agent for the purpose of completing, fulfilling
and discharging all of Seller's rights and liabilities arising after the
Closing Date under such contracts. Seller shall use its reasonable best
efforts to provide Buyer with the benefits of such contracts (including,
without limitation, permitting Buyer to enforce any rights of Seller
arising under such contracts), and Buyer shall, to the extent Buyer is
provided with the benefits of such contracts, assume, perform and in due
course pay and discharge all debts, obligations and liabilities of
Seller under such contracts.
6.8 EMPLOYEE MATTERS. While under no obligation to hire any
employees of the Station, Buyer shall make reasonable efforts to offer
employment at will to certain employees of the Station. Upon review of
a full list of employees and salaries, Buyer shall notify Seller of (i)
those employees to whom it will so offer employment as
<PAGE>
Page 32
soon as practicable and (ii) those employees that Buyer intends to
discharge not less than thirty (30) days prior to the Closing Date.
Seller shall be responsible for all salary and benefits of the employees
of the Station who do not accept, or are not offered, employment with
Buyer. Seller shall be responsible for all salary and other compensation
due to be paid for work for Seller for employees of the Station who
become employees of Buyer and Buyer shall be responsible for the salary
and other compensation due to be paid for work for Buyer on or after the
date of hire by Buyer for such employees. Seller shall be responsible
for severance payments which may be applicable under its employee
benefit plans to any employees not so offered employment and hired by
Buyer.
6.9 SURVEY. Buyer and Seller shall obtain, at Seller's
expense, a survey of each parcel of Real Property certified to Buyer or
its permitted assigns and the Title Company. The certification shall
be by a Registered Land Surveyor and shall be made on the ground in
accordance with the minimum technical standards of land surveying in
Florida. The survey shall be delivered to Buyer at least fifteen
(15) days prior to the Closing Date. If the survey shows: (i) the
Real Property does not have access to an abutting public road, (ii)
easements exist that are not approved by Buyer, (iii) violations of
restrictions or governmental zoning or building regulations, (iv)
buildings, structures or other improvements are constructed over any
easement; provided that unless the construction of a building,
structure or other improvement over an easement constitutes a
violation of an easement it shall not constitute a defect or
encroachment, (v) any building, structure or other improvement is not
entirely within the boundaries of the applicable parcel of Real
Property, (vi) any drainage facilities are not entirely within the
applicable parcel of Real Property or appropriate public or private
easements, or (vii) there are other material encroachments, gaps or
overlaps rendering title to the Real Property unmarketable; then
Buyer shall within seven (7) days of receipt of the survey notify
Seller in writing specifying the defects and encroachments reflected
by the survey, and Seller shall have ten (10) days within which to
remove such defects and encroachments.
6.10 RELOCATION APPLICATION. Upon execution of the
Agreement herein, Buyer shall prepare, at its sole cost and expense,
an FCC application and all required exhibits to move the WEEJ
transmitter from its present location to the former WOLZ site on Pine
Island, Florida. Said application will be forwarded to and filed by
Seller as the Licensee. Buyer shall timely reimburse Seller for all
reasonable
costs and fees for the tendering of the application to the FCC. All
costs incurred in order to
<PAGE>
Page 33
move the WEEJ transmitter facility shall be Buyer's responsibility.
6.11 ESCROW AGREEMENT. Seller and Buyer shall enter into
an Escrow Agreement substantially in the form attached hereto as
Exhibit D.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The performance of the obligations of the Buyer hereunder
is subject, at the election of the Buyer, to the following conditions
precedent:
7.1 COMMISSION APPROVALS. Notwithstanding anything herein
to
the contrary, the consummation of this Agreement is conditioned upon
(a) a grant by the Commission of the Assignment Application, and
(b) compliance by the parties with the conditions, if any, imposed by
the Commission in connection with the grant of the Assignment
Application (provided that neither party shall be required to accept
or comply with any condition which would be unreasonably burdensome
or which would have a materially adverse effect upon it). All
required governmental filings shall have been made, and all requisite
governmental approvals for the consummation of the transactions
contemplated hereby shall have been granted. Subject to the
provisions regarding the STA as set forth above the Licenses shall be
in unconditional full force and effect, shall be valid, as of March,
1996, for the license term applicable generally to radio stations
licensed to communities located in the State of Florida, and shall be
unimpaired by any acts or omissions of Seller's employees or agents,
or Seller.
7.2 PERFORMANCE. The Station Assets shall have been
transferred to Buyer by Seller, and all of the terms, conditions and
covenants to be complied with or performed by Seller on or before the
Closing Date shall have been duly complied with and performed in all
material respects, and Buyer shall have received from Seller a
certificate or certificates to such effect, in form and substance
reasonably satisfactory to Buyer.
7.3 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller to Buyer shall be true, complete and correct
in all material respects as of the Closing Date with the same force
and effect as if then made, and Buyer shall have received from Seller
a certificate or certificates to such effect, in form and substance
reasonably satisfactory to Buyer.
<PAGE>
Page 34
7.4 CONSENTS. Seller shall have received all consents
(including landlords' consents for the studio and tower sites)
specified in Section 3.8 of the Disclosure Schedule.
7.5 NO LITIGATION. No litigation, proceeding, or
investigation of any kind shall have been instituted or, to Seller's
knowledge, threatened which would materially adversely affect the
ability of Seller to comply with the provisions of this Agreement or
would materially adversely affect the operation of the Station.
7.6 NO ADVERSE CHANGE. No material adverse change shall
have
occurred with respect to the operation of the Station.
7.7 DOCUMENTS. Seller shall have obtained, executed,
where necessary, and delivered, to Buyer where applicable, all of the
documents, reports, orders and statements required of it herein, as
well as any other documents (including collateral assignments)
required by any entity providing financing for the transactions
contemplated by this Agreement and the Ancillary Agreements.
7.8 OPINIONS OF COUNSEL. Seller shall have delivered to
Buyer
an opinion of Farr, Farr, Emerich, Sifrit, Hackett & Carr, P.A.,
counsel to Seller, addressed to Buyer and in the form attached hereto
as Exhibit A. In addition, Seller shall have delivered to Buyer a
written opinion of Seller's FCC counsel, dated as of the Closing
Date, addressed to Buyer and in the form attached hereto as Exhibit
B.
7.9 FINANCING. Buyer shall have obtained financing for
the transactions contemplated by this Agreement on terms and
conditions satisfactory to Buyer in Buyer's sole discretion.
7.10 SURVEY. Buyer shall have received the survey of the
Real
Property in accordance with Section 6.9 herein.
7.11 ANCILLARY AGREEMENTS. Buyer and Seller shall have
entered into the Ancillary Agreements on terms and conditions
satisfactory to Buyer.
7.12 GUARANTEE. As of the date hereof Harold M. Kneller,
Jr. shall have delivered to Buyer a Guaranty in the form attached
hereto as Exhibit E.
<PAGE>
Page 35
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The performance of the obligations of Seller hereunder is
subject, at the election of Seller, to the following conditions
precedent:
8.1 PERFORMANCE. All of the terms, conditions and
covenants to be complied with or performed by Buyer on or before the
Closing Date shall have been duly complied with and performed in all
material respects, and Seller shall have received from Buyer a
certificate or certificates to such effect, in form and substance
reasonably satisfactory to Seller.
8.2 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer to Seller shall be true, complete and correct
in all material respects as of the Closing Date with the same force
and effect as if then made, and Seller shall have received from Buyer
a certificate or certificates to such effect, in form and substance
reasonably satisfactory to Seller.
8.3 GOVERNMENT APPROVALS. All required governmental
filings shall have been made and all requisite governmental approvals
for the consummation of the transactions contemplated hereby shall
have been granted.
8.4 DOCUMENTS. Buyer shall have obtained, executed, where
necessary, and delivered to Seller where applicable, all of the
documents, reports, orders and statements required of it herein.
8.5 OPINION OF COUNSEL. Buyer shall have delivered to
Seller an opinion of Paul, Weiss, Rifkind, Wharton & Garrison,
counsel to Buyer, addressed to Seller and in the form attached hereto
as Exhibit C.
8.6 CONSULTING AGREEMENT. As of the Closing Date, Buyer
and Seller shall have entered into a two-year Two Hundred Thousand
Dollar ($200,000.00) consulting agreement substantially in the form
attached hereto as Exhibit F.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. From and after the Closing
Date, Seller agrees to and shall jointly and severally indemnify,
defend and hold Buyer harmless, and
<PAGE>
Page 36
shall reimburse Buyer for and against any
and all actions, losses, expenses, damages, liabilities, taxes,
penalties or assessments, judgments and costs (including reasonable
legal expenses related thereto) resulting from or arising out of:
(a) Any breach by Seller of any representation, or
warranty contained in this Agreement, any Ancillary Agreement or in
any certificate, exhibit, schedule, or other document furnished to or
to be furnished pursuant hereto or in connection with the
transactions contemplated hereby;
(b) Any non-fulfillment or breach by Seller of any
covenant, agreement, term or condition contained in this Agreement,
any Ancillary Agreement or in any certificate, exhibit, schedule, or
other document furnished or to be furnished pursuant hereto or in
connection with the transactions contemplated hereby;
(c) Any material inaccuracy in any covenant,
representation, agreement or warranty by Seller including all
material statements or figures contained in the Financial Statements
heretofore furnished to Buyer; and
(d) Any liabilities of any kind or nature, absolute
or
contingent not assumed by Buyer including, without limitation, any
liabilities relating to or arising from the business and operation of
the Station by Seller prior to the Closing Date.
Notwithstanding any other provision contained herein,
Seller shall be solely responsible for any fine or forfeiture imposed
by the Commission relating to the operation of the Station prior to
the Closing Date.
9.2 INDEMNIFICATION BY BUYER. From and after the Closing
Date, Buyer agrees to and shall indemnify, defend and hold Seller
harmless, and shall reimburse Seller for and against any and all
actions, losses, expenses, damages, liabilities, taxes, penalties or
assessments, judgments and costs (including reasonable legal expenses
related thereto), resulting from or arising out of:
(a) Any breach by Buyer of any covenant, agreement,
term, condition, representation, or warranty contained in this
Agreement, any Ancillary Agreement or in any certificate, exhibit,
schedule, or any other document furnished or to be furnished pursuant
hereto or in connection with the transactions contemplated hereby;
(b) Any non-fulfillment by Buyer of any covenant
contained in this Agreement, any Ancillary
<PAGE>
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Agreement or in any certificate, exhibit, schedule, or
other document furnished or to be furnished pursuant hereto
or in connection with the transactions contemplated hereby; and
(c) Any liabilities of any kind or nature, absolute
or
contingent, relating to or arising from the business and operation of
the Station subsequent to the Closing Date.
9.3 NOTIFICATION OF CLAIMS.
(a) A party entitled to be indemnified pursuant to
Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the party
liable for such indemnification (the "Indemnifying Party") in writing
of any claim or demand which the Indemnified Party has determined has
given or could give rise to a right of indemnification under this
Agreement. Subject to the Indemnifying Party's right to defend in
good faith third party claims as hereinafter provided, the
Indemnifying Party shall satisfy its obligations under this Article
IX within thirty (30) days after the receipt of a written notice
thereof from the Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section 9.3(a),
and
if such claim or demand relates to a claim or demand asserted by a
third party against the Indemnified Party which the Indemnifying
Party acknowledges is a claim or demand for which it must indemnify
or hold harmless the Indemnified Party under Sections 9.1 or 9.2, the
Indemnifying Party shall have the right to employ counsel acceptable
to the Indemnified Party to defend any such claim or demand asserted
against the Indemnified Party. The Indemnified Party shall have the
right to participate in the defense of any such claim or demand. The
Indemnifying Party shall notify the Indemnified Party in writing, as
promptly as possible (but in any case before the due date for the
answer or response to a claim) after the date of the notice of claim
given by the Indemnified Party to the Indemnifying Party under
Section 9.3(a) of its election to defend in good faith any such third
party claim or demand. So long as the Indemnifying Party is defending
in good faith any such claim or demand asserted by a third party
against the Indemnified Party, the Indemnified Party shall not settle
or compromise such claim or demand. The Indemnified Party shall make
available to the Indemnifying Party or its agents all records and
other materials in the Indemnified Party's possession reasonably
required by it for its use in contesting any third party claim or
demand. Whether or not the Indemnifying Party elects to defend any
such claim or demand, the Indemnified Party shall have no
<PAGE>
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obligations to do so. Upon payment of any claim or demand
pursuant to this Article IX, the Indemnifying Party shall, to the
extent of payment, be subrogated to all rights of the Indemnified
Party.
ARTICLE X
MISCELLANEOUS
10.1 ASSIGNMENT.
(a) This Agreement shall not be assigned or conveyed
by either party hereto to any other person or entity without the
prior written consent of the other parties hereto; PROVIDED, HOWEVER,
that Buyer may assign this Agreement without Seller's prior consent
to one or more corporations or other entities controlled by Buyer;
PROVIDED, FURTHER, that Seller shall have recourse to Buyer in the
event Buyer's assignee defaults hereunder. Subject to the foregoing,
this Agreement shall be binding and shall inure to the benefit of the
parties hereto, their successors and assigns.
(b) Notwithstanding anything to the contrary set
forth herein, Buyer may assign and transfer to any entity providing
financing for the transactions contemplated by this Agreement (or any
refinancing of such financing) as security for such financing all of
the interest,
rights and remedies of Buyer with respect to this Agreement and the
Ancillary Agreements, and Seller shall expressly consent to such
assignment. Any such assignment will be made for collateral security
purposes only and will not release or discharge Buyer from any
obligations it may have pursuant to this Agreement. Notwithstanding
anything to the contrary set forth herein, Buyer may (i) authorize
and empower such financing sources to assert, either directly or on
behalf of Buyer, any claims Buyer may have against Seller under this
Agreement and (ii) make, constitute and appoint one agent bank in
respect of such financing (and all officers, employees and agents
designated by such agent) as the true and lawful attorney and agent-
in-fact of Buyer for the purpose of enabling the financing sources to
assert and collect any such claims.
10.2 SURVIVAL OF INDEMNIFICATION. The indemnification
obligations of Seller contained in this Agreement including, without
limitation, Section 1.5 shall survive indefinitely, except that any
indemnification arising under Section 9.1(a) hereof (other than any
indemnification required as a result of Seller's breach of Sections
3.1, 3.2 or 3.3 hereof, which indemnification shall survive
indefinitely) shall be binding for a period
<PAGE>
Page 39
of three (3) years following the date hereof. The representations
and warranties contained in this Agreement and in the Ancillary
Agreements shall survive.
10.3 BROKERAGE. Seller and Buyer warrant and represent to
one
another that, with the exception of Doyle Hadden, broker for the
Seller, there has been no broker in any way involved in the
transactions contemplated hereby and that no one other than Doyle
Hadden is or will be entitled to any fee or other compensation in the
nature of a brokerage fee or finder's fee as a result of the Closing
hereunder. Seller shall be wholly responsible for any brokerage or
other fee due to Doyle Hadden.
10.4 EXPENSES OF THE PARTIES. It is expressly understood
and
agreed that all expenses of preparing this Agreement and of preparing
and prosecuting the Assignment Application with the Commission, and
all other expenses, whether or not the transactions contemplated
hereby are consummated, shall be borne solely by the party who shall
have incurred the same and the other party shall have no liability in
respect thereto, except as otherwise provided herein. All costs of
transferring the Station Assets in accordance with this Agreement,
including recordation, transfer and documentary taxes and fees, and
any excise, sales or use taxes, shall be borne equally by Seller and
Buyer. Any filing or grant fees imposed by any governmental authority
the consent of which is required for the transactions contemplated
hereby shall be borne equally by Seller and Buyer.
10.5 ENTIRE AGREEMENT. This Agreement, together with any
related Schedules or Exhibits, contains all the terms agreed upon by
the parties with respect to the subject matter herein, and supersedes
all prior agreements and understandings among the parties and may not
be changed or terminated orally. No attempted change, termination or
waiver of any of the provisions hereof shall be binding unless in
writing and signed by the party against whom the same is sought to be
enforced.
10.6 HEADINGS. The headings set forth in this Agreement
have
been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any manner, or be deemed to interpret in whole
or
in part, any of the terms or provisions of this Agreement. Unless
otherwise specified herein, the section references contained herein
refer to sections of this Agreement.
10.7 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of New
York. <PAGE>
Page 40
10.8 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be
deemed an original, but all of such shall constitute one and the same
instrument.
10.9 NOTICES. Any notices or other communications shall
be
in
writing and shall be considered to have been duly given when
deposited into first class, certified mail, postage prepaid, return
receipt requested, delivered personally (which shall include delivery
by Federal Express or other recognized overnight courier service that
issues a receipt or other confirmation of delivery) or delivered via
facsimile machine;
IF TO SELLER:
Harold M. Kneller, Jr.
President
Kneller Broadcasting of
Charlotte County, Inc.
3151 Cooper Street
Suite 56
Punta Gorda, FL 33950
Fax: (941) 637-6187
Phone: (941) 639-1112
With a copy to:
Charles T. Boyle
Farr, Farr, Emerich,
Sifrit, Hackett and
Carr, P.A.
115 West Olympia Avenue
P.O. Drawer 1447
Punta Gorda, Florida
33951
IF TO BUYER:
Mr. Frank D. Osborn
Osborn Communications
Corp. 130 Mason Street
Greenwich, CT 06830
Fax: (203) 629-1749
Phone: (203) 629-0905
With a copy to:
Robert M. Hirsh
Paul, Weiss, Rifkind, Wharton &
Garrison 1285 Avenue of the
Americas
New York, NY 10019-6064
Fax: (212) 757-3990 Phone: (212) 373-3108
<PAGE>
Page 41
Any party may at any time change the place of receiving
notice by giving notice of such change to the other as provided
herein.
10.10 SPECIFIC PERFORMANCE. Seller acknowledges that the
Station is of a special, unique and extraordinary character and that
damages are inadequate to compensate Buyer for Seller's breach of
this Agreement. Accordingly, in the event of a material breach by
Seller of its representations, warranties, covenants and agreements
under this Agreement, Buyer may sue at law for damages or, at Buyer's
sole election in addition to any other remedy available to it, Buyer
may also seek a decree of specific performance requiring Seller to
fulfill its obligations under this Agreement, and Seller agrees to
waive its defense that an adequate remedy at law exists.
10.11 CONSENT TO JURISDICTION. Seller and Buyer hereby
submit to the nonexclusive jurisdiction of the courts of the State of
NewYork and the federal courts of the United States of America
located in such state solely in respect of the interpretation and
enforcement of the provisions hereof and of the documents referred to
herein, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement
hereof or of any such document, that they are not subject thereto or
that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that this Agreement or any of such
documents may not be enforced in or by said courts or that the
Station property is exempt or immune from execution, that the suit,
action or proceeding is brought in an inconvenient forum, or that the
venue of the suit, action or proceeding is improper.
10.12 FURTHER ASSURANCES. Seller and Buyer agree to
execute all such documents and take all such actions after the
Closing Date as any other party shall reasonably request in
connection with carrying out and effectuating the intent and purpose
hereof and all transactions and things contemplated by this
Agreement, including, without limitation, the execution and delivery
of any and all confirmatory and other documents in addition to those
to be delivered on the Closing Date and all actions which may
reasonably be necessary or desirable to complete the transactions
contemplated hereby.
10.13 PUBLIC ANNOUNCEMENTS. No public announcement
(including an announcement to employees) or press release concerning
the transactions provided for herein and in the LMA shall be made by
either party without the prior approval of the other party, except as
required by law.
<PAGE>
Page 42
1 IN WITNESS WHEREOF, the parties hereto have executed or
have
caused this Agreement to be executed by a duly authorized officer on
the day and year first above written.
SELLER
KNELLER BROADCASTING OF CHARLOTTE COUNTY, INC.
BY: Harold M. Kneller, Jr.
TITLE: President
BUYER
OSBORN COMMUNICATIONS
CORPORATION
BY: Frank D. Osborn
TITLE: President
