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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-K
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ____________________ TO ____________________
COMMISSION FILE NUMBER 0-16841
------------------------
OSBORN COMMUNICATIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
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DELAWARE 06-1142367
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
130 MASON STREET, GREENWICH, CT 06830
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 629-0905
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION L2(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 par value
(TITLE OF CLASS)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (SS229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [x]
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $32,491,494 as of March 13, 1996.
The number of shares outstanding of the registrant's classes of common
stock as of March 13, 1996 was as follows: Common Stock -- 5,276,847 shares;
Non-Voting Common Stock -- none.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Part III are incorporated herein by reference to the definitive
Proxy Statement for the annual meeting of shareholders on May 22, 1996.
________________________________________________________________________________
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OSBORN COMMUNICATIONS CORPORATION
DECEMBER 31, 1995
INDEX
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PAGE
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PART I
Item 1. Business....................................................................................... 2
Item 2. Properties..................................................................................... 11
Item 3. Legal Proceedings.............................................................................. 12
Item 4. Submission of Matters to a Vote of Security Holders............................................ 12
Executive Officers of the Registrant...................................................................... 12
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters...................... 13
Item 6. Selected Financial Data........................................................................ 13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 14
Item 8. Financial Statements and Supplementary Data.................................................... 21
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........... 38
PART III
Item 10. Directors and Executive Officers of the Registrant............................................. 38
Item 11. Executive Compensation......................................................................... 38
Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 38
Item 13. Certain Relationships and Related Transactions................................................. 38
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................ 38
</TABLE>
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PART I
ITEM 1. BUSINESS
Osborn Communications Corporation (the 'Company') was organized in 1984 and
is a broadcasting company primarily engaged in the operation of radio stations
in medium and small markets throughout the United States. In conjunction with
several of its radio stations, the Company promotes country music festivals and
concerts through Company-owned entertainment properties. The Company also
distributes programmed music, primarily Muzak, through exclusive franchises in
Florida and Georgia, and provides cable television entertainment and/or
interactive educational services to hospitals throughout the United States.
At December 31, 1995, the Company owned sixteen radio stations (eleven FM
and five AM) in medium-sized and small markets, primarily in the eastern United
States. These stations feature a variety of music formats of which country music
is the most prevalent. The Company also owns four programmed music and sound
equipment distributorships, a concert hall and certain country music shows and
festivals, and a hospital cable television company. In addition, the Company has
a 50% non-voting ownership interest (without control) of an FM radio station in
San Carlos Park/Ft. Myers, Florida, a 25% ownership interest in Fairmont
Communications Corporation ('Fairmont'), and an economic interest in Northstar
Television Group, Inc. ('Northstar') (see Fairmont and Northstar Management
Agreements).
The Company derives revenue from broadcasting and related businesses,
programmed music and sound equipment distribution, and hospital cable
television. The gross revenue contributed by each is as follows:
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GROSS REVENUE
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1995 1994 1993
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(IN MILLIONS)
<S> <C> <C> <C>
Broadcasting and related businesses.................................. $30.3 $25.1 $19.3
Programmed music and sound equipment distribution.................... $ 9.4 $ 8.3 $ 7.2
Hospital cable television............................................ $ 1.7 $ 1.8 $ 1.8
</TABLE>
Since its inception, the Company has used a variety of sources, including
bank and institutional borrowings, sales of common stock to private investors
and to the public, the sale of publicly-traded notes, and seller financing to
finance its acquisitions. The Company has used leverage to maximize the
potential returns on its investments.
In August 1995, the Company entered into a credit facility of $56.0 million
with Society National Bank (the 'Credit Facility'). The Credit Facility consists
of a $46.0 million revolving credit facility and a $10.0 million facility which
may be used for acquisitions. The initial drawdown of $44.5 million, along with
the Company's internally generated funds, was used to repay loans totalling
$50.0 million, at 101% of par value under the Company's outstanding debt
facilities and to pay transaction costs.
In July 1994, the Company effected a 1-for-2 reverse stock split. All share
data contained in Part I of this Annual Report on Form 10-K reflect the reverse
stock split.
Acquisitions and Dispositions. The Company has made numerous acquisitions
and dispositions, primarily of radio stations. The acquisitions and dispositions
for 1995 and 1994 are more fully described in Part II, Item 7 -- Management's
Discussion and Analysis of Financial Condition and Results of Operations.
BROADCASTING
Radio Operating Strategy. The Company's operating strategy is designed to
capitalize on competitive dynamics unique to medium and small radio markets.
Typically, these markets are characterized by lower revenues and fewer
competitors than large markets. In addition, because of the greater revenue
potential in larger markets, the Company believes medium and small markets tend
to attract small, local operators, rather than experienced, large market
broadcasting companies with sizable station portfolios and significant capital.
As a result, medium and small markets tend to be
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dominated by a few stations targeting the most profitable demographic segments.
In markets where the Company operates the leading stations, its operating
strategy is designed to maintain ratings dominance and enhance profitability
through a combination of an aggressive sales effort, strict cost control and, in
more competitive markets, audience research to ensure that programming appeals
to the preferences of its target demographic groups. By contrast, in markets in
which the Company has acquired a station that is not the market leader, its
operating strategy relies primarily on management's extensive operating
experience to achieve increased market share and profitability. This strategy is
implemented by focusing on profitable demographic niches within the market
through appealing formats and aggressive promotional campaigns. The Company has
successfully utilized these strategies in medium and small markets throughout
the United States over the past decade.
Programming is central to the Company's operating strategy because format
determines the demographics of the station's listeners and, in part, the
station's market share. These factors, in turn, largely determine the perceived
value of commercial air time to advertisers. The Company operates in each of its
radio markets with a format that has the potential either to capture a dominant
position in the most commercially desirable segment of listener demographics
(adults age 25-54) or to obtain a dominant position with regard to a profitable
market niche. The Company's stations are programmed in a variety of formats, the
most prevalent of which is country music, that both attracts audiences in those
demographics desirable to advertisers and accommodates relatively large amounts
of advertising.
The Company emphasizes programming instead of high profile, highly
compensated personalities to attract audience share as a lower cost, lower risk
strategy. The costs of on-air programming are relatively inexpensive because a
large portion of the Company's programming is music produced by record
companies, and the royalties payable to copyright holders are fixed at a
relatively low percentage of revenues. In addition, several stations broadcast
network originated programs and receive compensation in return for providing
airtime for which the network can solicit advertising.
The Company believes that the listening public's awareness of a station is
crucial and that focused promotional spending is directly related to a station's
success in adding and retaining new listeners. Management's goal is for the
Company to be the most marketing oriented competitor in each of its markets, and
its promotions are designed to attract and secure the largest share of listeners
in its targeted demographic group. A key factor in the Company's marketing
strategy is multimedia promotions. For example, the Company's stations sponsor
contests through direct mail to listeners with key demographics, thereby
promoting both the station and the advertisers included in the mailer. The
Company's mobile units occasionally broadcast live at high traffic retail
centers frequented by its targeted listeners, such as shopping malls. Promotions
of this type are cost effective for the Company because advertisers generally
provide prizes and contract for additional advertising time on the Company's
stations. The Company also capitalizes on cross-promotional opportunities with
its other businesses, such as its country music entertainment properties in
Wheeling, West Virginia.
Pricing strategy and inventory management are critical aspects of the
Company's radio station management. The Company seeks to maximize revenues by
continually monitoring inventory (i.e., available advertising time) and demand.
As available advertising time is sold, station general managers are able to
increase rates for remaining time. General managers also are able to react
quickly to a shift in demand between national and local advertising by directing
sales efforts to the appropriate markets.
Integral to the Company's pricing strategy is strong decentralized local
management. Local management is responsible for day-to-day operations of the
station while corporate management is responsible for long range strategic
planning and resource allocation. Local management is also responsible for
building a sales team capable of turning the station's audience rankings into
revenues. Members of the Company's sales force are encouraged to forge strong
relationships with local advertisers.
Advertising Sales. The Company's primary source of revenue is the sale of
broadcasting time for local, regional and national advertising. The Company
believes that radio is one of the most efficient, cost-effective means for
advertisers to reach specific demographic groups. The station's format, and in
some cases the content of specific programs, enable the potential advertiser to
determine which demographic groups its advertising will reach. Advertising rates
are based upon a program's popularity among the listeners an advertiser wishes
to attract (as measured principally by periodic Arbitron rating
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surveys that quantify the number of listeners tuned to the station at various
times), the number of advertisers competing for the available time, the size and
demographic makeup of the market served by the station and the availability of
alternative advertising media in the market area. Rates are the highest during
morning and evening drive-time hours.
Advertising time on the Company's radio stations is sold locally by each
station's sales staff, and nationally by sales representatives employed by firms
specializing in radio advertising sales on a national level. These national
sales representatives obtain advertising principally from advertising agencies
located outside the Company's markets and receive commissions based on the
revenues from the advertising obtained. Each station's sales staff directly
solicits advertising from local advertising agencies and businesses. The local
sales staff is also compensated on a commission basis. Most advertising
contracts are short-term, generally running for only a few weeks. The Company
determines the number of advertisements broadcast per hour that can maximize
revenue without jeopardizing listening levels. Although the number of
advertisements broadcast during a given time period may vary, the total number
of advertisements broadcast on a particular station generally does not vary
significantly from year to year.
Marketing and Promotion. For each station, the Company develops and pursues
a marketing strategy designed to attract and secure the largest share of
listeners within its targeted demographic group.
A radio station's listenership and competitive position in a market is
measured principally through periodic ratings surveys conducted by Arbitron.
Ratings provide a quantitative measure of a station's audience size and are used
by most advertisers in considering advertising with a station and by the Company
to track audience growth, establish advertising rates and adjust programming.
Each of the Company's stations makes its own marketing and promotional
determinations regarding the best method to reach its targeted audience. From
time to time, stations in more competitive markets conduct qualitative research
regarding the specific preferences of such station's target audience. The
station relies on the research to create and conduct marketing and promotional
campaigns, utilizing such media as direct mail, telemarketing and outdoor
advertising.
Acquisition Strategy. The Company seeks to acquire radio stations located
in medium and small markets with positive operating cash flow and competitive
technical facilities. The Company looks for properties selling at reasonable
multiples of operating cash flow that have not been managed aggressively. To
maximize management and operational efficiency, higher priority is given to
potential acquisitions of properties in proximity to existing areas of
operation. The Company has primarily focused on the southeastern United States
as an area of primary interest, given the region's economic and demographic
growth potential, although it considers potential acquisitions in all regions of
the United States.
As a result of revisions to its rules mandated by the Telecommunications
Act of 1996, the Federal Communications Commission ('FCC') now permits a company
to own, depending on the number of stations in a particular market, a maximum of
between five and eight stations in the same geographic market (see Federal
Regulation of Broadcasting). The Company intends to seek the acquisition of
additional radio stations in markets in which it has an existing station or
multiple stations in other markets. The Company believes that ownership of
multiple stations in a market achieves significant savings through consolidation
of administrative, engineering and management expenses and has the potential for
increasing revenues. By acquiring an additional station in a given market, the
Company can improve its market share and capture a larger share of the prime
advertising time available for sale in that market while minimizing the
possibility of direct format competition. In addition, ownership of multiple
stations in a market would allow the Company to capitalize on its market
expertise and existing relationships with advertisers, consequently lowering the
Company's acquisition risk. In addition, the Company would be at a competitive
disadvantage if its competitors acquire multiple stations in markets in which
the Company operates.
The Company has focused on medium and small markets because generally there
has been less competition to acquire broadcasting properties in those markets,
which has meant that relative acquisition costs have been lower than in large
markets. The Company believes that medium and small
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markets offer a reasonable rate of return on well-managed properties and that
generally there is less competition for advertising revenues within such
markets. Although the Company intends to continue to focus on medium and small
markets, it has considered, and expects to consider, acquisition opportunities
for radio stations in large markets.
Local Marketing Agreements. The Company has entered into certain local
marketing agreements ('LMAs') whereby it provides programming to a station owned
by a third party and pays a monthly fee for the right to air such programming.
The Company receives the right to solicit advertising and to receive payments
from the advertisers. In addition, the Company has entered into certain other
LMAs whereby a third party provides programming to a station owned by the
Company and pays a monthly fee for the right to air such programming. The third
party receives the right to solicit advertising and to receive payments from the
advertisers. The LMAs that the Company is a party to are more fully described in
Note 4 to the consolidated financial statements contained in Part II, Item
8 -- Financial Statements and Supplementary Data.
Television. In December 1995, the Company entered into an option agreement
with Allbritton Communications Company for the sale of television station
WJSU-TV, Anniston, Alabama, and an associated 10-year LMA. This transaction is
more fully described in Part II, Item 7 -- Management's Discussion and Analysis
of Financial Condition and Results of Operations. The Company has no other
television stations and has no current intention to own and operate broadcast
television properties in the future.
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Broadcasting Properties. The following table sets forth markets,
frequencies, transmitter power and other station details of the Company's radio
broadcasting properties:
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METRO
STATION POWER MARKET FCC LICENSE
MARKET STATION FREQUENCY DAY/NIGHT(1) RANK(2) EXPIRATION DATE
- -------------------------------------- ------------ --------- ------------- ------- ------------------
(IN
KILOWATTS)
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Jackson, TN........................... WTNV(FM) 104.1MHz 100.0 255 August 1, 1996
WTJS(AM) 1390kHz 5.0/1.0 August 1, 1996
Wheeling, WV.......................... WOVK(FM) 98.7MHz 50.0 212 October 1, 2002
WWVA(AM) 1170kHz 50.0 October 1, 2002
Dayton/Springfield, OH................ WING(FM) 102.9MHz 50.0 52 October 1, 1996
Asheville, NC......................... WKSF(FM) 99.9MHz 48.0 179 December 1, 2002
WWNC(AM) 570kHz 5.0 December 1, 2002
Fort Myers, FL........................ WOLZ(FM) 95.3MHz 100.0 77 February 1, 2003
Gadsden, AL........................... WQEN(FM) 103.7MHz 100.0 * April 1, 1996(3)
WAAX(AM) 570kHz 5.0/.5 April 1, 1996(3)
Fort Myers/San Carlos Park, FL(4)..... WDRR(FM) 98.5MHz 2.2 77 February 1, 2003
Pending Dispositions
Syracuse, NY(5)....................... WNTQ(FM) 93.1MHz 97.0 68 June 1, 1998
WNDR(AM) 1260kHz 5.0 June 1, 1998
Jacksonville, FL/Brunswick, GA(5)..... WWRD(FM) 100.7MHz 36.0 53 April 1, 1996
Raleigh/Tarboro, NC................... WFXK(FM) 104.3MHz 100.0 50 December 1, 2002
Atlantic City, NJ..................... WAYV(FM) 95.1MHz 50.0 136 June 1, 1998
Daytona Beach/Palatka, FL............. WFKS(FM) 99.9MHz 100.0 93 February 1, 2003
Pending Acquisitions
Port Charlotte, FL.................... WEEJ(FM) 100.1MHz 100.0 * February 1, 2003
WKII(AM)(6) 1070kHz 3.1/0.26 May 11, 1996
Fresno, CA............................ KNAX(FM) 97.9MHz 2.1 65 December 1, 1997
KRBT(FM) 101.1MHz 10.0 December 1, 1997
Wheeling/Bethlehem, WV................ WHLX(FM) 105.5MHz 13.5 212 October 1, 2002
Wheeling, WV.......................... WKWK(FM) 97.3MHz 50.0 212 October 1, 2002
WKWK(AM) 1400kHz 1.0 October 1, 2002
</TABLE>
- ------------
(1) Many AM radio stations are licensed to operate at a reduced power during
nighttime broadcasting hours; where applicable, both power ratings are
shown.
(2) Metro Market Rank is based on determination by Arbitron of the market's
number of persons aged 12 years and over.
(3) Renewal application pending.
(4) The Company has a 50% non-voting ownership interest in WDRR-FM.
(5) The sales of the Jacksonville, Florida and Syracuse, New York radio stations
were closed in January and February of 1996, respectively.
(6) WKII-AM has been operating pursuant to Special Temporary Authority issued to
it by the FCC.
* These markets are not assigned a Metro Market Rank by Arbitron.
BROADCAST-RELATED BUSINESSES
The Company's broadcast-related businesses provide extensive marketing and
promotional opportunities for its nearby radio stations. In Wheeling, West
Virginia, the Company enhances and capitalizes on its ratings dominance in
country music by the integration of its stations with its country music-related
entertainment businesses. The Company-owned Capitol Music Hall is a 2,500 seat
theater that hosts approximately 100 music, comedy and dramatic performances
each year, including Jamboree USA, a live country music concert and radio
program heard weekly throughout the northeastern United States featuring such
country music stars as John Michael Montgomery, Trisha Yearwood, Alan Jackson
and Lorrie Morgan. Each July, the Company stages Jamboree in the Hills, an
outdoor festival featuring
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20 or more country music stars held on a 200 acre site owned by the Company
outside of Wheeling. This four day event attracts tens of thousands of country
music fans each year from throughout the United States and Canada. Past
performers at Jamboree in the Hills include Vince Gill, Loretta Lynn, Brooks &
Dunn, Tim McGraw, and Travis Tritt. Jamboree in the Hills won the Country Music
Association's 1991 award for Festival of the Year and was featured in a one-hour
special on The Nashville Network in 1992.
Besides Jamboree USA, the Capitol Music Hall also hosts, among other
events, musical acts other than country, comedians, dramatic presentations and
symphonies. Attendance varies based upon the popularity of each particular
event. The Company also promotes shows in the 7,500 seat Wheeling Civic Center
and has begun promoting shows in markets outside of Wheeling.
PROGRAMMED MUSIC
The Company distributes programmed music, primarily Muzak, in the Atlanta,
Macon and Albany, Georgia and Ft. Myers, Florida markets. As the exclusive Muzak
franchisee in these markets, the Company provides subscribers with
commercial-free Muzak programming ranging from traditional background music to
newer formats including country and soft rock, and sells, leases and installs
the equipment required to receive the programming via satellite and other media.
The franchisor, Muzak L.P., provides the programming, and the Company
remits to Muzak a fee based upon the gross revenues from Muzak service. The
Company, and not the franchisor, is the owner of the contracts with the
individual users of the Muzak programming. These contracts generally have
five-year terms with an automatic renewal provision. In most cases, the Company
owns the equipment at the customers' sites and charges a lease fee for its use.
As part of its programmed music business, the Company also designs, sells
and installs sound, closed-circuit video and security systems and equipment in
locations such as offices, schools, hospitals, shopping malls and stadiums.
Examples of such systems include shopping mall paging, public address,
closed-circuit video, and fire/security systems. In addition, the Company is an
authorized distributor of the Rauland-Borg line of communications equipment for
schools and hospitals in various markets. The Company believes the sale and
installation of such sound equipment will continue to be an area of increasing
growth in revenues for the Company.
OSBORN HEALTHCARE
Osborn Healthcare was started by the Company in 1988 and offers a range of
education and entertainment services to hospitals. Osborn Healthcare operates
The Patient Network in 9 hospitals in the southeastern United States. The
Patient Network is a proprietary closed-circuit television system offering
patients premium cable television services such as movies, news and sports.
Separately, the Company distributes fully automated On-Demand Video systems,
which provide educational videos to physicians, patients and hospital staff. The
Company also offers The Automated Testing System, which is linked to On-Demand
Video and is proprietary software that allows viewer interaction with the
educational videos. These systems permit physicians to inform patients about
medical procedures via video with follow-up interactive question and answer
sessions. The Company is exploring expanded applications for these systems. In
addition, Osborn Healthcare distributes cable television programming via
satellite to 45 hospitals.
The sources of the movies shown by Osborn Healthcare are film distributors
licensed by major movie studios and the sources of The Patient Network's
programming are major cable networks and film distributors. Osborn Healthcare
generally pays a subscription fee based upon the number of beds in each of the
hospitals serviced.
EMPLOYEES
At December 31, 1995, the Company had approximately 288 full-time
employees, of whom 7 employees were on the corporate staff, and the balance were
employed at the operating subsidiary level in connection with the operation and
management of the Company's properties. One employee of the
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programmed music franchise in Atlanta is a union member. The Company believes
its relations with its employees are good.
COMPETITION
Radio. Radio is a highly competitive business. The Company's radio stations
compete with radio stations in their respective market areas, as well as with
other advertising media such as newspapers, television, cable television,
magazines, outdoor advertising, transit advertising and direct mail marketing.
Competition within the radio broadcasting industry occurs primarily in
individual market areas, so that a station in one market generally does not
compete with stations in other markets for local advertising, although it does
compete indirectly for national advertising. In addition to management
experience, factors material to competitive position include a station's
audience rank in its market, authorized power, quality of equipment, location of
transmitter, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other stations in the market
area.
Technological advances may have an impact on the competitive radio
broadcasting environment. Several companies have begun offering radio
programming by cable to subscribers of cable television. In addition, the FCC
has allocated spectrum for, and various companies have sought authorization to
provide, the direct transmission of radio programming to listeners via
satellite. The FCC is also considering permitting the broadcast of terrestrial
digital radio programming. The effect that these technological advances will
have on the Company's operations is uncertain.
In 1996, the FCC, in response to the Telecommunications Act of 1996,
relaxed its rules regarding ownership by one entity of multiple radio stations
in the same market. The effect that these changes will have on the Company's
business is unclear. However, to the extent that the Company can purchase
additional stations or enter into LMAs in markets where it has existing
stations, the Company's stations may have a competitive advantage in their
markets; conversely, the Company's stations may be at a competitive disadvantage
to the extent other broadcasters in their markets purchase additional stations
or enter into LMAs.
Broadcast-Related Businesses. The Company's broadcast-related businesses
generally compete regionally for audiences with other live concerts and sports
and entertainment events as well as other media such as films, broadcast and
cable television, videocassettes and radio. Competition for talent may come from
national or regional sources and is primarily from other concert venues.
Programmed Music. The Company's competition in the programmed music markets
is the ready availability of low-cost, nonprogrammed music, such as regular
radio broadcasts, audio cassettes and compact discs as well as competing
programmed music services. The Company competes in the sale and installation of
sound systems with numerous other sources of such equipment, including both
local and national distributors.
Hospital Cable Television. Competition for viewers for the Company's
hospital cable television service comes from broadcast television. The cable
television operations compete nationally for hospitals with a small number of
companies involved in supplying cable programming to hospitals, local cable
distributors and with companies which sell or lease television equipment to
hospitals. In addition, many hospitals choose to provide their own television
entertainment and education services.
FEDERAL REGULATION OF BROADCASTING
Introduction. Radio broadcasting is subject to regulation by the FCC under
the Communications Act of 1934, as amended (the 'Communications Act'). Under the
Communications Act, the FCC, among other things, assigns frequency bands for
broadcasting, determines the frequencies, location and power of stations,
issues, renews, revokes and modifies station licenses, regulates equipment used
by stations, and adopts and implements regulations and policies which directly
or indirectly affect the ownership, operations and employment practices of
broadcasting stations. In particular, the Communications Act prohibits the
assignment of a broadcasting license or the transfer of control of a corporation
holding a broadcasting license without prior approval of the FCC. In addition,
modification of the facilities of television and radio stations is subject to
FCC approval. The Telecommunications Act of
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1996 (the '1996 Act'), which was signed into law in February 1996, amended the
Communications Act in several key respects.
License Renewal. As a result of amendments to the Communications Act
brought about through the 1996 Act, the FCC must grant the renewal application
filed on behalf of a station if it finds that, during the preceding term of that
station's license, the station has served the public interest, convenience, and
necessity; there have been no serious violations by the licensee of the
Communications Act or the rules and regulations of the FCC; and there have been
no other violations by the licensee of the Communications Act or the rules and
regulations of the FCC which, taken together, would constitute a pattern of
abuse. If the FCC is unable to make such findings with respect to the station,
it can grant the station's renewal application, but on terms and conditions that
the FCC considers to be appropriate, or, the FCC can, after providing the
licensee with notice and an opportunity for hearing, and if the FCC determines
that no mitigating factors justify the imposition of a lesser sanction, deny the
renewal application. The terms and conditions that could be imposed by the FCC
in granting the renewal include requiring the payment of a forfeiture, requiring
the licensee to make periodic reports to the FCC or granting the renewal for a
period of time less than a normal license term. Only upon the issuance of an
order denying the renewal application may the FCC accept and consider
applications specifying the channel or broadcasting facilities of the former
licensee, whereas, prior to the amendments brought about by the 1996 Act, a
license was subject to competing applications being filed whenever the license
was due for renewal. In making its determination as to whether the licensee's
renewal application can be granted, the FCC may consider facts brought to its
attention by parties filing petitions seeking denial of the renewal application.
Also as a result of the 1996 Act, the FCC now has the authority to renew a
broadcast station license for a maximum term of eight years. Previously, the
Communications Act permitted the FCC to grant broadcast station license renewals
for a maximum term of seven years. The FCC has announced that it intends to
initiate a rulemaking in March 1996 looking toward the adoption of rules
consistent with the renewal term prescribed by the 1996 Act, and that it intends
to adopt such rules in the third quarter of 1996.
Ownership Matters. As a result of the 1996 Act, the FCC revised its
ownership rule effective March 15, 1996, to remove the national limit on the
number of stations that any one entity may own or in which that entity may have
an attributable interest. The FCC also revised its ownership rule so as to
provide that (a) in a radio market with 45 or more commercial radio stations, a
party may own, operate, or control up to 8 commercial radio stations, not more
than 5 of which may be in the same service (i.e., AM or FM); (b) in a radio
market with between 30 and 44 (inclusive) commercial radio stations, a party may
own, operate, or control up to 7 commercial radio stations, not more than 4 of
which may be in the same service; (c) in a radio market with between 15 and 29
(inclusive) commercial radio stations, a party may own, operate, or control up
to 6 commercial radio stations, not more than 4 of which may be in the same
service; and (d) in a radio market with 14 or fewer commercial radio stations, a
party may own, operate, or control up to 5 commercial radio stations, not more
than 3 of which are in the same service, except that the party may not own,
operate, or control more than 50 percent of the stations in such market.
Parties subject to the multiple ownership rules include officers,
directors, and holders of 5% or more of the voting stock of broadcasting
companies. Holders of debt and non-voting stock, however, are not subject to the
multiple ownership rules. Passive investments of less than 10% of the voting
stock of a broadcasting company held by certain categories of financial
institutions are also not recognized for purposes of these rules.
The multiple ownership rules could preclude the Company from acquiring
radio or TV stations in areas where its officers, directors, or stockholders
have such an interest.
Under the Communications Act, as amended by the 1996 Act, no FCC license
may be granted to any alien, to a corporation organized under the laws of a
foreign government, or to any corporation of which more than 20% of its capital
stock is owned of record or voted (i) by aliens or their representatives, (ii)
by a foreign government or representative thereof, or (iii) by any corporation
organized under the laws of a foreign country (collectively, 'Aliens'). In
addition, no one corporation may hold the capital stock of another corporation
owning broadcast licenses if more than 25% of the
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capital stock of such parent corporation is owned of record or voted by Aliens
or is subject to control by Aliens, unless specific FCC authorization is
obtained.
The Company's Restated Certificate of Incorporation and By-Laws authorize
the Board of Directors to prohibit ownership, voting, or transfer of its capital
stock which would cause the Company to violate the Communications Act or FCC
regulations.
Local Marketing Agreements. A number of broadcasting stations, including
several of the Company's stations, have entered into what have commonly been
referred to as 'Time Brokerage Agreements', 'Local Marketing Agreements', or
'LMAs'. While these agreements may take varying forms, under a typical LMA,
separately-owned and licensed radio stations agree to enter into cooperative
arrangements, subject to compliance with the requirements of antitrust laws and
with the FCC's rules and policies. Under these types of arrangements,
separately-owned stations could agree to function cooperatively in terms of
programming, advertising sales, etc., subject to the licensee of each station
maintaining independent control over the programming and station operations of
its own station. One typical type of LMA is a programming agreement among two
separately-owned radio stations serving a common service area, whereby the
licensee of one station programs substantial portions of the broadcast day on
the other licensee's station, subject to ultimate editorial and other controls
being exercised by the latter licensee, and sells advertising time during such
program segments.
The FCC has held that such agreements are not contrary to the
Communications Act, or the FCC's policies, provided that the licensee of the
station which is being substantially programmed by another entity maintains
complete responsibility for and control over operations of its broadcast station
and assures compliance with applicable FCC rules and policies.
The FCC's rules provide that a station brokering time on another station
serving the same market may be considered to have an attributable ownership
interest in the brokered station for purposes of the multiple ownership rules.
As a result, under the rules, a broadcast station will not be permitted to
program more than 15% of the broadcast time, on a weekly basis, of another local
station which it could not own under the multiple ownership rules. The FCC's
rules also prohibit a broadcast licensee from simulcasting more than 25% of its
programming on another station in the same broadcast service (i.e., AM/AM or
FM/FM) whether it owns the stations or through a time brokerage or LMA
arrangement, where the brokered and brokering stations serve substantially the
same geographic area.
Proposed Changes. The Congress and the FCC have under consideration, and
may in the future consider and adopt, new laws, regulations and policies
regarding a wide variety of matters that could, directly or indirectly, affect
the operation and ownership of the Company and its radio and television
broadcast properties. Such matters include, for example, the license renewal
process; proposals to impose spectrum use or other governmentally imposed fees
upon licensees; proposals to place limitations on the amount of commercial
matter that television stations can carry; proposals to change rules relating to
political broadcasting; proposals to increase the benchmarks or thresholds for
attributing ownership interest in broadcast media; proposals to require certain
types of programming; proposals to restrict the use of LMAs and certain types of
marketing arrangements; technical and frequency allocation matters, including
those relative to the implementation of digital audio broadcasting on both a
satellite and terrestrial basis; proposals to initiate a new high definition
television service; proposals to restrict or prohibit the advertising of beer,
wine and other alcoholic beverages or to limit the tax deductibility of such
advertisements; and changes to broadcast technical requirements. The Company
cannot predict what other changes might be considered in the future, nor can it
judge in advance what impact, if any, such changes might have on its business.
The foregoing is only a brief summary of certain provisions of the
Communications Act and FCC regulations. The Communications Act and FCC
regulations may be amended from time to time. The Company cannot predict whether
any such legislation will be enacted or whether new or amended FCC regulations
will be adopted, or the effect of any changes on the Company. For further
information, reference should be made to the Communications Act, FCC
regulations, and Public Notices issued by the FCC.
Other Matters. Construction projects such as broadcasting towers are
subject to state and local construction and environmental laws and regulations
and may require governmental permits.
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Broadcasting towers also must comply with regulations issued by the Federal
Aviation Administration ('FAA') and must receive FAA approval before
construction.
OTHER TRANSACTIONS
Fairmont and Northstar Management Agreements. The Company currently owns
25% of the stock of Fairmont Communications Corporation. Fairmont is managed by
the Company pursuant to a management agreement. In August 1992, Fairmont filed
for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.
In September 1993, Fairmont emerged from Chapter 11 upon approval by the
bankruptcy court of a plan of reorganization (the 'Plan'). The Plan provides for
the sale of Fairmont's assets, distribution of proceeds in accordance with the
Plan, and subsequent liquidation of Fairmont. 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 in 1996. For managing Fairmont, the Company receives
an annual fee of $125,000, plus reimbursement of out-of-pocket expenses and
allocated overhead costs. In 1994, the Company received additional management
fees of $728,000 related to the sale of Fairmont's stations. The Company also
earned distributions of $0.4 million and $2.3 million in 1995 and 1994,
respectively, classified as other income in the consolidated financial
statements, determined by the amounts realized by Fairmont from sales of its
assets.
The Company held a 32% interest in Northstar Television Group, Inc. 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 $1.6 million, classified as other income in
the consolidated financial statements.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located in Greenwich, Connecticut.
The Company leases offices in Greenwich pursuant to a lease terminating in May
1999.
The types of properties required to support each of the Company's radio
stations include offices, studios, and transmitter and antenna sites. The
Company and certain subsidiaries lease the following properties: Ft. Myers,
Florida, radio station and Muzak offices leased pursuant to leases terminating
September 2005 and June 1999, respectively; Tampa sound equipment distribution
offices leased pursuant to lease terminating March 2000; Atlanta Muzak offices
leased pursuant to lease terminating October 2001; Asheville, North Carolina, FM
broadcasting tower site leased pursuant to lease terminating October 1996;
Dayton, Ohio, offices leased pursuant to lease expiring March 1999; Greenwich,
Connecticut, offices leased pursuant to lease terminating May 1999; Daytona
Beach/Palatka, Florida, offices and tower site leased pursuant to leases
terminating May 1999 and December 2014, respectively; Nashville, Tennessee,
offices leased pursuant to lease terminating October 1999; Raleigh, North
Carolina, offices leased pursuant to lease expiring December 1999; Atlantic
City, New Jersey, broadcasting tower site and offices leased pursuant to leases
expiring December 1999 and December 2001, respectively; and Wheeling, West
Virginia, FM broadcasting tower site leased pursuant to lease terminating
February 2002. The Company owns the remaining broadcasting equipment and
offices, studios and broadcasting towers. The Company believes that its
facilities are adequate and suitable for their present uses.
All of the Company's properties are subject to encumbrances as security for
certain of the Company's borrowings. All of the stock in the subsidiaries
holding such properties has also been pledged as security for certain of the
Company's borrowings. See Notes 6 and 7 to the consolidated financial statements
contained in Part II, Item 8 -- Financial Statements and Supplementary Data.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any lawsuit or any legal proceeding that, in
the opinion of management, is likely to have a material adverse impact on the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders of the Company in the
fourth quarter of 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the name, age, present position with the Company and a
brief past five-year employment history of each executive officer of the
Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
Frank D. Osborn................................. 48 President, Chief Executive Officer, and Director
Thomas S. Douglas............................... 47 Senior Vice President -- Finance and Treasurer
W. Charles Hillebrand........................... 49 Senior Vice President -- Muzak
Michael F. Mangan............................... 34 Vice President -- Controller and Secretary
</TABLE>
Frank D. Osborn has been President and Chief Executive Officer of the
Company since the Company's formation in September 1984 and was its Treasurer
until August 1989. From 1983-1985, Mr. Osborn was Senior Vice President/Radio
for Price Communications Corporation, a diversified communications corporation.
From 1981-1983, Mr. Osborn served as Vice President and General Manager of WYNY,
NBC's New York FM radio station, and was Vice President of Finance and
Administration of NBC Radio from 1977-1981. Mr. Osborn serves as Chairman of the
Board and Chief Executive Officer of Fairmont Communications Corporation, and is
a Director of Northstar Television Group, Inc. Mr. Osborn is married to the
niece of Edward G. Nelson, a Director of the Company. Fairmont filed a voluntary
bankruptcy petition under Chapter 11 of the United States Bankruptcy Code on
August 28, 1992 and emerged from Chapter 11 in September 1993.
Thomas S. Douglas joined the Company in January 1994, and became Senior
Vice President -- Finance and Treasurer in March 1994. For the previous two
years, he was an investment banking advisor to the Czech Ministry of
Privatization in Prague, the Czech Republic in association with Deloitte &
Touche and the Bank Przemyslowo-Handlowy, Crakow, Poland in association with
KPMG Peat Marwick. From 1983 to 1991, he was a Director, Investment Banking, at
Prudential Securities Incorporated, New York, New York.
W. Charles Hillebrand has served as Senior Vice President -- Muzak since
joining the Company in 1986. In February 1993, Mr. Hillebrand was appointed
President of the Company's wholly-owned subsidiaries which own and operate its
programmed music businesses.
Michael F. Mangan, a certified public accountant, has served as Vice
President -- Controller since rejoining the Company in April 1994 and as
Secretary since June 1994. From July 1992 through April 1994, he was Assistant
Controller of PolyGram Holding, Inc. He previously served as the Company's
Controller from 1989 through June 1992, and as Assistant Controller from 1987
through 1989.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is traded on the NASDAQ National Market System
under the symbol OSBN. Common stockholders of record at December 31, 1995
numbered approximately 135, but the Company believes that the number of
beneficial owners is approximately 1,000, including those whose shares are held
in nominee or 'street' names.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
------------- ------------- --------------- -------------
1995 1994 1995 1994 1995 1994 1995 1994
----- ----- ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Quarterly market price range:
High....................................... 7 1/2 7 1/2 7 7 1/2 11 1/8 7 3/4 9 5/8 7 1/2
Low........................................ 6 3/4 6 1/2 6 6 1/4 6 1/4 6 1/2 7 1/4 6
</TABLE>
Market prices have been adjusted to reflect (to the nearest eighth) the
1-for-2 reverse stock split on July 11, 1994.
To date, the Company has not paid cash dividends on its common stock. Under
the terms of certain of the Company's debt agreements, the Company may not
declare or pay any dividend on, or make any distribution to the holders of, any
shares of capital stock of the Company.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Net revenues............................................... $39,100 $34,582 $27,399 $26,863 $24,860
Operating income (loss).................................... 2,215 1,315 398 (877) (4,035)
Income (loss) before extraordinary items................... 6,624 (1,114) (2,173) (4,507) (9,028)
Net income (loss).......................................... 2,703 (1,550) (2,173) (4,507) (9,028)
INCOME (LOSS) PER COMMON SHARE(2):
Primary earnings per common share:
Income (loss) before extraordinary items.............. 1.23 (0.21) (0.50) (1.29) (2.59)
Net income (loss)..................................... 0.50 (0.29) (0.50) (1.29) (2.59)
Fully diluted earnings per common share:
Income (loss) before extraordinary items.............. 1.22 (0.21) (0.50) (1.29) (2.59)
Net income (loss)..................................... 0.50 (0.29) (0.50) (1.29) (2.59)
Dividends.................................................. -- -- -- -- --
BALANCE SHEET AND OTHER DATA:
Total assets............................................... 77,634 79,166 47,498 50,376 55,335
Long-term debt and other long-term obligations............. 44,915 48,577 22,655 27,844 30,727
Total stockholders' equity................................. 21,497 19,282 19,158 13,735 18,242
Operating cash flow(3)..................................... 9,703 9,076 6,152 5,192 3,477
EBITDA(4).................................................. 7,997 6,600 4,654 3,701 827
</TABLE>
- ------------
(1) Reflects the acquisitions and dispositions described in Note 3 to the
consolidated financial statements, as well as acquisitions and dispositions
occurring in previous years.
(2) Per share data adjusted to reflect the 1-for-2 reverse stock split on July
11, 1994.
(3) Operating cash flow is defined as operating income before depreciation,
amortization and corporate expenses.
(4) EBITDA is defined as operating income before depreciation and amortization.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The primary source of the Company's broadcasting revenues is the sale of
air time on its radio stations for advertising. The Company's most significant
operating expenses are employee salaries and commissions, programming expenses
and advertising and promotional expenses. The Company strives to control these
expenses by working closely with station management.
The Company's revenues are affected primarily by the advertising rates its
radio stations charge. These rates are in large part based on a station's
ability to attract audiences in the demographic groups targeted by its
advertisers, as measured periodically by Arbitron. Because audience ratings in
local markets are crucial to a station's financial success, the Company
endeavors to develop strong listener loyalty.
The number of advertisements that can be broadcast without jeopardizing
listening levels (and the resulting ratings) is limited in part by the format of
a particular station. The Company's stations strive to maximize revenue by
constantly managing the number of commercials available for sale and adjusting
prices based upon local market conditions.
The Company's advertising contracts are generally short-term. The Company
generates most of its revenue from local advertising, which is sold primarily by
a station's sales staff. To generate national advertising sales, the Company
engages independent advertising sales representatives that specialize in
national sales for each of its stations. The Company's operating results in any
period may be affected by the incurrence of advertising and promotion expenses
that do not necessarily produce commensurate revenues until the impact of the
advertising and promotion is realized in future periods.
The performance of a broadcasting company is customarily measured by its
ability to generate operating cash flow. Operating cash flow is defined as
operating income before depreciation, amortization and corporate expenses.
Although operating cash flow is not a measure of performance calculated in
accordance with Generally Accepted Accounting Principles ('GAAP'), the Company
believes that operating cash flow is useful to investors because it is accepted
by the radio broadcasting industry as a generally recognized measure of
performance and is used by securities analysts who report publicly on the
performance of broadcasting companies. Operating cash flow should not be
considered in isolation or as a substitute for net income, cash flows from
operating activities and consolidated income or cash flow statement data
prepared in accordance with GAAP, or as a measure of the Company's profitability
or liquidity.
FINANCIAL ADVISOR
In November 1994, the Company engaged an investment banking firm as its
financial advisor to assist the Company in evaluating its options to increase
shareholder value. As a result of this process, the Company has decided to
dispose of broadcasting properties in Syracuse, New York and Anniston, Alabama.
The engagement of the financial advisor ended in January 1996.
TELECOMMUNICATIONS ACT OF 1996
The Telecommunications Act of 1996 (the '1996 Act'), which was signed into
law in February 1996, impacts the Company's operations in several respects. The
1996 Act, among other things, directs the Federal Communications Commission
('FCC') to modify its ownership rules to eliminate the limits on the number of
radio stations one entity may own nationally and to make the limits on the
number of radio stations one entity may own in a single market less restrictive.
Under the 1996 Act, depending on the number of radio stations in a particular
market, one entity may own a maximum of between five and eight radio stations in
a market, except that an entity may not own more than 50% of the stations in
such market. The 1996 Act directed the FCC to conduct a rulemaking to reevaluate
existing limitations on the number of television stations that a person or
entity may own, operate or control, or have a cognizable interest in within the
same television market. In addition, the FCC has the authority to grant
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broadcast license terms for a maximum term of eight years (previously seven
years). Additionally, the provisions of the 1996 Act strengthen the license
renewal expectancy for a license holder.
ACQUISITIONS AND DISPOSITIONS
Given the less restrictive regulatory environment, the Company intends to
own multiple radio stations in certain of its markets in order to attain a more
dominant position in the respective market. If the Company determines that
opportunities to acquire additional stations in a particular market are not
satisfactory, it may dispose of its stations in such market. The Company also
intends to pursue the acquisition of multiple stations in other markets.
Consistent with its strategy of owning multiple stations in a market or
leaving markets where opportunities to acquire additional stations are not
satisfactory, the Company has entered into several transactions for the
acquisition or disposition of broadcast properties in 1995 and early 1996. Each
of these transactions is more fully described in Notes 3 and 13 to the
consolidated financial statements.
In August 1995, the Company agreed to acquire substantially all the assets
of radio stations WKII-AM/WEEJ-FM, Port Charlotte, Florida 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 in order to better serve the Port Charlotte/Ft. Myers market,
additional consideration of $750,000 will be paid. The Company intends to
combine these stations with its existing operations in the Ft. Myers market. The
transaction is expected to close in April 1996.
In January 1996, the Company agreed to acquire substantially all the assets
of radio station duopoly KNAX-FM/KRBT-FM, Fresno, California for consideration
consisting of $6.0 million plus 120,000 shares of the Company's common stock.
The FCC has consented to this transaction which is expected to close in 1996.
In January 1996, the Company agreed to acquire substantially all the assets
of radio station WHLX-FM, Wheeling, West Virginia for $0.8 million and in
February 1996, agreed to acquire substantially all assets of radio stations
WKWK-AM/FM, also in Wheeling, for $2.7 million. Both acquisitions are subject to
FCC approval. The Company believes that these acquisitions will further
strengthen its dominant position in the Wheeling market.
Pending the closing of these acquisitions, the Port Charlotte and Fresno
stations are managed by the Company pursuant to local marketing agreements. The
Company also intends to enter into a local marketing agreement to manage radio
stations WKWK-AM/FM in Wheeling.
The Company has determined that attractive acquisition opportunities did
not exist in certain of its markets and in 1995 and early 1996 agreed to sell
certain broadcast properties.
In September 1995, the Company agreed to sell substantially all the assets
of radio stations WNDR-AM/WNTQ-FM, Syracuse, New York for $12.5 million. The
transaction closed in February 1996. Since September 1995 and pending the
closing of the transaction, the stations were 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 for total consideration of $6.5 million. The
sale of WWRD-FM closed in January 1996. The closing of the WFKS-FM transaction
is expected in 1996. Pending the closing of the transactions, the stations have
been managed by the purchaser pursuant to local marketing agreements.
In February 1996, the Company agreed to sell substantially all the assets
of radio station WAYV-FM, Atlantic City, New Jersey for $3.1 million, subject to
FCC approval. Pending the closing of the transaction, which is expected in 1996,
the purchaser is managing the station pursuant to a local marketing agreement.
The station was acquired by the Company in March 1994 for consideration of $2.5
million.
In February 1996, the Company entered into an agreement to sell
substantially all the assets of radio station WFXK-FM, Raleigh/Tarboro, North
Carolina for $5.9 million, subject to FCC approval.
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Pending the closing of the transaction, which is expected in 1996, the station
will continue to be operated by the purchaser pursuant to a local marketing
agreement.
In December 1995, the Company entered into an option agreement with
Allbritton Communications Company for the sale of television station WJSU-TV,
Anniston, Alabama, and an associated 10-year local marketing agreement. In
consideration for the option, the Company received a nonrefundable cash payment
of $10.0 million. Because the cash proceeds from the option are nonrefundable,
the Company accounted for the economic substance of the transaction as if a sale
of substantially all the assets of the station had occurred. Accordingly, a gain
of approximately $8.1 million was recorded. In addition, upon the exercise of
the option and the necessary FCC consent, the Company will receive an additional
cash payment of $2.0 million. If the necessary approvals to relocate the
station's broadcast transmitter to a new location to maximize broadcast coverage
are received, the Company will receive additional cash payments of up to $7.0
million. WJSU-TV was the Company's only television station and it does not
intend to acquire additional broadcast television stations in the foreseeable
future.
1994 ACQUISITIONS
In June 1994, the Company acquired substantially all the assets of three FM
and one AM radio stations for $20.0 million plus transaction costs. The
acquisition included radio stations WWNC-AM/WKSF-FM, Asheville, North Carolina;
WOLZ-FM, Ft. Myers, Florida; and WFKS-FM, Daytona Beach/Palatka, Florida. In
August 1994, the Company, through a wholly-owned subsidiary, acquired
substantially all the assets of radio stations WAAX-AM/WQEN-FM, Gadsden, Alabama
for $1.75 million plus transaction costs. The seller of the six stations has
agreed not to own or operate radio stations in these markets for a period of
three years. The Gadsden market is adjacent to the Anniston market, in which the
Company owned its television station. In August 1995, the Company was granted a
waiver of the FCC's regulations prohibiting ownership of radio and television
stations in the same market. Pending the FCC's ruling on the waiver application,
the Gadsden stations were placed in a trust which operated the stations on the
Company's behalf.
The Asheville, Ft. Myers, Daytona Beach/Palatka, Gadsden and Atlantic City
acquisitions have been accounted for using the purchase method of accounting.
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 properties are included in the Company's consolidated results
of operations from the respective dates of acquisition for properties acquired
and until the date of disposition for properties disposed. Prior to the grant of
the waiver of the FCC's cross-ownership regulations, the Gadsden acquisition was
accounted for using the equity method of accounting. Accordingly, prior year
financial statements have been reclassified to reflect the consolidation of the
Gadsden radio stations.
Due to the acquisitions, dispositions, and local marketing agreements, the
results of operations from period to period are not comparable and are not
necessarily indicative of future results. The effects of these acquisitions and
dispositions on 1996 revenue, operating cash flow and net income are dependent
on the timing of the closing of each transaction. In general, it is expected
that the net result will be a reduction of net revenue and operating cash flow
in 1996 as compared to 1995 because acquired properties will be included for a
partial year whereas divested properties will not be included for a majority of
the year. The reduction in operating cash flow is expected to be more than
offset by the reduction in interest expense due to the expected reduced
borrowings.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 VS. 1994
Net revenues of $39.1 million in 1995 represent a 13% increase from 1994
net revenues of $34.6 million. The increase is primarily attributable to the
radio stations acquired in 1994, as well as improved operations at the Company's
Asheville and Gadsden radio stations and its Georgia and Florida programmed
music franchises. For businesses owned and operated for a comparable period in
1995 and 1994, net revenues increased 3%. For broadcasting and related
businesses operated for a comparable period, net revenues of $23.4 million in
1995 were basically flat compared to 1994. This is attributable to reductions in
net revenues for the Syracuse and Daytona Beach/Palatka radio stations which
have been
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subject to local marketing agreements since September 1995 pending disposition
in 1996, and the Anniston television station which benefited in 1994 from
significant political advertising, offset by increased revenues by the Company's
other broadcasting properties. Net revenues for the programmed music division
increased 13%, from $8.3 million in 1994 to $9.4 million in 1995. The increase
reflects the growth of sound equipment sales in Georgia and Florida.
Total operating expenses increased 11%, from $33.3 million in 1994 to $36.9
million in 1995. The increase is primarily attributable to the radio stations
acquired in 1994, offset by expense reductions at the Syracuse and Daytona
Beach/Palatka radio stations, which have been subject to local marketing
agreements since September 1995. For businesses owned and operated for a
comparable period in 1995 and 1994, operating expenses increased 2%. The
increase in operating expenses for comparable properties reflects the increased
level of business at the Company's broadcasting and programmed music operations,
partially offset by the expense reductions at the Syracuse and Daytona
Beach/Palatka radio stations. The decrease in corporate expenses is primarily
due to nonrecurring costs incurred in 1994, totalling approximately $0.5
million, primarily relating to the relocation of the Company's corporate
headquarters from New York City to Greenwich, Connecticut, severance costs, the
installation of new management for the hospital cable television business, and
certain costs relating to the 1994 refinancing.
Operating cash flow increased 7%, to $9.7 million in 1995 from $9.1 million
in 1994. The increase is attributable to a full year of operations for the radio
stations acquired in 1994, as well as stronger results for the Asheville and
Gadsden radio stations and the programmed music franchises. For businesses owned
and operated for a comparable period in 1995 and 1994, operating cash flow
increased 4%. The increase in operating cash flow for comparable properties
primarily reflects the strong performance by the Asheville and Gadsden radio
stations and the growth of the sound equipment business in Georgia and Florida,
partially offset by the Syracuse radio stations.
Operating income increased 68% to $2.2 million in 1995, from $1.3 million
in 1994. Results in 1995 include distributions totalling $1.9 million,
classified as other income, from Northstar Television Group ('Northstar') and
Fairmont Communications Corporation ('Fairmont') relating to the sale of
Northstar's television stations and Fairmont's radio stations, while results in
1994 include a distribution of $2.3 million relating to the sale of Fairmont's
radio stations (see Management Agreements). Interest expense increased 19%, to
$5.2 million in 1995 from $4.4 million in 1994 due to the increased level of
debt outstanding following the 1994 acquisitions. Interest expense in 1995 and
1994 includes $0.3 million and $0.2 million, respectively, of non-cash interest
attributable to warrant and deferred financing cost amortization. Included in
results in 1995 is the gain on the sale of the Anniston station of $8.1 million.
Included in 1995 and 1994 results are extraordinary losses on the early
extinguishment of debt of $3.9 million and $0.4 million, respectively. Net
income of $2.7 million, or $0.50 per share in 1995 compares to a net loss of
$1.6 million, or $0.29 per share in 1994.
YEAR ENDED DECEMBER 31, 1994 VS. 1993
Net revenues of $34.6 million in 1994 represent a 26% increase from 1993
net revenues of $27.4 million. The increase is primarily attributable to the
radio stations acquired in 1994, as well as improved operations at the Company's
other businesses. For businesses owned and operated for a comparable period in
1994 and 1993, net revenues increased 10%. For broadcasting and related
businesses operated for a comparable period, net revenues increased 8%, to $19.9
million in 1994 from $18.4 million in 1993. The increase primarily reflects
strong performance by the Company's Anniston television station, as well as
certain other broadcasting properties. Net revenues for the programmed music
division increased from $7.2 million in 1993 to $8.3 million in 1994, which
represents a 15% increase. The increase reflects the growth of sound equipment
sales in Georgia and Florida. Net revenues in 1994 include management fee
revenue of $0.7 million relating to the sale of Fairmont Communications
Corporation's radio stations (see Management Agreements).
Total operating expenses increased 23%, from $27.0 million in 1993 to $33.3
million in 1994. The increase is primarily attributable to the radio stations
acquired in 1994. For businesses owned and operated for a comparable period in
1994 and 1993, operating expenses increased 6%. The increase in operating
expenses for comparable properties reflects the increased level of business at
the Company's broadcasting and programmed music operations, partially offset by
the local marketing agreement
17
<PAGE>
<PAGE>
entered into by radio station WING-FM, Dayton in 1993 and reductions in expenses
at certain of the Company's broadcasting properties. The increase in corporate
expenses is primarily due to nonrecurring costs totalling approximately $0.5
million primarily relating to the relocation of the Company's corporate
headquarters from New York City to Greenwich, Connecticut, severance costs, the
installation of new management for the hospital cable television business, and
certain costs relating to the 1994 refinancing.
Operating cash flow increased 48%, to $9.1 million in 1994 from $6.2
million in 1993. The increase is attributable to improved results at the
businesses owned for a comparable period and the radio stations acquired in
1994. For businesses owned and operated for a comparable period in 1994 and
1993, operating cash flow increased 33%. The increase in operating cash flow for
comparable properties primarily reflects the strong performance by the Anniston
television station, the Wheeling radio and entertainment businesses and the
growth of the sound equipment business in Georgia. These increases also reflect
increased operating cash flow attributable to the local marketing agreement at
the Company's Dayton radio station.
Operating income of $1.3 million in 1994 compares to $0.4 million in 1993.
Other income (expense) in 1994 includes a $2.3 million distribution from
Fairmont relating to the sale of all of Fairmont's radio stations, partially
offset by a charge of $0.4 million relating to the registration statement filed
by the Company in March 1994 and withdrawn in July 1994. Interest expense
increased 62%, to $4.4 million in 1994 from $2.7 million in 1993. The increase
in interest expense is due to the increased level of debt outstanding following
the 1994 acquisitions. Interest expense in 1994 includes $0.2 million of
non-cash interest attributable to warrant and deferred financing cost
amortization. The net loss in 1994 of $1.6 million includes a tax provision of
$0.3 million, while the net loss of $2.2 million in 1993 includes a tax
provision of $0.2 million. Included in 1994's results is an extraordinary loss
on the early extinguishment of debt of $0.4 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS FROM OPERATING ACTIVITIES
In 1995 and 1994, net cash provided by operating activities totalled $1.9
million and $2.8 million, respectively (see Results of Operations.)
CASH FLOWS FROM INVESTING ACTIVITIES
During 1995, the Company received cash distributions relating to the sale
of Northstar's and Fairmont's broadcasting properties totalling $4.2 million, of
which $2.3 million related to income accrued in 1994.
In June and August 1994, the Company acquired six radio stations for an
aggregate of $21.8 million plus transaction costs and in 1995 the Company
entered into an option agreement for $10.0 million to sell its television
station (see Acquisitions and Dispositions).
During 1995 and 1994, the Company received $1.6 million and $0.3 million,
respectively, representing the remaining principal from a note issued in 1988 by
the purchaser of the Company's Toledo, Ohio radio station and programmed music
franchise.
In December 1995, the Company paid $260,000 in exchange for the interest
held by outside investors in Osborn Healthcare Communications, Inc. ('Osborn
Healthcare'), thereby increasing its ownership to 100%. Osborn Healthcare
provides cable television services to hospitals.
In addition to debt service requirements, the Company's remaining liquidity
demands will primarily be for capital expenditures and to meet working capital
needs. The Company made capital expenditures of $1.3 million and $0.9 million in
1995 and 1994, respectively. These expenditures are primarily attributable to
the addition of new customers by its programmed music franchises and upgrades to
technical facilities at several of the broadcasting properties, including those
acquired in 1994. For 1996, the Company expects to make capital expenditures for
its existing properties totalling $0.9 million and will make capital
expenditures for the properties acquired in 1996 as needed.
18
<PAGE>
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
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 facility and a $10.0 million facility which may be used for acquisitions.
The initial drawdown of $44.5 million, along with the Company's internally
generated funds, was used to repay all outstanding indebtedness, totalling $50.0
million, at 101% of par value under the Company's existing debt facilities and
to pay transaction costs.
In June 1994, the Company entered into loan agreements totalling $50.0
million with World Subordinated Debt Partners, L.P., an affiliate of Citicorp
Mezzanine Investment Fund ('CMIF'). The proceeds were used to fund the 1994
acquisitions, except the Atlantic City acquisition (see Acquisitions and
Dispositions); to repay certain of the Company's existing debt; to redeem the
Company's 13.875% senior subordinated notes of $10.7 million at 101% of par
value; to pay transaction costs; and to provide funds for general corporate
purposes. As partial consideration for making the loans, CMIF received a warrant
to purchase 1,014,193 shares of the Company's common stock at $7.00 per share.
The warrant is exercisable for a 10-year period. The CMIF loans were repaid in
August 1995, primarily with the proceeds from the Society National Bank credit
facility. Along with the repayment of debt, the Company was able to cancel
purchase rights with respect to 676,162 warrant shares of the 1,014,193 warrant
shares issued with the CMIF loans.
LONG-TERM DEBT
Long-term debt to total capitalization decreased between December 31, 1994
and December 31, 1995 from 73% to 69% (see Cash Flows from Financing
Activities). Based on transactions announced to date, the Company anticipates a
net reduction in the ratio of long-term debt to total capitalization following
the closing of the acquisitions and dispositions described above (see
Acquisitions and Dispositions).
WORKING CAPITAL
At December 31, 1995 and 1994, cash and cash equivalents totalled $13.0
million and $6.4 million, respectively. Working capital increased $3.9 million,
from $8.3 million to $12.2 million during 1995. The change in working capital is
primarily attributable to the results of operations (see Cash Flows from
Operating Activities) and the proceeds from the Anniston transaction.
Assuming no deterioration in the economic climate, the Company believes the
funds generated from its existing operations are adequate to service its debt
and to meet all other existing obligations in the normal course of business, and
will continue to be adequate for the foreseeable future. The Company believes
that the funds available under its existing credit facility, combined with the
expected proceeds from the Syracuse, Jacksonville, Daytona Beach/Palatka, and
Raleigh dispositions, will be sufficient to fund the Port Charlotte, Fresno, and
Wheeling acquisitions. In 1996, 1997, 1998, and 1999 through 2001, $2.7 million,
$4.1 million, $5.4 million, and $35.0 million respectively, of the Company's
long-term debt principal is scheduled to be repaid. The Company anticipates that
the 1996 amount will be repaid from the proceeds of the sale of the Atlantic
City radio station. Such indebtedness is secured by the stock and assets of
Atlantic City and is otherwise nonrecourse to the Company and its other assets.
There can be no assurance that funds generated from operations will be
sufficient to meet these obligations in full at maturity and refinancing and/or
asset sales may be necessary. There can be no assurance as to the Company's
ability to refinance this debt or sell assets on acceptable terms.
It is not possible to ascertain the effect on the Company's liquidity that
would result from potential future acquisitions, dispositions or debt
repurchases. 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 is managed by the Company pursuant to a management
agreement, for which the Company
19
<PAGE>
<PAGE>
receives a management fee of $125,000 plus reimbursement of out-of-pocket
expenses and allocated overhead costs. In August 1992, Fairmont filed for
protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. In
September 1993, Fairmont emerged from Chapter 11 upon approval by the bankruptcy
court of a plan of reorganization (the 'Plan'). The Plan provides for the sale
of Fairmont's assets, distribution of proceeds in accordance with the Plan, and
subsequent liquidation of Fairmont. All of Fairmont's stations were sold by
1994. The Company will continue to manage Fairmont pursuant to the management
agreement which expires upon the liquidation of Fairmont, which is expected in
1996. In addition to its management fees, the Company received distributions of
$0.4 million and $2.3 million in 1995 and 1994, respectively, relating to the
sale of Fairmont's radio stations.
The Company held a 32% interest in Northstar Television Group, Inc. and
managed Northstar's four television stations pursuant to a management agreement
in return for a management fee plus 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 $1.6 million.
OSBORN HEALTHCARE
The Company's credit facility limits the amount of additional investment
the Company may make in Osborn Healthcare to $2.0 million, of which $0.4 million
was made in 1995. The Company believes that this limitation will not
significantly impact the operation of the business in 1996.
SEASONALITY
For broadcasting properties, the first quarter is expected to reflect the
lowest revenues and net income of the year, while the fourth quarter
historically has 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 retail advertising after the holidays.
The Company's entertainment properties are expected to reflect the lowest
revenues and net operating results 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 of each year.
EFFECTS OF INFLATION
The Company believes the relatively moderate rates of inflation over the
past three years have not had a significant impact on the profitability of the
Company. In general, the Company believes the effects of inflation are offset
through increases in advertising rates.
20
<PAGE>
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Consolidated Financial Statements:
Consolidated Balance Sheets at December 31, l995 and l994........................................ 22
Consolidated Statements of Operations for the years ended December 31, 1995, 1994 and 1993....... 23
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993....... 24
Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 1995,
1994 and 1993................................................................................... 25
Notes to Consolidated Financial Statements............................................................ 26
Report of Independent Auditors........................................................................ 37
</TABLE>
21
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................................... $12,994,779 $ 6,368,473
Accounts receivable, less allowance for doubtful accounts of $518,157 in 1995
and $370,102 in 1994......................................................... 5,759,562 5,435,792
Distribution receivable....................................................... -- 2,264,552
Note receivable............................................................... -- 1,620,455
Inventory..................................................................... 889,942 1,080,647
Prepaid expenses and other current assets..................................... 1,525,308 782,544
----------- -----------
Total current assets..................................................... 21,169,591 17,552,463
Investment in affiliated companies................................................. 524,084 535,913
Property, plant and equipment, at cost, less accumulated depreciation of
$18,624,021 in 1995 and $15,945,361 in 1994...................................... 15,358,070 16,442,810
Intangible assets, net of accumulated amortization of $15,238,193 in 1995 and
$13,308,848 in 1994.............................................................. 40,463,595 44,418,927
Other noncurrent assets............................................................ 118,753 216,373
----------- -----------
Total assets............................................................. $77,634,093 $79,166,486
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses......................................... $ 4,509,292 $ 3,787,528
Accrued wages and sales commissions........................................... 434,309 304,781
Accrued interest payable...................................................... 459,114 1,944,787
Accrued income taxes.......................................................... 825,712 535,489
Current portion of long-term debt............................................. 2,718,000 2,700,000
----------- -----------
Total current liabilities................................................ 8,946,427 9,272,585
Long-term debt..................................................................... 44,482,000 48,313,905
Deferred income taxes.............................................................. 2,275,711 2,035,047
Other noncurrent liabilities....................................................... 432,916 263,107
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........................................................... (18,250,326) (20,953,014)
----------- -----------
Total stockholders' equity............................................... 21,497,039 19,281,842
----------- -----------
Total liabilities and stockholders' equity............................... $77,634,093 $79,166,486
----------- -----------
----------- -----------
</TABLE>
See accompanying notes.
22
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net revenues........................................................ $39,100,496 $34,581,651 $27,398,647
----------- ----------- -----------
Operating expenses:
Selling, technical and program................................. 11,380,774 9,087,356 6,591,832
Direct programmed music and entertainment...................... 10,489,513 9,807,495 9,199,885
General and administrative..................................... 7,526,897 6,611,035 5,454,912
Depreciation and amortization.................................. 5,782,404 5,285,280 4,256,648
Corporate expenses............................................. 1,705,850 2,475,675 1,497,617
----------- ----------- -----------
Total operating expenses.................................. 36,885,438 33,266,841 27,000,894
----------- ----------- -----------
Operating income.................................................... 2,215,058 1,314,810 397,753
Other income........................................................ 2,314,508 2,246,450 297,592
Interest expense.................................................... 5,212,999 4,385,827 2,714,071
Equity in results of affiliated company............................. (11,829) -- --
Gain on sale of station............................................. 8,094,993 -- --
----------- ----------- -----------
Income (loss) before income taxes and extraordinary item............ 7,399,731 (824,567) (2,018,726)
Provision for income taxes.......................................... 775,982 289,220 154,366
----------- ----------- -----------
Income (loss) before extraordinary item............................. 6,623,749 (1,113,787) (2,173,092)
Extraordinary item:
Loss on debt extinguishment.................................... (3,921,061) (436,329) --
----------- ----------- -----------
Net income (loss)................................................... $ 2,702,688 ($1,550,116) ($2,173,092)
----------- ----------- -----------
----------- ----------- -----------
Primary earnings per common share:
Income (loss) before extraordinary item........................ $1.23 ($0.21) ($0.50)
Loss on extinguishment of debt................................. (0.73) (0.08) --
----------- ----------- -----------
Net income (loss) per common share.................................. $0.50 ($0.29) ($0.50)
----------- ----------- -----------
----------- ----------- -----------
Fully diluted earnings per common share:
Income (loss) before extraordinary item........................ $1.22 ($0.21) ($0.50)
Loss on extinguishment of debt................................. (0.72) (0.08) --
----------- ----------- -----------
Net income (loss) per common share.................................. $0.50 ($0.29) ($0.50)
----------- ----------- -----------
----------- ----------- -----------
Weighted average common shares outstanding:
Primary shares................................................. 5,388,001 5,376,715 4,372,922
----------- ----------- -----------
----------- ----------- -----------
Fully diluted shares........................................... 5,459,353 5,376,715 4,372,922
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes.
23
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................................... $ 2,702,688 ($1,550,116) ($2,173,092)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization.............................................. 5,782,404 5,285,280 4,256,648
Gain on sale of station.................................................... (8,094,993) -- --
Deferred income taxes...................................................... 240,664 175,000 --
Loss on extinguishment of debt............................................. 3,921,061 436,329 --
Write-off of registration statement costs.................................. -- 397,583 --
Non-cash interest expense.................................................. 332,284 210,421 --
Equity in results of affiliated company.................................... 11,829 -- --
Distributions from affiliated companies.................................... (1,942,731) -- --
Changes in current assets and current liabilities:
Increase in accounts receivable....................................... (323,770) (2,165,123) (464,823)
Decrease (increase) in inventory...................................... 190,705 (214,241) (42,029)
(Increase) decrease in prepaid expenses and other current assets...... (742,764) (177,499) 55,702
Acquisition deposit held in escrow.................................... 180,000 -- --
Increase in distribution receivable................................... -- (2,264,552) --
Increase (decrease) in accounts payable and accrued expenses.......... 721,764 1,069,534 (511,018)
Increase (decrease) in accrued wages and sales commissions............ 129,528 (96,287) 18,251
(Decrease) increase in accrued interest payable....................... (1,485,673) 1,632,742 33,646
Increase in accrued income taxes...................................... 290,223 15,009 84,250
----------- ----------- -----------
Total adjustments................................................ (789,469) 4,304,196 3,430,627
----------- ----------- -----------
Net cash provided by operating activities............................. 1,913,219 2,754,080 1,257,535
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from affiliated companies.................................... 4,207,283 -- --
Payments for business acquisitions......................................... -- (21,825,094) --
Proceeds from sale of station.............................................. 10,000,000 -- --
Accrued transaction costs.................................................. (1,411,981) -- --
Proceeds from note receivable.............................................. 1,620,455 329,545 1,450,000
Capital expenditures....................................................... (1,326,492) (942,771) (340,464)
Acquisition deposit held in escrow......................................... (180,000) -- (500,000)
Expenditures for intangible assets......................................... (524,863) -- --
----------- ----------- -----------
Net cash provided by (used in) investing activities................... 12,384,402 (22,438,320) 609,536
----------- ----------- -----------
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........................................................ (1,183,824) (1,887,965) --
Registration statement costs............................................... -- (228,587) --
Proceeds from exercise of stock options.................................... 154,863 6,000 --
Purchase and retirement of treasury stock.................................. (642,354) (107,058) --
Proceeds from rights offering.............................................. -- -- 6,597,253
Prepayment penalty on debt retirement...................................... (500,000) -- --
Principal payments on long-term debt and notes payable..................... (50,000,000) (23,286,671) (8,086,529)
----------- ----------- -----------
Net cash (used in) provided by financing activities................... (7,671,315) 24,731,538 (1,489,276)
----------- ----------- -----------
Net increase in cash and cash equivalents....................................... 6,626,306 5,047,298 377,795
Cash and cash equivalents at beginning of period................................ 6,368,473 1,321,175 943,380
----------- ----------- -----------
Cash and cash equivalents at end of period...................................... $12,994,779 $ 6,368,473 $ 1,321,175
----------- ----------- -----------
----------- ----------- -----------
Supplemental cash flow information:
Cash paid for interest..................................................... $ 6,366,388 $ 2,542,664 $ 2,680,425
----------- ----------- -----------
----------- ----------- -----------
Cash paid for income taxes................................................. $ 245,095 $ 99,211 $ 70,116
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes.
24
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
VOTING NON-VOTING
--------------------- ------------------ ADDITIONAL
PAR PAR PAID-IN ACCUMULATED
SHARES VALUE SHARES VALUE CAPITAL DEFICIT
---------- ------- ------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992.................... 6,976,688 $69,768 -- -- $30,894,831 ($17,229,806)
Net loss........................................ -- -- -- -- -- (2,173,092)
Sale of common stock............................ 3,490,000 34,900 -- -- 6,562,353 --
Issuance of common stock in exchange for
minority interest............................. 285,493 2,855 -- -- 996,371 --
---------- ------- ------- ------- ----------- -----------
Balance at December 31, 1993.................... 10,752,181 107,523 -- -- 38,453,555 (19,402,898)
Exercise of stock options....................... 1,500 15 -- -- 5,984 --
Issuance of stock warrant....................... -- -- -- -- 1,774,837 --
Effect of 1-for-2 reverse stock split........... (5,376,091) (53,762) -- -- 53,762 --
Purchase and retirement of treasury stock....... (17,843) (178) -- -- (106,880) --
Net loss........................................ -- -- -- -- -- (1,550,116)
---------- ------- ------- ------- ----------- -----------
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 stock options....................... 23,659 237 -- -- 154,626 --
Net income...................................... -- -- -- -- -- 2,702,688
---------- ------- ------- ------- ----------- -----------
Balance at December 31, 1995.................... 5,276,347 $52,764 -- -- $39,694,601 ($18,250,326)
---------- ------- ------- ------- ----------- -----------
---------- ------- ------- ------- ----------- -----------
</TABLE>
See accompanying notes.
25
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 -- NATURE OF BUSINESS AND ORGANIZATION
Osborn Communications Corporation (the 'Company') is engaged in the
operation of radio, television, programmed music, cable television and other
communications properties throughout the United States.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
A. Basis of presentation -- The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries. All
material intercompany items and transactions have been eliminated. Investments
in affiliated companies are accounted for using the equity method. Prior years'
amounts have been reclassified to conform with the current year's presentation.
B. Depreciation -- Property, plant and equipment are recorded at cost and
depreciated using the straight-line method over the estimated useful lives of
the assets, as follows:
<TABLE>
<S> <C>
Buildings..................................................................... 10-30 years
Furniture and fixtures........................................................ 5 years
Broadcasting equipment........................................................ 3-19 years
Transportation equipment...................................................... 3-5 years
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred.
C. Intangible assets -- Intangible assets include $2.5 million for 1995 and
$3.0 million for 1994 for agreements not to compete relating to certain
transactions described in Note 3, and $3.4 million for 1995 and 1994 assigned to
Muzak customer contracts acquired in 1990 and 1986, which are being amortized
over their estimated useful lives. Deferred financing costs of $1.2 million for
1995 and $1.9 million for 1994 are being amortized over the term of the related
debt on a straight-line basis, which approximates the interest method. The
remainder, in the amount of $48.6 million for 1995 and $49.3 million for 1994,
represents the excess of acquisition cost over the amounts assigned to other
assets acquired in the Company's acquisitions, and is being amortized on a
straight-line basis principally over a 40-year period.
It is the Company's policy to account for goodwill and all other intangible
assets at the lower of amortized cost or estimated realizable value. As part of
an ongoing review of the valuation and amortization of intangible assets of the
Company and its subsidiaries, management assesses the carrying value of the
intangible assets if facts and circumstances suggest that there may be
impairment. If this review indicates that the intangibles will not be
recoverable as determined by a non-discounted cash flow analysis of the
operating assets over the remaining amortization period, the carrying value of
the intangible assets would be reduced to estimated realizable value.
The Financial Accounting Standards Board issued SFAS No.121, 'Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of' in March 1995, which establishes standards for the recognition and
measurement of impairment losses on long-lived assets, certain identifiable
intangible assets, and goodwill. The requirements of SFAS No.121 will be
effective for the Company's financial statements beginning in 1996. The Company
does not believe that the implementation of SFAS No. 121 will have a material
effect on its financial statements.
D. Barter transactions -- Revenue from barter transactions (advertising
provided in exchange for goods and services) is recognized as income when
advertisements are broadcast, and merchandise or services received are charged
to expense (or capitalized as appropriate) when received or used.
E. Minority interest -- In December 1995, the Company paid $260,000 in
exchange for the interest held by outside investors in Osborn Healthcare
Communications, Inc. ('Osborn Healthcare'), thereby increasing its ownership to
100%. Osborn Healthcare provides cable television services to hospitals.
26
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
F. Revenue -- Broadcast revenue is presented net of advertising commissions
and representative fees of $2,326,000, $2,089,000 and $1,417,000 in 1995, 1994
and 1993, respectively.
G. Per share data -- Primary earnings per common share for 1995 is based on
the net income for the year divided by the weighted average number of common and
common equivalent shares. Common stock equivalents consist of stock options and
warrants (see Notes 11 and 12). Shares issuable upon the exercise of all common
stock equivalents and other potentially dilutive securities are not included in
the computations for 1994 and 1993 since their effect is not dilutive.
H. Cash equivalents -- Cash equivalents consist of short-term, highly
liquid investments which are readily convertible into cash and have an original
maturity of three months or less when purchased.
I. Inventory -- Inventories, consisting of merchandise for the Company's
entertainment properties, sound equipment held for resale by the Company's Muzak
franchises and equipment held for resale by the Company's healthcare cable
business, are valued at the lower of cost or market using the first-in,
first-out method.
J. Risks and Uncertainties -- The preparation of financial statements in
conformity with generally accepted accounting principles requires the Company to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reported period. Actual results may differ from those estimates.
NOTE 3 -- ACQUISITIONS AND DISPOSITIONS
At December 31, 1995 the Company owned and operated eleven FM and five AM
radio stations, four programmed music and sound equipment distributorships, a
hospital cable television company and certain entertainment properties.
1995:
In December 1995, the Company entered into an option agreement with
Allbritton Communications Company for the sale of television station WJSU-TV,
Anniston, Alabama, and an associated 10-year local marketing agreement. In
consideration for the option, the Company received a nonrefundable cash payment
of $10.0 million. Because the cash proceeds from the option are nonrefundable,
the Company accounted for the economic substance of the transaction as if a sale
of substantially all the assets of the station had occurred. Accordingly, a gain
of approximately $8.1 million was recorded. In addition, upon the exercise of
the option and the necessary FCC consent, the Company will receive an additional
cash payment of $2.0 million. If the necessary approvals to relocate the
station's broadcast transmitter to maximize broadcast coverage of the facility
are received, the Company will receive additional cash payments of up to $7.0
million.
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. ('Kneller') 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 in order to better serve the Port
Charlotte/Ft. Myers market, additional consideration of $750,000 will be paid.
Pending the closing of the transaction, which is expected in April 1996, the
stations are 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
L.L.C. ('Pilot') for $12.5 million, subject to FCC approval. Pending the closing
of the transaction, which occurred in February
27
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
1996, the stations were managed by the purchaser pursuant to a local marketing
agreement (see Note 13).
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 ('Renda') for
total consideration of $6.5 million. The closing of the transactions is subject
to FCC approval. The sale of WWRD-FM closed in January 1996 (see Note 13) and
the sale of WFKS-FM is expected to close in 1996. Pending the closing of the
transactions, the stations have been managed by the purchaser pursuant to local
marketing agreements.
1994:
In June 1994, the Company acquired substantially all the assets of three FM
and one AM radio stations for $20.0 million plus transaction costs. The
acquisition included radio stations WWNC-AM/WKSF-FM, Asheville, North Carolina;
WOLZ-FM, Ft. Myers, Florida; and WFKS-FM, Daytona Beach/Palatka, Florida. In
August 1994, the Company acquired substantially all the assets of radio stations
WAAX-AM/WQEN-FM, Gadsden, Alabama for $1.75 million plus transaction costs. The
seller of the six stations has agreed not to own or operate radio stations in
these markets for a period of three years. The Gadsden market is adjacent to the
Anniston market, in which the Company owned its television station. In August
1995, the Company was granted a waiver of the FCC's regulations prohibiting
ownership of radio and television stations in the same market. Pending the FCC's
ruling on the waiver application, the Gadsden stations were placed in a trust
which operated the stations on the Company's behalf.
In March 1994, the Company, through a wholly-owned subsidiary, acquired
radio station WAYV-FM, Atlantic City, New Jersey, for consideration of
approximately $2.5 million (see Note 6.) In February 1996, the Company entered
into an agreement to sell substantially all the assets of radio station WAYV-FM,
Atlantic City, New Jersey to Equity Communications, L.P. for $3.1 million,
subject to FCC approval. Pending the closing of the transaction, which is
expected in 1996, the purchaser is managing the stations pursuant to a local
marketing agreement.
All of the acquisitions have been accounted for using the purchase method
of accounting. 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 properties acquired are included in the
Company's consolidated results of operations from the respective dates of
acquisition and until the date of disposition for properties disposed. Prior to
the grant of the waiver of the FCC's cross-ownership regulations, the Gadsden
acquisition was accounted for using the equity method of accounting.
Accordingly, prior year financial statements have been reclassified to reflect
the consolidation of the Gadsden radio stations.
OTHER INVESTMENTS:
In 1989, the Company acquired, for $620,000, a 50% non-voting ownership
interest (without control) in a corporation that owns and operates radio station
WDRR-FM, San Carlos Park, Florida. The station became operational in September
1995. The Company's net investment is included in investment in affiliated
companies on the consolidated balance sheet.
In 1989, the Company acquired a 32% ownership interest in Northstar
Television Group, Inc. ('Northstar') for $329,000. From Northstar's inception
through May 1994, the Company managed Northstar's four television stations for
an annual fee of up to $250,000, plus reimbursement of out-of-pocket expenses
and allocated overhead costs. In 1994, as a result of a proposed restructuring
of Northstar, the Company agreed, as payment for prior services rendered, to
receive an immediate
28
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
payment of $250,000, another payment of $250,000 within two years, and the
retention of an economic interest. The Company's management agreement terminated
following the restructuring. In 1995, three of Northstar's four television
stations were sold and the Company received a distribution of $1.6 million,
classified as other income in the consolidated statement of operations, plus
accrued management fees of $250,000.
In 1987, the Company acquired 25% of the stock of Fairmont Communications
Corporation ('Fairmont') for $500,000. Fairmont owned seven radio stations in
four large and medium sized markets. In August 1992, Fairmont filed for
protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. In
September 1993, Fairmont emerged from Chapter 11 upon approval by the bankruptcy
court of a plan of reorganization (the 'Plan'). The Plan provided for the sale
of Fairmont's assets, distribution of the proceeds in accordance with the Plan,
and subsequent liquidation of Fairmont. All of Fairmont's stations were sold by
the second quarter of 1994. The Company will continue to manage Fairmont
pursuant to a management agreement which expires upon the liquidation of
Fairmont, which is expected in 1996. For managing Fairmont, the Company receives
an annual fee of $125,000, plus reimbursement of out-of-pocket expenses and
allocated overhead costs. In 1994, the Company received additional management
fees of $728,000 related to the sale of Fairmont's stations. The Company also
earned distributions of $0.4 million and $2.3 million in 1995 and 1994,
respectively, classified as other income and distribution receivable in the
consolidated financial statements, determined by the amounts realized by
Fairmont from sales of its assets.
NOTE 4 -- LOCAL MARKETING AGREEMENTS
The Company has entered into certain local marketing agreements ('LMAs')
whereby it provides programming to a station owned by a third party and pays a
monthly fee for the right to air such programming. The Company receives the
right to solicit advertising and to receive payments from the advertisers.
In September 1995, the Company entered into an LMA with Kneller to manage
Kneller's radio stations WKII-AM/WEEJ-FM, Port Charlotte, Florida pending the
acquisition of the stations (see Note 3).
In January 1996, the Company entered into an LMA with EBE Communications
Limited Partnership and EBE Broadcasting, L.P. ('EBE') to manage EBE's radio
stations KNAX-FM/KRBT-FM, Fresno, California pending the acquisition of the
stations (see Note 13).
In addition, the Company has entered into certain other LMAs whereby a
third party provides programming to a station owned by the Company and pays a
monthly fee for the right to air such programming. The third party receives the
right to solicit advertising and to receive payments from the advertisers.
In September 1995, the Company entered into LMAs with Renda to manage radio
stations WWRD-FM, Jacksonville, Florida/Brunswick, Georgia and WFKS-FM, Daytona
Beach/Palatka, Florida pending the disposition of the stations (see Note 3).
In September 1995, the Company entered into an LMA with Pilot to manage
radio stations WNDR-AM/WNTQ-FM, Syracuse, New York pending the disposition of
the stations (see Note 3).
In 1993, the Company entered into a five-year LMA with Great Trails
Broadcasting Corporation ('Great Trails') to manage the Company's radio station
WING-FM, Dayton/Springfield, Ohio. Great Trails has the option to purchase the
station at escalating prices throughout the term of the LMA.
In 1992, the Company entered into a five-year LMA with Pinnacle
Broadcasting Company, Inc. ('Pinnacle') to manage the Company's radio station
WFXK-FM, Raleigh/Tarboro, North Carolina. In
29
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
February 1996, the Company agreed to sell substantially all the assets of the
station to Pinnacle (see Note 13).
NOTE 5 -- PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
Net revenues............................................................. $32,349,000 $30,485,000
Loss before extraordinary item........................................... (533,000) (1,377,000)
Net loss................................................................. (4,454,000) (1,813,000)
Net loss per share....................................................... ($0.82) ($0.34)
</TABLE>
The unaudited pro forma information for the year ended December 31, 1995
assumes that the Anniston, Syracuse and Jacksonville/Brunswick dispositions, as
described in Note 3, had occurred on January 1, 1995. The unaudited pro forma
information for the year ended December 31, 1994 assumes that the Anniston,
Syracuse and Jacksonville/Brunswick dispositions and Atlantic City, Asheville,
Ft. Myers, Daytona Beach/Palatka, and Gadsden acquisitions, as described in Note
3, the CMIF credit agreement, as described in Note 6, and reverse stock split,
as described in Note 12, had occurred on January 1, 1994. The pro forma
information is not necessarily indicative either of the results of operations
that would have occurred had these transactions been made at the beginning of
the period, or of future results of operations.
Net assets of properties to be disposed in Syracuse, Anniston,
Jacksonville/Brunsick, Daytona Beach, Raleigh/Tarboro and Atlantic City
aggregated $17.6 million at December 31, 1995, consisting of current assets of
$0.8 million, net property, plant and equipment of $4.1 million, and net
intangible assets of $12.7 million.
30
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
NOTE 6 -- LONG-TERM DEBT
A summary of long-term debt as of December 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Note payable to Society National Bank, at the prime rate plus
1.5%; interest payable quarterly; principal due in quarterly
installments from December 31, 1996 through December 31,
2001(A)...................................................... $14,500,000 --
Note payable to Society National Bank, at LIBOR plus 2.75%;
principal due in quarterly installments from December 31,
1996 through December 31, 2001(A)............................ 30,000,000 --
Notes payable to World Subordinated Debt Partners, L.P.:
Senior Note at 9.25%; interest payable quarterly;
principal due in quarterly installments in varying
amounts June 1996 through June 2002(B).................. -- $25,000,000
Senior Subordinated Note at 11.00%; interest payable
quarterly; principal due in quarterly installments in
varying amounts June 1996 through June 2002(B).......... -- 10,000,000
Subordinated Note at 12.00%; interest payable
semiannually; principal due in equal installments June
2003 and June 2004(B)................................... -- 15,000,000
Unamortized warrant value(B)................................... -- (1,686,095)
Term loan payable to National Westminster Bank, net of
unamortized debt discount of $700,000; interest payable
quarterly at LIBOR plus 2.5%; principal due in quarterly
installments in varying amounts June 1996 through March
2000(C)...................................................... 2,700,000 2,300,000
Revolving loan payable to National Westminster Bank, interest
payable quarterly at LIBOR plus 2.5%; principal due in
quarterly installments in varying amounts June 1996 through
March 2000(C)................................................ -- 400,000
----------- -----------
47,200,000 51,013,905
Less current portion........................................... 2,718,000 2,700,000
----------- -----------
$44,482,000 $48,313,905
----------- -----------
----------- -----------
</TABLE>
- ------------
(A) In August 1995, the Company entered into a credit facility of $56.0 million
with Society National Bank (the 'Credit Facility'). The Credit Facility
consists of a $46.0 million revolving credit facility and a $10.0 million
facility which may be used for acquisitions. The initial drawdown of $44.5
million, along with the Company's internally generated funds, was used to
repay existing loans totalling $50.0 million and pay transaction costs. The
Credit Facility contains covenants which require, among other things, that
the Company and its subsidiaries (excluding Atlantic City Broadcasting
Corp.) maintain certain financial levels, principally with respect to
EBITDA and
31
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
leverage ratios, and limit the amount of capital expenditures. The Credit
Facility also restricts the payment of cash dividends. The Credit Facility
is collateralized by pledges of the tangible and intangible assets of the
Company and its subsidiaries (excluding Atlantic City Broadcasting Corp.),
as well as the stock of those subsidiaries. At December 31, 1995, the
Company has additional availability under the revolving credit facility and
the acquisition facility of $1.5 million and $10.0 million, respectively.
The Company pays an annual commitment fee of 0.5% of the unused commitment.
(B) In June 1994, the Company entered into two loan agreements totalling $50.0
million with World Subordinated Debt Partners, L.P., an affiliate of
Citicorp Mezzanine Investment Fund ('CMIF'). As part of the consideration
for making the loans, the lender was given a warrant to purchase 1,014,193
shares of the Company's common stock at $7.00 per share (see Note 12.) The
net proceeds from the loans were used to fund the acquisitions of radio
stations and to repay certain of the Company's other debt, resulting in an
extraordinary loss on the early extinguishment of debt of $436,000 in 1994.
The loans were repaid in August 1995, primarily using the proceeds from the
Credit Facility. Along with the repayment of debt, the Company was able to
cancel purchase rights with respect to 676,162 warrant shares of the
1,014,193 warrant shares issued with the previous loans.
As a result of the repayment of the CMIF loans, the Company recorded an
extraordinary loss on the early extinguishment of debt of approximately
$3.9 million in 1995. The extraordinary loss is primarily due to non-cash
charges from the write-off of deferred financing costs and debt discount.
(C) The term loan and revolving loan contain covenants with respect to the
Company's wholly-owned subsidiary, Atlantic City Broadcasting Corp. which,
among other things, restrict cash distributions to the Company and limit
the amount of annual capital expenditures. The revolving loan converted to
a term loan in March 1995. These loans are collateralized by pledges of the
tangible and intangible assets and stock of Atlantic City Broadcasting
Corp., and is otherwise nonrecourse to the Company and its other assets.
The Company and the lender have agreed to sell substantially all the assets
of Atlantic City Broadcasting Corp., and accordingly, the debt is
classified as short term. All proceeds of the proposed sale are expected to
be used to fund transaction costs and repay the debt (see Note 13). The
assets of Atlantic City Broadcasting Corporation were acquired in March
1994 for consideration of approximately $2.5 million, consisting of the
assumption of debt.
------------------------
At December 31, 1995, the aggregate amounts of long-term debt due during
the next five years are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- ------------------------------------------------------------ ----------
<S> <C>
1996........................................................ $2,718,000
1997........................................................ 4,094,000
1998........................................................ 5,428,000
1999........................................................ 6,900,000
2000........................................................ 9,108,000
</TABLE>
The fair value of the debt approximates net book value.
32
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
NOTE 7 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, consists of the following:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Land.......................................................... $ 4,256,414 $ 4,212,237
Buildings..................................................... 4,168,839 4,122,771
Equipment..................................................... 25,556,838 24,053,163
------------ ------------
33,982,091 32,388,171
Less accumulated depreciation................................. (18,624,021) (15,945,361)
------------ ------------
$ 15,358,070 $ 16,442,810
------------ ------------
------------ ------------
</TABLE>
At December 31, 1995, all property, plant and equipment is pledged as
collateral for the debt disclosed in Note 6.
NOTE 8 -- INCOME TAXES
At December 31, 1995, the Company has consolidated net operating loss
carryforwards for income tax purposes of $33.9 million that expire in years 2002
through 2010. Of the total net operating loss carryforwards, $11.0 million may
be used only to offset future income of the Company's subsidiary, Osborn
Entertainment Enterprises Corporation. For financial reporting purposes, a
valuation allowance of $9.1 million has been recognized to offset the deferred
tax asset related to carryforwards.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of December 31, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $13,577,873 $ 12,389,451
Other..................................................... 713,951 643,740
----------- ------------
14,291,824 13,033,191
Valuation allowance....................................... (9,088,722) (10,909,106)
----------- ------------
5,203,102 2,124,085
Deferred tax liabilities:
Depreciation and amortization............................. 4,014,313 3,984,132
Sale of station........................................... 3,289,500 --
Other..................................................... 175,000 175,000
----------- ------------
7,478,813 4,159,132
----------- ------------
Net deferred tax liability................................ $ 2,275,711 $ 2,035,047
----------- ------------
----------- ------------
</TABLE>
The 1995 provision for income taxes consists entirely of state and local
taxes, of which $535,000 is current and $241,000 is deferred. The 1994 provision
consists entirely of state and local taxes, of which $114,000 is current and
$175,000 is deferred. The 1993 provision consists entirely of current state and
local taxes.
33
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
The reconciliation of income tax computed at the U.S. federal statutory tax
rate to income tax expense is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- -------- --------
<S> <C> <C> <C>
Amount computed using statutory rate................... $ 1,217,532 ($428,705) ($686,367)
State and local taxes, net of federal benefit.......... 504,388 190,885 101,882
Losses (with) without tax benefit...................... (1,228,507) 234,539 611,691
Nondeductible expenses................................. 282,569 292,501 127,160
----------- -------- --------
$ 775,982 $289,220 $154,366
----------- -------- --------
----------- -------- --------
</TABLE>
NOTE 9 -- COMMITMENTS
The Company leases office space, vehicles and office equipment. Rental
expense amounted to $994,000, $768,000 and $710,000 in 1995, 1994 and 1993,
respectively.
The minimum aggregate annual rentals under noncancellable operating leases
are payable as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- -------------------------------------------------------------------------------- ----------
<S> <C>
1996............................................................................ $1,492,000
1997............................................................................ 1,137,000
1998............................................................................ 917,000
1999............................................................................ 653,000
2000............................................................................ 279,000
and thereafter.................................................................. 752,000
----------
$5,230,000
----------
----------
</TABLE>
NOTE 10 -- EMPLOYEE BENEFIT PLANS
The Company sponsors a profit sharing plan which qualifies under Section
401(k) of the Internal Revenue Code. The plan is available to all full-time
employees with at least one year of employment with the Company. All eligible
employees may elect to contribute a portion of their compensation to the profit
sharing plan, subject to Internal Revenue Code limitations. In December 1994,
the Company adopted a non-qualified deferred compensation plan available to
certain management employees.
NOTE 11 -- STOCK OPTION PLAN
The Company's Incentive Stock Option Plan provides for the granting to
officers and key employees of incentive and non-qualified stock options to
purchase the Company's voting common stock as defined under current tax laws.
Incentive stock options are exercisable at a price equal to the fair market
value, as defined, on the date of grant, for a maximum 10-year period from the
date of grant. Non-qualified stock options may be granted at an exercise price
equal to at least 85% of the fair market value on the date of grant, for a
maximum 11-year period from the date of grant. The exercise prices of all
options granted in 1995, 1994 and 1993 were the fair market values at the date
of grant.
34
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
The following table summarizes the plan's transactions for the years ended
December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Outstanding options, beginning of year....................... 417,000 382,750 339,250
Granted...................................................... 66,500 108,250 47,500
Cancelled or expired......................................... (12,500) (72,500) (4,000)
Exercised.................................................... (23,659) (1,500) --
------- ------- -------
Outstanding options, end of year............................. 447,341 417,000 382,750
------- ------- -------
------- ------- -------
Average price of options exercised........................... $6.55 $4.00 --
Weighted average exercise price, end of year................. $6.66 $6.64 $5.52
Options exercisable, end of year............................. 283,921 280,083 300,884
Options available for future grant........................... 79,000 133,000 17,250
</TABLE>
The Financial Accounting Standards Board issued SFAS No. 123, 'Accounting
for Stock Based Compensation' in October 1995, which establishes financial
accounting and reporting standards for stock based employee compensation plans
including stock purchase plans, stock options, restricted stock, and stock
appreciation rights. The Company has elected to continue accounting for stock
based compensation under Accounting Principles Board Opinion No. 25. The
disclosure requirements of SFAS No. 123 will be effective for the Company's
financial statements beginning in 1996. The Company does not believe that the
implementation of SFAS No. 123 will have a material effect on its financial
statements.
NOTE 12 -- STOCKHOLDERS' EQUITY
In January 1995, the Company repurchased and subsequently retired 107,059
unregistered shares of its common stock which were held by an institution,
totalling approximately $642,000. In December 1994, the Company repurchased and
subsequently retired 17,843 shares of its common stock at $6.00 per share,
totalling approximately $107,000.
In June 1994, the Company entered into two credit agreements totalling
$50.0 million with CMIF (see Note 6.) As partial consideration for making the
loans, CMIF received a warrant to purchase 1,014,193 shares (after giving effect
to the reverse stock split described below) of the Company's common stock at
$7.00 per share. The warrant is exercisable for a 10-year period. Under the
terms of the warrant agreement, in the event that the CMIF loans were repaid by
December 31, 1995, purchase rights with respect to 676,162 warrant shares will
be cancelled. The loans were repaid in August 1995 and, accordingly, the
purchase rights with respect to 676,162 warrant shares were cancelled.
On July 11, 1994, the Company effected a 1-for-2 reverse stock split for
shareholders of record on that date. Cash was paid in lieu of fractional shares.
All per share amounts in the consolidated statement of operations reflect the
reverse stock split.
NOTE 13 -- SUBSEQUENT EVENTS (UNAUDITED)
In January 1996, the Company entered into an agreement to acquire
substantially all assets of radio stations KNAX-FM/KRBT-FM, Fresno, California
from EBE Broadcasting, L.P., subject to FCC approval. Consideration for the
acquisition consists of $6.0 million plus 120,000 shares of the Company's common
stock. Pending the closing of the transaction, which is expected in 1996, the
Company is managing the stations pursuant to a local marketing agreement.
In January 1996, the Company entered into an agreement to acquire
substantially all the assets of radio station WHLX-FM, Wheeling, West Virginia
from Bethlehem Radio, Inc. for $0.8 million, subject to FCC approval. The
transaction is expected to close in 1996.
35
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
In February 1996, the Company entered into an agreement to acquire
substantially all the assets of radio stations WKWK-AM/FM, Wheeling, West
Virginia from WKWK Radio, Inc. for $2.7 million, subject to FCC approval.
Pending the closing of the transaction, which is expected in 1996, the Company
intends to enter into a local marketing agreement to manage the stations as soon
as FCC regulations permit.
In January 1996, the Company sold substantially all the assets of radio
station WWRD-FM, Jacksonville, Florida/Brunswick, Georgia to Renda Broadcasting
Corp. for $2.5 million. This transaction resulted in a pre-tax gain of
approximately $0.8 million (see Note 3).
In February 1996, the Company sold substantially all the assets of radio
stations WNDR-AM/WNTQ-FM, Syracuse, New York to Pilot Communications, L.L.C. for
$12.5 million. This transaction resulted in a pre-tax gain of approximately $6.0
million (see Note 3).
In February 1996, the Company entered into an agreement to sell
substantially all the assets of radio station WFXK-FM, Raleigh/Tarboro, North
Carolina to Pinnacle Broadcasting Corporation for $5.9 million, subject to FCC
approval. Pending the closing of the transaction, which is expected in 1996, the
purchaser is continuing to manage the station pursuant to a local marketing
agreement (see Note 4).
In February 1996, the Company entered into an agreement to sell
substantially all the assets of radio station WAYV-FM, Atlantic City, New Jersey
to Equity Communications, L.P. for $3.1 million, subject to FCC approval.
Pending the closing of the transaction, which is expected in 1996, the purchaser
is managing the stations pursuant to a local marketing agreement.
36
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
OSBORN COMMUNICATIONS CORPORATION
We have audited the accompanying consolidated balance sheets of Osborn
Communications Corporation as of December 31, 1995 and 1994, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1995. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Osborn
Communications Corporation at December 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
February 16, 1996
37
<PAGE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The information required by this item is not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item relating to Directors of the Company
is included in the Company's definitive proxy statement for the annual meeting
of shareholders to be held on May 22, l996 and is incorporated herein by
reference. The information required by this item relating to the executive
officers of the Company is included in Part I of this report on page 12.
All directors hold office until the next annual meeting of the shareholders
of the Company and until their successors are elected and qualified. Officers
are elected by the Board of Directors and serve at the pleasure of the Board,
except that Mr. Osborn serves as President pursuant to a contract expiring
December 1996, as discussed in Part III, Item 11 of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is included in the Company's
definitive proxy statement for the annual meeting of shareholders to be held on
May 22, l996 and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is included in the Company's
definitive proxy statement for the annual meeting of shareholders to be held on
May 22, l996 and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is included in the Company's
definitive proxy statement for the annual meeting of shareholders to be held on
May 22, l996 and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) The following consolidated financial statements of Osborn
Communications Corporation and subsidiaries are filed as a part of this report:
Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, l995 and l994
Consolidated Statements of Operations for the years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993
Consolidated Statement of Changes in Stockholders' Equity for the years
ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Independent Auditors
(a)(2) The following Financial Statement Schedule for the years ended
December 31, 1995, 1994 and 1993 is filed as Exhibit 99(a) as part of this
annual report on Form 10-K.
Schedule II -- Valuation and qualifying accounts
All other schedules have been omitted because the information is not
applicable or is not material or because the information required is included in
the consolidated financial statements or the notes thereto.
(a)(3) Exhibits
The exhibits listed in the accompanying index to exhibits on page 41 are
filed as part of this annual report on Form 10-K.
(b) Reports on Form 8-K for the quarter ended December 31, l995: None
38
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section l3 or l5(d) of the Securities
Exchange Act of l934, the registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
OSBORN COMMUNICATIONS CORPORATION
(Registrant)
By: /s/ FRANK D. OSBORN
...................................
FRANK D. OSBORN
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
March 25, 1996
Pursuant to the requirements of the Securities Exchange Act of l934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ FRANK D. OSBORN Principal Executive Officer and March 25, 1996
......................................... Director; President and Chief
(FRANK D. OSBORN) Executive Officer
/s/ THOMAS S. DOUGLAS Principal Financial Officer; Senior March 25, 1996
......................................... Vice President -- Finance and
(THOMAS S. DOUGLAS) Treasurer
/s/ MICHAEL F. MANGAN Principal Accounting Officer; Vice March 25, 1996
......................................... President -- Controller and Secretary
(MICHAEL F. MANGAN)
/s/ BROWNLEE O. CURREY, JR. Director March 25, 1996
.........................................
(BROWNLEE O. CURREY, JR.)
/s/ H. ANTHONY ITTLESON Director March 25, 1996
.........................................
(H. ANTHONY ITTLESON)
/s/ EDWARD G. NELSON Director March 25, 1996
.........................................
(EDWARD G. NELSON)
/s/ WILLIAM G. SPEARS Director March 25, 1996
.........................................
(WILLIAM G. SPEARS)
/s/ ROBERT K. ZELLE Director March 25, 1996
.........................................
(ROBERT K. ZELLE)
</TABLE>
39
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-30820) pertaining to the Osborn Communications Corporation 1987
Incentive Stock Plan, as Amended, and in the related Prospectus, of our report
dated February 16, 1996 with respect to the consolidated financal statements and
the financial statement schedule included in this Annual Report (Form 10K) of
Osborn Communications Corporation.
ERNST & YOUNG LLP
New York, New York
March 25, 1996
40
<PAGE>
<PAGE>
INDEX TO EXHIBITS
ITEM 14(A)3.
<TABLE>
<S> <C> <C>
3(a) -- Osborn Communications Corporation Restated Certificate of Incorporation, previously filed as
Exhibit 10.4 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by
reference......................................................................................
(b)(i) -- By-laws of the Company, as amended, previously filed as Exhibit 3(b) to Form 10-K for the year
ended December 31, 1989 and incorporated herein by reference...................................
(b)(ii) -- By-laws of the Company, as amended, previously filed as Exhibit 3(b)(ii) to Form 10-K for the
year ended December 31, 1992 and incorporated herein by reference..............................
4(a) -- Form of Specimen Stock Certificate, previously filed as Exhibit 4.1 to Registration Statement
No. 33-12804 and incorporated herein by reference..............................................
9(a) -- Irrevocable Voting Trust Agreement among Southeast Radio Holding Corp., Gadsden Broadcasting
Corp., Osborn Communications Corporation and James M. Ward dated August 1, 1994, previously
filed as Exhibit 9.1 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by
reference......................................................................................
10(a) -- Stock Purchase Agreement, dated August 6, 1985, between the Company and purchasers of the
Company's Common Stock, previously filed as Exhibit 10.1 to Registration Statement No. 33-12804
and incorporated herein by reference...........................................................
(b)* -- Employment Agreement between Osborn Communications Corporation and Frank D. Osborn dated July
1, 1994, previously filed as Exhibit 10.5 to Form 10-Q for the period ended June 30, 1994 and
incorporated herein by reference...............................................................
(c)* -- Consulting Agreement, dated August 6, 1985 between the Company and Nelson Capital Corp.,
previously filed as Exhibit 10.3 to Registration Statement No. 33-12804 and incorporated herein
by reference...................................................................................
(d) -- Stock Purchase Agreement by and among Price Communications Corporation, Republic Broadcasting
Corporation, and Fairfield Broadcasting, Inc., dated as of April 27, 1987, previously filed as
Item 7(c)(2) to Form 8-K dated August 31, 1987 and incorporated herein by reference............
(e) -- Senior Credit Agreement between Osborn Communications Corporation and World Subordinated Debt
Partners, L.P. dated as of June 30, 1994, previously filed as Exhibit 10.1 to Form 10-Q for the
period ended June 30, 1994 and incorporated herein by reference................................
(f) -- Subordinated Credit Agreement among Osborn Communications Corporation, its Subsidiaries and
World Subordinated Debt Partners, L.P. dated as of June 30, 1994, previously filed as Exhibit
10.2 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference......
(g) -- Warrant Agreement dated as of June 30, 1994 by and among World Subordinated Debt Partners,
L.P. and Osborn Communications Corporation, previously filed as Exhibit 10.3 to Form 10-Q for
the period ended June 30, 1994 and incorporated herein by reference............................
(h) -- Registration Rights Agreement, dated April 12, 1988 between Frank D. Osborn and the Company,
previously filed as Item 6(a)(1) to Form 10-Q for the quarter ended March 31, 1988 and
incorporated herein by reference...............................................................
(i)* -- Osborn Communications Corporation 1987 Incentive Stock Plan, as amended, previously filed as
Item 20.4d to Registration Statement S-8 No. 33-30820 and incorporated herein by reference.....
(j)* -- Osborn Communications Corporation Profit Sharing Plan, as amended, previously filed as Item
(10)(j) to Form 10-K for the period ended December 31, 1994 and incorporated herein by
reference......................................................................................
(k)* -- Osborn Communications Corporation Deferred Compensation Plan, previously filed as Item (10)(k)
to Form 10-K for the period ending December 31, 1994 and incorporated herein by reference......
(l) -- Asset Purchase Agreement, dated April 28, 1988 among Waite Broadcasting Corp., Osborn
Communications Corporation, Noble Broadcast of Toledo, Inc. and Noble Broadcast Group Inc.,
previously filed as Item 7(c)(1) to Form 8-K dated September 1, 1988 and incorporated herein by
reference......................................................................................
(m)(i) -- Promissory Note, dated September 1, 1988, by Noble Broadcast Group, Inc. to Waite Broadcasting
Corp., previously filed as Exhibit (10)(hh) to Form 10-K for the year ended December 31, 1988
and incorporated herein by reference...........................................................
</TABLE>
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41
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(table continued from previous page)
<TABLE>
<S> <C> <C>
(m)(ii) -- Agreement for Modification of Promissory Note, dated August 29, 1993 by Noble Broadcast Group,
Inc. to Waite Broadcasting Corp., previously filed as Exhibit 10.33 to Registration Statement
No. 33-76260 and incorporated herein by reference..............................................
(n) -- Asset Purchase Agreement, dated September 22, 1988 among Champion City Broadcasting Company,
Osborn of Ohio, Inc., and Osborn Communications Corporation, previously filed as Exhibit
(10)(ii) to Form 10-K for the year ended December 31, 1988 and incorporated herein by
reference......................................................................................
(o) -- Asset Purchase Agreement, dated October 21, 1988 among Yellow Brick Radio Corporation, Osborn
Communications Corporation, KKRD Inc., and Sherman Broadcasting Corporation, previously filed
as Exhibit (10)(jj) to Form 10-K for the year ended December 31, 1988 and incorporated herein
by reference...................................................................................
(p) -- Asset Purchase Agreement, dated November 15, 1988 among Beatrice Broadcasting Corp. and
Keymarket of NEPA, Inc., previously filed as Exhibit (10)(kk) to Form 10-K for the year ended
December 31, 1988 and incorporated herein by reference.........................................
(q) -- Stock Exchange Agreement, dated September 28, 1988 among Osborn Communications Corporation,
Donald W. Curtis and J.D. Longfellow, previously filed as Exhibit (10)(ll) to Form 10-K for the
year ended December 31, 1988 and incorporated herein by reference..............................
(r) -- Amended and Restated Asset Purchase Agreement by and among NTG, Inc., Price Communications
Corporation, and Western Michigan Broadcasting Corporation, Rhode Island Broadcasting
Corporation, Magnolia Broadcasting Corporation, and Keystone Broadcasting Corporation,
previously filed as Item 7(c)(1) to Form 8-K filed November 15, 1989 an incorporated herein by
reference......................................................................................
(s) -- Asset Purchase Agreement between Brunswick Broadcasting Corporation and Nelson Broadcasting
Corporation, dated June 1, 1989, previously filed as Exhibit (10)(t) to Form 10-K for the year
ended December 31, 1989 and incorporated herein by reference...................................
(t) -- Purchase and Sale Agreement between Florida Sound Engineering Company and Osborn Sound &
Communications of Florida, Inc., dated October 10, 1989, previously filed as Exhibit (10)(u) to
Form 10-K for the year ended December 31, 1989 and incorporated herein by reference............
(u) -- Asset Purchase Agreement, dated December 1, 1993, among Pine Trails Broadcasting Co., Inc.,
Beachside East Broadcasting, Inc., and Beachside West Broadcasting, Inc., as Sellers; Heritage
Broadcast Group, Inc. as Sellers' Guarantor; Asheville Broadcasting Corp., Daytona Beach
Broadcasting Corp. and Fort Myers Broadcasting Corp., as Buyers, and Southeast Radio Holding
Corp., as Issuer, previously filed as Exhibit 10.1 to Registration Statement No. 33-76260 and
incorporated herein by reference...............................................................
(v) -- Asset Purchase Agreement, dated December 1, 1993, among Big Thicket Broadcasting Company of
Alabama, Inc., as Seller; Heritage Broadcast Group, Inc., as Seller's Guarantor; Gadsden
Broadcasting Corp., as Buyer, and Southeast Radio Holding Corp., as Issuer, previously filed as
Exhibit 10.2 to Registration Statement No. 33-76260 and incorporated herein by reference.......
(w) -- Amendatory Agreement, dated as of March 23, 1994, among Pine Trails Broadcasting Co., Inc.,
Beachside East Broadcasting , Inc., Beachside West Broadcasting, Inc., Big Thicket Broadcasting
Company of Alabama, Inc., Heritage Broadcast Group Inc., Asheville Broadcasting Corp., Gadsden
Broadcasting Corp., Southeast Radio Holding Corp., and United States Trust Company of New York,
previously filed as Exhibit 10 (hh) to Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference...............................................................
(x) -- Management Agreement, dated as of March 18, 1994, by and between Pine Trails Broadcasting Co.,
Inc., Beachside East Broadcasting, Inc., Beachside West Broadcasting, Inc., Heritage
Broadcasting Group, Inc. and Southeast Radio Holding Corp., previously filed as Exhibit 10 (ii)
to Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.........
</TABLE>
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42
<PAGE>
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(table continued from previous page)
<TABLE>
<CAPTION>
<S> <C> <C>
(y) -- Amendatory Agreement No. 2, dated as of June 29, 1994, among Pine Trails Broadcasting Co.,
Inc., Beachside East Broadcasting, Inc., Beachside West Broadcasting, Inc., Big Thicket
Broadcasting Company of Alabama, Inc., Heritage Broadcast Group Inc., Asheville Broadcasting
Corp., Daytona Beach Broadcasting Corp., Fort Myers Broadcasting Corp., Gadsden Broadcasting
Corp., Southeast Radio Holding Corp., and United States Trust Company of New York, previously
filed as an exhibit to Form 8-K dated June 30, 1994 and incorporated herein by reference.......
(z) -- Asset Purchase Agreement, dated November 30, 1993, between Acquisition Holding Company and
Radio WAYV, Inc., previously filed as Exhibit 10.3 to Registration Statement No. 33-76260 and
incorporated herein by reference...............................................................
(aa) -- Letter Agreement, dated as of November 22, 1993, between the Company and James Cullen, Jr.,
previously filed as Exhibit 10.5 to Registration Statement No. 33-76260 and incorporated herein
by reference...................................................................................
(bb) -- Agreement, dated as of June 2, 1993 among Spears, Benzak, Salomon & Farrell, William G. Spears
and the Company, previously filed as Exhibit 10 to Registration Statement No. 33-62660 and
incorporated herein by reference...............................................................
(cc) -- Stock Exchange Agreement, dated as of December 17, 1993, by and among Barker, Lee & Co.,
Upland Associates L.P. and the Company, previously filed as Exhibit 10.8 to Registration
Statement No. 33-76260 and incorporated herein by reference....................................
(dd) -- Stock Exchange Agreement, dated as of December 17, 1993, by and among Evergreen IV, L.P.,
Brentwood Associates IV, L.P. and the Company, previously filed as Exhibit 10.9 to Registration
Statement No. 33-76260 and incorporated herein by reference....................................
(ee) -- Agreements between the Company and certain stockholders to restrict transfer of Common Stock,
previously filed as Exhibit 10.17 to Registration Statement No. 33-29629 and incorporated
herein by reference............................................................................
(ff) -- Management Agreement, dated September 30, 1987, between Fairfield Broadcasting, Inc. (now
known as Fairmont Communications Corporation) and the Company, previously filed as Exhibit
10(d) to the Company's Registration Statement No. 33-29629 and incorporated herein by
reference......................................................................................
(gg) -- Amendment to Management Agreement, dated September 21, 1993, between Fairmont Communications
Corporation and the Company, previously filed as Exhibit 10.31 to Registration Statement No.
33-76260 and incorporated herein by reference..................................................
(hh) -- Credit Agreement between Atlantic City Broadcasting Corp. and National Westminster Bank USA,
dated as of March 30, 1994, previously filed as Exhibit 10 (gg) to Form 10-K for the year ended
December 31, 1993 and incorporated herein by reference.........................................
(ii) -- Loan Agreement by and among Osborn Communications Corporation, Society National Bank, and the
Financial Institutions Listed Herein as of August 18, 1995, previously filed as Item 6(a)(1) to
Form 10-Q for the period ended September 30, 1995 and incorporated herein by reference.........
(jj) -- Asset Purchase Agreement, dated August 31, 1995, between Kneller Broadcasting of Charlotte
County, Inc. and Osborn Communications Corporation, previously filed as Item 6(a)(2) to Form
10-Q for the period ended September 30, 1995 and incorporated herein by reference..............
(kk) -- Asset Purchase Agreement, dated August 31, 1995 by and between Nelson Broadcasting Corporation
and Renda Broadcasting Corporation, previously filed as Item 6(a)(3) to Form 10-Q for the
period ending September 30, 1995 and incorporated herein by reference..........................
(ll) -- Asset Purchase Agreement, dated August 31, 1995 by and between Daytona Beach Broadcasting
Corporation and Renda Broadcasting Corporation, previously filed as Item 6(a)(4) to Form 10-Q
for the period ending September 30, 1995 and incorporated herein by reference..................
(mm) -- Stock Purchase Agreement, dated August 31, 1995 between Renda Broadcasting Corporation and SNG
Holdings, Inc., the sole stockholder of Nelson Tower Corporation, previously filed as Item
6(a)(5) to Form 10-Q for the period ending September 30, 1995 and incorporated herein by
reference......................................................................................
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43
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(table continued from previous page)
<TABLE>
<S> <C> <C>
(oo) -- Asset Purchase Agreement, dated September 18, 1995, between Pilot Communications of Syracuse,
Inc. and Orange Communications, Inc., previously filed as Item 6(a)(6) to Form 10-Q for the
period ending September 30, 1995 and incorporated herein by reference..........................
(pp)(i) -- Asset Purchase Agreement, dated December 31, 1995, between EBE Broadcasting, L.P. and
Breadbasket Broadcasting Corporation...........................................................
(pp)(ii) -- Asset Purchase Agreement, dated December 31, 1995, between EBE Communications Limited
Partnership and Breadbasket Broadcasting Corporation...........................................
(qq) -- Option Agreement, dated December 21, 1995, between RKZ Television, Inc. and Allbritton
Communications Corporation.....................................................................
(rr) -- Asset Purchase Agreement, dated January 29, 1996, between Bethlehem Radio, Inc. and Mountain
Radio Corporation..............................................................................
(ss) -- Asset Purchase Agreement and Amendment to Program Service Agreement, dated February 12, 1996,
between Great American East, Inc., Osborn Communications Corporation, WFXK and WDUR, Inc. and
Pinnacle Myrtle Corp...........................................................................
(tt) -- Asset Purchase Agreement, dated February 20, 1996, between WKWK Radio, Inc. and Mountain Radio
Corporation....................................................................................
(uu) -- Asset Purchase Agreement, dated February 29, 1996, between Atlantic City Broadcasting
Corporation and Equity Communications, L.P.....................................................
21 -- Subsidiaries of the Company...................................................................
23 -- Consent of Ernst & Young LLP appears on page 40 of this report................................
27 -- Financial Data Schedules......................................................................
99(a) -- Schedule II -- Valuation and Qualifying Accounts..............................................
</TABLE>
- ------------
* Indicates a management contract or compensatory plan or arrangement.
44
<PAGE>
<PAGE>
OSBORN COMMUNICATIONS
CORPORATION
130 Mason Street
Greenwich, Connecticut 06830
Telephone (203) 629-0905
Fax (203) 629-1749
DIRECTORS
Brownlee O. Currey, Jr.
H. Anthony Ittleson
Edward G. Nelson
Frank D. Osborn
William G. Spears
Robert K. Zelle
OFFICERS
Frank D. Osborn
President and Chief
Executive Officer
Thomas S. Douglas
Senior Vice President/Finance
and Treasurer
Michael F. Mangan
Vice President/Controller
and Secretary
RADIO
Larry A. Anderson
Vice President/General Manager
Radio and Entertainment
Wheeling, West Virginia
Robert E. Vandine
Station Manager
Radio Stations
WWVA-AM/WOVK-FM
Wheeling, West Virginia
Mark Bass
Vice President/General Manager
Radio Stations
WAAX-AM/WQEN-FM
Gadsden, Alabama
Donald Boyles
Senior Vice President -- Southwest
Florida/General Manager
Radio Stations
WKII-AM*/WOLZ-FM/
WEEJ-FM*
Lynn Golub
General Manager
Radio Station WFKS-FM
Daytona Beach, Florida
Donald P. Hodges
Vice President/General Manager
Radio Stations
WTJS-AM/WTNV-FM
Jackson, Tennessee
William R. McMartin
Vice President/General Manager
Radio Stations
WWNC-AM/WKSF-FM
Asheville, North Carolina
Chris Pacheco
Vice President/General Manager
Radio Stations
KNAX/KRBT-FM*
Fresno, California
John Rae
General Manager
Radio Station WFXK-FM
Raleigh/Tarboro, North Carolina
Ruth Ray
President/General Manager
Radio Station WDRR-FM**
Fort Myers/San Carlos Park, Florida
John Soller
Group Director of Engineering
General Manager
Radio Station WING-FM
Dayton/Springfield, Ohio
Joan Taylor
General Manager
Radio Station WAYV-FM
Atlantic City, New Jersey
MUZAK'r'/OSBORN SOUND
& COMMUNICATIONS
W. Charles Hillebrand
President
Peter P. Longley
Vice President
Kenneth R. Maas
General Manager
Tampa, Florida
Mark A. Rupert
General Manager
Fort Myers, Florida
Dominique Martin
General Manager
Albany, Georgia
HEALTHCARE COMMUNICATIONS
John F. McLane
President
Nashville, Tennessee
CORPORATE COUNSEL
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
FCC COUNSEL
Haley, Bader & Potts
4350 Fairfax Drive
Arlington, Virginia 22203
AUDITORS
Ernst & Young, LLP
787 Seventh Avenue
New York, New York 10019
STOCK TRANSFER AGENT
American Stock Transfer & Trust Co.
40 Wall Street
New York, New York 10005
COMMON STOCK
The Company's common stock is listed on the NASDAQ National Market System and
trades under the symbol OSBN.
- ------------
* Operating under an LMA pending acquisition
** The Company has a 50% non-voting ownership interest in WDRR-FM
45
<PAGE>
<PAGE>
___________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of December 31, 1995
by and between
EBE BROADCASTING, L.P.
(Seller)
and
BREADBASKET BROADCASTING CORPORATION
(Buyer)
___________________________________________________________
<PAGE>
<PAGE>
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......................4
1.4 Consideration..................................5
1.5 Proration of Income and Expenses...............5
1.6 Allocation of Purchase Price...................6
1.7 Guaranty.......................................6
ARTICLE II CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION
2.1 Closing........................................6
2.2 Transactions at the Closing....................7
2.3 Termination....................................9
2.4 Operation of Station pursuant to the LMA......11
2.5 Risk of Loss..................................11
2.6 Interruption of Broadcast Transmissions.......12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Organization..............................12
3.2 Authority; No Conflict........................12
3.3 Government Authorizations.....................13
3.4 Compliance with Regulations...................14
3.5 Taxes.........................................14
3.6 Personal Property.............................14
3.7 Real Property.................................15
3.8 Consents......................................17
3.9 Contracts.....................................17
3.10 Environmental.................................17
3.11 Intellectual Property.........................18
3.12 Financial Statements..........................18
3.13 Personnel Information; Labor Contracts........19
3.14 Employee Benefit Plans........................19
3.15 Litigation....................................19
3.16 Compliance with Laws..........................20
3.17 Insurance.....................................20
3.18 Undisclosed Liabilities.......................20
3.19 Instruments of Conveyance; Good Title.........21
3.20 Absence of Certain Changes....................21
3.21 Insolvency Proceedings........................22
3.22 Material Adverse Change.......................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation.............................23
4.2 Authority; No Conflict........................23
4.3 Consents......................................23
4.4 Litigation....................................24
4.5 Compliance with Laws..........................24
4.6 Qualification.................................24
<PAGE>
<PAGE>
ARTICLE V COVENANTS OF SELLER
5.1 Continued Operation of Station................24
5.2 Financial Obligations.........................25
5.3 Reasonable Access.............................25
5.4 Maintenance of Assets.........................25
5.5 Notification of Developments..................25
5.6 Payment of Taxes..............................25
5.7 Third Party Consents..........................25
5.8 Encumbrances..................................26
5.9 Assignment of Assets..........................26
5.10 Commission Licenses and Authorizations........26
5.11 Technical Equipment...........................26
5.12 Compensation Increases........................26
5.13 Sale of Broadcast Time........................26
5.14 Insurance.....................................26
5.15 Negotiations with Third Parties...............27
ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application........................27
6.2 Performance...................................27
6.3 Conditions....................................27
6.4 Confidentiality...............................27
6.5 Cooperation...................................28
6.6 Environmental Reports.........................28
6.7 Consents to Assignment........................28
6.8 Bulk Sales Laws...............................29
6.9 Employee Matters..............................29
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals..........................30
7.2 Performance...................................31
7.3 Failure of Transfer...........................31
7.4 Representations and Warranties................31
7.5 Consents......................................31
7.6 No Litigation.................................32
7.7 Documents.....................................32
7.8 Opinions of Counsel...........................32
7.9 Disclosure Schedule...........................32
7.10 Ancillary Agreements..........................32
7.11 Simultaneous Closing..........................32
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance...................................33
8.2 Representations and Warranties................33
8.3 Government Approvals..........................33
8.4 Documents.....................................33
8.5 Opinion of Counsel............................33
ARTICLE IX INDEMNIFICATION
9.1 Indemnification by Seller.....................33
9.2 Indemnification by Buyer......................34
9.3 Notification of Claims........................35
<PAGE>
<PAGE>
ARTICLE X MISCELLANEOUS
10.1 Assignment....................................36
10.2 Survival of Indemnification...................37
10.3 No Right of Reversion.........................37
10.4 Brokerage.....................................37
10.5 Expenses of the Parties.......................37
10.6 Entire Agreement..............................37
10.7 Headings......................................38
10.8 Governing Law.................................38
10.9 Counterparts..................................38
10.10 Notices.......................................38
10.11 Specific Performance..........................39
10.12 Consent to Jurisdiction.......................39
10.13 Further Assurances............................39
10.14 Public Announcements..........................40
<PAGE>
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of this 31st
day of December, 1995 by and between EBE BROADCASTING L.P., a Delaware
limited partnership ("Seller"), and BREADBASKET BROADCASTING 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 KRBT(FM), Fresno, California (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")
effective as of the 1st day of January 1996;
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 (as defined herein), 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.
(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
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Licenses include the right to use the call letters of the Station,
including but not limited to the call letters KRBT(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 and easement interests in real property leased by Seller and
used by the Station, including all agreements, leases, grants of
easements 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 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
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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.
(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.
(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) ACCOUNTS RECEIVABLE. All accounts receivable of the
Seller through the date hereof with regard to the operation of the
Station prior to the Commencement Date of the LMA (as that term is
defined herein). Seller shall list its accounts receivable as of
November 30, 1995 in Section 1.1(k) of the Disclosure Schedule.
Buyer agrees to use commercially reasonable efforts to collect
Seller's accounts receivable with respect to radio station KFRE(AM) in
the ordinary and normal course of business for a period of one hundred
twenty (120) days after the date hereof (the "Collection Period"), but shall
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not be required to employ counsel or any collection agency or to
initiate any litigation or use any extraordinary means of collection.
During the Collection Period, amounts collected by Buyer for the account
of Seller shall be remitted to Seller within fifteen (15) days following
the end of each calendar month.
(l) 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) 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.
(c) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All
contracts described in Sections 1.1(f), (g) and (i) of the Disclosure
Schedule that are terminated or will have expired prior to the Closing
Date in the ordinary course of business.
(d) PENSION AND PROFIT-SHARING PLANS. All pension and
profit-sharing plans, trusts established thereunder and assets thereof,
if any, of Seller.
(e) OTHER EMPLOYEE BENEFIT PLANS. All other employee
benefit plans (including health insurance) of Seller and the assets
thereof.
(f) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS. All
employment agreements and collective bargaining agreements of Seller.
(g) OTHER ASSETS. Those assets, if any, listed in
Section 1.2(g) of the Disclosure Schedule.
1.3 LIABILITIES TO BE ASSUMED. Except as otherwise provided
in this Section 1.3, Buyer assumes no liabilities or obligations of
Seller of any nature whatsoever, contingent or otherwise, except for (i)
amounts in respect of Seller's accounts payable with regard to the
Station as of the date hereof,(ii) Seller's trade
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liabilities as of the date hereof, (iii) Seller's negative trade commitments
as of the date hereof and (iv) post-closing obligations related to Real Estate
Contracts, Contracts, Broadcasting Agreements and Trade Agreements (the
"Assumed Contracts") assigned to and specifically assumed by Buyer.
Seller shall provide (w) a calculation of the amount of its working
capital on Section 1.3 of the Disclosure Schedule, (x) a list of its
accounts payable through December 22, 1995 in Section 1.3(a) of the
Disclosure Schedule, (y) a list of its trade liabilities through December
22, 1995 in Section 1.3(b) of the Disclosure Schedule and (z) a list of
its negative trade commitments through December 22, 1995 in Section
1.3(c) of the Disclosure Schedule. On or prior to the Closing Date
Seller shall pay or else retain all debts, liabilities and other
obligations of Seller arising prior to the Closing Date and not assigned
to and specifically assumed by Buyer.
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 pay to Seller on the Closing Date, by wire
transfer, the sum of Two Million Dollars ($2,000,000.00) (the "Purchase
Price").
1.5 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 10.5 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(a)), 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, rents and similar prepaid deferred items attributable
to the ownership and operation of the Station.
(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. 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.
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(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 an independent appraiser selected 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. Buyer and Seller shall
agree that the Purchase Price shall not be attributed to the transfer of
the Real Estate Contracts.
1.7 GUARANTY. In order to secure the obligations and
agreements of Buyer hereunder, Osborn Communications Corporation
("Osborn"), parent of Buyer, hereby unconditionally, irrevocably and
absolutely guarantees to the Seller and its successors and assigns for a
period of two (2) years the full and punctual payment when due of all
amounts payable to the Seller by the Buyer in connection with the
indemnification, the Default Payment (as defined in Section 2.4) and
other obligations arising under this Agreement (the "Guaranteed
Obligations"), whether by default or otherwise. Upon failure by the
Buyer to pay when due any amount of the Guaranteed Obligations in
accordance with the terms of this Agreement, Osborn shall pay or cause to
be paid, on demand by the Seller, the amount not so paid at the place and
in the manner specified in this Agreement. Osborn agrees that this
Guaranty is a guaranty of payment and performance, and not of collection
only, and that Osborn's obligations under this Guaranty shall be primary,
absolute and unconditional.
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 the
offices of Paul, Weiss, Rifkind Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York 10019 at 10:00 a.m. on a mutually agreed
upon day five (5) days after the latter of (a) the Commission's approval
of the Assignment Application, as defined in
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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
7.4;
(iii) a copy of the resolutions of the board of
directors of Seller's General Partner authorizing the execution,
delivery and performance of this Agreement and the agreements and
documents listed in Section 2.2 of the Disclosure Schedule, if any
(the "Ancillary Agreements"), and the consummation of the
transactions contemplated hereby and thereby, together with a
certificate of the Secretary of Seller's General Partner, dated as
of the Closing Date, that such resolutions were duly adopted and are
in full force and effect;
(iv) 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.
(v) 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
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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.
(vi) 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;
(vii) the Ancillary Agreements, duly executed by Seller
as appropriate;
(viii) the originals of all written consents of the
respective lessors, landowners, grantors 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
including the following: (i) a grant of easement granting to Buyer
all of Seller's rights pursuant to that certain Grant of Easement
dated November 7, 1994 between Headliner Broadcasting, Inc., as
grantor, and Seller, as grantee (the "HEADLINER EASEMENT"); (ii) a
Cancellation of Headliner Easement canceling all of Seller's rights
to the Headliner Easement; (iii) prior written consent of the
Headliner Easement to Buyer as required pursuant to that certain
Easement Agreement entered into as of August 18, 1989, by and
between Azalea Biglione and others, as grantors, and KLOK Radio, a
limited partnership, doing business as Radio KFIG, as grantee,
recorded as Instrument No. 91075013 in the official records of the
County Recorder of Fresno County, California and subsequently
assigned by Headliner Broadcasting, Inc. on November 1, 1989 to
Seller;
(ix) evidence satisfactory to Buyer's counsel that no
financing statements are outstanding on the Station Assets;
(x) all files, records, logs, and program materials
relating to the Station;
(xi) the opinion of counsel for Seller, dated the
Closing Date, as described in Section 7.8;
(xii) assignments to Buyer of all the Contracts and
Real Estate Contracts in form satisfactory to Buyer;
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(xiii) a current estoppel certificate from the Landlord
under each Real Property Contract in form satisfactory to counsel to
Buyer; and
(xiv) 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;
(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) an Agreement of Assumption of Liabilities and
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 six (6)
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months from the date the notice of filing of 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 pursuant to
this Section, the parties shall be released and discharged from any
further obligation hereunder.
(d) It is further PROVIDED, HOWEVER, that no party may
terminate this Agreement if such party is in
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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.
2.4 OPERATION OF STATION PURSUANT TO THE LMA. Notwithstanding
any provision to the contrary in this Agreement:
(a) As of January 1, 1996 (the "Commencement Date"), and
until the consummation of the transactions contemplated by, or the
termination of, this Agreement (the "LMA Term") 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 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
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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 ORGANIZATION. Seller is a limited partnership duly
organized and in good standing under the laws of the State of Delaware,
and is duly qualified to do business in the State of California. The
Seller's general partner 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 the State of California. Seller has
the power and authority to own and 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 all necessary partnership action by Seller.
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
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provisions of (a) the Partnership Agreement or Certificate
of limited partnership 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 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 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, regulations, requirements,
policies and orders of the Commission, would disqualify
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Seller as assignor, and Buyer as assignee, in connection with the Assignment
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, policies and
orders 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 the Owned Real Property is
assessed 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
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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 does not own any fee title to real property
as described on Section 1.1(d) of the Disclosure Schedule (hereinafter,
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 and or the grantee interest, as
applicable, 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 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 such
Real Estate Contract. Seller shall use best efforts to obtain valid and
binding third-party consents, 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, enforceability and
continuity of any of the Real Estate Contracts. To the best of Seller's
knowledge, Seller is in compliance with all its obligations under the
Real Estate Contracts.
(c) Entire Premises. All of the land, buildings,
structures and other improvements used by Seller in the conduct of the
Business are included in the Real Estate Contracts.
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(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 free of structural
defects and are in good working order and repair. All water, gas,
electrical, steam, compressed air, 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 so-called hook-up fees or other
associated charges have been fully paid, ordinary wear and tear excepted.
(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.
(i) Encroachments. There are no encroachments or other
facts or conditions affecting any parcel of Real Property which would,
individually or in the aggregate, (i) interfere in any material respect
with, or materially increase the cost of, the use, occupancy or operation
thereof as currently used, occupied and operated or as intended to be
used, occupied and operated, (ii) materially reduce the fair market value
thereof below the fair market value such parcel would have had but for such
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encroachment or other fact or condition. To the best of Seller's
knowledge, no portion of any Improvement encroaches upon any property not
included within the Real Property or upon the area of any easement
affecting the Real Property.
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) of
the Disclosure Schedule 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 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.
Subject to obtaining any required consents, 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
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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 1.1(e) of the Disclosure
Schedule is a true and complete list of all the Intellectual Property.
The 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 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 applicable to the Station 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 Seller applicable thereto, consistently
applied. The Financial Statements present fairly the financial condition
and results of operations of the Station for the periods indicated.
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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 3.14 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 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,
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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,
regulation, requirement, policy or order (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,
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 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 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
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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, 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, 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;
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(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 $5,000;
(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 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; or
(n) Any change in any method of accounting or accounting
practice used by 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.
3.22 MATERIAL ADVERSE CHANGE. (a) Between November 30, 1995
and the date hereof there has been no change in the manner in which
Seller conducts its business with respect to working capital and there
has not been a material adverse change in the assets of Seller other than
changes in the ordinary and usual course of business consistent with past
practice.
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(b) Between December 22, 1995 and the date hereof there
has not been a material adverse change in the liabilities of Seller other
than changes in the ordinary and usual course of business consistent with
past practice.
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 California.
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 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, the Ancillary Agreements to which it is a party
or any of the agreements or actions contemplated thereby.
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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 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 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
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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
$5,000 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
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
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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, including the Real Property.
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 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 30 days' 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.
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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.
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 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
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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 "Act 307" 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 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 Phase I 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. Except for the Real Estate
Contracts, to the extent that any Contract, Broadcast Agreement, Trade
Agreement or other contract identified in the Disclosure Schedule that is to be
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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.
Except for any consents required pursuant to a Real Estate Contract, 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 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.
6.9 EMPLOYEE MATTERS.
(a) 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 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
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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. Except as expressly provided in
paragraph (b) below, Buyer shall assume no liability under an employment
agreement or severance agreement entered into or maintained by Seller
with respect to current or former employees of the Station. Except as
otherwise required by applicable law, employees of the Station who become
employees of Buyer shall cease to participate in the employees benefit
plans of Seller as of the date of hire by Buyer and Buyer shall have no
liability with respect thereto.
(b) Notwithstanding the foregoing, in the event Buyer
terminates the employment of Rita Walls or Laura Eaton during the LMA
Term, Buyer shall be responsible for the severance payments due to each
such person under the terms of the employment agreements, dated August
14, 1995, between EBE Communications Limited Partnership and Rita Walls
and EBE Communications Limited Partnership and Laura Eaton, respectively;
PROVIDED, HOWEVER, that the Cash Payment shall be reduced by the amount
of any such payments made by Buyer. In the event Buyer terminates the
employment of the persons listed in Section 3.13 of the Disclosure
Schedule during the LMA Term, other than Ms. Walls and Ms. Eaton, Buyer
shall be responsible for the severance payments due to each such person
under the terms of the employment agreements entered into between EBE
Communications Limited Partnership and each such employee, attached to
Section 3.13 of the Disclosure Schedule, and no adjustment to the Cash
Payment shall be made.
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
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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 and become Final Orders. 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 California, and shall be unimpaired
by any acts or omissions of Seller or Seller's employees or agents.
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 FAILURE OF TRANSFER. Notwithstanding any other provision
in this Agreement to the contrary, in the event that any law, regulation
or official policy prevents the transfer or assignment of the Station
Assets from Seller to Buyer or any Buyer affiliate, the parties shall
have amended this Agreement and/or executed such supplemental agreements,
as necessary, to achieve for both Buyer and Seller, to the maximum extent
possible, the benefits of the transactions contemplated by this Agreement
and the Ancillary Agreements in a manner consistent with applicable law.
7.4 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.
7.5 CONSENTS. Seller shall have received all consents
(including landlord and grantor consents for the studio and tower sites)
specified in Section 3.8 of the Disclosure Schedule and as follows: (i)
a grant of easement granting to Buyer all of Seller's rights pursuant to
that certain Grant of Easement dated November 7, 1994 between Headliner
Broadcasting, Inc., as grantor, and Seller, as grantee (the "HEADLINER
EASEMENT"); (ii) a Cancellation of Headliner Easement canceling all of
Seller's rights to the Headliner Easement; (iii) prior written consent of
the Headliner Easement to Buyer as required pursuant to that certain
Easement Agreement
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entered into as of August 18, 1989, by and between Azalea Biglione and others,
as grantors, and KLOK Radio, a limited partnership, doing business as Radio
KFIG, as grantee, recorded as Instrument No. 91075013 in the official records
of the County Recorder of Fresno County, California and subsequently assigned
by Headliner Broadcasting, Inc. on November 1, 1989 to Seller.
7.6 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.
7.7 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 Moses & Singer, counsel to Seller, addressed to Buyer and
substantially 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
substantially in the form attached hereto as Exhibit B.
7.9 DISCLOSURE SCHEDULE. Seller shall have delivered to Buyer
each Section of the Disclosure Schedule required of it herein and the
information contained therein shall be in form and content reasonably
satisfactory to Buyer.
7.10 ANCILLARY AGREEMENTS. Buyer and Seller shall have entered
into the Ancillary Agreements, if any, on terms and conditions
satisfactory to Buyer.
7.11 SIMULTANEOUS CLOSING. The Closing shall occur
simultaneously with the closing of the transactions contemplated by that
certain Asset Purchase Agreement by and between EBE Communications,
Limited Partnership and Buyer dated of even date herewith.
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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 substantially in the form attached hereto as
Exhibit C.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. From and after the Closing
Date, Seller agrees to and shall indemnify, defend and hold Buyer
harmless, and 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,
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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.
Anything in this Section 9.1 to the contrary notwithstanding,
Buyer shall be entitled to indemnity only to the extent that all damages
exceed an aggregate of $25,000.
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 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
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(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.
Anything in this Section 9.2 to the contrary notwithstanding,
Seller shall be entitled to indemnity only to the extent that all damages
exceed an aggregate of $25,000.
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 assume the defense of such
third party claim or demand and to employ counsel reasonably 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 at its
own expense. Notwithstanding the foregoing, the Indemnified Party shall
have the right to employ separate counsel at the Indemnifying Party's
expense and to control its own defense if in the reasonable opinion of
counsel to such Indemnified Party a conflict or potential conflict exists
between the Indemnifying Party and such Indemnified Party that would make
such separate representation advisable. 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
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Indemnified Party, the Indemnified Party shall not settle or compromise such
claim or demand. The Indemnifying Party shall not settle or compromise such
claim or demand with respect to the Indemnified Party without the prior written
consent of the Indemnified Party (which shall not be unreasonably withheld).
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 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 and 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
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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 (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 of three (3) years following the date
hereof.
10.3 NO RIGHT OF REVERSION. Buyer and Seller represent and
warrant to each other that upon the consummation of the transactions
contemplated herein and the assignment to Buyer of the Licenses and
authorizations, Seller shall retain no right of reversion of the Licenses
and authorizations, no right to a reassignment of the Licenses and
authorizations in the future, and reserve no right to use the facilities
of the Station for any period whatsoever.
10.4 BROKERAGE. Seller and Buyer warrant and represent to one
another that, with the exception of Exline Media Broker Consultants
(William Exline), broker for the Seller, there has been no broker in any
way involved in the transactions contemplated hereby and that no one
other than Exline Media Broker Consultants (William Exline), 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 Exline Media
Broker Consultants (William Exline).
10.5 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.
10.6 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
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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.
10.7 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.
10.8 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of New York.
10.9 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.
10.10 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:
William J. McEntee Jr.
Vice President
EBE Communications Limited Partnership
400 Executive Drive, Suite 210
West Palm Beach, FL 33401
Fax: 407-640-7699
Phone: 407-640-3585
With a copy to:
Jerome S. Traum
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019-6076
Fax: 212-554-7700
Phone: 212-554-7813
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IF TO BUYER:
Mr. Frank D. Osborn
Osborn Communications Corporation
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
Any party may at any time change the place of receiving notice
by giving notice of such change to the other as provided herein.
10.11 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.
10.12 CONSENT TO JURISDICTION. Seller and Buyer hereby submit
to the nonexclusive jurisdiction of the courts of the State of New York
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.
10.13 FURTHER ASSURANCES. Seller and Buyer agree to execute
all such documents and take all such actions
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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.
10.14 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.
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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
EBE BROADCASTING, L.P.
By: Guild Radio Corporation, Inc.,
General Partner
By:
Name:
Title:
BUYER
BREADBASKET BROADCASTING CORPORATION
By:
Name:
Title:
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 1.7 hereof.
OSBORN COMMUNICATIONS CORPORATION
By:
Name:
Title:
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___________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of December 31, 1995
by and between
EBE COMMUNICATIONS LIMITED PARTNERSHIP
(Seller)
and
BREADBASKET BROADCASTING CORPORATION
(Buyer)
___________________________________________________________
<PAGE>
<PAGE>
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 Proration of Income and Expenses...............6
1.6 Allocation of Purchase Price...................6
1.7 Guaranty.......................................7
ARTICLE II CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION
2.1 Closing........................................7
2.2 Transactions at the Closing....................7
2.3 Termination...................................11
2.4 Default Payment...............................12
2.5 Operation of Station pursuant to the LMA......13
2.6 Risk of Loss..................................13
2.7 Interruption of Broadcast Transmissions.......13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Organization..............................14
3.2 Authority; No Conflict........................14
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.....................................19
3.10 Environmental.................................19
3.11 Intellectual Property.........................20
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.........23
3.20 Absence of Certain Changes....................23
3.21 Insolvency Proceedings........................24
3.22 Material Adverse Change.......................24
3.23 Investment Intent of Seller...................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation.............................25
4.2 Authority; No Conflict........................25
4.3 Consents......................................26
4.4 Litigation....................................26
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4.5 Compliance with Laws..........................26
4.6 Qualification.................................26
4.7 Stock.........................................26
ARTICLE V COVENANTS OF SELLER
5.1 Continued Operation of Station................27
5.2 Financial Obligations.........................27
5.3 Reasonable Access.............................27
5.4 Maintenance of Assets.........................27
5.5 Notification of Developments..................28
5.6 Payment of Taxes..............................28
5.7 Third Party Consents..........................28
5.8 Encumbrances..................................28
5.9 Assignment of Assets..........................28
5.10 Commission Licenses and Authorizations........28
5.11 Technical Equipment...........................29
5.12 Compensation Increases........................29
5.13 Sale of Broadcast Time........................29
5.14 Insurance.....................................29
5.15 Negotiations with Third Parties...............29
ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application........................29
6.2 Performance...................................30
6.3 Conditions....................................30
6.4 Confidentiality...............................30
6.5 Cooperation...................................30
6.6 Environmental Reports.........................30
6.7 Consents to Assignment........................31
6.8 Bulk Sales Laws...............................32
6.9 Employee Matters..............................32
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals..........................33
7.2 Assets of Station.............................33
7.3 Performance...................................35
7.4 Failure of Transfer...........................35
7.5 Representations and Warranties................35
7.6 Consents......................................35
7.7 No Litigation.................................35
7.8 Documents.....................................35
7.9 Disclosure Schedule...........................35
7.10 Opinions of Counsel...........................36
7.11 Ancillary Agreements..........................36
7.12 Simultaneous Closing..........................36
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance...................................36
8.2 Representations and Warranties................36
8.3 Government Approvals..........................36
8.4 Documents.....................................36
8.5 Opinion of Counsel............................37
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ARTICLE IX INDEMNIFICATION
9.1 Indemnification by Seller.....................37
9.2 Indemnification by Buyer......................38
9.3 Notification of Claims........................38
ARTICLE X MISCELLANEOUS
10.1 Assignment....................................39
10.2 Survival of Indemnification...................40
10.3 No Right of Reversion.........................40
10.4 Brokerage.....................................40
10.5 Expenses of the Parties.......................41
10.6 Entire Agreement..............................41
10.7 Headings......................................41
10.8 Governing Law.................................41
10.9 Counterparts..................................41
10.10 Notices.......................................41
10.11 Specific Performance..........................42
10.12 Consent to Jurisdiction.......................43
10.13 Further Assurances............................43
10.14 Public Announcements..........................43
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of this 31st
day of December, 1995 by and between EBE COMMUNICATIONS LIMITED
PARTNERSHIP, a Delaware limited partnership ("Seller"), and BREADBASKET
BROADCASTING 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 KNAX(FM), Fresno, California (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")
effective as of the 1st day of January 1996;
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 (as defined herein), 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.
(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
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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 KNAX(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 and easement interests in real property leased by Seller and
used by the Station, including all agreements, leases, grants of
easements 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 the Meadow Lakes Property as more particularly
described in Section 7.2 hereof 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 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").
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(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.
(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.
(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) ACCOUNTS RECEIVABLE. All accounts receivable of the
Seller through the date hereof with regard to the operation of the
Station prior to the Commencement Date of the LMA (as that term is
defined herein). Seller
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shall list its accounts receivable as of November 30, 1995 in Section 1.1(k)
of the Disclosure Schedule.
Buyer agrees to use commercially reasonable efforts to collect
Seller's accounts receivable with respect to radio station KFRE(AM) in
the ordinary and normal course of business for a period of one hundred
twenty (120) days after the date hereof (the "Collection Period") as
listed on Section 1.1(k) of the Disclosure Schedule, but shall not be
required to employ counsel or any collection agency or to initiate any
litigation or use any extraordinary means of collection. During the
Collection Period, amounts collected by Buyer for the account of Seller
shall be remitted to Seller within fifteen (15) days following the end of
each calendar month.
(l) 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) 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.
(c) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All
contracts described in Sections 1.1(f), (g) and (i) of the Disclosure
Schedule that are terminated or will have expired prior to the Closing
Date in the ordinary course of business.
(d) PENSION AND PROFIT-SHARING PLANS. All pension and
profit-sharing plans, trusts established thereunder and assets thereof,
if any, of Seller.
(e) OTHER EMPLOYEE BENEFIT PLANS. All other employee
benefit plans (including health insurance) of Seller and the assets
thereof.
(f) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS. All
employment agreements and collective bargaining agreements of Seller.
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(g) OTHER ASSETS. Those assets, if any, listed in
Section 1.2(g) of the Disclosure Schedule.
1.3 LIABILITIES TO BE ASSUMED. Except as otherwise provided
in this Section 1.3, Buyer assumes no liabilities or obligations of
Seller of any nature whatsoever, contingent or otherwise, except for (i)
amounts in respect of Seller's accounts payable with regard to the
Station as of the date hereof, (ii) Seller's trade liabilities as of the
date hereof, (iii) Seller's negative trade commitments as of the date
hereof and (iv) post-closing obligations related to Real Estate
Contracts, Contracts, Broadcasting Agreements and Trade Agreements (the
"Assumed Contracts") assigned to and specifically assumed by Buyer.
Seller shall provide (w) a calculation of the amount of its working
capital in Section 1.3 of the Disclosure Schedule, (x) a list of its
accounts payable through December 22, 1995 in Section 1.3(a) of the
Disclosure Schedule, (y) a list of its trade liabilities through December
22, 1995 in Section 1.3(b) of the Disclosure Schedule and (z) a list of
its negative trade commitments through December 22, 1995 in Schedule
1.3(c) of the Disclosure Schedule. On or prior to the Closing Date
Seller shall pay or else retain all debts, liabilities and other
obligations of Seller arising prior to the Closing Date and not assigned
to and specifically assumed by Buyer.
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:
(i) pay to Seller on the Closing Date, by wire transfer,
the sum of Four Million Dollars ($4,000,000.00) (the "Cash
Payment");
(ii) deliver certificates representing One Hundred Twenty
Thousand (120,000) Shares of Common Stock of Osborn
Communications Corporation ("Osborn"), the parent of Buyer (the
"Osborn Shares") (the Osborn Shares and the Cash Payment are
collectively referred to herein as the "Purchase Price");
(iii) grant an option to Seller to purchase Common Stock of
the Buyer at an exercise price of Eight Dollars ($8) per share
(the "Option"), exercisable on the third anniversary of the
Closing Date (or earlier in the event of the sale of the
Station by Buyer) (the Exercise Date"). The number of shares
that Seller is entitled to purchase may be calculated by
multiplying cash flow on the Exercise Date by ten and subtracting
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eight million from the product and then multiplying
five percent by the difference and dividing by eight, as
follows: cash flow x 10 - 8 million x .05 [divided by] 8 = number
of shares underlying the Option.
1.5 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 10.5 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(a)), 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, rents and similar prepaid deferred items attributable
to the ownership and operation of the Station.
(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. 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.
(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 an independent appraiser selected 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. Buyer and Seller shall
agree that
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the Purchase Price shall not be attributed to the transfer of
the Real Estate Contracts.
1.7 GUARANTY. In order to secure the obligations and
agreements of Buyer hereunder, Osborn hereby unconditionally, irrevocably
and absolutely guarantees to the Seller and its successors and assigns
for a period of two (2) years the full and punctual payment when due of
all amounts payable to the Seller by the Buyer in connection with the
indemnification, the Default Payment (as defined in Section 2.4) and
other obligations arising under this Agreement (the "Guaranteed
Obligations"), whether by default or otherwise. Upon failure by the
Buyer to pay when due any amount of the Guaranteed Obligations in
accordance with the terms of this Agreement, Osborn shall pay or cause to
be paid, on demand by the Seller, the amount not so paid at the place and
in the manner specified in this Agreement. Osborn agrees that this
Guaranty is a guaranty of payment and performance, and not of collection
only, and that Osborn's obligations under this Guaranty shall be primary,
absolute and unconditional.
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 the
offices of Paul, Weiss, Rifkind Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York 10019 at 10:00 a.m. on a mutually agreed
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:
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(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,
7.3 and 7.5;
(iii) a copy of the resolutions of the board of
directors of Seller's General Partner authorizing the execution,
delivery and performance of this Agreement and the agreements and
documents listed in Section 2.2 of the Disclosure Schedule, if any
(the "Ancillary Agreements"), and the consummation of the
transactions contemplated hereby and thereby, together with a
certificate of the Secretary of Seller's General Partner, 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 California), in proper statutory form for recording,
conveying each parcel of Owned Real Property;
(v) Buyer and Seller shall obtain, at Buyer's expense,
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 than taxes not
yet due and payable) and free and clear of title defects and other
exceptions to or exclusions from coverage other than those Title
Defects (as hereinafter defined in Section 3.7(a)) which, 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").
(vi) At Buyer's expense, a survey of each parcel of
Owned 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 in accordance with the minimum technical
standards of land surveying in California. The survey shall be
prepared in accordance with the
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Minimum Detail Standards for Land Title Survey of 1992 of the American
Title Association and American Congress on Surveying and Mapping. Each
such survey shall show (i) the courses and distances of all boundary
lines of such parcel (including, appurtenant easements), (ii) the location
of all Improvements situated on or above such parcel and on or above any
easements or rights of way affecting said parcel, (iii) all
encroachments of adjoining properties or improvements onto such
parcel, (iv) all encroachments of Improvements onto any adjoining
property, (v) the location of all easements and other rights
burdening such parcel and all encroachments of Improvements onto the
areas of such easements, (vi) the location of all roadways, alleys,
rights of way and the like affecting such parcel, (vii) all access
ways from such parcel to public streets and (viii) such other facts
and conditions affecting such parcel as are appropriate, or as may
have been reasonably requested by Buyer, to be shown on such survey.
Each such survey shall otherwise be in form satisfactory to counsel
for Buyer.
(vii) all real property transfer tax returns and other
similar filings and all associated transfer tax costs 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.
(viii) 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.
(ix) 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;
(x) the Ancillary Agreements, duly executed by Seller
as appropriate;
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(xi) the originals of all written consents of the
respective lessors, landowners, grantors 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;
(xii) evidence satisfactory to Buyer's counsel that no
financing statements are outstanding on the Station Assets;
(xiii) all files, records, logs, and program materials
relating to the Station;
(xiv) the opinion of counsel for Seller, dated the
Closing Date, as described in Section 7.10;
(xv) assignments to Buyer of all the Contracts and
Real Estate Contracts in form satisfactory to Buyer;
(xvi) a current estoppel certificate from the Landlord
under each Real Property Contract in form satisfactory to counsel to
Buyer; and
(xvii) 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;
(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
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(vi) an Agreement of Assumption of Liabilities and
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 six (6) months from the date the
notice of filing of 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
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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 pursuant to
this Section, the parties shall be released and discharged from any
further obligation hereunder.
(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.
2.4 DEFAULT PAYMENT. In the event this Agreement is
terminated due to Buyer's default or failure to close, Buyer shall pay
Seller an amount (the "Default Payment") equal to all accrued interest
payable in respect of that certain Amended and Restated Loan Agreement
between Seller and State Street Bank and Trust Company dated as of
November 3, 1989, as amended by a First Amendment dated as of August 4,
1992, a Forbearance Agreement dated as of March 13, 1995 and an Amended
and Restated Forbearance Agreement dated as of October 24, 1995
(collectively, the "Loan Agreement"), for the LMA Term (as defined in Section
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2.5(a) herein); PROVIDED, HOWEVER, that such amount shall not
exceed the value of six months of accrued interest payable under the Loan
Agreement.
2.5 OPERATION OF STATION PURSUANT TO THE LMA. Notwithstanding
any provision to the contrary in this Agreement:
(a) As of January 1, 1996 (the "Commencement Date"), and
until the consummation of the transactions contemplated by, or the
termination of, this Agreement (the "LMA Term") 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.
2.6 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 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.
2.7 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
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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 ORGANIZATION. Seller is a limited partnership duly
organized and in good standing under the laws of the State of Delaware,
and is duly qualified to do business in the State of California. The
Seller's general partner 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 the State of California. Seller has
the power and authority to own and 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 all necessary partnership action by Seller.
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 Partnership Agreement or Certificate
of Limited Partnership 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 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
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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 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, regulations, requirements,
policies and orders of the Commission, would disqualify Seller as
assignor, and Buyer as assignee, in connection with the Assignment
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, policies and
orders 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,
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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 the Owned Real Property is
assessed 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) As of the date hereof, Seller does not own any fee
title to real property as described on Section 1.1(d) of the Disclosure
Schedule (hereinafter 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
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all the Real Estate Contracts. Seller holds the leasehold interest and or the
grantee interest, as applicable, 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 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 such
Real Estate Contract. Seller shall use best efforts to obtain valid and
binding third-party consents 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, enforceability and
continuity of any of the Real Estate Contracts. To the
best of Seller's knowledge, Seller is in compliance with all its
obligations under the Real Estate Contracts.
(c) Entire Premises. All of the land, buildings,
structures and other improvements used by Seller in the conduct of the
Business are included in the Real Estate Contracts.
(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 free of structural
defects and are in good working order and repair. All water, gas,
electrical, steam, compressed air, 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 so-called hook-up fees or
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other associated charges have been fully paid, ordinary wear and tear excepted.
(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.
(i) Encroachments. There are no encroachments or other
facts or conditions affecting any parcel of Real Property which would,
individually or in the aggregate, (i) interfere in any material respect
with, or materially increase the cost of, the use, occupancy or operation
thereof as currently used, occupied and operated or as intended to be
used, occupied and operated, (ii) materially reduce the fair market value
thereof below the fair market value such parcel would have had but for
such encroachment or other fact or condition. To the best of Seller's
knowledge, no portion of any Improvement encroaches upon any property not
included within the Real Property or upon the area of any easement
affecting the Real Property.
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,
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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) of
the Disclosure Schedule 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 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.
Subject to obtaining any required consents, 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
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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 1.1(e) of the Disclosure
Schedule is a true and complete list of all the Intellectual Property.
The 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 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 applicable to the Station 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 Seller 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 3.14 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 3.15 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
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applicable statute, rule, regulation, requirement, policy or order (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,
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 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 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.
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3.19 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, 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 $5,000;
(j) The disposition, lapse or termination of any
Intellectual Property;
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(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 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; or
(n) Any change in any method of accounting or accounting
practice used by 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.
3.22 MATERIAL ADVERSE CHANGE. (a) Between November 30, 1995
and the date hereof there has been no change in the manner in which
Seller conducts its business with respect to working capital and there
has not been a material adverse change in the assets of Seller other than
changes in the ordinary and usual course of business consistent with past
practice.
(b) Between December 22, 1995 and the date hereof there
has not been a material adverse change in the liabilities of Seller other
than changes in the ordinary and usual course of business consistent with
past practice.
3.23 INVESTMENT INTENT OF SELLER. Seller acknowledges that it
understands that the Osborn Shares to be purchased by it hereunder will
not be registered under the Securities Act of 1933 (the "Securities Act")
in reliance upon the exemption afforded by Section 4(2) thereof for
transactions by an issuer not involving any public offering, and will not
be registered or qualified under any applicable state securities laws.
Seller represents that (i) it is acquiring the Osborn Shares for
investment only and without any view toward distribution thereof, and it
will not sell or otherwise dispose of such Osborn Shares except in
compliance with the registration requirements or exemption provisions of
the Securities Act and any applicable state securities laws, (ii) its economic
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circumstances are such that it is able to bear all risks of the
investment in the Osborn Shares for an indefinite period of time,
including the risk of a complete loss of its investment in the Osborn
Shares, (iii) it has knowledge and experience in financial and business
matters sufficient to evaluate the merits and risks of investment in the
Osborn Shares and has had access to, or has been furnished with, all such
information as it has considered necessary, (iv) it has consulted with
its own counsel and tax advisor, to the extent deemed necessary by it, as
to all legal and taxation matters covered by this Agreement and has not
relied upon Buyer for any explanation of the application of the various
United States or state securities laws or tax laws with regard to its
acquisition of the Osborn Shares and (v) in making any subsequent
offering or sale of the securities the undersigned will be acting only
for itself and not as part of a sale or planned distribution that would
be in violation of the Securities Act. Seller further acknowledges and
represents that it has made its own independent investigation of Osborn
and the business conducted by Osborn. Seller is an "accredited investor"
as that term is defined in Regulation D promulgated under the Securities
Act.
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 California.
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
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(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, the Ancillary Agreements to which it is a party
or any of the agreements or actions contemplated thereby.
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 which
would disqualify Buyer from being the assignee of the Licenses and the
other Station Assets.
4.7 STOCK. The Osborn Shares to be delivered by Buyer on the
Closing Date consists of shares of Common Stock which have been duly
authorized and validly issued
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and are fully paid and non-assessable. Said shares are not subject to
preemptive rights of any shareholder and shall be issued or transferred
to Seller free of adverse claim.
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
$5,000 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
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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, including the Real Property.
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 respect to the Licenses at
the Commission or any other applicable governmental authority.
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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 30 days' 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.
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.
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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.
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
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relating to Hazardous Waste; (ii) the real property subject to Real Estate
Contracts is not subject to any federal, state or local "superfund" or "Act
307" 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 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 Phase I 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. Except for the Real Estate
Contracts, to the extent that any Contract, Broadcast Agreement, Trade
Agreement 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.
Except for any consents required pursuant to a Real Estate Contract, 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
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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 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.
6.9 EMPLOYEE MATTERS.
(a) 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 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. Except as expressly provided in
paragraph (b) below, Buyer shall assume no liability under an employment
agreement or severance agreement entered into or maintained by Seller
with respect to current or former employees of the Station. Except as
otherwise required by applicable law, employees of the Station who become
employees of Buyer shall cease to participate in the employees benefit
plans of Seller as of the date of hire by Buyer and Buyer shall have no
liability with respect thereto.
(b) Notwithstanding the foregoing, in the event Buyer
terminates the employment of Rita Walls or Laura Eaton during the LMA
Term, Buyer shall be responsible for the severance payments due to each
such person under the terms of the employment agreements, dated August
14, 1995, between Seller and Rita Walls and Seller and Laura Eaton,
respectively; PROVIDED, HOWEVER, that the Cash Payment shall be reduced
by the amount of any such payments made by Buyer. In the event Buyer
terminates the employment of the persons listed in Section 3.13 of the
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Disclosure Schedule during the LMA Term, other than Ms. Walls and Ms.
Eaton, Buyer shall be responsible for the severance payments due to each
such person under the terms of the employment agreements entered into
between Seller and each such employee, attached to Section 3.13 of the
Disclosure Schedule, and no adjustment to the Cash Payment shall be made.
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 and become Final Orders. 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 California, and shall be unimpaired
by any acts or omissions of Seller or Seller's employees or agents.
7.2 ASSETS OF STATION.
(a) The transmitter building, FM tower, transmitter
equipment and telephone equipment shall have been transferred to Seller
by Michelle Leasing II and Meadow Lakes Tower Company, Inc. and
including, without limitation, that property leased by Meadow Lakes Tower
Company, Inc., as lessor, to Seller, as lessee, pursuant to that certain
lease dated April 1, 1992 (the "Meadow Lakes Property") and Michelle
Leasing II, and all terms, conditions and covenants to be complied with
or performed by Seller and Meadow Lakes Tower Company, Inc. and Michelle
Leasing II in respect thereof 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.
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(b) A special warranty deed (or its equivalent in the
State of California), in proper statutory form for recording, conveying
each parcel of Owned Real Property to Buyer;
(c) Buyer and Seller shall obtain, at Buyer's expense,
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 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 Schedule
B standard pre-printed exceptions (other than taxes not yet due and
payable) and free and clear of title defects and other exceptions to or
exclusions from coverage other than the Permitted Owned Real Property
Exceptions.
(d) Buyer and Seller shall obtain, at Buyer's expense, a
survey of each parcel of Owned 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 in accordance with the minimum
technical standards of land surveying in California. The survey shall be
prepared in accordance with the Minimum Detail Standards for Land Title
Survey of 1992 of the American Title Association and American Congress on
Surveying and Mapping. Each such survey shall show (i) the courses and
distances of all boundary lines of such parcel (including, appurtenant
easements), (ii) the location of all Improvements situated on or above
such parcel and on or above any easements or rights of way affecting said
parcel, (iii) all encroachments of adjoining properties or improvements
onto such parcel, (iv) all encroachments of Improvements onto any
adjoining property, (v) the location of all easements and other rights
burdening such parcel and all encroachments of Improvements onto the
areas of such easements, (vi) the location of all roadways, alleys,
rights of way and the like affecting such parcel, (vii) all access ways
from such parcel to public streets and (viii) such other facts and
conditions affecting such parcel as are appropriate, or as may have been
reasonably requested by Buyer, to be shown on such survey. Each such
survey shall otherwise be in form satisfactory to counsel for Buyer. The
survey shall be delivered to Buyer at least thirty (30) days prior to the
Closing Date. Buyer shall within fourteen (14) 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. If Seller does not remove such
defects, Buyer may elect to terminate this Agreement.
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7.3 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.
7.4 FAILURE OF TRANSFER. Notwithstanding any other provision
in this Agreement to the contrary, in the event that any law, regulation
or official policy prevents the transfer or assignment of the Station
Assets from Seller to Buyer or any Buyer affiliate, the parties shall
have amended this Agreement and/or executed such supplemental agreements,
as necessary, to achieve for both Buyer and Seller, to the maximum extent
possible, the benefits of the transactions contemplated by this Agreement
and the Ancillary Agreements in a manner consistent with applicable law.
7.5 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.
7.6 CONSENTS. Seller shall have received all consents
(including landlord and grantor consents for the studio and tower sites)
specified in Section 3.8 of the Disclosure Schedule.
7.7 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.
7.8 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.
7.9 DISCLOSURE SCHEDULE. Seller shall have delivered to Buyer
each Section of the Disclosure Schedule required of it herein and the
information contained therein
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shall be in form and content reasonably satisfactory to Buyer.
7.10 OPINIONS OF COUNSEL. Seller shall have delivered to Buyer
an opinion of Moses & Singer, counsel to Seller, addressed to Buyer and
substantially 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
substantially in the form attached hereto as Exhibit B.
7.11 ANCILLARY AGREEMENTS. Buyer and Seller shall have entered
into the Ancillary Agreements, if any, on terms and conditions
satisfactory to Buyer.
7.12 SIMULTANEOUS CLOSING. The Closing shall occur
simultaneously with the closing of the transactions contemplated by that
certain Asset Purchase Agreement by and between EBE Broadcasting L.P. and
Buyer dated of even date herewith.
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
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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 substantially in the form attached hereto as
Exhibit C.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. From and after the Closing
Date, Seller agrees to and shall indemnify, defend and hold Buyer
harmless, and 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.
Anything in this Section 9.1 to the contrary notwithstanding,
Buyer shall be entitled to indemnity only
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to the extent that all damages exceed an aggregate of $25,000.
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 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.
Anything in this Section 9.2 to the contrary notwithstanding,
Seller shall be entitled to indemnity only to the extent that all damages
exceed an aggregate of $25,000.
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
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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
assume the defense of such third party claim or demand and to employ counsel
reasonably 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 at
its own expense. Notwithstanding the foregoing, the Indemnified Party shall
have the right to employ separate counsel at the Indemnifying Party's
expense and to control its own defense if in the reasonable opinion of
counsel to such Indemnified Party a conflict or potential conflict exists
between the Indemnifying Party and such Indemnified Party that would make
such separate representation necessary. 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 Indemnifying Party
shall not settle or compromise such claim or demand with respect to the
Indemnified Party without the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld). 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 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
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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 PROVIDED, FURTHER, that Seller may assign its
right to the Default Payment under Section 2.4 hereunder to State Street
Bank and Trust Company when, as, and if such payment becomes due.
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 (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 of three (3) years following the date
hereof.
10.3 NO RIGHT OF REVERSION. Buyer and Seller represent and
warrant to each other that upon the consummation of the transactions
contemplated herein and the assignment to Buyer of the Licenses and
authorizations, Seller shall retain no right of reversion of the Licenses
and authorizations, no right to a reassignment of the Licenses and
authorizations in the future, and reserve no right to use the facilities
of the Station for any period whatsoever.
10.4 BROKERAGE. Seller and Buyer warrant and represent to one
another that, with the exception of Exline Media Broker Consultants
(William Exline) broker for the Seller, there has been no broker in any way
involved in the transactions contemplated hereby and that no one other than
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Exline Media Broker Consultants (William Exline) 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 Exline Media
Broker Consultants (William Exline).
10.5 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.
10.6 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.
10.7 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.
10.8 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of New York.
10.9 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.
10.10 NOTICES. Any notices or other communications shall be in
writing and shall be considered to have been duly given when deposited
into first class,
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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:
William J. McEntee Jr.
Vice President
EBE Communications Limited Partnership
400 Executive Drive, Suite 210
West Palm Beach, FL 33401
Fax: 407-640-7699
Phone: 407-640-3585
With a copy to:
Jerome S. Traum
Moses & Singer LLP
1301 Avenue of the Americas
New York, NY 10019-6076
Fax: 212-554-7700
Phone: 212-554-7813
IF TO BUYER:
Mr. Frank D. Osborn
Osborn Communications Corporation
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
Any party may at any time change the place of receiving notice
by giving notice of such change to the other as provided herein.
10.11 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
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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.
10.12 CONSENT TO JURISDICTION. Seller and Buyer hereby submit
to the nonexclusive jurisdiction of the courts of the State of New York
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.
10.13 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.
10.14 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.
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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
EBE COMMUNICATIONS LIMITED PARTNERSHIP
By: Guild Radio Corporation, Inc.,
General Partner
By:
Name:
Title:
BUYER
BREADBASKET BROADCASTING CORPORATION
By:
Name:
Title:
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 1.7 hereof.
OSBORN COMMUNICATIONS CORPORATION
By:
Name:
Title:
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OPTION AGREEMENT
by and between
RKZ TELEVISION, INC.
and
ALLBRITTON COMMUNICATIONS COMPANY
dated as of December 21, 1995
TABLE OF CONTENTS
Page
ARTICLE 1 GRANT OF THE OPTION; EXERCISE OF THE OPTION 2
Section 1.1. Grant of Option 2
Section 1.2. Schedules and Due Diligence Review 2
Section 1.3. Payment of Option Amount 2
Section 1.4. Exercise of the Option 2
ARTICLE 2 SUPPLEMENTAL AMOUNT 4
Section 2.1. Relocation of Transmitter Site 4
Section 2.2. Construction of Tower 4
Section 2.3. Payment of Supplemental Amount 4
Section 2.4. Termination of Obligation to Pay Supplemental
Amount 5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF
GRANTOR 5
Section 3.1. Incorporation; Authorization; etc. 5
Section 3.2. Consents and Approvals 6
Section 3.3. Financial Statements 6
Section 3.4. Brokers, Finders, etc. 6
Section 3.5. Representations and Warranties in the Purchase
Agreement 7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ACC 7
Section 4.1. Incorporation; Authorization; etc 7
Section 4.2. Consents and Approvals 7
Section 4.3. Brokers, Finders, etc 7
Section 4.4. Representations and Warranties in the Purchase
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Agreement 8
ARTICLE V ADDITIONAL AGREEMENTS 8
Section 5.1. Due Diligence Review 8
Section 5.2. Delivery of Schedules 8
Section 5.3. Operation of the Station 8
Section 5.4. Additional Deliveries of Grantor 8
Section 5.5. Additional Deliveries of ACC 9
Section 5.6. Confidentiality 9
Section 5.7. Non-solicitation of Employees 9
ARTICLE 6 CREDIT OR REFUND OF OPTION AMOUNT;
TERMINATION 10
Section 6.1. Credit for Option Amount and Supplemental Amount 10
Section 6.2. Termination 10
ARTICLE 7 GENERAL PROVISIONS 10
Section 7.1. Survival of Representations 10
Section 7.2. Agreement of Grantor to Indemnify 10
Section 7.3. Agreement of ACC to Indemnify 11
Section 7.4. Specific Performance 11
Section 7.5. Remedies Cumulative 11
ARTICLE 8 GENERAL PROVISIONS 12
Section 8.1. Expenses 12
Section 8.2. Notices 12
Section 8.3. Public Announcements 13
Section 8.4. Headings 13
Section 8.5. Severability 13
Section 8.6. Entire Agreement 13
Section 8.7. Successors and Assigns 13
Section 8.8. Third-Party Beneficiaries 14
Section 8.9. Amendment; Wavier 14
Section 8.10. Governing Law 14
Section 8.11. Jurisdiction and Forum 14
Section 8.12. Counterparts 15
Section 8.13. Osborn Guaranty 15
THIS OPTION AGREEMENT (the "Option Agreement") is made this
21st day of December, 1995, by and between Allbritton Communications Company,
a Delaware corporation, or its designated affiliate (collectively, "ACC") and
RKZ Television, Inc., a Delaware corporation ("Grantor").
W I T N E S S E T H:
WHEREAS, Grantor owns and operates television broadcast station
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WJSU-TV, Channel 40, Anniston, Alabama, together with certain auxiliary
facilities (the "Station");
WHEREAS, ACC and Grantor are entering into a Time Brokerage
Agreement as of the date hereof (the "Time Brokerage Agreement") pursuant to
which ACC agrees to provide programs, and Grantor agrees to broadcast such
programs on the Station, in conformance with the Time Brokerage Agreement and
the rules, regulations and policies of the Federal Communications Commission
("FCC");
WHEREAS, ACC is willing to enter into the Time Brokerage Agreement only
upon the condition that Grantor enters into this Option Agreement pursuant to
which Grantor grants to ACC the option to acquire the assets of the Station from
the Grantor for the Purchase Price as set forth in the Purchase Agreement (as
defined herein) and in accordance with and subject to the terms and conditions
set forth herein;
WHEREAS, ACC shall pay the Option Amount (as defined herein) to
Grantor on or before January 15, 1996, subject to a satisfactory due diligence
review by ACC of the Station and the Assets of the Station; and
WHEREAS, capitalized terms used herein but not defined shall have the
meanings ascribed to such terms in the form of Asset Purchase Agreement attached
hereto as Exhibit A and incorporated herein by reference (the "Purchase
Agreement").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE 1.
GRANT OF THE OPTION; EXERCISE OF THE OPTION
Section 1.1. Grant of Option. Grantor hereby grants to ACC the
irrevocable right and option (the "Option"), but not the obligation, to acquire
the assets of the Station from Grantor, upon the terms and subject to the
conditions set forth herein and in the Purchase Agreement.
Section 1.2. Schedules and Due Diligence Review. On or before December
31, 1995, the Grantor shall deliver to ACC and ACC's counsel schedules, which
shall be complete and accurate in all material respects (together with copies of
the documents referred to therein) identified on Exhibit B hereto regarding the
Station and the assets of the Station (collectively, the "Schedules"). Grantor
shall
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prepare the Schedules in compliance with the terms and conditions of the
Purchase Agreement. Upon receipt, ACC shall promtly review the Schedules and
shall conduct its due diligence review of the Station and the assets of the
Station (collectively, the "Diligence Review") until the later to occur of
December 31, 1995 or four (4) business days after ACC's receipt of the Schedules
(the "Commitment Date").
Section 1.3. Payment of Option Amount. In the event that on or before
the Commitment Date ACC is satisfied with the Diligence Review, ACC agrees to
pay to Grantor on or before January 15, 1996, the sum of Ten Million Dollars
($10,000,000) (the "Option Amount") (the date of such payment is hereafter
referred to as the "Commencement Date"). In the event that ACC provides written
notice to Grantor on or before the Commitment Date that ACC is not in its good
faith reasonable business judgment satisfied with the Diligence Review because
(a) Grantor has failed to deliver material information which had been reasonably
and timely requested by ACC, or (b) ACC has learned of a material adverse
disclosure regarding the business, assets, liabilities, results of operations,
business conditions (financial or otherwise) or properties of the Station (the
"Business Condition"), ACC shall have no obligation to pay the Option Amount to
Grantor, the Option and this Option Agreement shall terminate and neither party
hereto shall have any further liabilities or obligations hereunder.
Section 1.4. Exercise of the Option. ACC may exercise the Option at any
time prior to the tenth anniversary of the date of this Option Agreement (the
"Option Term") by delivering written notice of exercise thereof to Grantor. Upon
receipt of such notice, the Grantor, ACC and the Guarantor (as defined herein)
shall immediately enter into the Purchase Agreement and the Grantor shall
provide to ACC updates of the Schedules (the "Updated Schedules") within 15 days
following the execution of the Purchase Agreement. In the event that the Updated
Schedules contain materially adverse disclosures regarding the Business
Condition, ACC may terminate the Purchase Agreement and pursue any and all legal
and equitable remedies against Grantor.
ARTICLE 2.
SUPPLEMENTAL AMOUNT
Section 2.1. Relocation of Transmitter Site. Grantor agrees to use its
reasonable best efforts to obtain authorization from the FCC and the Federal
Aviation Administration ("FAA") to relocate the Station's antenna tower and
related transmitter facilities (collectively, the "Station Tower") to one of the
following locations (the "Transmitter Site"): (a) to the site presently
specified in Grantor's pending application on FCC Form 301, filed on August 8,
1995 (FCC File No. BPCT-950808KF) (the "Modification Application"), or (b) such
other site which is reasonably acceptable to ACC and which places a predicted
city grade contour over at least part of the presently incorporated city limits
of Birmingham, Alabama (the "Birmingham Limits"). Grantor shall (a) pay all
preliminary costs necessary to
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acquire access and/or ownership of the Transmitter Site, (b) complete the
engineering and FAA studies necessary for the Transmitter Site, (c) obtain all
federal, state, and local governmental approvals necessary for the relocation,
which approvals shall no longer be subject to judicial or administrative review
(collectively, the "Governmental Approvals"), and (d) pay all costs incurred in
connection with obtaining the Governmental Approvals.
Section 2.2. Construction of Tower. Following receipt of all
Governmental Approvals, ACC shall construct the Station Tower at the Transmitter
Site as authorized by the FCC and the FAA and abiding by the specifications of
any construction permits issued to Grantor. ACC shall own all assets acquired in
connection with the construction of the Station Tower, and shall grant to the
Grantor a license to use the Station Tower for the operation of the Station, for
a fee of one dollar ($1.00) per year, until the earlier to occur of the
following: (a) the Closing under the Purchase Agreement, (b) the termination of
the Purchase Agreement, or (c) the termination of the Option Agreement. If, upon
termination of such license, Grantor remains the initial Licensee of the
Station, ACC and Grantor shall enter into a lease on commercially reasonable
terms for Grantor's continued use of the Station Tower for operation of the
Station.
Section 2.3. Payment of Supplemental Amount.
(a) Upon receipt of all Governmental Approvals (the "Approval Date"),
the sum of Seven Million Dollars ($7,000,000) shall be payable by ACC to Grantor
as a supplemental payment in accordance with the terms of this Section 2.3 (the
"Supplemental Amount"). In the event that Grantor remains the owner and operator
of the Station on the Approval Date, ACC agrees to pay to Grantor Five Million
Dollars ($5,000,000) of the Supplemental Amount on the Approval Date and pay the
balance of Two Million Dollars ($2,000,000) of the Supplemental Amount upon the
Closing of the Purchase Agreement. In the event that ACC (or its assignee) has
become the owner and operator of the Station on the Approval Date, ACC shall pay
to Grantor the Supplemental Amount in full on the Approval Date.
(b) In the event that the area within the Birmingham Limits encompassed
by the predicted city grade contour of the Station, as approved and authorized
by the FCC, from the Station Tower at the Transmitter Site (the "Authorized
Contour Area") is less than the area within the Birmingham Limits encompassed by
the predicted city grade contour presently proposed in the Modification
Application (the "Proposed Contour Area"), the Supplemental Amount shall be
reduced to equal the amount which is the product of (i) Seven Million Dollars
($7,000,000) multiplied by (ii) the fraction of which the numerator is the
Authorized Contour Area and the denominator is the Proposed Contour Area. In the
event that the Supplemental Amount is reduced in accordance with the preceding
sentence, all partial payments of the Supplemental Amount shall also be reduced
pro rata. 2.4. Termination of Obligation to Pay Supplemental Amount. In the
event that Grantor has not obtained all Governmental Approvals within
forty-eight (48) months of the Commencement Date, ACC shall have the right by
written notice
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to Grantor to terminate all of ACC's obligations under this Article 2 and
neither party hereto shall have any further liabilities or obligations under
this Article 2.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF GRANTOR
Grantor represents and warrants to ACC as follows:
Section 3.1. Incorporation; Authorization; etc. Grantor is a corporation
validly existing and in good standing under the laws of the State of Delaware,
and Grantor has full corporate power to execute and deliver this Option
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Option
Agreement and the Purchase Agreement, the performance of Grantor's obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby by Grantor have been duly and validly authorized by the board
of directors of Grantor and no other corporate proceedings or actions on the
part of Grantor, its board of directors or stockholders are necessary therefor.
The execution, delivery and performance of this Option Agreement and the
Purchase Agreement by Grantor will not (a) conflict with or violate any law,
order, award, judgment, injunction or decree applicable to Grantor, the Assets
or the Station or by which any of the Assets or the Station is subject or
affected, (b) conflict with or result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
of any Contract to which Grantor is a party or by which Grantor is bound or to
which any of the Assets or the Station is subject or affected, or result in the
acceleration of any indebtedness or in the creation of any Encumbrance upon the
Assets, or (c) conflict with or violate the articles of incorporation, bylaws or
any related organizational documents of Grantor. This Option Agreement has been
duly executed and delivered by Grantor, and, assuming the due execution hereof
by ACC, this Option Agreement constitutes the legal, valid and binding
obligation of Grantor.
Section 3.2. Consents and Approvals. Except for the consent of Society
National Bank, the execution and delivery of this Option Agreement do not and
will not require any consent, approval, exemption, authorization or other action
by, or filing with or notification to any Government Authority or any other
person, except that the Option Agreement shall be filed with the FCC within
thirty (30) days from the date hereof.
Section 3.3. Financial Statements. Grantor has prepared and shall
furnish to ACC the unaudited balance sheets of Grantor as of the end of the
fiscal year ending in each of 1992, 1993, and 1994 and unaudited statements of
income. Grantor also has prepared and shall furnish to ACC the unaudited balance
sheets of Grantor as of the end of each month of Grantor ending after November
30, 1995, and unaudited statements of income for the respective months then
ended. All of
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the financial statements, including, without limitation, the notes thereto,
referred to in this Section: (a) are in accordance with the books and records of
the Grantor, (b) present fairly the consolidated financial position of the
Grantor as of the respective dates and the results of operations and changes in
financial position for the respective periods indicated, and (c) have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior accounting periods.
Section 3.4. Brokers, Finders, etc.. Grantor has not employed, and is
not subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated hereby who would
have a valid claim for a fee or commission from ACC in connection with such
transactions. Grantor has employed the services of Alex Brown & Co. as broker
and shall be solely responsible for its fees in connection therewith.
Section 3.5. Representations and Warranties in the Purchase Agreement.
Grantor hereby makes all of the representations and warranties of the "Seller"
set forth in Article 3 of the Purchase Agreement for the benefit of ACC and all
such representations and warranties are (a) true and correct as of the date
heref, and (b) incorporated herein by reference in their entirety.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ACC
ACC represents and warrants to Grantor as follows:
Section 4.1. Incorporation; Authorization; etc. ACC is a corporation
validly existing and in good standing under the laws of the State of Delaware,
and ACC has full corporate power to execute and deliver this Option Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Option Agreement, the
performance of ACC's obligations hereunder and the consummation of the
transactions contemplated hereby by ACC have been duly and validly authorized by
the board of directors of ACC and no other corporate proceedings or actions on
the part of ACC, its board of directors or stockholders are necessary therefor.
The execution, delivery and performance under this Option Agreement by ACC will
not (a) conflict with or violate any law, order, award, judgment, injunction or
decree applicable to ACC, (b) conflict with or result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) of a contract to which ACC is bound, or (c) conflict
with or violate the articles of incorporation, bylaws or any related
organizational documents of ACC. This Option Agreement has been duly executed
and delivered by ACC, and, assuming the due execution hereof by Grantor, this
Option Agreement constitutes the legal, valid and binding obligation of ACC,
enforceable against ACC in accordance with its terms.
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Section 4.2. Consents and Approvals. The execution and delivery of this
Option Agreement do not and will not require any consent, approval, exemption,
authorization or other action by, or filing with or notification to any
Government Authority or any other person, except that the Option Agreement shall
be filed with the FCC within thirty (30) days from the date hereof.
Section 4.3. Brokers, Finders, etc. ACC has not employed, and is not
subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated hereby who would
have a valid claim for a fee or commission from ACC in connection with such
transactions.
Section 4.4. Representations and Warranties in the Purchase Agreement.
ACC hereby makes all of the representations and warranties of the "Buyer" set
forth in Article 4 of the Purchase Agreement for the benefit of Grantor and all
such representations and warranties are (a) true and correct as of the date
heref, and (b) incorporated herein by reference in their entirety.
ARTICLE 5.
ADDITIONAL AGREEMENTS
Section 5.1. Due Diligence Review. Grantor covenants and agrees to
provide ACC and ACC's authorized representatives (a) full and complete access
upon reasonable notice during normal business hours to Grantor's properties,
books, records, contracts, commitments, facilities, premises, and equipment and
to Grantor's respective directors, officers and employees, agents and
representatives, and (b) all such other information and copies of documents as
ACC may reasonably request, concerning Grantor, the operation of the Station and
the Assets of the Station, and the Station's customers and suppliers. Grantor
covenants and agrees to permit Buyer's consulting engineers and other
representatives, agents, employees and independent contractors, at Buyer's
expense, to conduct engineering and other inspections of the Station and the
assets of the Station.
Section 5.2. Delivery of Schedules. Grantor covenants and agrees to
deliver to ACC and ACC's counsel the Schedules on or before December 31, 1995.
Grantor further covenants and agrees that the Schedules shall be true, complete
and accurate as of the date hereof.
Section 5.3. Operation of the Station. From and after the date of this
Option Agreement, Grantor agrees to comply with and be bound by the covenants
and agreements regarding operation of the Station set forth in Section 7 of the
Purchase Agreement and such covenants and agreements are incorporated herein by
reference in their entirety. Grantor agrees to keep ACC fully apprised of all
material developments with respect to the Station and the Grantor.
Section 5.4. Additional Deliveries of Grantor. In addition to the other
things required to be done hereby, Grantor shall deliver, or cause to be
delivered, as
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of the date hereof, to ACC the following: (a) a copy of the resolutions of the
board of directors of Grantor, authorizing the execution, delivery and
performance hereof by Grantor, and a certificate of its secretary or assistant
secretary, dated as of the date hereof, that such resolutions were duly adopted
and are in full force and effect, and (b) such other certificates, instruments
and documents as may be reasonably requested by ACC to carry out the provisions
hereof and give effect to the transactions contemplated hereby.
Section 5.5. Additional Deliveries of ACC. In addition to the payment of
the Option Amount and the other things required to be done hereby, ACC shall
deliver, or cause to be delivered, as of the date hereof, to Grantor the
following: (a) a copy of the resolutions of the board of directors of ACC,
authorizing the execution, delivery and performance hereof by ACC, and a
certificate of ACC's secretary or assistant secretary, dated as of the date
hereof, that such resolutions were duly adopted and are in full force and
effect, and (b) such other certificates, instruments and documents as may be
reasonably requested by Grantor to carry out the provisions hereof and give
effect to the transactions contemplated hereby.
Section 5.6. Confidentiality. ACC shall maintain strict confidentiality
with respect to all documents and information furnished to ACC by or on behalf
of Grantor; provided, however, that ACC shall have no such obligations with
respect to confidential information that (a) is a matter of public knowledge or
(b) has been or is hereafter publicly disclosed other than by or through ACC. In
the event the Option Agreement is terminated, ACC will return to Grantor all
copies in its possession of documents, drafts, work papers, and other material
prepared or furnished by Grantor relating to the transactions contemplated
hereunder, whether obtained before or after the execution of the Option
Agreement and the agreements and instruments called for hereunder.
Section 5.7. Non-solicitation of Employees. In the event that ACC
terminates the Option pursuant to Section 1.3 of this Option Agreement, ACC
agrees that it will not solicit for hire or hire any employee of Grantor for a
period of one (1) year from the date hereof.
Section 5.8. Delivery of Bank Consent. Grantor shall obtain written
consent of Society National Bank in connection with the Grantor's execution,
delivery and performance of the Time Brokerage Agreement, the Purchase Agreement
and this Option Agreement. Grantor covenants and agrees to deliver to ACC and
ACC's counsel a copy of such consent within three (3) business days from the
date hereof.
ARTICLE 6. CREDIT OF OPTION AMOUNT AND SUPPLEMENTAL AMOUNT; TERMINATION
Section 6.1. Credit for Option Amount and Supplemental Amount. In
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the event the Option is exercised pursuant to Section 1.4, the Option Amount and
any portion of the Supplemental Amount paid to Grantor (collectively, the
"Reimbursable Amounts") shall be credited to the payment of the Purchase Price
pursuant to terms and conditions of the Purchase Agreement.
Section 6.2 Termination. Without limiting any rights of ACC set forth in
Article 7, ACC shall have the right to terminate this Option Agreement upon the
occurrence of any of the following events:
(a) any representation or warranty of Grantor contained in Article 3
hereof shall fail to be true and correct in all material respects; or
(b) Grantor shall fail to comply in any material respect with any
covenant or obligation applicable to it set forth in this Option Agreement, the
Time Brokerage Agreement or the Purchase Agreement.
ARTICLE 7.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS; REMEDIES
Section 7.1. Survival of Representations. All representations and
warranties made by any party in this Option Agreement or pursuant hereto shall
survive the date hereof for a period of two (2) years, provided that Sections
3.13 and 3.15 of the Purchase Agreement, as incorporated by reference herein in
Section 3.5, shall survive the date of this Option Agreement for a period equal
to the applicable statute of limitations and Section 3.05(b) of the Purchase
Agreement shall survive without limitation as to time.
Section 7.2 Survival of Covenants. All other covenants, indemnities and
other agreements made by any party to this Option Agreement herein or pursuant
hereto shall survive the date hereof and any investigation, audit or inspection
at any time made by or on behalf of any party hereto.
Section 7.3. Agreement of Grantor to Indemnify. Grantor hereby agrees to
indemnify, defend and hold harmless ACC and its affiliates, employees,
stockholders, representatives, agents, officers and directors (the "ACC
Indemnified Persons") from and against and in any respect of all Losses asserted
against, resulting to, imposed upon or incurred by the ACC Indemnified Persons
(whether such Losses are by, against or relate to Grantor or any other party,
including a governmental entity), directly or indirectly, by reason of or
resulting from any misrepresentation or breach of any representation or
warranty, or noncompliance with any conditions, covenants or other agreements,
given or made by Grantor in this Option Agreement or the Time Brokerage
Agreement.
Section 7.4. Agreement of ACC to Indemnify. ACC hereby agrees to
indemnify, defend and hold harmless Grantor and its affiliates, employees,
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stockholders, representatives, agents, officers and directors (the "Grantor
Indemnified Persons") from and against and in respect of all Losses asserted
against, resulting to, imposed upon or incurred by the Grantor Indemnified
Persons (whether such Losses are by, against or relate to ACC or any other
party, including, without limitation, a governmental entity), directly or
indirectly, by reason of or resulting from any misrepresentation or breach of
any representation or warranty, or noncompliance with any conditions, covenants
or other agreements, given or made by ACC in this Option Agreement or the Time
Brokerage Agreement.
Section 7.5. Specific Performance. In addition to any other remedies
which ACC may have at law or in equity, Grantor hereby acknowledge that the
Assets and the Station are unique, and that the harm to ACC resulting from a
breach by Grantor of its obligations cannot be adequately compensated by
damages. Accordingly, Grantor agrees that ACC shall have the right to have all
obligations, undertakings, agreements, covenants and other provisions of this
Option Agreement specifically performed by Grantor, and that ACC shall have the
right to obtain an order or decree of such specific performance in any of the
courts of the United States of America or of any state or other political
subdivision thereof.
Section 7.6. Remedies Cumulative. The remedies provided herein shall be
cumulative and shall not preclude the assertion by Grantor or ACC of any other
rights or the seeking of any other remedies against the other, or their
respective successors or assigns.
ARTICLE 8.
GENERAL PROVISIONS
Section 8.1. Expenses. Unless otherwise indicated in this Option
Agreement, all costs and expenses incurred in connection with this Option
Agreement and the transactions contemplated hereby, including fees and
disbursements of counsel, financial advisors and accountants, shall be paid by
the party incurring such costs and expenses.
Section 8.2. Notices. All notices, requests, claims, demands and other
communications given or made pursuant hereto shall be in writing (and shall be
deemed to have been duly given or made upon receipt) by delivery in person, by
telecopy (with confirmation copy of such telecopied material delivered in person
or by registered or certified mail, postage prepaid, return receipt requested)
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section). Notices to Grantor shall be addressed to:
RZK Television, Inc.
c/o Osborn Communications Corporation
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130 Mason Street
Greenwich, CT 06830
Attention: Frank D. Osborn
Telecopy Number: (203) 629-1749
with a copy to:
Haley Bader & Potts, P.L.C.
4350 N. Fairfax Drive, #900
Arlington, VA 22203
Attention: Theodore D. Kramer, Esq.
Telecopy Number: (703) 841-2345
or at such other address and to the attention of such other person as Grantor
may designate by written notice to ACC. Notices to ACC shall be addressed to:
Allbritton Communications Company
800 17th Street, N.W., Suite 301
Washington, DC 20006
Attention: Jerald N. Fritz
Telecopy Number: (202) 822-6749
with a copy to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Mace J. Rosenstein, Esq.
Telecopy Number: (202) 637-5910
or such other address and to the attention of such other person as ACC may
designate by written notice to Grantor.
Section 8.3. Public Announcements. The parties hereto shall not make, or
cause to be made, any press releases or public announcements in respect of this
Option Agreement or the transactions contemplated herein or otherwise
communicate with any news media without prior notification of the other, and the
parties shall cooperate as to the timing and content of any such announcement.
Section 8.4. Headings. The descriptive headings contained in this Option
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Option Agreement.
Section 8.5. Severability. If any term or other provision of this Option
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or
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public policy, all other conditions and provisions of this Option Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Option Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.
Section 8.6. Entire Agreement. This Option Agreement, together with the
other agreements contemplated hereby, constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, with respect to the
subject matter hereof.
Section 8.7. Successors and Assigns. This Option Agreement shall be
binding upon and inure to the benefit of the parties hereto and their permitted
successors and assigns. Grantor may not assign its rights and obligations
hereunder without the prior written consent of ACC. ACC shall be permitted to
assign any of its rights hereunder to any person, but shall remain liable on
ACC's obligations.
Section 8.8. Third-Party Beneficiaries. This Option Agreement is for the
sole benefit of the parties hereto and their permitted assigns and nothing
herein expressed or implied shall give or be construed to give to any person,
other than the parties hereto and such assigns, any legal or equitable rights
thereunder.
Section 8.9. Amendment; Wavier. This Option Agreement may not be amended
or modified except by an instrument in writing duly executed by each party
hereto. Waiver of any term or condition of this Option Agreement shall only be
effective if in a writing signed by the party to be charged therewith and shall
not be construed as a waiver of any subsequent breach or waiver of the same term
or condition, or a waiver of any other term or condition of this Option
Agreement.
Section 8.10. Governing Law. This Option Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York applicable
to contracts executed and performed in that State.
Section 8.11. Jurisdiction and Forum. (a) The parties hereto agree that
an appropriate forum and venue for any disputes between the parties hereto
arising out of this Option Agreement shall be any state or federal court in the
State of New York. By the execution and delivery of this Option Agreement, each
of ACC and Grantor irrevocably submits to the personal jurisdiction of any state
or federal court in the State of New York in any suit or proceeding arising out
of this Option
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Agreement or the transactions contemplated hereby. The foregoing shall not limit
the rights of any party to obtain execution of judgment in any other
jurisdiction. The parties further agree, to the extent permitted by law, that
final and unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of such judgment.
(b) To the extent that either ACC or Grantor has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, each of ACC and Grantor hereby irrevocably waives such immunity in
respect of its obligations with respect hereto.
Section 8.12. Counterparts. This Option Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Section 8.13. Osborn Guaranty. (a) Osborn Communications Corp.
("Guarantor") hereby irrevocably and unconditionally guarantees to ACC the
prompt and complete payment and performance of each and every obligation of
Grantor to ACC, direct or indirect, now existing or hereafter arising under this
Option Agreement, including the due and punctual performance and observance by
Grantor of all of the terms and conditions of this Option Agreement.
(b) The obligations of Guarantor hereunder shall be absolute and
unconditional and shall continue in full force and effect until the payment and
performance of all of the obligations of Grantor under this Option Agreement,
and are in no way conditioned upon any event or contingency, or upon any attempt
to enforce Grantor's performance under this Option Agreement or any other right
or remedy against Grantor or to collect from Grantor through the commencement of
legal proceedings or otherwise.
(c) The obligations of Guarantor hereunder shall not be affected,
reduced, impaired, modified, changed, released, limited or discharged in any
manner whatsoever by reason of any impairment, modification, change, release, or
limitation of the liability of Grantor or its estate in bankruptcy, resulting
from the operation of any present or future provision of the bankruptcy laws or
other similar statute, or from the decision of any court.
(d) Guarantor unconditionally waives diligence, presentment, protest,
notice of dishonor, demand, extension of time for payment, notice of
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nonpayment at maturity, and indulgences and notices of every kind, and consents
to any and all changes in terms, covenants, and conditions hereof.
(e) Guarantor agrees that the obligations of Guarantor hereunder are
irrevocable and are independent of the obligations of Grantor under this Option
Agreement; that a separate action or actions may be brought and prosecuted
against Guarantor regardless of whether any action is brought against Grantor or
whether Grantor is joined in any such action or actions.
(f) Guarantor agrees that Guarantor shall not exercise any rights that
it may acquire by way of subrogation hereunder or otherwise until the
performance in full of all obligations guaranteed pursuant hereto.
(g) Guarantor represents and warrants to ACC that (i) it is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, (ii) it has the full corporate power and
corporate authority to enter into this Option Agreement, and this Option
Agreement has been duly authorized, executed and delivered by Guarantor and is a
legal, valid and binding agreement and obligation of Guarantor enforceable
against Guarantor in accordance with its terms, except to the extent limited by
applicable bankruptcy, insolvency, moratorium and other similar laws of general
application relating to or affecting the enforcement of creditors' rights and
general equity principles, (iii) neither the execution and delivery of this
Option Agreement, the consummation of any of the transactions contemplated
herein, nor compliance with the terms hereof, will conflict with or result in a
breach of any provision of any law or regulation applicable to Guarantor, or any
indenture, contract or other agreement to which Guarantor is a party or by which
Guarantor is bound, or any statute, rule, regulation, judgment, decree or order
binding upon Guarantor, and (iv) Guarantor indirectly owns all of the issued and
outstanding stock of Grantor.
(h) The provisions of this Section shall inure to the benefit of and may
be enforced by ACC and its successors and assigns, and shall be binding upon and
enforceable against Guarantor and Guarantor's successors or assigns.
Section 8.14. Delivery of Forms of Exhibits. Within fourteen (14) days
from the date of this Option Agreement, Grantor shall deliver to ACC in form and
substance reasonably satisfactory to ACC the form of Exhibits A through G of the
Purchase Agreement.
IN WITNESS WHEREOF, the parties have caused this Option Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
ALLBRITTON COMMUNICATIONS
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COMPANY
By:
Name: Jerald N. Fritz
Title: Vice President
RKZ TELEVISION, INC.
By:
Name: Frank D. Osborn
Title: President
For purposes of Section 8.13 of
this Option Agreement
OSBORN COMMUNICATIONS CORP.
By:
Frank D. Osborn
President
EXHIBIT A - FORM OF ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
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ARTICLE 1. 1
DEFINITIONS AND REFERENCES 1
ARTICLE 2. 6
SALE AND PURCHASE OF ASSETS; PURCHASE PRICE;
PAYMENT OF PURCHASE PRICE; ASSUMPTION OF
LIABILITIES 6
2.01 Asset Sale. 6
2.02 Purchase Price. 6
2.03 Payment of Purchase Price. 6
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2.04 Assumption of Liabilities. 6
ARTICLE 3 7
REPRESENTATIONS AND WARRANTIES BY SELLER 7
3.01 Organization and Standing. 7
3.02 Authorization. 7
3.03 Litigation; Compliance with Law. 7
3.04 Financial Statements and Condition; Liabilities. 8
3.05 Assets; Consents. 8
3.06 Condition of Tangible Assets. 9
3.07 Trademarks; Licenses. 10
3.08 Licenses. 10
3.09 Reports and Records. 10
3.10 Contracts. 11
3.11 Conflicts. 11
3.12 Related Parties. 11
3.13 Taxes. 12
3.14 Employee Benefit Plans. 12
3.15 Environmental Matters. 14
3.16 Labor Relations. 15
3.17 Broadcast of Programming 15
3.18 Insurance. 15
3.19 Disclosure. 16
ARTICLE 4. 16
REPRESENTATIONS AND WARRANTIES BY BUYER 16
4.01 Organization and Standing. 16
4.02 Authorization. 16
4.03 Qualification as Licensee. 17
ARTICLE 5. 17
APPLICATION FOR COMMISSION CONSENT 17
ARTICLE 6. 17
HART-SCOTT-RODINO 17
ARTICLE 7. 18
COVENANTS AND AGREEMENTS OF SELLER 18
7.01 Negative Covenants. 18
7.02 Affirmative Covenants. 19
7.03 Removal of Materials. 21
7.04 Confidentiality. 21
7.05 Employees. 21
ARTICLE 8. 22
COVENANTS AND AGREEMENTS OF BUYER 22
8.01 Confidentiality. 22
8.02 Corporate Action. 22
ARTICLE 9. 22
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE 22
9.01 Representations and Covenants. 22
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9.02 Consents. 23
9.03 Delivery of Documents. 23
9.04 FCC Order. 23
9.05 Title Insurance Commitment and Survey. 23
9.06 Legal Proceedings. 23
9.07 Hart-Scott-Rodino. 23
9.08 Absence of Material Change. 23
ARTICLE 10. 24
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO
CLOSE. 24
10.01 Representations and Covenants. 24
10.02 Delivery of Documents. 24
10.03 FCC Order. 24
10.04 Legal Proceedings. 24
10.05 Hart-Scott-Rodino. 24
ARTICLE 11. 25
THE CLOSING 25
11.01 Closing. 25
11.02 Delivery by Seller. 25
11.03 Delivery by Buyer. 26
ARTICLE 12. 27
ALLOCATION OF PURCHASE PRICE AMONG ASSETS 27
ARTICLE 13. 27
POSSESSION AND CONTROL 27
ARTICLE 14. 27
RISK OF LOSS 27
ARTICLE 15. 28
SURVIVAL; INDEMNIFICATION 28
15.01 Survival of Seller's Representations. 28
15.02 Indemnification by Seller. 28
15.03 Survival of Buyer's Representations. 28
15.04 Indemnification by Buyer. 29
15.05 Conditions of Indemnification. 29
ARTICLE 16. 30
TERMINATION 30
ARTICLE 17. 31
REMEDIES 31
17.01 Default by Buyer. 31
17.02 Default by Seller. 31
17.03 Specific Performance. 31
ARTICLE 18. 32
GUARANTEE 32
ARTICLE 19. 33
ADDITIONAL ACTIONS AND DOCUMENTS 33
ARTICLE 20. 33
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BROKERS 33
ARTICLE 21. 34
EXPENSES 34
ARTICLE 22. 34
NOTICES 34
ARTICLE 23. 35
WAIVER 35
ARTICLE 24. 36
BENEFIT AND ASSIGNMENT 36
ARTICLE 25. 36
REMEDIES CUMULATIVE 36
ARTICLE 26. 36
ENTIRE AGREEMENT; AMENDMENT 36
ARTICLE 27. 37
SEVERABILITY 37
ARTICLE 28. 37
PRESS RELEASES 37
ARTICLE 29. 37
HEADINGS 37
ARTICLE 30. 37
GOVERNING LAW 37
ARTICLE 31. 38
SIGNATURE IN COUNTERPARTS 38
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
this day of , 199___ by and between RKZ TELEVISION, INC., a Delaware corporation
("Seller"), and ALLBRITTON COMMUNICATIONS COMPANY, a Delaware corporation, or
its designated affiliate ("Buyer").
WHEREAS, Seller owns and operates Television Station WJSU-TV,
Channel 40, Anniston, Alabama, together with certain auxiliary facilities
(collectively, the "Station");
WHEREAS, Seller and Buyer are parties to that certain Option Agreement
dated as of , 1995 whereby Seller granted to Buyer the option to purchase the
assets of the Station from Seller (the "Option Agreement");
WHEREAS, Buyer exercised the Option pursuant to written notice
dated as of ; and
WHEREAS, Buyer agrees to purchase from Seller all the Assets (as
hereinafter defined), and Seller desires to sell all the Assets to Buyer, all in
accordance with and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, and intending to be legally
bound, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
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As used herein, the following terms shall have the meanings set forth
below, unless the context otherwise requires:
"Accounts Receivable" means all accounts, notes or accounts receivable
with respect to the Station.
"Additional Agreements" shall have the meaning set forth in
Section 7.01(e).
"Applications" shall have the meaning set forth in Section 5.
"Assets" means the Station and all real, personal and mixed assets, both
tangible and intangible (including the business of the Station as a "going
concern"), wherever located, owned or held by Seller and which are used or
useful in the business and operation of the Station. Subject to the provisions
of Section 7, Assets shall include all such assets existing on the date of this
Agreement and all such assets acquired between that date and the Closing Date,
and shall include, without limitation, all of Seller's right, title and interest
in and to the following assets:
(a) that certain real property set forth and described in Schedule 1(a).
(b) the leasehold interests in that certain real property described in
Schedule 1(b).
(c) all buildings, structures, fixtures, and other improvements now or
hereafter actually or constructively attached to the Property, and all
modifications, additions, restorations, or replacements of the whole or any part
thereof, including, without limitation, those described in Schedules 1(a) and
1(b) (the "Improvements").
(d) as landlord (whether named as such therein or by assignment or
otherwise) in all leases and subleases, if any, of the Property and the
Improvements now existing or at any time hereafter made, and any and all
amendments, modifications, supplements, renewals and extensions thereof,
together with all rents, royalties, security deposits, revenues, issues,
earnings, profits, income and other benefits of the Property or the Improvements
now due or hereafter to become due with respect to the Property or the
Improvements or any part thereof.
(e) in and to all streets, roads and public places, opened or proposed,
and all easements and rights of way, public and private, rights and
appurtenances, now or hereafter used in connection with, or belonging, incident
or appertaining to, the Property or the Improvements.
(f) all furniture, fixtures, furnishings, machinery, equipment,
inventory, supplies, antenna installations, towers and other property,
including, without limitation, those described in Schedule 1(f).
(g) all of the Licenses (as hereinafter defined) for the Station as more
fully described in Schedule 1(g).
(h) all of the copyrights, trademarks and trade names (including any
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and all applications, registrations, extensions and renewals relating thereto),
and all of the rights associated therewith, including, without limitation, those
described in Schedule 1(h) and Seller's rights to the call letters for the
Station.
(i) all contracts, agreements, leases and other intangible assets,
including, without limitation, those trade-out agreements and other contracts,
agreements and leases described in Schedule 1(i).
(j) all deposits and prepaid expenses, including, without limitation,
those described in Schedule 1(j).
(k) all automotive equipment and motor vehicles, including, without
limitation, those described in Schedule 1(k).
(l) all engineering, business and other books, papers, files and
records, but not the articles of incorporation, by-laws, minute books, stock
transfer records, or other corporate records of Seller.
(m) all translators, earth stations, and other auxiliary facilities, and
all applications therefor. "Assignment of Contracts" means that certain
Assignment of Contracts, dated as of the Closing Date and executed by Seller,
substantially in the form attached hereto as Exhibit D.
"Assignment of Leases" means that certain Assignment of Leases, dated as
of the Closing Date and executed by Seller, substantially in the form attached
hereto as Exhibit A.
"Assignment of Licenses" means that certain Assignment of Licenses,
dated as of the Closing Date and executed by Seller, substantially in the form
attached hereto as Exhibit C.
"Assumption Agreement" means that certain Assumption Agreement dated as
of the Closing Date and executed by Buyer and Seller, substantially in the form
attached hereto as Exhibit G.
"Bill of Sale" means that certain Bill of Sale and Assignment of Assets,
dated as of the Closing Date and executed by Seller, substantially in the form
attached hereto as Exhibit B.
"Claims" shall have the meaning specified in Section 15.05.
"Closing" means the closing of the purchase, assignment and sale of the
Assets contemplated hereunder.
"Closing Date" means the time and date on which the Closing takes place,
as established by Section 11.01.
"Commission" means the Federal Communications Commission.
"Deed" means the general warranty deed of Seller, substantially in the
form attached hereto as Exhibit E.
"Encumbrances" mean any mortgages, pledges, liens, claims, security
interests, agreements, restrictions, defects in title, easements, encumbrances,
or charges.
"FCC Order" means an order or orders of the Commission, or of the Chief,
Mass Media Bureau, acting under delegated authority, consenting to the
assignment to Buyer of the Licenses for the Station, as proposed in the
Applications
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therefor, without conditions which are adverse to Buyer or which in any way
diminish the operating rights with respect to the Assets and the Station, except
any such conditions expressly accepted by Buyer in writing.
"Final Order" means the FCC Order(s) as to which the time for filing a
request for administrative or judicial review, or for instituting administrative
review sua sponte, shall have expired without any such filing having been made
or notice of such review having been issued; or, in the event of such filing or
review sua sponte, as to which such filing or review shall have been disposed of
favorably to the grant and the time for seeking further relief with respect
thereto shall have expired without any request for such further relief having
been filed.
"Indemnified Party" and "Indemnifying Party" shall have the respective
meanings specified in Section 15.05.
"Licenses" means all of the licenses and other authorizations issued by
the Commission for the operation of the Station, as set forth in Schedule 1(g).
"Option" means the option to purchase the Station granted by Seller to
Buyer, pursuant to the exercise of which this Agreement has been entered into.
"Option Consideration" means the amount of Ten Million Dollars
($10,000,000) which Buyer has paid Seller pursuant to the terms of the Option
Agreement and any portion of the Supplemental Amount, if any, previously paid by
Buyer to Seller.
"Property" means, collectively, that certain real property described in
Schedule 1(a) and the leasehold interests in that certain real property
described in Schedule 1(b).
"Purchase Price" means the amount of Twelve Million Dollars
($12,000,000) and up to an additional amount of Seven Million Dollars
($7,000,000) in the event that the Supplemental Amount has been paid by Buyer to
Seller as specified in Section 2.3 of the Option Agreement.
"Station Contracts" shall have the meaning set forth in Section 3.10.
"Supplemental Amount" shall have the meaning set forth in the Option
Agreement.
"Survey" means the surveys for all parcels of real property described on
Schedule 1(a), each of which shall be prepared by a registered land surveyor
licensed in the State of Alabama (the "Surveyor"), certified by the Surveyor to
Buyer and Buyer's lender, and showing (a) the location of all lot and street
lines, (b) the location of encroachments, overhangs or projections by buildings
or improvements erected on adjacent lands or on such real property, (c) means of
ingress and egress to public roads, (d) the location of all utility and other
easements, rights of way, set-back lines and other matters of record affecting
such real property; (e) a description and the location of all existing
improvements (including parking areas), and (f) such other facts and information
as Buyer may require.
"TBA" means that certain Time Brokerage Agreement, dated as of December
21, 1995, by and between Seller and Buyer.
"Title Insurance Commitment" means an irrevocable title insurance
commitment issued by a title insurance company acceptable to Buyer with respect
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to the real property described in Schedule 1(a) for (i) a prepaid owner's policy
of title insurance (on ALTA Form B 1990 or form offering similar coverage),
showing fee simple title to the real property described in Schedule 1(a) in
Buyer, with no exception as to survey matters, no standard pre-printed
exceptions, no creditors' rights exceptions, no exceptions for mechanics and
materialmen's liens, no gap exceptions, and affirmative coverage as Buyer may
reasonably request, and (ii) a prepaid full-coverage mortgagee policy of title
insurance (on the ALTA 1990 form or form offering similar coverage), naming
Buyer's lender as the insured party, with no exception as to survey matters, no
standard pre-printed exceptions, no creditors' rights exceptions, no exceptions
for mechanics and materialmen's liens, no gap exceptions, and affirmative
coverage as Buyer may reasonably request, insuring that the mortgage of Buyer's
lender constitutes a valid and recorded first lien on a good and marketable fee
simple interest in the real property described in Schedule 1(a). The dollar
amount of each policy shall be equal to the amount of consideration allocated to
the real property pursuant to Section 12.
All references to Sections, Exhibits and Schedules are to Sections of
and Exhibits and Schedules to this Agreement.
ARTICLE 2.
SALE AND PURCHASE OF ASSETS; PURCHASE PRICE; PAYMENT OF
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.01 Asset Sale.
On the basis of the representations, warranties and agreements contained
herein, and subject to the terms and conditions hereof, Seller agrees to sell,
assign, transfer, convey and deliver to Buyer, and Buyer agrees to purchase from
Seller, the Assets at the Closing.
2.02 Purchase Price.
For and in consideration of the conveyances and assignments described
herein and in addition to the assumption of liabilities as set forth in Section
2.04, Buyer agrees to pay to Seller, and Seller agrees to accept from Buyer, the
Purchase Price (less the Option Consideration), subject to adjustment for
payment of expenses as provided for in Section 21. The Purchase Price shall be
payable as described in Section 2.03. The Purchase Price shall be allocated
among the Assets in accordance with Section 12.
2.03 Payment of Purchase Price.
On the Closing Date, the Buyer shall pay the adjusted Purchase Price (as
calculated in accordance with Section 2.02) to Seller by wire transfer of
immediately available funds.
2.04 Assumption of Liabilities.
At the Closing, Buyer shall assume only the following liabilities and
obligations of Seller (the "Assumed Liabilities"): (a) the liabilities and
obligations of Seller to be performed after the Closing Date under the
contracts, agreements and leases set forth and described in Schedules 1(b) and
1(i) and (b) the liabilities and obligations of Seller to be performed after the
Closing Date under any contracts, agreements and leases which are entered into
after the date hereof (in compliance
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with Section 7) and which are identified in the certificate referred to in
Section 11.02(c). Buyer shall not assume or be deemed to assume any debts,
liabilities or obligations of Seller except as specified in this Section 2.04.
All such assumptions pursuant to this Section 2.04 shall be subject to Buyer's
confirmation with creditors of existing unperformed obligations.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES BY SELLER
Seller represents and warrants to Buyer as follows:
3.01 Organization and Standing.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and authorized to conduct
business in the State of Alabama. Neither the nature of the business conducted
by Seller, nor the character of the properties owned, leased or otherwise held
by Seller makes any such qualification necessary in any other state, country,
territory or jurisdiction. Seller has the full and unrestricted power and
authority, corporate and otherwise, to own, lease and operate the Assets, to
carry on its business as now conducted, and to enter into and perform the terms
of this Agreement, the agreements, and instruments referred to herein, and the
transactions contemplated hereby and thereby.
3.02 Authorization.
The execution, delivery and performance of this Agreement and of the
agreements and instruments called for hereunder, and the consummation of the
transactions contemplated hereby and by such agreements and instruments have
been duly and validly authorized by all necessary actions of Seller (none of
which actions has been modified or rescinded and all of which actions are in
full force and effect). This Agreement constitutes, and upon execution and
delivery each other agreement and instrument will constitute, a valid and
binding agreement and obligation of Seller, enforceable in accordance with its
respective terms. Except as specified in Section 3.05, the execution, delivery
and performance by Seller of this Agreement and the agreements and instruments
called for hereunder will not require the consent, approval or authorization of
any person, entity or governmental authority.
3.03 Litigation; Compliance with Law.
There is no action, suit, investigation, claim, arbitration or
litigation pending or, so far as Seller knows, threatened against or involving
either Seller, the Assets, the Station or the Station's business and operations,
at law or in equity, or before or by any court, arbitrator or governmental
authority, and neither Seller nor the Station is operating under or subject to
any order, judgment, decree or injunction of any court, arbitrator or
governmental authority, except for those listed in Schedule 3.03. Seller has
complied and is in compliance in all material respects with all laws,
ordinances, regulations, awards, orders, judgments, decrees and injunctions
applicable to Seller, to the Assets, to the Station and to its business and
operations, including all federal, state and local laws, ordinances, regulations
and orders pertaining to employment or labor, safety, health, environmental
protection,
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zoning and other matters. Seller has obtained all material permits, licenses and
approvals (none of which has been modified or rescinded and all of which are in
full force and effect) from all governmental authorities necessary in order to
conduct the operation of the Station as presently conducted and to own, use and
maintain the Assets.
3.04 Financial Statements and Condition; Liabilities.
3.04(a) Seller has prepared and/or furnished to Buyer the balance sheets
of Seller as of the dates specified on Schedule 3.04(a), and the statements of
income, stockholders' equity and changes in financial position for the periods
specified on Schedule 3.04(a). All of the financial statements, including,
without limitation, the notes thereto, referred to in Schedule 3.04(a) or
furnished to Buyer after the date hereof pursuant to this Agreement: (i) are in
accordance with the books and records of the Seller, (ii) are true, correct and
complete in all material respects and present fairly the financial position of
Seller as of the respective dates and the results of operations and changes in
cash flow for the respective periods indicated, and (iii) have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior accounting periods. All deposits and prepaid expenses, if
any, included as assets of Seller represent bona fide deposits or payments
theretofore made by Seller, the benefit and advantage of which will be obtained
and enjoyed by Seller and, after the Closing Date, by Buyer.
3.04(b) Except as reflected in the balance sheets as of , 199 ,
including the notes thereto, there exist no liabilities of Seller, contingent or
absolute, matured or unmatured, known or unknown. Since , 199 , (i) Seller has
not made any contract, agreement or commitment or incurred any obligation or
liability (contingent or otherwise), except in the ordinary course of business
and consistent with past business practices, (ii) there has not been any
discharge or satisfaction of any obligation or liability owed to Seller, which
is not in the ordinary course of business or which is inconsistent with past
business practices, or (iii) there has not occurred any loss or material injury
to the Assets as the result of any fire, accident, act of God or the public
enemy, or other casualty, or any adverse material change in the Assets.
3.05 Assets; Consents.
3.05(a) The Assets to be acquired at the Closing constitute all of the
real, personal, and mixed assets, both tangible and intangible, that are used,
held for use or necessary for the business and operations of the Station as
presently conducted.
3.05(b) Seller is the sole and exclusive legal and equitable owner of
all right, title and interest in and has good, marketable, and insurable title
to the Assets, free and clear of any Encumbrances, except for and subject only
to (i) liens for real estate taxes not yet due and payable, (ii) existing
easements of record on real property which do not materially impair the use of
such property for the purposes contemplated hereunder, and (iii) those
encumbrances set forth in Schedule 3.05(b), which shall be removed prior to or
contemporaneously with the Closing Date.
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3.05(c) On the Closing Date, Buyer shall acquire good, marketable and
insurable title to, and all right, title and interest in, the Assets, free and
clear of all Encumbrances, except for and subject only to liens for real estate
taxes not yet due and payable and existing easements of record on real property
which do not materially impair the use of such property for the purposes
contemplated hereunder.
3.05(d) All of the Assets to be transferred hereunder are transferable
by Seller by Seller's sole act and deed, and no consent on the part of any other
person is necessary to validate the transfer to Buyer, except (i) the Licenses
described in Schedule 1(g) are not assignable without the consent of the
Commission as provided by law and (ii) certain of the agreements described in
Schedules 1(b) and 1(i), as specified in Schedule 3.05(d), may be assigned only
with the consent of third parties.
3.05(e) The Property and all of the Improvements have direct and
unobstructed access to all public utilities necessary for the uses to which the
Property and all of the Improvements are presently devoted by Seller and to a
public street. No portion of the Property or any Improvement is the subject of,
or affected by, any condemnation or eminent domain proceedings currently
instituted or pending, and so far as Seller knows, no such proceedings are
threatened. The Property and the Improvements are not subject to any covenant or
other restriction preventing or limiting Seller's right to convey Seller's
right, title and interest in the Property and the Improvements or to use the
Property and the Improvements for the various purposes for which the Property
and the Improvements are being used.
3.06 Condition of Tangible Assets.
All tangible Assets are in good operating condition and repair, and are
suitable, adequate and fit for the uses for which they are intended or are being
used; and the present use of such Assets do not violate in any material respect
any applicable licenses, statutes, or building, fire, zoning, health and safety
or any other laws or regulations. Without limiting the foregoing, such tangible
assets and operations thereof do not result in exposure of workers or the
general public to levels of radio frequency radiation in excess of the "Radio
Frequency Protection Guides" recommended in "American National Standard Safety
Levels With Respect to Human Exposure to Radio Frequency Electromagnetic Fields,
300 KHz to 100 GHz," issued by the American National Standards Institute and
which the Commission has incorporated in its rules and regulations.
3.07 Trademarks; Licenses.
Schedule 1(h) contains a true and complete listing of all franchises,
licenses, trademarks, trade names, copyrights and applications therefor owned or
licensed by or registered in the name of Seller and used or held for use in the
business and operations of the Station, other than the Licenses, all of which
are transferable to Buyer by the sole act and deed of Seller; and no consent on
the part of any other person is necessary to validate the transfer to Buyer.
Seller pays no royalty to anyone under any of the foregoing. Seller owns or
possesses all rights to use all franchises, licenses, service marks, trademarks,
trade names, copyrights, patents and applications therefor necessary to the
conduct of the business of the
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Station. Seller does not have any knowledge nor has Seller received any notice
to the effect that any service rendered by Seller relating to the business of
the Station may infringe on any trademark, service mark, trade name, copyright,
patent, trade secret or legally protectable right of another.
3.08 Licenses.
The Licenses for the Station are valid through April 1, 1997, and there
are no orders, complaints, proceedings or investigations, pending or, so far as
Seller knows, threatened, which would affect the validity of the Licenses.
3.09 Reports and Records.
During the current term of the Licenses, all returns, reports and
statements relating to the Station currently required to be filed by Seller with
the Commission or any other governmental instrumentality have been filed and
complied with and are true, correct and complete in all material respects. All
such reports, returns and statements shall continue to be filed on a current
basis until the Closing Date, and will be true, correct, and complete in all
material respects. During the current term of the Licenses, all documents
required by the Commission's rules to be placed in the Station's public files
have been placed and are being held in such files. During the current term of
the Licenses, all logs and business records of every type and nature relating to
the business and operations of the Station, including but not limited to
political and public record files, program, operating and maintenance logs,
equipment performance measurements, policies or evidence of insurance, licenses,
payroll, social security and withholding tax returns, operator agreements and
other records pertaining to the business and operations of the Station have been
maintained in all material respects in accordance with good business practices
and the rules of the Commission and are at the Station.
3.10 Contracts.
The contracts, agreements and leases set forth and described in
Schedules 1(b), and 1(i) are all of the contracts, agreements, leases and
commitments (both written and oral) relating to the Assets, to the Station or to
the business and operations thereof, other than (i) contracts for the sale of
advertising for cash, which are not for a term longer than thirty (30) days, and
(ii) contracts or commitments which do not require payments of more than $5,000
each or $20,000 in the aggregate. Seller has delivered to Buyer prior to the
execution of this Agreement true and complete copies or descriptions of all
contracts, agreements, leases and commitments (and all amendments and
modifications thereto) relating to the Assets, the Station or to the business
and operations thereof (collectively, the "Station Contracts"). The unperformed
obligations ascertainable from the terms on the face of the Station Contracts
are the existing unperformed obligations thereunder. Each Station Contract is in
full force and effect, and constitutes a valid and binding obligation of, and is
legally enforceable in accordance with its terms against, the parties thereto.
The parties thereto have complied with all of the material provisions of the
Station Contracts and are not in default thereunder, and there has not occurred
any event which (whether with or without notice, lapse of time, or the happening
or occurrence of any other event) would constitute such a default. There has not
been (i) any failure of any party to any Station Contract to
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comply with all material provisions thereof, (ii) any default by any party
thereunder, (iii) any threatened cancellation thereof, (iv) any outstanding
dispute thereunder, or (v) any basis for any claim of breach or default
thereunder.
3.11 Conflicts.
Except as set forth in Schedule 3.11, the execution and delivery of this
Agreement and the agreements and instruments called for hereunder, the
fulfillment of and the compliance with the respective terms and provisions of
each, and the consummation of the transactions described in each, do not and
will not conflict with or violate any law, ordinance, regulation, order, award,
judgment, injunction or decree applicable to Seller, to the Assets or to the
Station, or conflict with or result in a breach of or constitute a default under
any of the terms, conditions or provisions of Seller's articles of incorporation
or bylaws, or any contract, agreement, lease, commitment, or understanding to
which Seller is a party or by which Seller is bound or to which any of the
Assets or the Station is subject, or result in the acceleration of any
indebtedness or in the creation of any Encumbrance upon the Assets.
3.12 Related Parties.
Neither Seller nor any shareholder, officer or director of Seller has
any interest whatsoever in any corporation, firm, partnership or other business
enterprise which has had any business transactions with Seller relating to the
Assets or the Station, and no shareholder of Seller has entered into any
transaction with Seller relating to the Assets or the Station, except for those
set forth in Schedule 3.12.
3.13 Taxes.
The Seller has timely filed with all appropriate governmental agencies
all federal, state, commonwealth, local, and other tax or information returns
and tax reports (including, but not limited to, all income tax, unemployment
compensation, social security, payroll, sales and use, profit, excise,
privilege, occupation, property, ad valorem, franchise, license, school and any
other tax under the laws of the United States or of any state or any
commonwealth or any municipal entity or of any political subdivision with valid
taxing authority) due for all periods ended on or before the date hereof. Seller
has paid in full all federal, state, commonwealth, foreign, local and other
governmental taxes, estimated taxes, interest, penalties, assessments and
deficiencies (collectively, "Taxes") which have become due pursuant to such
returns or without returns or pursuant to any assessments received by Seller.
Such returns and forms are true, correct and complete in all material respects,
and Seller has no liability for any Taxes in excess of the Taxes shown on such
returns. Seller is not a party to any pending action or proceeding, and, to
Seller's knowledge, there is no action or proceeding threatened by any
government or authority against Seller for assessment or collection of any
Taxes, and no unresolved claim for assessment or collection of any Taxes has
been asserted against Seller.
3.14 Employee Benefit Plans.
3.14(a) Except as described in Schedule 3.14(a), neither Seller nor any
Affiliates (as defined below) have at any time established, sponsored,
maintained,
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or made any contributions to, or been parties to any contract or other
arrangement or been subject to any statute or rule requiring them to establish,
maintain, sponsor, or make any contribution to, (1) any "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended, and regulations thereunder ("ERISA"))
("Pension Plan"); (ii) any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) ("Welfare Plan"); or (iii) any deferred compensation,
bonus, stock option, stock purchase, or other employee benefit plan, agreement,
commitment, or arrangement ("Other Plan"). Seller and the Affiliates have no
obligations or liabilities (whether accrued, absolute, contingent, or
unliquidated, whether or not known, and whether due or to become due) with
respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA) or
Other Plan that is not listed in Schedule 3.14(a). For purposes of this Section
3.14, the term "Affiliate" shall include all persons under common control with
Seller within the meaning of Sections 4001(a)(14) or (b)(1) of ERISA or any
regulations promulgated thereunder, or Sections 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code").
3.14(b) Each plan or arrangement listed in Schedule 3.14(a) (and any
related trust or insurance contract pursuant to which benefits under such plans
or arrangements are funded or paid) has been administered in all respects in
full compliance with its terms and in both form and operation is in compliance
with applicable provisions of ERISA, the Code, the Consolidated Omnibus Budget
Reconciliation Act of 1986 and regulations thereunder, and other applicable law.
Each Pension Plan listed in Schedule 3.14(a) has been determined by the Internal
Revenue Service to be qualified under Section 401(a) and, if applicable, Section
401(k) of the Code, and nothing has occurred or been omitted since the date of
the last such determination that resulted or could result in the revocation of
such determination. Seller and the Affiliates have made all required
contributions or payments to or under each plan or arrangement listed in
Schedule 3.14(a) on a timely basis and have made adequate provision for reserves
to meet contributions and payments under such plans or arrangements that have
not been made because they are not yet due.
3.14(c) The consummation of this Agreement (and the employment by Buyer
of former employees of Seller or any employees of an Affiliate) will not result
in any carryover liability to Buyer for taxes, penalties, interest or any other
claims resulting from any employee benefit plan (as defined in Section 3(3) of
ERISA) or Other Plan. In addition, Seller and each Affiliate make the following
representations (i) as to all of their Pension Plans: (A) neither Seller nor any
Affiliate has become liable to the PBGC under ERISA under which a lien could
attach to the assets of Seller or an Affiliate; (B) Seller and each Affiliate
has not ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA; and (C) Seller and each Affiliate has
not made a complete or partial withdrawal from a multiemployer plan (as defined
in Section 3(37) of ERISA) so as to incur withdrawal liability as defined in
Section 4201 of ERISA, and (ii) all group health plans maintained by the Seller
and each Affiliate have been operated in compliance with Section 4980B(f) of the
Code.
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3.14(d) The parties agree that Buyer does not and will not assume the
sponsorship of, or the responsibility for contributions to, or any liability in
connection with, any Pension Plan, any Welfare Plan, or Other Plan maintained by
Seller or an Affiliate for its employees, former employees, retirees, their
beneficiaries or any other person. In addition and not as a limitation of the
foregoing covenant, the parties agree that Seller and such Affiliate shall be
liable for any continuation coverage (including any penalties, excise taxes or
interest resulting from the failure to provide continuation coverage) required
by Section 4980B of the Code due to qualifying events which occur on or before
Closing Date.
3.15 Environmental Matters.
3.15(a) For purposes of this section, "Hazardous Materials" means any
wastes, substances, or materials, whether solids, liquids or gases, that are
deemed hazardous, toxic, pollutants, or contaminants, including but not limited
to substances defined as "hazardous wastes," "hazardous substances," "toxic
substances," "radioactive materials," or other similar designations in, or
otherwise subject to regulation under, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, ("CERCLA") as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. 9601 et seq.; the
Toxic Substance Control Act ("TSCA"), 15 U.S.C. 2601 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. 1802 et seq.; the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C. 9601 et seq.; the Clean Water Act ("CWA"),
33 U.S.C. 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. 300f et seq.; the
Clean Air Act ("CAA"), 42 U.S.C. 7401 et seq.; or other applicable federal,
state, or local laws, including any plans, rules, regulations, orders, or
ordinances adopted, or other criteria and guidelines promulgated pursuant to the
preceding laws or other similar laws, regulations, rules, orders, or ordinances
now or hereafter in effect relating to the protection of human health and the
environment (collectively "Environmental Laws"). "Hazardous Materials" includes
but is not limited to polychlorinated biphenyls (PCBs), asbestos and lead-based
paints.
3.15(b) Seller's Environmental Representations and Warranties. Seller
hereby represents and warrants that except as set forth on Schedule 3.15(b):
(i) There are no pending or, to Seller's knowledge threatened,
actions, suits, claims, legal proceedings or any other proceedings based on
Hazardous Materials or the Environmental Laws at the Property, or any part
thereof, or otherwise arising from Seller's activities at the Property involving
Hazardous Materials;
(ii) To Seller's knowledge, there are no conditions, facilities,
procedures or any other facts or circumstances which could give rise to claims,
expenses, losses, liabilities, or governmental action against Buyer in
connection with any Hazardous Materials present at or disposed of from the
Property, including without limitation the following conditions arising out of,
resulting from, or attributable to, the assets, business, or operations of
Seller at the Property: (A) the presence of any Hazardous Materials on the
Property or the release or threatened release of any Hazardous Materials into
the environment
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from the Property; (B) the off-site disposal of Hazardous Materials originating
on or from the Property or the business or operations of Seller; (C) the release
or threatened release of any Hazardous Materials into any storm drain, sewer,
septic system or publicly owned treatment works; (D) any noncompliance with
federal, state or local requirements governing occupational safety and health,
or presence or release in the air and water supply systems of the Property of
any substances that pose a hazard to human health or an impediment to working
conditions; or (E) any facility operations, procedures or designs, which do not
conform to the statutory or regulatory requirements of any Environmental Laws.
(iii) To Seller's knowledge, neither polychlorinated biphenyls
nor asbestos-containing materials are present on or in the Property.
(iv) The Property contains no underground storage tanks,
or underground piping associated with tanks, used currently or, to Seller's
knowledge, in the past for the management of Hazardous Materials.
3.16 Labor Relations.
There are no strikes, work stoppages, grievance proceedings,
union organization efforts, or other controversies pending or threatened between
Seller and any of its employees or agents or any union or collective bargaining
unit. Seller has complied and is in compliance in all material respects with all
laws and regulations relating to the employment of labor, including without
limitation provisions relating to wages, hours, collective bargaining,
occupational safety and health, equal employment opportunity, and the
withholding of income taxes and social security contributions. Except as set
forth in Schedule 3.16 hereto, there are no collective bargaining agreements or
employment agreements between Seller and any of its employees. The consummation
of the transactions contemplated hereby will not cause Buyer to incur or suffer
any liability relating to, or obligation to pay, severance, termination, or
other payments to any person or entity. Except as set forth in Schedule 3.16
hereto, no employee of Seller has any contractual right to continued employment
by Seller following consummation of the transactions contemplated by this
Agreement. Seller has previously delivered to Buyer an accurate and complete
list, a date no more than fourteen (14) days prior to the date of this
Agreement, of all employees of Seller and the rate of compensation (including
salary, bonuses and commissions) of each such employee.
3.17 Broadcast of Programming
The motion pictures, feature films, and syndicated programs for
which Seller has obtained broadcast rights have been scheduled and broadcast in
the ordinary course of business, consistent with Seller's past business
practices and with customary practices in the television broadcast industry.
3.18 Insurance.
Schedule 3.18 contains a list and brief description of all
policies of title, property, fire, casualty, liability, life, workmen's
compensation, business interruption and other forms of insurance of any kind
relating to the Assets or the business and operations of the Station and owned
or held by Seller. All such policies: (i) are in full force and effect; (ii) are
sufficient for compliance in all material respects
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by Seller with all requirements of law and of all agreements to which Seller is
a party; (iii) are valid, outstanding, and enforceable policies; and (iv) insure
against risks of the kind customarily insured against and in amounts customarily
carried by corporations similarly situated and provide adequate insurance
coverage for the Assets and the Station (including the business and operations
thereof).
3.19 Disclosure.
All facts of material importance to the Assets, to the Station
and to the business of Seller have been fully and truthfully disclosed to Buyer
in this Agreement. No representation or warranty by Seller and no document,
statement, certificate, schedule or exhibit to be furnished or delivered to
Buyer pursuant to or in connection with this Agreement contains or will contain
any material untrue or misleading statement of fact or omits or will omit any
fact necessary to make the statements contained herein or therein not materially
misleading.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Seller as follows:
4.01 Organization and Standing.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and by the Closing Date
will be duly qualified to do business as a foreign corporation in Alabama. Buyer
has the full and unrestricted power and authority, corporate and otherwise, to
enter into and perform the terms of this Agreement, the agreements and
instruments referred to herein, and the transactions contemplated hereby and
thereby.
4.02 Authorization.
The execution, delivery and performance of this Agreement and of
the agreements and instruments called for hereunder, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary actions of Buyer (none of which actions has been
modified or rescinded and all of which actions are in full force and effect).
This Agreement constitutes, and upon execution and delivery each other agreement
and instrument will constitute, a valid and binding agreement and obligation of
Buyer, enforceable in accordance with its respective terms. Except for the
consent of the Commission to the assignment to Buyer of the Licenses described
in Schedule 1(g), the pre-merger notification clearance required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any
consents which may be required from certain lenders of Buyer as described in
Schedule 4.02, the execution, delivery and performance by Buyer of this
Agreement and the agreements and instruments called for hereunder will not
require the consent, approval or authorization of any person, entity or
governmental authority.
4.03 Qualification as Licensee.
Except for possible contour overlap with television station
WCFT-TV, Tuscaloosa, Alabama, Buyer knows of no reason why it should not be
found by the Commission to be qualified under the Communications Act of 1934, as
amended, and the Commission's rules and regulations to become the licensee of
the Station.
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ARTICLE 5.
APPLICATION FOR COMMISSION CONSENT
As promptly as practicable and no later than ten (10) business
days following the execution of this Agreement, Seller and Buyer shall take all
steps reasonably necessary to file and shall participate in the filing of
applications with the Commission (the "Applications") requesting its written
consent to the assignment of the Licenses for the Station (and any extensions
and renewals thereof) from Seller to Buyer. Seller and Buyer will diligently
take all necessary and proper steps, provide any additional information
reasonably requested, and otherwise use their best efforts in order to obtain
promptly the requested consent and approval of the Applications by the
Commission; provided that neither of the parties hereto shall have any
obligation to take any unreasonable steps to satisfy complainants, if any, or to
participate in any evidentiary hearing (other than a hearing at which only oral
argument is to be presented).
ARTICLE 6.
HART-SCOTT-RODINO
As promptly as practicable and no later than thirty (30) days
following the execution of this Agreement, Seller and Buyer shall complete any
filing that may be required pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or shall mutually agree that no such
filing is required. Seller and Buyer shall diligently take all necessary and
proper steps and provide any additional information reasonably requested in
order to comply with the requirements of such Act.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees with Buyer as follows:
7.01 Negative Covenants.
Pending and prior to the Closing, Seller will not, without the
prior written approval of Buyer, do or agree to do any of the following:
7.01(a) Dispositions; Mergers. Sell, assign, lease or otherwise
transfer or dispose of any of the Assets or merge or consolidate with or into
any other entity or enter into any negotiations or agreements relating thereto;
provided, however, Seller may sell, assign, lease or otherwise transfer or
dispose of any asset described in Schedule 1(f) if such asset is expended in the
ordinary course of business, consistent with Seller's past business practices
and with customary practices in the television broadcast industry, and property
or equipment of like kind and equivalent value is substituted therefor.
7.01(b) Accounting Principles and Practices. Change or modify any
of Seller's accounting principles or practices or any method of applying such
principles or practices.
7.01(c) Trade-Outs. Enter into any trade-out agreement, or
similar contract, commitment or understanding to provide broadcast time, except
those
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which are in the ordinary course of business and consistent with Seller's past
business practices and the TBA and which can be and are performed completely
prior to the Closing Date.
7.01(d) Broadcast Time Agreements. Enter into any broadcast time
sales agreement, contract, commitment or understanding except those that are in
the ordinary course of business and consistent with customary practices in the
television broadcast industry and the TBA.
7.01(e) Local Marketing Arrangements. Except for the TAB, acquire
or enter into any local marketing arrangements, time brokerage agreements or
other similar contracts.
7.01(f) Program Contracts. Acquire or enter into any new program
contracts or renew, extend, amend, alter, modify or otherwise change any
existing program contract, except that Seller may enter into new program
contracts, consistent with the terms of the TBA, which have a term of less than
six months.
7.01(g) Additional Agreements. Materially modify or amend any of
the agreements listed in Schedule 3.05(d) which are marked by an asterisk or
enter into any other agreements, contracts, leases, commitments, understandings,
or licenses (collectively, "Additional Agreements") or incur any obligation or
liability (contingent or absolute); provided, however, that Seller may enter
into trade-out agreements, broadcast time agreements and program contracts
consistent with this Section 7.01 and the terms of the TBA; and that any
Additional Agreements are entered into in the ordinary course of business
consistent with Seller's past business practices and customary practices in the
television broadcast industry, so long as such Additional Agreements do not
involve payments or obligations in excess of One Million Dollars ($1,000,000)
for all such Additional Agreements in the aggregate.
7.01(h) Breaches; Employment Contracts. Do or omit to do any act
(or permit such action or omission) which will cause a material breach of any
Station Contract; enter into or become subject to any employment, labor or union
contract, any professional service contract not terminable at will, or any
bonus, pension, insurance, profit sharing, deferred compensation, severance pay,
retirement, hospitalization, employee benefit, or other similar plan; increase
the compensation payable or to become payable to any employee; or pay or arrange
to pay any bonus payment to any employee.
7.01(i) Actions Affecting Licenses or Contracts. Take any action
which under existing law may reasonably be expected to have a material adverse
effect on the validity or enforceability of or rights under the Licenses or any
material lease or contract.
7.01(j) Programming. Program or broadcast any motion picture,
feature film or syndicated program, except in the ordinary course of business,
within the terms of the TBA and consistent with Seller's past business
practices.
7.01(k) Accounts. Accelerate the collection of or sell or assign
any accounts receivable, or decelerate the payment of accounts payable, except
in order to conform with Seller's past business practices and the terms of the
TBA.
7.02 Affirmative Covenants.
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Pending and prior to the Closing Date, Seller will:
7.02(a) Preserve Existence. Preserve its corporate existence and
business organization intact, maintain its existing franchises and licenses, use
its reasonable best efforts to preserve for Buyer its relationships with
suppliers, customers, employees and others having business relations with
Seller, and keep all Assets in their present condition, ordinary wear and tear
excepted.
7.02(b) Normal Operations. Subject to the terms and conditions of
this Agreement (including, without limitation, Section 7.01) and the terms and
conditions of the TBA: (i) carry on the business and activities of the Station,
including without limitation, the sale of advertising time, entering into trade
or barter arrangements, entering into other agreements, leases, commitments or
understandings, or purchasing and scheduling of programming, in the usual and
ordinary course of business consistent with Seller's past business practices and
with customary practices in the television broadcast industry; (ii) pay or
otherwise satisfy all obligations (cash and barter) of the Station as they come
due and payable; (iii) maintain all of its properties in customary repair, order
and condition; and (iv) maintain its books of account, records, and files in
substantially the same manner as heretofore.
7.02(c) Maintain Licenses. Maintain the validity of the Licenses,
and comply in all material respects with all rules and regulations of the
Commission.
7.02(d) Payables. Pay all of its obligations, including, without
limitation, obligations under the Station Contracts and under any such contracts
that shall be entered into between the date hereof and the Closing pursuant to
Section 7.01, as and when they become due and payable.
7.02(e) Corporate Action. Take all corporate action under the law
of the State of Delaware necessary to effectuate the transactions contemplated
by this Agreement and by the agreements and instruments called for hereunder.
7.02(f) Transfer Tax; Bulk Sales. Take all necessary action to
provide for the payment of all applicable state sales, transfer or use taxes,
and to comply with all applicable bulk transfer and similar laws, in connection
with the transactions contemplated by this Agreement and the agreements and
instruments called for hereunder.
7.02(g) Access. Give to Buyer and Buyer's authorized
representatives full and complete access upon reasonable notice during normal
business hours to Seller's properties, books, records, contracts, commitments,
facilities, premises, and equipment and to Seller's officers and employees.
7.02(h) Other Information. Provide to Buyer all such other
information and copies of documents concerning Seller, the operation of the
Station, the Assets, and Seller's customers and suppliers as Buyer may request.
7.02(i) Insurance. Maintain in full force and effect all of its
existing casualty, liability, and other insurance through the day following the
Closing Date in amounts not less than those in effect on the date hereof.
7.02(j) Financial Statements. Provide Buyer with (i) unaudited
monthly balance sheets, and statements of revenues and expenses reflecting the
results of business and operations of the Station and of Seller for the month
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preceding the date of this Agreement and for each month thereafter, within
twenty (20) days of the end of each such month; and (ii) with unaudited
statements of assets and liabilities and statements of revenues and expenses
reflecting the results of the business and operations of the Station for the
preceding twelve (12) months, within thirty (30) days of the end of the fiscal
year. All of the foregoing financial statements shall comply with the
requirements concerning financial statements set forth in Section 3.04.
7.02(k) Interruption in Broadcast Operations. Promptly notify
Buyer in writing if any Station ceases to broadcast at its authorized power for
more than 48 consecutive hours.
7.02(l) Consents. Obtain third party consents to assign to Buyer
those agreements on Schedule 3.05(d) which are marked with an asterisk and use
its best efforts to obtain third party consents for assignment of all other
agreements listed on Schedule 3.05(d).
7.03 Removal of Materials.
Any building materials or other items located in or around the
Property which qualify as Hazardous Wastes or Toxic Substances shall immediately
be removed from the Property at Seller's cost and expense.
7.04 Confidentiality.
Seller will use its best efforts to maintain strict
confidentiality with respect to all documents and information furnished to
Seller by or on behalf of Buyer; provided, however, that Seller shall have no
such obligations with respect to confidential information that (i) is a matter
of public knowledge or (ii) has been or is hereafter publicly disclosed other
than by or through Seller. In the event this Agreement is terminated, Seller
will return to Buyer all documents, drafts, work papers, and other material
prepared or furnished by Buyer relating to the transactions contemplated
hereunder, whether obtained before or after the execution of this Agreement.
7.05 Employees.
For a period commencing upon the execution of this Agreement and
ending twelve (12) months following the Closing Date, Seller and its affiliates
will not offer employment elsewhere than at the Station to any employee of
Seller currently employed at the Station without the prior written approval of
Buyer.
ARTICLE 8.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Seller as follows:
8.01 Confidentiality.
Buyer will maintain strict confidentiality with respect to all
documents and information furnished to Buyer by or on behalf of Seller;
provided, however, that Buyer shall have no such obligations with respect to
confidential information that (i) is a matter of public knowledge or (ii) has
been or is hereafter publicly disclosed other than by or through Buyer. In the
event this Agreement is terminated, Buyer will return to Seller all copies in
its possession of documents, drafts, work papers, and other material prepared or
furnished by Seller relating to
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the transactions contemplated hereunder, whether obtained before or after the
execution of this Agreement and the agreements and instruments called for
hereunder.
8.02 Corporate Action.
Prior to the Closing, Buyer shall take all corporate action under
the law of the State of Delaware necessary to effectuate the transactions
contemplated by this Agreement and by the agreements and instruments called for
hereunder.
ARTICLE 9.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to proceed
with the Closing are subject to the satisfaction (or waiver by Buyer) at or
prior to the Closing of each of the following conditions:
9.01 Representations and Covenants.
The representations and warranties of Seller made herein or in
any agreement, instrument or document called for hereunder shall have been true
and correct when made and shall be true and correct on the Closing Date as
though such representations and warranties were made on and as of the Closing
Date, and Seller shall have performed and complied with all covenants and
agreements required by this Agreement to be performed or complied with by Seller
prior to the Closing Date.
9.02 Consents.
Seller shall have obtained prior to the Closing Date all consents
necessary to effect valid assignments to Buyer of those contracts on Schedule
3.05(d) which are marked with an asterisk and all other consents necessary to
consummate the transactions contemplated hereby (except for the FCC Order which
shall be governed by Section 9.04).
9.03 Delivery of Documents.
Seller shall have delivered to Buyer all agreements, instruments
and documents required to be delivered by Seller to Buyer pursuant to Section
11.02.
9.04 FCC Order.
The FCC Order shall have become a Final Order with respect to the
Station.
9.05 Title Insurance Commitment and Survey.
Buyer shall have received the Title Insurance Commitment and
Survey referred to in Section 1 for the real property described in Schedule
1(a), in form and substance satisfactory to Buyer.
9.06 Legal Proceedings.
No action or proceeding by or before any governmental authority
shall have been instituted or threatened (and not subsequently dismissed,
settled or otherwise terminated) which might restrain, prohibit or invalidate
the transactions contemplated by this Agreement (other than an action or
proceeding instituted or threatened by Buyer).
9.07 Hart-Scott-Rodino.
All applicable waiting periods under the Hart-Scott-Rodino
Antitrust
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Improvements Act of 1976, as amended, shall have expired.
9.08 Absence of Material Change.
Neither the Station nor the Assets shall have suffered a material
adverse change since the date hereof, and there shall have been no changes since
the date hereof in the business, operations, prospects, condition (financial or
otherwise), properties, assets or liabilities of Seller, of the Station or of
the Assets (regardless of whether or not such events or changes are consistent
with the representations and warranties given herein by Seller), except changes
contemplated by this Agreement and changes in the ordinary course of business
which are not (either individually or in the aggregate) materially adverse.
ARTICLE 10.
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
The obligation of Seller to sell, transfer, convey and deliver
the Assets and to proceed with the Closing are subject to the satisfaction (or
waiver by Seller) at or prior to the Closing of each of the following
conditions:
10.01 Representations and Covenants.
The representations and warranties of Buyer made in this
Agreement or in any agreement, instrument or document called for hereunder shall
have been true and correct when made and shall be true and correct on the
Closing Date as though such representations and warranties were made on and as
of the Closing Date, and Buyer shall have performed and complied with all
covenants and agreements required to be performed or complied with by Buyer
prior to the Closing Date.
10.02 Delivery of Documents.
Buyer shall have delivered to Seller the Purchase Price and all
agreements, instruments and documents required to be delivered by Buyer to
Seller pursuant to Section 11.03.
10.03 FCC Order.
The FCC Order shall have been issued with respect to the Station.
10.04 Legal Proceedings.
No action or proceeding by or before any governmental authority
shall have been instituted or threatened (and not subsequently dismissed,
settled, or otherwise terminated) that might restrain, prohibit or invalidate
the transactions contemplated by this Agreement, other than an action or
proceeding instituted or threatened by Seller.
10.05 Hart-Scott-Rodino.
All applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have expired.
ARTICLE 11.
THE CLOSING
11.01 Closing.
Unless otherwise agreed by the parties hereto, the Closing
hereunder shall be held on a date specified by Buyer within ten (10) days
following the date
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that the FCC Order becomes a Final Order. The Closing shall be held at 10:00
A.M. local time at the offices of Hogan & Hartson in Washington, D.C. or at such
other time and place as the parties may agree.
11.02 Delivery by Seller.
At or before the Closing, Seller shall deliver to Buyer the following:
11.02(a) Agreements and Instruments. The following bills of sale,
statements, assignments and other instruments of transfer, dated as of the
Closing Date, in form sufficient to transfer and convey to Buyer title (of the
quality provided for in this Agreement) to the Assets:
(i) the Assignment of Leases;
(ii) the Bill of Sale;
(iii) the Assignment of Licenses;
(iv) the Assignment of Contracts;
(v) the Deed; and
(vi) such other instruments or documents as Buyer or Buyer's
senior lender may reasonably request.
11.02(b) Consents. Copies of all consents necessary to effect
valid assignments to Buyer of all of the agreements listed on Schedule 3.05(d)
which are marked with an asterisk and any other consents Seller has been able to
obtain.
11.02(c) Certificate Concerning Interim Agreements. A certificate
of Seller describing all broadcast time sales agreements made, all trade- out
agreements entered into, and all other contracts, agreements and leases entered
into by Seller between the date hereof and the Closing Date, and certifying that
such agreements, contracts and leases were entered into in accordance with
Section 7.01.
11.02(d) Corporate Resolutions. Copies of the resolutions of
directors and shareholders of Seller, certified as being correct and complete
and then in full force and effect, authorizing the execution, delivery and
performance of this Agreement and the agreements and instruments called for
hereunder, and the consummation of the transactions contemplated hereby and by
such agreements and instruments.
11.02(e) Officers' Certificate. A certificate of Seller signed by
the President and the Secretary of Seller certifying that the representations
and warranties of Seller made herein were true and correct in all material
respects as of the date of this Agreement and are true and correct in all
material respects as of the Closing Date, and that Seller has performed and
complied with all covenants and agreements required to be performed or complied
with by Seller on or prior to the Closing Date.
11.02(f) Opinion of Counsel. An opinion of counsel for Seller,
dated the Closing Date, addressed to Buyer and to Buyer's lender, substantially
in the form attached hereto as Exhibit F.
11.02(g) Seller's IRS Form 8594. Internal Revenue Service Form
8594 completed by Seller in connection with the acquisition of the Assets by
Buyer. 11.03 Delivery by Buyer.
At or before the Closing, Buyer shall deliver to Seller the
following:
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11.03(a) Purchase Price.
(i) The Purchase Price in the amount and manner set forth in
Section 2.
11.03(b) Assumption Agreement. The Assumption Agreement.
11.03(c) Corporate Resolutions. Copies of the resolutions of the
directors of Buyer, certified as being correct and complete and then in full
force and effect, authorizing the execution, delivery and performance of this
Agreement and the agreements and instruments called for hereunder, and the
consummation of the transactions contemplated by this Agreement and by such
agreements and instruments.
11.03(d) Officers' Certificate. A certificate of Buyer signed by
the President and the Secretary of Buyer certifying that the representations and
warranties of Buyer made herein were true and correct in all material respects
as of the date of this Agreement and are true and correct in all material
respects as of the Closing Date, and that Buyer has performed and complied with
all covenants and agreements required to be performed or complied with by Buyer
prior to the Closing Date.
11.03(e) Buyer's IRS Form 8594. Internal Revenue Service Form
8594 completed by Buyer in connection with the acquisition of the Assets by
Buyer.
ARTICLE 12.
ALLOCATION OF PURCHASE PRICE AMONG ASSETS
Seller and Buyer each represent, warrant, covenant, and agree
with each other that the Purchase Price shall be allocated among the Assets, as
set forth in an appraisal of the tangible assets to be performed prior to the
Closing (at Buyer's sole expense) by Bond & Pecaro, for purposes of all federal,
state and other income tax returns filed by it or other tax payments made by it.
Notwithstanding any other provision of this Agreement, the provisions of this
Section 12 shall survive the Closing Date without limitation.
ARTICLE 13.
POSSESSION AND CONTROL
Between the date hereof and the Closing Date, Buyer shall not
directly or indirectly control, supervise or direct, or attempt to control,
supervise or direct, the business and operations of the Station, and such
operation, including complete control and supervision of all programs, shall be
the sole responsibility of Seller; provided, however, Buyer shall be entitled to
inspect the Assets as provided in Section 7.02(h) so that an uninterrupted and
efficient transfer of ownership may be effected. On and after the Closing Date,
Seller shall have no control over, or right to intervene or participate in, the
business and operations of the Station.
ARTICLE 14.
RISK OF LOSS
The risk of loss or damage by fire or other casualty or cause to
the Assets until the Closing Date shall be upon Seller. In the event of such
loss or
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damage prior to the Closing Date, Seller shall promptly restore, replace or
repair the damaged Assets to their previous condition at Seller's sole cost and
expense. In the event such loss or damage shall not be restored, replaced, or
repaired as of the Closing Date, Buyer shall, at its option, either (a) proceed
with the Closing and receive all insurance proceeds to which Seller would be
entitled as a result of such loss or damage (provided, however, if such proceeds
do not equal the loss, Seller shall pay the deficiency to Buyer), or (b) defer
the Closing Date until such restorations, replacements or repairs are made
(provided that no such deferral shall affect the right of Buyer to terminate
this Agreement pursuant to the provisions of Section 16).
ARTICLE 15.
SURVIVAL; INDEMNIFICATION
15.01 Survival of Seller's Representations.
Except as otherwise specified, the representations and warranties
made by Seller in this Agreement or pursuant hereto shall survive the Closing
Date for a period of two (2) years, provided that Sections 3.13 and 3.15 shall
survive the Closing Date for a period equal to the applicable statute of
limitations and Section 3.05(b) shall survive without limitation as to time, and
the representations and warranties made by Seller shall also survive and shall
be unaffected by (and shall not be deemed waived by) any investigation, audit,
appraisal, or inspection at any time made by or on behalf of Buyer.
15.02 Indemnification by Seller.
Subject to the conditions and provisions of Section 15.05, Seller
agrees to indemnify, defend and hold harmless Buyer, Buyer's employees, managers
and directors ("Buyer Indemnified Parties") from and against and in respect of
any and all demands, claims, complaints, actions or causes of action, suits,
proceedings, investigations, arbitrations, assessments, losses, damages,
liabilities, costs and expenses, including, but not limited to, interest,
penalties and attorneys' fees and disbursements, asserted against, imposed upon
or incurred by Buyer Indemnified Parties, directly or indirectly, by reason of
or resulting from (a) any liability, obligation, or claim against Seller
(whether absolute, accrued, contingent or otherwise and whether a contractual,
tax or any other type of liability or obligation or claim) not expressly assumed
by Buyer pursuant to Section 2.04, arising out of, relating to or resulting from
the business of Seller, or relating to or resulting from the Assets or the
business and operations of the Station during the period prior to the Closing
Date; (b) any misrepresentation or breach of the representations and warranties
of Seller contained in or made pursuant to this Agreement; or (c) any
noncompliance by Seller with any covenants, agreements or undertakings of Seller
contained in or made pursuant to this Agreement.
15.03 Survival of Buyer's Representations.
The representations and warranties made by Buyer in this
Agreement or pursuant hereto shall survive the Closing Date for a period of two
(2) years, and shall also survive and shall be unaffected by (and shall not be
deemed waived by) any investigation, audit, appraisal or inspection at any time
made by or on behalf of
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Seller.
15.04 Indemnification by Buyer.
Subject to the conditions and provisions of Section 15.05, Buyer
hereby agrees to indemnify, defend and hold harmless Seller, Seller's employees,
managers and directors ("Seller Indemnified Parties") from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, but not limited to, interest,
penalties and attorneys' fees and disbursements, asserted against, imposed upon
or incurred by Seller Indemnified Parties, directly or indirectly, by reason of
or resulting from (a) any liability, obligation, or claims against Seller
Indemnified Parties (whether absolute, accrued, contingent or otherwise and
whether contractual, tax or any other type of liability or obligation or claim)
expressly assumed by Buyer hereunder; (b) any misrepresentation or breach of the
representations and warranties of Buyer contained in or made pursuant to this
Agreement; or (c) any noncompliance by Buyer with any covenants, agreements or
undertakings of Buyer contained in or made pursuant to this Agreement.
15.05 Conditions of Indemnification.
The obligations and liabilities of Seller and of Buyer hereunder
with respect to their respective indemnities pursuant to this Section 15,
resulting from any claim or other assertion of liability by third parties
(hereinafter called collectively, "Claims"), shall be subject to the following
terms and conditions:
15.05(a) The party seeking indemnification (the "Indemnified
Party") must give the other party or parties, as the case may be (the
"Indemnifying Party"), notice of any such Claim promptly after the Indemnified
Party receives notice thereof.
15.05(b) The Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
of such claim.
15.05(c) In the event that the Indemnifying Party shall elect not
to undertake such defense, or within a reasonable time after notice of any such
Claim from the Indemnified Party shall fail to defend, the Indemnified Party
(upon further written notice to the Indemnifying Party) shall have the right to
undertake the defense, compromise or settlement of such Claim, by counsel or
other representatives of its own choosing, on behalf of and for the account and
risk of the Indemnifying Party (subject to the right of the Indemnifying Party
to assume defense of such Claim at any time prior to settlement, compromise or
final determination thereof).
15.05(d) Anything in this Section 15.05 to the contrary
notwithstanding, (i) if there is a reasonable probability that a Claim may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise or
settlement of the Claim, (ii) the Indemnifying Party shall not, without the
Indemnified Party's written consent, settle or compromise any Claim or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability
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in respect of such Claim, and (iii) in the event that the Indemnifying Party
undertakes defense of any Claim, the Indemnified Party, by counsel or other
representative of its own choosing and at its sole cost and expense, shall have
the right to consult with the Indemnifying Party and its counsel or other
representatives concerning such Claim and the Indemnifying Party and the
Indemnified Party and their respective counsel or other representatives shall
cooperate with respect to such Claim.
ARTICLE 16.
TERMINATION
If (i) an FCC Order has not become a Final Order and/or the
Closing has not occurred on or before the tenth anniversary of the date of the
Option Agreement, (ii) the Commission designates the Application contemplated by
Section 5 for an evidentiary hearing, or (iii) the Commission issues an order in
connection with such application with conditions which are adverse to Buyer or
which in any way diminish the operating rights with respect to the Assets and
the Station (except any such conditions expressly accepted by Buyer in writing),
then in any such event Buyer may, upon written notice to the Seller, terminate
this Agreement without any further obligation to the Seller hereunder, provided,
that such notice of termination is given prior to the date of the Closing or the
date on which such FCC Order shall have become a Final Order. If the Closing has
not occurred on or before the tenth anniversary of the date of the Option
Agreement, then in such event Seller may, upon written to the Buyer, terminate
this Agreement without any further obligation to the Buyer hereunder, provided,
that, such notice of termination is given prior to the date of the Closing and
the Seller is not in material default at such time. Upon termination of this
Agreement pursuant to this Section 16, this Agreement shall be deemed null,
void, and of no further force and effect (except for the provisions of Sections
7.04, 8.01, and 21, which shall survive such termination).
ARTICLE 17.
REMEDIES
17.01 Default by Buyer.
If Buyer shall default in the performance of its obligations
under this Agreement in any material respect or if, as a result of Buyer's
action or failure to act, the conditions precedent to Seller's obligation to
close specified in Section 10 are not satisfied, and for such reason or reasons
this Agreement is not consummated, and provided that Seller shall not then be in
default in the performance of Seller's obligations hereunder, Seller shall be
entitled, by written notice to Buyer, to terminate this Agreement and to pursue
any other remedies Seller has at law or in equity or otherwise.
17.02 Default by Seller.
If Seller shall default in the performance of Seller's
obligations under this Agreement in any material respect, or if, as a result of
Seller's action or failure to act, the conditions precedent to Buyer's
obligation to close specified in Section 9
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are not satisfied and for such reason or reasons this Agreement is not
consummated, or if Seller fails to operate the Station at its authorized power
for longer than 48 consecutive hours, and provided that Buyer shall not then be
in default in any material respect in the performance of Buyer's obligations
hereunder, Buyer shall be entitled, at Buyer's sole option:
(i) To require Seller to consummate and specifically perform the
sale in accordance with the terms of this Agreement, if necessary through
injunction or other court order or process; or
(ii) By written notice to Seller, to terminate this Agreement and
to pursue any other remedies Buyer has at law or in equity or otherwise.
17.03 Specific Performance.
Seller acknowledges that the Assets to be sold and delivered to
Buyer pursuant to this Agreement are unique and that Buyer has no adequate
remedy at law if Seller shall fail to perform any of their obligations
hereunder, and Seller therefore confirms and agrees that Buyer's right to
specific performance is essential to protect the rights and interests of Buyer.
Accordingly, in addition to any other remedies which Buyer may have hereunder or
at law or in equity or otherwise, Seller hereby agrees that Buyer shall have the
right to have all obligations, undertakings, agreements and other provisions of
this Agreement specifically performed by Seller and that Buyer shall have the
right to obtain an order or decree of such specific performance in any of the
courts of the United States or of any state or other political subdivision
thereof.
ARTICLE 18.
GUARANTEE
18.01 Osborn Communications Corp. ("Guarantor") hereby
irrevocably and unconditionally guarantees to Buyer the prompt and complete
performance and payment of each and every obligation of Seller to Buyer, direct
or indirect, now existing or hereafter arising under this Agreement, including
the due and punctual performance and observance by Seller of all of the terms
and conditions of this Agreement.
18.02 The obligations of Guarantor hereunder shall be absolute
and unconditional and shall continue in full force and effect until the
performance and payment of all of the obligations of Seller under this
Agreement, and are in no way conditioned upon any event or contingency, or upon
any attempt to enforce Seller's performance under this Agreement or any other
right or remedy against Seller or to collect from Seller through the
commencement of legal proceedings or otherwise.
18.03 The obligations of Guarantor hereunder shall not be
affected, reduced, impaired, modified, changed, released, limited or discharged
in any manner whatsoever by reason of any impairment, modification, change,
release, or limitation of the liability of Seller or its estate in bankruptcy,
resulting from the operation of any present or future provision of the
bankruptcy laws or other similar statute, or from the decision of any court.
18.04 Guarantor unconditionally waives diligence, presentment,
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protest, notice of dishonor, demand, extension of time for payment, notice of
nonpayment at maturity, and indulgences and notices of every kind, and consents
to any and all changes in terms, covenants, and conditions hereof.
18.05 Guarantor agrees that the obligations of Guarantor
hereunder are irrevocable and are independent of the obligations of Seller under
this Agreement; that a separate action or actions may be brought and prosecuted
against Guarantor regardless of whether any action is brought against Seller or
whether Grantor is joined in any such action or actions.
18.06 Guarantor agrees that Guarantor shall not exercise any
rights that it may acquire by way of subrogation hereunder or otherwise until
the performance in full of all obligations guaranteed pursuant hereto.
18.07 Guarantor represents and warrants to Buyer that (a) it is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, (b) it has the full corporate power and corporate
authority to enter into this Agreement, and this Agreement has been duly
authorized, executed and delivered by Guarantor and is a legal, valid and
binding agreement and obligation of Guarantor enforceable against Guarantor in
accordance with its terms, except to the extent limited by applicable
bankruptcy, insolvency, moratorium and other similar laws of general application
relating to or affecting the enforcement of creditors' rights and general equity
principles, (c) neither the execution and delivery of this Agreement, the
consummation of any of the transactions contemplated herein, nor compliance with
the terms hereof, will conflict with or result in a breach of any provision of
any law or regulation applicable to Guarantor, or any indenture, contract or
other agreement to which Guarantor is a party or by which Guarantor is bound, or
any statute, rule, regulation, judgment, decree or order binding upon Guarantor,
and (d) Guarantor indirectly owns all of the issued and outstanding stock of
Seller.
18.08 The provisions of this Section shall inure to the benefit
of and may be enforced by Buyer and its successors and assigns, and shall be
binding upon and enforceable against Guarantor and Guarantor's successors or
assigns.
ARTICLE 19.
ADDITIONAL ACTIONS AND DOCUMENTS
Each of the parties hereto agrees that it will, at any time,
prior to, at or after the Closing Date, take or cause to be taken such further
actions, and execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments, and obtain such consents, as may
be necessary or reasonably requested in connection with the consummation of the
purchase and sale contemplated by this Agreement or in order to fully effectuate
the purposes, terms and conditions of this Agreement.
ARTICLE 20.
BROKERS
Except for Alex Brown & Co., Seller represents to Buyer that
Seller has not engaged, or incurred any unpaid liability (for any brokerage
fees, finders'
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fees, commissions or otherwise) to, any broker, finder or agent in connection
with the transactions contemplated by this Agreement; Buyer represents to Seller
that Buyer has not engaged, or incurred any unpaid liability (for any brokerage
fees, finders' fees, commissions or otherwise) to, any broker, finder or agent
in connection with the transactions contemplated by this Agreement; and Seller
agrees to indemnify Buyer, and Buyer agrees to indemnify Seller, against any
claims asserted against the other parties for any such fees or commissions by
any person purporting to act or to have acted for or on behalf of the
indemnifying party. Notwithstanding any other provision of this Agreement, this
representation and warranty shall survive the Closing Date without limitation as
to time.
ARTICLE 21.
EXPENSES
Each party hereto shall pay its own expenses incurred in
connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein. Notwithstanding the foregoing, (a) Seller
and Buyer shall share equally in all sales, use, transfer, stamp, documentary,
and recording taxes and fees, all costs of conveyances, all notary fees, all
filing and application fees to any federal, state or local agency, all filing
fees to the Commission in connection with the Applications, all sales, stamp,
documentary, transfer, and recording taxes and fees applicable to the
transactions contemplated by this Agreement and the instruments and documents
called for hereunder, including, without limitation, any Alabama sales, use,
stamp, documentary, transfer or similar taxes imposed with respect to the sale
of any motor vehicle or with respect to the transfer of any real property, (b)
Buyer shall pay all fees and expenses of the appraiser referred to in Section 12
and the Title Insurance Commitment, and all filing fees in connection with any
filing under the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as
amended, and (c) Seller shall pay all fees and expenses for the Survey.
ARTICLE 22.
NOTICES
All notices, demands, requests, or other communications which may
be or are required to be given or made by any party to any other party pursuant
to this Agreement shall be in writing and shall be hand delivered (including
delivery by overnight courier), mailed by first-class registered or certified
mail, return receipt requested, postage prepaid, delivered by overnight air
courier, or transmitted by telegram, telex or facsimile transmission addressed
as follows:
(i) If to Buyer:
Allbritton Communications Company
800 17th Street, N.W.
Suite 301
Washington, D.C. 20006
Attn.: Jerald N. Fritz, Esq.
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with a copy (which shall not constitute notice) to:
Hogan & Hartson
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn.: Mace J. Rosenstein, Esq.
(ii) If to Seller:
RKZ Television, Inc.
c/o Osborn Communications Corp.
130 Mason Street
Greenwich, CT 06830
Attn: Frank D. Osborn
with a copy (which shall not constitute notice) to:
Haley, Bader & Potts P.L.C.
4350 North Fairfax Drive
Suite 900
Arlington, VA 22203-1633
Attn: Theodore D. Kramer
or such other address as the addressee may indicate by written notice.
Each notice, demand, request, or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex or facsimile) the answer back being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
ARTICLE 23.
WAIVER
No delay or failure on the part of any party hereto in exercising
any right, power or privilege under this Agreement or under any other instrument
or document given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any party hereto unless made in writing and signed by the
party against whom enforcement of such waiver is sought and then only to the
extent expressly specified therein.
ARTICLE 24.
BENEFIT AND ASSIGNMENT
Except as hereinafter specifically provided in this Section 24,
no party hereto shall assign this Agreement, in whole or in part, whether by
operation of law or otherwise without the prior written consent of Seller (if
the assignor is Buyer) or
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Buyer (if the assignor is Seller), and any purported assignment contrary to the
terms hereof shall be null, void and of no force and effect. In no event shall
any assignment by Seller of its rights and obligations under this Agreement,
whether before or after the Closing, release Seller from its liabilities
hereunder. Notwithstanding the foregoing, Buyer or any permitted assignee of
Buyer may assign this Agreement and any and all rights hereunder, in whole or in
part, to any subsidiary of Buyer or to any entity in which the controlling
shareholders of Buyer maintain control. Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. No person or entity other than the
parties hereto is or shall be entitled to bring any action to enforce any
provision of this Agreement against any of the parties hereto, and the covenants
and agreements set forth in this Agreement shall be solely for the benefit of,
and shall be enforceable only by, the parties hereto or their respective
successors and assigns as permitted hereunder.
ARTICLE 25.
REMEDIES CUMULATIVE
Except as specifically provided herein, the remedies provided
herein shall be cumulative and shall not preclude the assertion by Seller or by
Buyer of any other rights or the seeking of any other remedies against the
other.
ARTICLE 26.
ENTIRE AGREEMENT; AMENDMENT
This Agreement, together with all Exhibits and Schedules hereto,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby.
ARTICLE 27.
SEVERABILITY
If any part of any provision of this Agreement or any other
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions hereof or of said agreement, document or writing.
ARTICLE 28.
PRESS RELEASES
All notices to third parties and other publicity relating to the
transactions contemplated by this Agreement shall be jointly planned,
coordinated and agreed to by Buyer and Seller. Prior to the Closing Date neither
of the parties hereto shall act unilaterally in this regard without the prior
written approval of the
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other, except as required by law and/or the rules and regulations of the
Commission.
ARTICLE 29.
HEADINGS
The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
ARTICLE 30.
GOVERNING LAW
This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by and construed
under and in accordance with the laws of the State of New York, excluding the
choice of law rules thereof.
ARTICLE 31.
SIGNATURE IN COUNTERPARTS
This Agreement may be executed in separate counterparts, neither
of which need contain the signatures of both parties, each of which shall be
deemed to be an original, and both of which taken together constitute one and
the same instrument. It shall not be necessary in making proof of this Agreement
to produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Asset Purchase Agreement, or has caused this Asset Purchase Agreement to be duly
executed and delivered in its name on its behalf, all as of the day and year
first above written.
SELLER
RKZ TELEVISION, INC.
By:
Name:
Title:
BUYER
ALLBRITTON COMMUNICATIONS
COMPANY
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By: ________________________________
Robert L. Allbritton
Executive Vice President
For purposes of Article 18 of
this Asset Purchase Agreement
OSBORN COMMUNICATIONS CORP.
By:
Name:
Title:
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DECEMBER 29, 1995 LETTER TO RKZ TELEVISION, INC.
December 29, 1995
RKZ Television, Inc.
Osborn Communications Corporation
c/o Osborn Communications Corporation
130 Mason Street
Greenwich, Connecticut 06830
Re: WJSU-TV, Anniston, Alabama (the "Station")
Gentlemen:
Reference is hereby made to that (a) certain Option Agreement,
dated as of December 21, 1995 (the "Option Agreement"), by and among RKZ
Television, Inc., a Delaware corporation ("Grantor"), Osborn Communications
Corporation, a Delaware corporation ("Guarantor" and together with "Grantor,"
the "Sellers"), and Allbritton Communications Company, a Delaware corporation
("ACC") and (b) that certain Asset Purchase Agreement to be entered into by and
among the Sellers and ACC upon the exercise of the option described in the
Option Agreement (the "Purchase Agreement" and together with the Option
Agreement, the "Transaction Agreements"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Transaction Agreements.
Notwithstanding anything to the contrary set forth in the
Transaction Agreements or otherwise, this letter agreement (the "Letter
Agreement") sets forth our agreement with respect to the following matters:
1. Liens and Encumbrances. Sellers, ACC and Society National Bank
(the "Bank") have entered into an agreement dated as of December 29, 1995 (the
"Bank Agreement"), pursuant to which the Bank will give notice to ACC prior to
the foreclosure by the Bank on its liens and security interests in the Assets,
provided that the Sellers pay certain amounts to the Bank as set forth in the
Bank Agreement. Sellers represent and warrant that the Option Amount and any
Supplemental Amount (net of reasonable transaction expenses and applicable
taxes) paid by ACC will be paid to the Bank. Except for the liens and security
interests disclosed by Grantor to ACC on Schedule 3.05(b) to the Option
Agreement delivered pursuant thereto, Sellers shall not, and shall not permit
any of its
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subsidiaries to, directly or indirectly, create, incur, assume or permit to
suffer to exist any lien, security interest or other encumbrance of any kind on,
or with respect to, the Assets, whether now owned or hereafter acquired, or any
income or profits therefrom. Notwithstanding anything to the contrary, Sellers
may permit new liens, security interests or other encumbrances in connection
with the refinancing of any debt presently owed to the Bank, provided that the
banks or such other financial institutions which agree to provide refinancing to
the Sellers agree in writing to the terms and conditions applicable to the Bank
which are set forth in the Bank Agreement and in the consent agreement dated as
of December 29, 1995 entered into by and between the Guarantor and the Bank.
2. Intercompany Debt. Sellers acknowledge and agree that (a)
intercompany debt and interest in the amount of approximately $10.4 million is
owed to O.C.C., Inc., a wholly-owned subsidiary of the Guarantor, by the Grantor
and (b) the entire intercompany debts and obligations of the Grantor will be
extinguished and paid in full upon payment by ACC of the Option Amount. Except
as may be reasonably required by Grantor, pursuant to the exercise of its sole
good faith business judgment, to carry out its obligations under the Transaction
Agreements, including Grantor's obligations as the licensee of the Station,
Grantor shall not, directly or indirectly, create, incur, assume, guaranty or
otherwise become or remain directly or indirectly liable with respect to any
intercompany indebtedness or any indebtedness with an affiliate of Grantor.
3. Bankruptcy.
(a) Grantor represents that as of the date hereof and continuing through the
Closing Date, Grantor has not filed a voluntary petition for relief, nor is
there any involuntary petition pending against the Grantor or against or with
respect to the Assets, under any provision of the federal bankruptcy laws or
other local, state, federal, or other insolvency or similar laws providing for
the relief of debtors (individually, an "Insolvency Proceeding").
(b) The Grantor represents, warrants and covenants to ACC that the exercise by
ACC of its rights pursuant to the Option Agreement will not be thwarted,
prevented, hindered or delayed by an Insolvency Proceeding. Grantor further
represents, warrants and covenants to ACC that Grantor shall not voluntarily
commence an Insolvency Proceeding, and that Grantor shall use its best efforts
to cause to be immediately dismissed any involuntary Insolvency Proceeding.
(c) In the event that an Insolvency Proceeding is commenced, Grantor knowingly,
voluntarily and intentionally, after consultation with and advice of counsel,
stipulates and agrees, to the fullest extent allowed by law and with the full
intention that such stipulations and agreements shall survive the filing of any
Insolvency Proceeding, that:
(i) Without the necessity of an evidentiary hearing and without the necessity or
requirement that ACC establish or prove the value of the Assets, or the lack of
adequate protection of ACC's interest in the Assets, Grantor consents to and ACC
shall be entitled to the
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immediate modification or termination of any stays of proceedings pursuant to 11
U.S.C. Section 362 or otherwise, thereby allowing ACC to exercise all of its
legal rights and remedies including, without limitation, the right to acquire
the Assets. Grantor shall not oppose, directly or indirectly, or otherwise
defend against ACC's effort to gain such relief from the any stays.
(ii) The Grantor hereby irrevocably appoints ACC as its attorney in fact to
communicate to any court of competent jurisdiction the express consent of the
Grantor to any request by ACC for the modification or termination of the stays
of proceedings as set forth above, and to take any and all other and further
actions necessary or appropriate to the modification or termination of any
stays.
(iii) In addition to and not in lieu of the modification or termination of any
stays of proceedings contemplated above and to the extent that the Letter
Agreement, the Transaction Agreements and the transactions contemplated hereby
are or might be considered to be in the nature of executory contracts, the
Grantor shall, at the request of ACC, immediately assume and cure any default in
performance under the terms of this Letter Agreement and the Transaction
Agreements and shall file with a court of competent jurisdiction such motions,
adversary proceedings or other actions as may be necessary to give immediate
effect to the assumption thereof. Failure or refusal of the Grantor to undertake
immediately and successfully such assumption shall constitute additional cause
for the modification or termination of any and all stays of proceedings.
(iv) The Grantor hereby irrevocably appoints ACC as its attorney in fact to
communicate to any court of competent jurisdiction the express consent of the
Grantor to the assumption of this Letter Agreement and the Transaction
Agreements and to take any and all other and further actions necessary or
appropriate to implement such assumption. The rights and remedies set forth in
this Paragraph (c) are in addition to and not in substitution for ACC's right to
submit and have allowed a claim pursuant to 11 U.S.C. Section 502(g) (or any
similar or successor statute or rule of court) in the event that this Letter
Agreement or the Transaction Agreements are rejected as executory contracts in
an Insolvency Proceeding.
(d) The Grantor expressly acknowledges that the agreements of the parties with
respect to the matters set forth in this Letter Agreement constitute a
materially significant portion of the inducement for ACC to pay the Option
Amount as of the date hereof.
4. Relocation of Transmitter Site. Section 2.1 of the Option Agreement is
amended to clarify that the determination of whether a Transmitter Site is
"reasonably acceptable to ACC" shall not include consideration of the extent of
coverage of Birmingham from such a site as long as such site places a predicted
city grade contour over at least part of the Birmingham Limits using the
prediction methodology specified in paragraph 5 hereof.
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5. Calculation of Predicted City Grade Contour. For purposes of Sections 2.1 and
2.3(b) of the Option Agreement, the Grantor and ACC agree that the area within
the Authorized Contour Area and the area within the Proposed Contour Area shall
each be determined as follows: A grid of evenly-spaced squares, each one of
which is of 1,000 meters in length on each side, shall be superimposed over the
area within the Birmingham Limits. Within each square, the predicted signal
strength will be determined using the MSite Program of EDX Engineering. The
predicted signal strength will be determined by assuming free space propagation
minus diffraction losses caused by terrain based upon the rounded obstacle
diffraction model described in Section 7.3 of NBS Technical Note 101, assuming
50 percent time and location variability and the receiving antenna height
assumed by the FCC's F(50,50) curves. Each square receiving a predicted signal
strength of 80 dBu or greater will be deemed to be encompassed by the city grade
contour of the Station. The area encompassed within all such squares receiving a
predicted signal strength of 80 dBu or greater shall be considered to be the
area within the Birmingham Limits encompassed by the predicted city grade
contour. The signal strength prediction shall be subject to review by ACC's
engineer to assure that assumptions have been made consistent with similar
studies submitted to the FCC using the MSite program or another EDX program
employing the same diffraction loss calculation techniques and assumptions.
6. Delivery of the Option Amount. ACC acknowledges that payment by ACC of the
Option Amount shall constitute a waiver by ACC of any right to terminate the
Option pursuant to Section 1.3 of the Option Agreement.
7. Miscellaneous. This Letter Agreement and the covenants and agreements set
forth herein shall be binding upon and inure solely to the benefit of the
signatory parties hereto (and their successors and assigns as permitted under
the Transaction Agreements). This Letter Agreement shall be deemed to amend the
Transaction Agreements and to the extent that any of the terms or conditions
herein are inconsistent or conflict with the forms or conditions of the
Transaction Agreements, the terms and conditions of this Letter Agreement shall
govern.
Please acknowledge your understanding of and agreement with the
foregoing by signing this Letter Agreement in the spaces provided below,
retaining one original for your files and returning the other original to ACC in
the manner provided in the Purchase Agreement.
Sincerely,
ALLBRITTON COMMUNICATIONS
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COMPANY
By:
Name: Jerald N. Fritz
Title: Vice President
ACCEPTED AND AGREED TO THIS __th DAY OF December, 1995:
RKZ TELEVISION, INC.
By:
Name: Michael F. Mangan
Title: Vice President
OSBORN COMMUNICATIONS
CORPORATION
By:
Name: Michael F. Mangan
Title: Vice President
RKZ Television, Inc.
Osborn Communications Corporation
c/o Osborn Communications Corporation
December 29, 1995
Page 6
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WJSU TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT
Time Brokerage Agreement ("Agreement") dated as of December 21,
1995, by and between RKZ Television Inc. ("Licensee") and Allbritton
Communications Company ("Broker").
WHEREAS, Licensee owns and operates television station WJSU-TV,
Channel 40, Anniston, Alabama (the "Station"); and
WHEREAS, Licensee and Broker have entered into on this day an Option
Agreement relating to the Station (the "Option Agreement") pursuant to which
Broker has purchased from Licensee the option to purchase the Station; and
WHEREAS, Licensee, while maintaining control over the Station's
finances, personnel matters and programming, desires to accept and broadcast
programming supplied by Broker on the Station and Broker desires to provide such
programming;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as follows:
1. Air Time and Transmission Services. Licensee hereby agrees, beginning
on the Commencement Date, as defined in the Option Agreement, to broadcast, or
cause to be broadcast, on the Station, during times when Licensee Programs are
not broadcast, programming provided by Broker (the "Programming"), which may
include, without limitation, network programming, syndicated programs, barter
programs, paid-for programs, locally produced programs and advertising.
2. Payments. Broker hereby agrees, beginning on the Commencement Date,
to pay Licensee, as full and complete consideration for the rights granted
hereunder, the amounts, and pursuant to the terms, set forth in Attachment I.
Broker shall receive a payment credit for any Programming not broadcast by the
Station, such credit to be determined by multiplying the sum of the Base and
Expenses Payments by the ratio of the amount of time preempted or not accepted
to the total number of hours of Programming supplied each month, provided that
the failure of the Station to broadcast such Programming is not due to the
negligent act of Broker, equipment downtime or local needs programming in
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accordance with Paragraph 8; provided, further, that if Licensee without
Broker's concurrence has not broadcast any programming supplied to the Station
pursuant to any affiliation agreement between the Broker and the ABC Television
Network (the ABC Affiliation Agreement), then Licensee shall be responsible for
satisfying any obligations to the ABC Network thereunder ("Network
Obligations").
3. Term. The term of this Agreement shall be until the earlier of: (i)
the acquisition of the Station pursuant to the Option Agreement; or (ii) ten
(10) years beginning on the Commencement Date.
4. Programming. Broker shall furnish or cause to be furnished the
Programming, which shall be programming of its selection and may include
commercial matter, network programming, syndicated programming, news,
entertainment, promotions, contests, public service announcements and other
television programming. On a regular basis, Licensee shall air, or shall require
Broker to air, on the Station programming responsive to issues of importance to
the local community and educational and informational programming for children
aged 16 years and younger. All Programming shall be in accordance with (i) the
Communications Act of 1934, as amended; (ii) Federal Communications Commission
(the "FCC") rules, requirements and policies, including, without limitation, the
FCC's rules on plugola/payola, lotteries, station identification, children's
programming, sponsorship identification, political programming and political
advertising rates; (iii) all applicable federal, state and local regulations and
policies; and (iv) generally accepted quality standards consistent with
Licensee's past practices. Subject to the provisions of Paragraph 2 hereof,
Broker agrees that if, in the sole, good faith judgment of the Licensee or the
Station General Manager, Broker does not comply with the standards of this
paragraph, Licensee may suspend or cancel any Programming not in compliance.
Licensee and Broker shall cooperate in an effort to avoid conflicts regarding
broadcasts on the Station. The right to use the Programming and to authorize its
use in any manner and in any media whatsoever shall be, and remain, vested
solely in Broker.
5. Special Events. Licensee reserves the right in its discretion to
preempt, delay or delete any of the broadcasts of the Programming and to
substitute programming which in Licensee's judgment is of greater local or
national importance. In all such cases, Licensee shall use its best efforts to
give Broker reasonable notice of its intention to preempt such Programming, and,
in the event of such preemption, Broker shall receive a payment credit and
Licensee shall be responsible for Network Obligations for the Programming so
omitted pursuant to the terms of Paragraph 2 hereof.
6. Advertising and Programming Revenues. Broker shall retain all
advertising and other revenues, and all accounts receivables, relating to the
Programming it delivers to the Station for broadcast, including, without
limitation, network compensation revenues, promotion-related revenues and
retransmission
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consent revenues. Broker shall be responsible for payment of the commissions due
to any sales representative engaged by it for the purpose of selling advertising
which is part of the Programming it provides for the Station. Licensee shall
retain the revenue from the sale of any advertising on the Station on programs
not produced or delivered to it by Broker. Licensee and Broker each shall have
the right, at their own expense, to seek copyright royalty payments for their
own programming. Broker may sell advertising on the Station in combination with
the sale of advertising on other broadcasting stations of its choosing, subject
to compliance with antitrust laws.
7. Broadcast Obligations. Licensee represents and warrants that all
contracts, commitments or understandings of Licensee to broadcast on the Station
any programs or commercial matter on or after the date hereof are set forth in
Attachment II ("Broadcast Obligations"). Those Broadcast Obligations which
Broker agrees to assume on the Commencement Date are marked with an asterisk on
Attachment II, and Broker agrees to assume all Broadcast Obligations which may
not be terminated without penalty on 30-days written notice. As of the
Commencement Date, Licensee shall have paid all amounts owed on its Broadcast
Obligations as of that date. Licensee shall not incur any other Broadcast
Obligations without the prior written consent of Broker. Licensee agrees to be
solely responsible for, and to indemnify Broker against, satisfying and/or
terminating any Broadcast Obligation not expressly assumed by Broker and shall
provide to Broker evidence of such satisfaction or termination no later than 30
days following the Commencement Date. Licensee agrees, upon request of the
Broker, to terminate its affiliation agreement with the CBS Television Network
as of a date as soon as possible after the commencement of the ABC Affiliation
Agreement.
8. Station Facilities.
8.1. Use of Facilities. Subject to the qualifications set forth in this
Agreement, throughout the term of this Agreement, Licensee shall make the
facilities of the Station available to Broker for operation and broadcast with
the maximum authorized facilities twenty-four (24) hours a day, seven (7) days a
week, except for downtime occasioned by routine maintenance not to exceed two
(2) hours each Sunday morning between the hours of 12 Midnight and 4:00 a.m. To
the extent practicable, any maintenance work affecting the operation of the
Station at full power shall be scheduled upon at least forty-eight (48) hours
prior notice with the agreement of Broker, such agreement not to be unreasonably
withheld. During the term of this Agreement, Broker agrees to perform, without
charge, routine monitoring of the Station's transmitter performance and tower
lighting, subject to the Licensee's supervision.
9. Right of Access. Broker and Broker's employees or agents shall at all
times be afforded reasonable access to the Station in order to perform their
duties in connection with the production and transmission of the Programming
over
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the facilities of the Station. Broker shall have the right to install at
Licensee's and/or Broker's premises, and to maintain throughout the term of this
Agreement, at Broker's expense, any microwave studio/transmitter relay
equipment, telephone lines, transmitter remote control, monitoring devices or
any other equipment necessary for the proper transmission of the Programming on
the Station, and Licensee and Broker shall take all steps reasonably necessary
to prepare and file any applications with the FCC to effectuate such proper
transmission. Whenever on the Station's premises, Broker and its employees and
agents shall be subject to the supervision and direction of Licensee's General
Manager and/or other designated employee or agent.
10. New Technologies. The parties agree that any future FCC frequency
allocations associated with the operation of the Station, or any additional uses
of the Station's frequency authorized by the FCC (or any government agency or
entity succeeding to the FCC's authority), including but not exclusively the
transmission of advanced television, high definition, or digital broadcasts, are
included under the provisions of this Agreement. Following a timely request by
Broker, Licensee agrees to apply for any additional FCC authorization, or
authorization from such other government agency or entity which may be necessary
in order to make use of any future frequency allocations or additional uses of
the Station's frequency as provided herein.
11. Force Majeure. Any failure or impairment of facilities or any delay
or interruption in broadcasting the Programming, or failure at any time to
furnish facilities, in whole or in part, for broadcasting, due to acts of God,
strikes, or threats thereof, force majeure, or due to causes beyond the control
of Licensee, shall not constitute a breach of this Agreement, and Licensee shall
not be liable to Broker, except to the extent of allowing in each such case an
appropriate payment credit for time not provided or broadcasts not carried based
upon a pro rata adjustment to amounts due as specified in Paragraph 2 hereof
calculated upon the length of time during which the failure or impairment exists
and Licensee's satisfaction of any Network Obligations.
12. Licensee Control of Station. Notwithstanding anything to the
contrary in this Agreement, Licensee shall have full authority, control and
power over the operation of the Station during the period of this Agreement.
Licensee shall retain control, said control to be reasonably exercised, over the
policies, programming and operations of the Station, including, without
limitation, the right to decide whether to accept or reject any Programming or
advertisements, the right to preempt any Programming in order to broadcast a
program deemed by Licensee to be of greater national, regional, or local
interest, and the right to take any other actions necessary for compliance with
the laws of the United States; the laws of the relevant states; the rules,
regulations, and policies of the FCC (including without limitation the
prohibition on unauthorized transfers of control); and the rules, regulations
and policies of other federal governmental authorities, including
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without limitation the Federal Trade Commission and the Department of Justice.
Licensee shall be responsible for ensuring that FCC requirements are met with
respect to ascertainment of the problems, needs and interests of the community,
public service programming, main studio staffing, maintenance of public
inspection files and the preparation of quarterly issues/programs lists and
children's programming reports. Broker shall, upon request by Licensee, provide
Licensee with information with respect to such of Broker's programs which are
responsive to the problems, needs and interests of the community or which
contain educational and informational programming for children, so as to assist
Licensee in the preparation of required quarterly issues/programs lists and
children's programming reports, and shall provide upon request other information
to enable Licensee to prepare other records, reports and logs required by the
FCC or other local, state or federal governmental agencies.
13. Responsibility for Employees and Expenses. Broker shall employ and
be responsible for the salaries, taxes, insurance and related costs for all
personnel used in the production of the Programming (including, without
limitation, salespeople, traffic personnel and programming staff). Licensee
shall employ two full-time employees of the Station, one of whom shall be a
manager, both of whom shall report to and be accountable solely to Licensee, and
who shall be ultimately responsible for the day-to-day operation of the Station.
Licensee shall be responsible for the salaries, taxes, insurance and related
costs for such personnel. Licensee shall also be responsible for all expenses
related to the Station's studio and broadcast transmission, including, but not
limited to, tower and studio rent or mortgages, utilities, insurance on
Licensee's facilities, automobile expenses of Licensee's employees, property
taxes and income taxes relating to Licensee's earnings from this arrangement.
Whenever on the Station's premises, all Broker personnel shall be subject to the
supervision and the direction of Licensee's designated personnel. Broker shall
pay for all telephone calls associated with program production and listener
responses, for all fees to ASCAP, BMI and SESAC, for all sums owed under assumed
contracts and for any other copyright fees attributable to the Broker's
Programming broadcast on the Station.
14. Indemnification. Broker shall indemnify and hold Licensee and its
stockholders, directors, officers, agents, employees, successors, and assigns
harmless against all liability for libel, slander, illegal competition or trade
practice, infringement of trade marks, trade names, or program titles, violation
of rights of privacy, and infringement of copyrights and proprietary rights and
other liabilities resulting from or relating to the broadcast of Programming
furnished by Broker and for any breach of any representations, covenants or
warranties of Broker contained in or made pursuant to this Agreement. Licensee
agrees to indemnify and to hold Broker and its stockholders, directors,
officers, agents, employees, successors, and assigns harmless against all
liability arising out of (i) material broadcast by Licensee other than the
Programming and/or (ii) liabilities of the type described in the first sentence
of this Paragraph that arise as a result of Licensee's preemption
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or alteration of any Programming prior to broadcast by Licensee; or (iii) any
breach of any representations, covenants or warranties of Licensee contained in
or made pursuant to this Agreement. Broker's and Licensee's obligations to hold
the other harmless against the liabilities specified above shall survive any
termination of this Agreement until the expiration of all applicable statutes of
limitation. Each of Broker and Licensee shall carry errors and omissions
insurance covering broadcasts made under this Agreement, and shall name the
other party as an additional insured on such insurance policy to cover
broadcasts made under this Agreement.
15. Events of Default: Cure periods and Remedies.
15.1. Events of Default. The following shall, after the expiration of
the applicable cure periods, constitute Events of Default under the Agreement:
15.1.1. Non-Payment. Broker's failure to timely pay the
consideration provided for in Paragraph 2 hereof;
15.1.2. Default in Covenants or Adverse Legal Action. The
default by any party hereto in the material observance or performance of
any material covenant, condition or agreement contained herein, or if
any party shall (a) make a general assignment for the benefit of
creditors, (b) files or has filed against it a petition for bankruptcy,
for reorganization or an arrangement, or for the appointment of a
receiver, trustee or similar creditors' representative for the property
or assets of such party under any federal or state insolvency law,
which, if filed against such party, has not been dismissed or discharged
within sixty (60) days thereof, or, specifically and without limitation,
if Licensee's successors and assigns, including, without limitation, any
assignee of the FCC license for the Station, except if such successor or
assign is Broker, refuses to abide by or terminates this Agreement
during the term of this Agreement, such event shall constitute a breach
by Licensee.
15.1.3. Breach of Representation. If any material representation
or warranty herein made by either party hereto, or in any certificate or
document furnished by either party to the other pursuant to the
provisions hereof, shall prove to have been false or misleading in any
material respect as of the time made or furnished.
15.2. Cure Periods. An Event of Default shall not be deemed to have
occurred until twenty (20) business days after the nondefaulting party has
provided the defaulting party with written notice specifying the event or events
that if not cured would constitute an Event of Default and specifying the
actions necessary to cure within such period, except that in the Event of
Default pursuant to Paragraph 15.1.1 hereof, an Event of Default shall not be
deemed to have occurred until five (5) business days after Licensee has provided
Broker with
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written notice specifying the event or events that if not cured would constitute
an Event of Default and specifying the actions necessary to cure within such
period. The twenty (20) business-day period may be extended for a reasonable
period of time if the defaulting party is acting in good faith to cure and such
delay is not materially adverse to the other party. The Event of Default shall
not be deemed to have occurred if actions necessary to cure are taken during the
relevant cure period.
15.3. Termination Upon Default. Upon the occurrence of an Event of
Default, the non-defaulting party may terminate this Agreement provided that it
is not also in material default hereunder. If Broker has defaulted in the
performance of its obligations, Licensee shall be under no further obligation to
make available to Broker any further broadcast time or broadcast transmission
facilities and all amounts accrued or payable to Licensee up to the date of
termination which have not been paid, less any payment credits, shall
immediately become due and payable. If Licensee has defaulted in the performance
of its obligations hereunder, Broker may seek such remedies at law and/or equity
as are available, including, without limitation, specific performance.
15.4. Liabilities Upon Termination. Broker shall be responsible for all
liabilities, debts and obligations of Broker accrued from the purchase of air
time and transmission services including, without limitation, accounts payable,
barter agreements and unaired advertisements, but not for Licensee's federal,
state, and local tax liabilities associated with Broker's payments to Licensee
as provided for herein. With respect to Broker's obligations to broadcast
material over the Station after termination hereunder, Broker may propose
compensation to Licensee for meeting these obligations, but Licensee shall be
under no duty to accept such compensation or to perform such obligations. Upon
termination, Broker shall return to Licensee any equipment or property of the
Station used by Broker, its employees or agents, in substantially the same
condition as such equipment existed on the date of this Agreement, ordinary wear
and tear excepted. Notwithstanding anything in the foregoing to the contrary,
termination shall not extinguish any rights of either party as may be provided
by Paragraphs 14, 15 or 16 hereof.
16. Broker Termination Options. Broker may elect, but shall not be
required, to terminate this Agreement at any time during the term hereof (a) in
the event that Licensee preempts or substitutes other programming for that
supplied by the Broker during five (5) percent or more of the total hours of
operation of the Station during any calendar month. In the event Broker elects
to terminate this Agreement pursuant to this provision, it shall give Licensee
notice of such election at least sixty (60) days prior to the termination date.
Upon termination, all sums owing to Licensee by Broker shall be paid.
Notwithstanding anything in the foregoing to the contrary, termination shall not
extinguish any rights of either party as may be provided by Paragraph 14 hereof.
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17. Responsive Programming. Broker and Licensee mutually acknowledge
their interest in ensuring that the Station serves the needs and interests of
the residents of the Station's community of license and service area and agree
to cooperate in doing so. Licensee shall, on a regular basis, assess the issues
of concern to residents of the Station's community of license and service area
and address those issues in its public service programming. Licensee shall
describe those issues and responsive programming and place issues/programs lists
in the Station's public inspection file as required by FCC rules. Licensee may
request, and Broker shall provide, information concerning such of Broker's
Programming that is responsive to community issues so as to assist Licensee in
the satisfaction of its public service programming obligations. Licensee shall
also evaluate the local need for children's educational and informational
programming and shall inform Broker of its conclusions in that regard. Licensee,
in cooperation with Broker, shall ensure that educational and informational
programming for children aged 16 years and younger is broadcast over the Station
in compliance with applicable FCC requirements. Broker shall also provide to
Licensee upon request such other information necessary to enable Licensee to
prepare records and reports required by the FCC or other local, state or federal
government entities.
18. Time Brokerage Challenge. If this Agreement is challenged in whole
or in part at the FCC or in another administrative or judicial forum, whether or
not in connection with the Station's license renewal application, counsel for
the Licensee and counsel for the Broker shall jointly defend the Agreement and
parties' performance thereunder throughout all such proceedings. Each of
Licensee and Broker shall bear its respective costs of such proceedings. If
portions of this Agreement do not receive the approval of the FCC's staff, then
the parties shall endeavor in good faith to reform the Agreement as necessary to
satisfy the FCC staff's concerns or seek reversal of the staff decision and
approval from the full Commission on appeal.
19. Representations and Warranties.
19.1. Mutual Representations and Warranties. Both Licensee and Broker
represent that they are legally qualified, empowered, and able to enter into
this Agreement, and that the execution, delivery and performance hereof shall
not constitute a breach or violation of any agreement, contract or other
obligation to which either party is subject or by which it is bound.
19.2. Licensee's Representations, Warranties and Covenants. Licensee
makes the following further representations, warranties and covenants:
19.2.1. Authorizations. During the term of this Agreement,
Licensee shall own and hold all licenses and other permits and
authorizations necessary for the operation of the Station as presently
conducted (including licenses, permits and authorizations issued by the
FCC), and such
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licenses, permits and authorizations shall be in full force and effect
for the entire term, unimpaired by any acts or omissions of Licensee,
its principals, employees or agents. There is not now pending or, to
Licensee's best knowledge, threatened, any action by the FCC or other
party to revoke, cancel, suspend, refuse to renew or modify adversely
any of such licenses, permits or authorizations, and, to Licensee's best
knowledge, no event has occurred that allows or, after notice or lapse
of time or both would allow, the revocation or termination of such
licenses, permits or authorizations or the imposition of any restriction
thereon of such a nature that may limit the operation of the Station as
presently conducted. Licensee has no reason to believe that any such
license, permit or authorization shall not be renewed during the term of
this Agreement in its ordinary course. Licensee is not in violation of
any statute, ordinance, rule, regulation, order or decree of any
federal, state, local or foreign governmental agency, court or authority
having jurisdiction over it or over any part of its operations or
assets, which default or violation would have a material adverse effect
on Licensee or its assets or on its ability to perform this Agreement.
Licensee shall not take any action or omit to take any action which
would have an adverse impact upon the Licensee, its assets, the Station
or upon Licensee's ability to perform this Agreement.
19.2.2. Filings. All material reports and applications required
to be filed with the FCC (including ownership reports and renewal
applications) or any other governmental agency, department or body in
respect of the Station have been filed during the current license term
and in the future shall be filed in substantially a timely manner, and
are and shall be true and complete and accurately present the
information contained therein in all material respects. All such reports
and documents, to the extent required to be kept in the public
inspection files of the Station, are and shall be kept in such files.
19.2.3. Facilities. The Station's facilities shall be maintained
at the expense of Licensee and shall comply and be operated, in all
material respects, in accordance with the FCC authorizations for the
Station and with good engineering standards necessary to deliver a high
quality technical signal to the area served by the Station, and with all
applicable laws and regulations (including the requirements of the
Communications Act and the rules, regulations, policies and procedures
of the FCC promulgated thereunder). Licensee, throughout the term of
this Agreement, shall maintain good and marketable title to all of the
assets and properties used and useful in the operation of the Station.
During the term of this Agreement, Licensee shall not dispose of,
transfer, assign or pledge any of such assets and properties except with
the prior written consent of the Broker, if such action might adversely
affect Licensee's performance hereunder or the business and operations
of Licensee or the Station permitted hereby. All expenditures reasonably
required to maintain the quality of the Station's signal shall be made
promptly by Licensee, provided that Broker reimburses Licensee for such
expenses as set forth in Attachment I.
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19.2.4. Compliance with Law. Throughout the term of this
Agreement, Licensee shall comply with all laws and regulations
applicable in the conduct of Licensee's business and Licensee
acknowledges that Broker has not urged, counseled, or advised the use of
any unfair business practice.
19.2.5. Payment of Obligations. Licensee shall not incur any
debt, obligation or liability without the prior written consent of
Broker if such undertaking would adversely affect Licensee's performance
hereunder or the business and operations of the Broker permitted hereby.
Licensee shall pay in a timely fashion all of its debts, assessments and
obligations, including without limitation tax liabilities and payments
attributable to the operations of the Station, as they come due from and
after the effective date of this Agreement.
19.2.6. Broadcast Obligations. Licensee has no agreement,
contract, commitment or understanding to broadcast on the Station on or
after the Commencement Date, any programs or commercial matter other
than those listed in Attachment II hereto. Licensee shall not incur any
other such obligation without the prior written consent of Broker.
19.2.7. Insurance. Licensee shall maintain in full force and
effect throughout the term of this Agreement insurance with responsible
and reputable insurance companies or associations covering such risks
(including fire and other risks insured against by extended coverage,
public liability insurance, insurance for claims against personal injury
or death or property damage and such other insurance as may be
applicable) and in such amounts and on such terms as is conventionally
carried by broadcasters operating television stations with facilities
comparable to those of the Station. Any insurance proceeds received by
Licensee in respect of damaged property shall be used to repair or
replace such property so that the operations of the Station conform with
this Agreement.
19.2.8. Licensee Control. Licensee hereby verifies that for the
term of this Agreement it shall maintain ultimate control over the
Station's facilities, including specifically control over the Station's
finances, personnel and programming, and nothing herein shall be
interpreted as depriving Licensee of the power or right of such ultimate
control.
19.3. Broker's Representations, Warranties and Covenants.
19.3.1. Compliance with Applicable Law. Broker's performance of
its obligations under the Agreement and its furnishing of Programming
shall be in compliance with, and shall not violate, any applicable laws
or any applicable rules, regulations, or orders of the FCC or any other
governmental agency. Throughout the term of this Agreement, Broker shall
comply with all laws and regulations applicable in the conduct of
Broker's business and
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Broker acknowledges that Licensee has not urged, counseled, or advised
the use of any unfair business practice.
19.3.2. Children's Television Advertising. Broker shall not
broadcast advertising in programs originally designed for children aged
12 years and under in excess of the amounts permitted under applicable
FCC rules.
19.3.3. Handling of Complaints. Broker shall promptly advise
Licensee of any public or FCC complaint or inquiry that Broker receives
concerning the Programming on the Station.
19.3.4. Contracts. On the Commencement Date, Broker shall assume
Licensee's rights and obligations under the Broadcast Obligations marked
with an asterisk on Attachment II, and all Broadcast Obligations which
may not be terminated without penalty on 30 days written notice.
19.3.5. Copyright and Licensing. Broker represents and warrants
to Licensee that Broker has and shall have throughout the term of this
Agreement the full authority to broadcast the Programming on the Station
and that Broker shall not broadcast on the Station any material in
violation of the Copyright Act.
19.3.6. Information For FCC Reports. Upon request by Licensee,
Broker shall provide in a timely manner any such information in its
possession which shall enable Licensee to prepare, file or maintain the
records and reports required by the FCC.
19.3.7. Payola/Plugola. Broker shall not accept, and shall not
permit any of its agents or employees to accept, any consideration,
compensation, gift or gratuity of any kind whatsoever, regardless of its
value or form, including, but not limited to, a commission, discount,
bonus, materials, supplies or other merchandise, services or labor,
whether or not pursuant to written contracts or agreements between
Broker and merchants or advertisers, unless the payer is identified in
the program as having paid for or furnished such consideration, in
accordance with FCC requirements. Broker agrees to annually, or more
frequently at the request of Licensee, execute and provide Licensee with
an affidavit regarding payola/plugola compliance.
19.3.8. Insurance. Broker shall maintain in full force and effect
throughout the term of this Agreement insurance with responsible and reputable
insurance companies or associations covering such risks (including fire and
other risks insured against by extended coverage, public liability insurance,
insurance for claims against personal injury or death or property damage and
such other insurance as may be applicable), in such amounts and on
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such terms as is conventionally carried by broadcasters operating television
stations with facilities comparable to those of the Station, and shall name the
Licensee as an additional insured on such insurance policy. Any insurance
proceeds received by Broker in respect of damaged property shall be used to
repair or replace Station facilities. Broker shall carry also errors and
omissions insurance covering broadcasts made on the Station, and shall name the
Licensee as an additional insured on such insurance policy.
20. Publicity. Licensee and Broker shall not issue any press release or
otherwise make any public statement with respect to the transactions
contemplated herein except as may be required by law or regulation or as agreed
to by Licensee and Broker.
21. Modification and Waiver. No modification or waiver of any provision
of this Agreement shall in any event be effected unless the same shall be in
writing and signed by the party adversely affected by the waiver or
modification, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
22. No Waiver: Remedies Cumulative. No failure or delay on the part of
Licensee or Broker in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of Licensee and Broker herein
provided are cumulative and are not exclusive of any right or remedies which it
may otherwise have.
23. Construction. This Agreement shall be construed in accordance with
the laws of the State of New York, and the obligations of the parties hereto are
subject to all federal, state or municipal laws or regulations now or hereafter
in force and to the regulations of the FCC and all other governmental bodies or
authorities presently or hereafter to be constituted.
24. Headings. The headings contained in this Agreement are included for
convenience only and no such heading shall in any way alter the meaning of any
provision.
25. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including, without limitation, and Licensee shall assign this Agreement to, any
assignee of the FCC license for the Station.
26. Notices. Any notice required hereunder shall be in writing and any
payment, notice or other communications shall be deemed given when
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delivered personally, or mailed by certified mail or Federal Express; postage
prepaid, with return receipt requested, and addressed in accordance with the
listing set forth in Attachment III hereto.
27. Entire Agreement. This Agreement embodies the entire agreement
between the parties and there are no other agreements, representations,
warranties, or understandings, oral or written, between them with respect to the
subject matter hereof. No alterations, modification or change of this Agreement
shall be valid unless by like written instrument.
28. Severability. The event that any of the provisions contained in this
Agreement is held to be invalid, illegal or unenforceable shall not affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had not been contained herein,
subject to Broker's right to terminate pursuant to Paragraphs 15 and 18 hereof.
29. Counterpart Signatures. This Agreement may be signed in one or more
counterparts, each of which shall be deemed a duplicate original, binding on the
parties hereto notwithstanding that the parties are not signatory to the
original or the same counterpart. This Agreement shall be binding and effective
as of the date on which the executed counterparts are exchanged by the parties.
IN WITNESS WHEREOF, the parties have executed this Time Brokerage
Agreement as of the date first above written.
RKZ TELEVISION INC.
By: _________________________________
Name: Frank D. Osborn
Title: President
ALLBRITTON COMMUNICATIONS
COMPANY
By: _________________________________
Name: Jerald N. Fritz
Title: Vice President
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TIME BROKERAGE AGREEMENT
ATTACHMENT I
(1) During the term of this Agreement, Broker shall pay to Licensee on
the first day of each calendar month an "Expenses Payment" plus a "TBA Payment"
by wire transfer or check. The Expenses Payment shall reimburse Licensee for all
of its monthly legitimate and prudent expenses in operating the Station pursuant
to this Agreement, as set forth in the budget of anticipated Licensee expenses
attached hereto as Attachment IV. Pursuant to such budget, the monthly Expenses
Payment shall initially be $24,500.00 per month. The TBA Payment shall equal
$15,000.00 per month until all Governmental Approvals for the Station Tower, as
defined in the Option Agreement, have been obtained, after which the TBA Payment
shall be increased to $30,000.00 per month. In addition to the above, a
supplemental TBA Payment of $3,000 per month shall be paid by Broker to Licensee
commencing forty-eight (48) months from the date hereof.
(2) There shall be a settlement at the end of each calendar year where
the actual legitimate and prudent operating expenses of Licensee relating to the
Station are compared to the Expenses Payments paid that calendar year by Broker
to Licensee. To the extent, if any, that the actual legitimate and prudent
operating expenses are more or less than those paid by Broker, going forward,
the monthly Expenses Payment shall be increased or decreased by the amount of
overpayment or underpayment.
(3) Licensee shall submit to Broker no later than thirty (30) days prior
to the end of each calendar year a proposed budget for the upcoming calendar
year. Broker and Licensee shall agree in good faith on an amount for the
upcoming year's budgeted expenses no later than September 30 of each year.
TIME BROKERAGE AGREEMENT
ATTACHMENT II
TIME BROKERAGE AGREEMENT
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ATTACHMENT III
If the notice is to Licensee:
RKZ Television, Inc.
c/o Osborn Communications Corporation
130 Mason Street
Greenwich, CT 06830
Attention: Frank D. Osborn
Telecopy No. (203) 629-1749
With a copy to (which shall not constitute notice):
Haley, Bader & Potts P.L.C.
4350 N. Fairfax Drive
Suite 900
Arlington, VA 22203
Attention: Theodore D. Kramer, Esq.
Telecopier No. (703) 841-2345
If the notice is to Broker:
Allbritton Communications Company
800 17th Street, N.W., Suite 301
Washington, DC 20006
Attention: Jerald N. Fritz
Telecopier No. (202) 822-6749
With a copy to (which shall not constitute notice):
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: Mace J. Rosenstein, Esq.
Telecopier No. (202) 637-5910
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TIME BROKERAGE AGREEMENT
ATTACHMENT IV
Station Operating Budget
OSBORN COMMUNICATIONS CORPORATION
Calculation of Expenses relating to LMA
WJSU
Technical
Technical Personnel
Salary 3,667
Insurance 590
Payroll Tax 281
Unemployment Ins. 128
Repairs & Maintenance 650
Utilities 4,900
General
General Manager
Salary 3,423
Insurance 590
Payroll Tax 262
Unemployment Ins. 245
Lease Payment 3,155
Utilities 900
Telephone-Svc. Chg./Maint. 1,000
Repairs & Maintenance 300
Property Insurance 3,820
Property Tax 500
Payroll Service 50
_______
24,462
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LETTER AMENDMENT TO WJSU TIME BROKERAGE
December 29, 1995
RKZ Television, Inc.
c/o Osborn Communications Corporation
130 Mason Street
Greenwich, Connecticut 06830
Re: WJSU-TV, Anniston, Alabama (the "Station")
Gentlemen:
Reference is hereby made to that certain Time Brokerage Agreement, dated
as of December 21, 1995 (the "Brokerage Agreement"), by and between RKZ
Television, Inc., a Delaware corporation ("Licensee") and Allbritton
Communications Company, a Delaware corporation ("Broker"). Capitalized terms
used but not otherwise defined herein shall have the meanings ascribed to such
terms in the Brokerage Agreement.
Notwithstanding anything to the contrary set forth in the Brokerage
Agreement or otherwise, this letter agreement (the "Letter Agreement") sets
forth our agreement with respect to the following matters:
1. Station Employees. Licensee and Broker acknowledge and agree that
after February 1, 1996, the "expenses" of Licensee which the Broker agrees to
reimburse pursuant to Attachment I of the Brokerage Agreement shall not include
any compensation or other remuneration for any employee (or former employee) of
the Station (other than the General Manager and Chief Engineer). Broker shall be
entitled, but not obligated, to offer employment to any of the employees of
Licensee other than the General Manager and Chief Engineer on or before February
1, 1996. Licensee shall be liable and responsible for any salary, commission,
bonus, benefit plan contribution, or other compensation or benefit of the
employees (or former employees) of the Station arising or incurred prior to the
Commencement Date, and such payments shall not be deemed expenses reimbursable
pursuant to Attachment I of the Brokerage Agreement.
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2. Programming Revenue. Licensee and Broker acknowledge and agree that
all programs broadcast or selected for broadcast by Broker pursuant to
contracts, the obligations for which have been assumed by Broker pursuant to
Section 7 of the Brokerage Agreement, shall be deemed Programming for purposes
of the Brokerage Agreement, and Broker shall be entitled to all revenue derived
in connection therewith, including without limitation any network compensation
pursuant to the Affiliation Agreement by and between Licensee and CBS Affiliate
Relations dated as of December 4, 1992, as amended. Exhibit A hereto, listing
the existing program agreements of Licensee, shall be deemed to be Attachment II
to the Brokerage Agreement.
3. Studio Lease. Licensee acknowledges that the lease for studio space
in Anniston, Alabama terminated as of July 5, 1994. Licensee agrees that in the
event that the new lease, presently being negotiated, should provide for a lease
term of greater than six (6) months, Licensee must obtain the prior written
consent of Broker, which consent will not be unreasonably withheld prior to
entering into such lease.
4. Miscellaneous. This Letter Agreement and the covenants and agreements
set forth herein shall be binding upon and inure solely to the benefit of the
signatory parties hereto (and their successors and assigns as permitted under
the Brokerage Agreement). This Letter Agreement shall be deemed to amend the
Brokerage Agreement and to the extent that any of the terms or conditions herein
are inconsistent or conflict with the forms or conditions of the Brokerage
Agreement, the terms and conditions of this Letter Agreement shall govern.
Please acknowledge your understanding of and agreement with the
foregoing by signing this Letter Agreement in the spaces provided below,
retaining one original for your files and returning the other original to Broker
in the manner provided in the Brokerage Agreement.
Sincerely,
ALLBRITTON COMMUNICATIONS
COMPANY
By:
Name: Jerald N. Fritz
Title: Vice President
ACCEPTED AND AGREED TO THIS __th DAY OF December, 1995:
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RKZ TELEVISION, INC.
By:
Name: Michael F. Mangan
Title: Vice President
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ASSET PURCHASE AGREEMENT dated as of January 29, 1996 by and between
BETHLEHEM RADIO, INC.
(Seller)
and
MOUNTAIN RADIO CORPORATION
(Buyer)
TABLE OF CONTENTS
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ARTICLE I - ASSIGNMENT AND PURCHASE OF ASSETS
1.1 Assignment of Assets 1
1.2 Excluded Assets 4
1.3 Liabilities to be Assumed 5
1.4 Purchase Price 5
1.5 Proration of Income and Expenses 6
1.6 Allocation of Purchase Price 6
ARTICLE II - CLOSING, TERMINATION, AND RISK OF LOSS
2.1 Closing 7
2.2 Transactions at the Closing 7
2.3 Termination 10
2.4 Risk of Loss 11
2.5 Interruption of Broadcast Transmissions 12
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation 12
3.2 Authority; No Conflict 13
3.3 Government Authorizations 13
3.4 Compliance with Regulations 14
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3.5 Taxes and Regulatory Fees 14
3.6 Personal Property 14
3.7 Real Property 15
3.8 Consents 17
3.9 Contracts 17
3.10 Environmental 18
3.11 Intangibles 18
3.12 Financial Statements 19
3.13 Personnel Information; Labor Contracts 19
3.14 Employee Benefit Plans 19
3.15 Litigation 20
3.16 Compliance with Laws 20
3.17 Insurance 21
3.18 Undisclosed Liabilities 21
3.19 Instruments of Conveyance; Good Title 21
3.20 Absence of Certain Changes 21
3.21 Insolvency Proceedings 23
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation 23
4.2 Authority; No Conflict 23
4.3 Consents 24
4.4 Litigation 24
4.5 Compliance with Laws 24
4.6 Qualification 24
ARTICLE V - COVENANTS OF SELLER
5.1 Continued Operation of Station 25
5.2 Financial Obligations 25
5.3 Reasonable Access 25
5.4 Maintenance of Assets 25
5.5 Notification of Developments 26
5.6 Payment of Taxes 26
5.7 Third Party Consents 26
5.8 Encumbrances 26
5.9 Assignment of Assets 26
5.10 Commission Licenses and Authorizations 26
5.11 Technical Equipment 27
5.12 Compensation Increases 27
5.13 Sale of Broadcast Time 27
5.14 Insurance 27
5.15 Negotiations with Third Parties 27
5.16 Covenant Not to Compete 27
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ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application 28
6.2 Performance 28
6.3 Conditions 28
6.4 Confidentiality 28
6.5 Cooperation 29
6.6 Environmental Reports 29
6.7 Consents to Assignment 29
6.8 Employee Matters 30
6.9 Survey 30
6.10 Escrow Agreement 31
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals 31
7.2 Performance 32
7.3 Failure of Transfer 32
7.4 Representations and Warranties 32
7.5 Consents 2
7.6 No Litigation 32
7.7 No Adverse Change 2
7.8 Documents 3
7.9 Opinions of Counsel 33
7.10 Financing 3
7.11 Survey 33
7.12 Non-compete Agreement 33
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance 33
8.2 Representations and Warranties 33
8.3 Government Approvals 34
8.4 Documents 34
8.5 Opinion of Counsel 34
ARTICLE IX - INDEMNIFICATION
9.1 Indemnification by Seller 34
9.2 Indemnification by Buyer 35
9.3 Notification of Claims 35
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ARTICLE X - MISCELLANEOUS
10.1 Assignment 37
10.2 Survival of Indemnification 37
10.3 Brokerage 38
10.4 Expenses of the Parties 38
10.5 Entire Agreement 38
10.6 Headings 38
10.7 Governing Law 38
10.8 Counterparts 38
10.9 Notices 39
10.10 Specific Performance 40
10.11 Consent to Jurisdiction 40
10.12 Further Assurances 40
10.13 Public Announcements 40
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DISCLOSURE SCHEDULE
1.1(a) Licenses and Authorizations
1.1(b) Tangible Personal Property
1.1(d) Real Estate Contracts
Real Estate Assets
1.1(e) Intangibles
1.1(f) Leases and Contracts
1.1(g) Contracts for Sale of Broadcast Time
1.1(i) Future Contracts
1.2(h) Excluded Assets
3.7 Title Defects
3.8 Seller's Consents
3.12 Financial Statements
3.13 Personnel
3.14 Employee Benefit Plans
3.15 Litigation
3.17 Insurance
3.20 Certain Changes
4.3 Buyer's Consents
THIS ASSET PURCHASE AGREEMENT is entered into this 29th day of January,
1996 by and between BETHLEHEM RADIO, INC., a corporation formed under the laws
of the State of West Virginia ("Seller"), and MOUNTAIN RADIO CORPORATION, a
corporation formed under the laws of the State of Delaware ("Buyer") (Seller and
Buyer sometimes being referred to herein individually as a "Party" and jointly
as "Parties").
R E C I T A L S
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WHEREAS, Seller owns and operates and has been duly licensed by the
Federal Communications Commission (the "FCC" or the "Commission") to operate
radio station WHLX-FM, Bethlehem, West Virginia (the "Station"); and
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.
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 AND PURCHASE OF ASSETS
1.1 Assignment 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 (as defined herein), 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 that certain lease agreement of July 6, 1995 between
Bethlehem Radio, Inc., and Colonial Pacific Leasing Corporation:
(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 WHLX (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").
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(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 Estate 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) Intangibles. The good will of the Station and other intangible
assets used or useful in the operation of the Station, including all of Seller's
rights in the trade names, copyrights, trademarks, service marks, patents,
patent applications, slogans, jingles, logos or other similar rights relating to
the 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
"Intangibles").
(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 pursuant to which payment is
to be received in whole or in part in services, merchandise or other non-cash
considerations ("Trade Agreements") entered into prior to the date of this
Agreement, except as agreed to by Buyer and set forth in Section 1.1(g) of the
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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
(other than Broadcast Agreements, which are governed by Section 5.13 hereof)
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.
(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 Closing Date (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.
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(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.
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 post-closing obligations related to Real
Estate Contracts, Contracts, Broadcast Agreements and Trade Agreements (the
"Assumed Contracts") assigned to and specifically assumed by Buyer. Without
limiting the generality of the foregoing, the Parties particularly agree that
Buyer should have no responsibility or liability regarding (i) federal, state or
local tax liability of any kind whatsoever incurred by Seller or (ii) any
employee benefit plan maintained by Seller, and Seller expressly agrees to
defend and indemnify Buyer against same. On or prior to the Closing Date Seller
shall pay or else have made arrangements, satisfactory to Buyer, to assume all
liabilities, debts and other obligations of the Station arising prior to the
Closing Date and not assigned to and specifically assumed by Buyer.
1.4 Purchase Price. In consideration of Seller's performance of this
Agreeement, Buyer shall pay to Seller the sum of Seven Hundred Fifty Thousand
Dollars($750,000) (the "Purchase Price") as follows:
(a) Escrow Deposit. As security for Buyer's failure to close, and as an
inducement for Seller to perform its obligations under this Agreement, Buyer,
upon execution of this Agreement, shall deposit the sum of Forty-Thousand
Dollars ($40,000.00) (the "Escrow Deposit") in the One Valley Bank. Sam E.
Schafer, Esq., and Harry Buch, Esq., shall act as escrow agents (the "Escrow
Agents") with respect to such accounts. At the Closing, the Escrow Deposit, and
any interest that has accrued thereon, shall be delivered to Seller and credited
against the Purchase Price. If the Closing fails to occur because
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Buyer is in material breach of this Agreement, the Escrow Deposit shall be paid
to Seller as liquidated damages and as Seller's exclusive remedy for such breach
and any interest on the Escrow Deposit shall be paid to Buyer. If the Closing
fails to occur for any other reason, the Escrow Deposit and any interest that
has accrued thereon shall be paid to Buyer.
(b) On the Closing Date at the Closing, Buyer shall pay the Purchase
Price, minus any sums that have been credited against the Purchase Price
pursuant to Subparagraph 1.4(a), above, by wire transfer of federal funds.
1.5 Proration of Income and Expenses. Except as otherwise provided
herein, 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(a)), 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 1.1(g) hereof, rents and similar prepaid deferred items attributable
to the ownership and operation of the Station.
(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.
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.
(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. Buyer and Seller agree to use such allocation in completing
and filing Internal Revenue Service Form 8594 for federal income tax
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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.
ARTICLE II
CLOSING, TERMINATION, AND RISK OF LOSS
2.1 Closing. Unless otherwise agreed upon by the Parties, the purchase
and sale of the Station Assets contemplated by this Agreement (the "Closing")
shall take place at 10:00 a.m. on the fifth business day after the Commission's
approval of the Assignment Application, as defined in Section 6.1 below, becomes
a Final Order (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 7.4;
(iii) a copy of the resolutions of the board of directors of Seller authorizing
the execution, delivery and performance of this Agreement and the Non-compete
Agreement to be delivered by Seller and its principals pursuant to Subparagraph
2.2(a)(ix) 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 West Virginia),
in proper statutory form for recording, conveying each parcel of Owned Real
Property;
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(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 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 unde
(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) a Non-compete Agreement, in the form attached hereto as Exhibit A, whereby
Seller and its principals agree not to compete with Buyer in the Wheeling, West
Virginia radio market, as defined by the Arbitron Company, for a period of five
(5) years following the Closing, 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;
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(xii) all files, records, logs, and program materials relating to the Station;
and all other records required to be maintained by the FCC with respect to the
Station, including the Station's public file, which shall be left at the station
and thereby delivered to Buyer.
(xiii) the opinion of counsel for Seller, dated the Closing Date, as described
in Section 7.9;
(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 any sums that have been credited against the
Purchase Price pursuant to Section 1.4(a) of this Agreement;
(ii) the consideration due under the Non-compete Agreement;
(iii) 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, 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;
(iv) the certificates contemplated by Sections 8.1 and 8.2;
(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;
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(ii) either Buyer or Seller if the Closing does not occur before December 1,
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 Form 314 is placed on the Commission's public
notice (through no fault of the terminating Party) or is denied by the
Commission by a Final Order;
(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 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)
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nation 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.
2.4 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
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.
2.5 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 five (5) 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
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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 West Virginia, and
is duly qualified to do business in and is in good standing in the State of West
Virginia. 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 Non-compete Agreement 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 Non-compete
Agreement 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 Non-compete Agreement,
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 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
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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 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.
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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 and Regulatory Fees. 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 the Owned
Real Property is assessed for real estate purposes as a wholly independent tax
lot, separate from any adjoining lot or improvements not constituting a part of
such parcel. Seller has paid all FCC Regulatory Fees required to be paid by
Seller with respect to the Station.
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
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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 Disclosure 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 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.
Notwithstanding the cross-reference in Section 3.7 of the Disclosure Schedule to
the Certificate of Title, the deeds of trust discussed in Note 1 to the
Certificate of Title and the liens listed in Note 2 to the Certificate of Title
shall not be considered Permitted Owned Real Property Exceptions and must be
removed and released by Closing.
(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
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the leasehold interest under each Real Estate 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 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
shall not affect the validity, enforceability 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 are listed in the Disclosure Schedule.
(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, 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 so-called 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.
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(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 Non-compete Agreement 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 Non- compete
Agreement.
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 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
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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, and if any equipment does contain
Hazardous Waste that is not required by law to be removed, 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 Intangibles. Section 1.1(e) of the Disclosure Schedule is a true
and complete list of all trade names, copyrights, trademarks, service marks,
patents or applications therefor (the "Intellectual Property") that have been
duly registered by, filed by, or issued to the Seller. Seller has not granted
any license or other rights with respect to the Intangibles (including the
Intellectual Property). Seller has not received any written notice of any
infringement or unlawful use of the Intangibles 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 Seller 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
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employee benefit plans 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
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 3.15 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
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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, 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, true and complete copies of which are 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.
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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 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 $5,000;
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(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
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 West Virginia.
4.2 Authority; No Conflict. 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
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contemplated hereby. The execution, delivery, performance hereof, and compliance
by Buyer with the terms and provisions hereof 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, 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
Non-Compete Agreement.
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, other than with
respect to the ownership limitations imposed by the FCC, 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 which would disqualify Buyer from
being the assignee of the Licenses and the other Station Assets.
ARTICLE V
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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. 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. 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
$5,000 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 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.
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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, 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 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
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course of business. In addition Seller shall not enter into, extend or renew any
Broadcast Agreement exceeding $10,000 in amount unless such Broadcast Agreement
is terminable on 30 days' notice, and 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.
5.16 Covenant Not to Compete.
(a) Seller agrees not to compete with Buyer, or to solicit Buyer's
employees, 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 within a seventy-five (75) mile radius
of Bethlehem, West Virginia (the "Non-Compete Area"). For the purposes of this
Section 5.16, the term "Seller" shall include Bethlehem Radio, Inc. and its
principal shareholders, Neil Fondas and Raymond Schreiber.
(b) 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 March 1, 1996, 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
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required of them under this Agreement and shall refrain from taking or omitting
to take any action that would violate their representations and warranties
hereunder or render those representations and warranties 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.
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 con- templated 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 "Act 307" 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;
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(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 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 Phase I 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. The Parties recognize, however, that
the FCC licenses to be assigned under this Agreement may not be assigned without
the prior approval of the FCC and will not attempt to effectuate such an
assignment without the FCC's prior approval.
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
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whom it will so offer employment as 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 West Virginia. 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 Escrow Agreement. Seller and Buyer shall enter into an Escrow
Agreement substantially in the form attached hereto as Exhibit B.
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
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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 and become Final Orders. 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 West Virginia, and shall be unimpaired by
any acts or omissions of Seller or Seller's employees or agents.
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 Failure of Transfer. Notwithstanding anything to the contrary
contained in this Agreement, in the event that any law, regulation or official
policy prevents the transfer or assignment of the Station Assets from Seller to
Buyer or any Buyer affiliate, the Parties shall have amended this Agreement
and/or executed such supplemental agreements, as necessary, to achieve for both
Buyer and Seller, to the maximum extent possible, the benefits of the
transactions contemplated by this Agreement in a manner consistent with
applicable law.
7.4 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.
7.5 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.
7.6 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.
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7.7 No Adverse Change. Buyer shall have completed its due diligence
which shall, in its sole judgment, be satisfactory and no material adverse
change shall have occurred with respect to the operation of the Station since
the conclusion of such due diligence.
7.8 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 Non- Compete Agreement.
7.9 Opinions of Counsel. Seller shall have delivered to Buyer an opinion
of Sam E. Schafer, counsel to Seller, addressed to Buyer and in the form
attached hereto as Exhibit C. 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 D.
7.10 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.
7.11 Survey. Buyer shall have received the survey of the Real Property
in accordance with Section 6.9 herein.
7.12 Non-compete Agreement. Buyer, Seller, Neil Fondas and Raymond
Schreiber shall have entered into a Non-compete Agreement in the form and
substance of Exhibit A, hereto.
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
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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, addressed to Seller and in the form attached hereto as
Exhibit E.
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 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, the Non-compete 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, the Non- compete 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
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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, the Non-compete
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, the Non-compete 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
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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 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 Party 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; or as needed to ensure that the transactions contemplated
by this Agreement comply with applicable law, regulations or policy 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 Non-compete Agreement, 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
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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 1.3
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 of three (3) years following
the date hereof.
10.3 Brokerage. Seller and Buyer warrant and represent to one another
that there has been no broker in any way involved in the transactions
contemplated hereby and that no one 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.
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
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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.
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:
Neil Fondas
Raymond Schreiber
Bethlehem Radio, Inc.
27 Highland Lane
Bethlehem, WV 26003
Fax: (941) 637-6187
Phone: (941) 639-1112
With a copy to:
Sam E. Schafer
300 Board of Trade Building
Wheeling, WV 26003
If to Buyer:
Frank D. Osborn
Osborn Communications Corporation
130 Mason Street
Greenwich, CT 06830
With a copy to:
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John M. Pelkey
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive
Arlington, Virginia 22203-1633
Fax: (703) 841-2345
Phone: (703) 841-0606
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 New York 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 the 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
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transactions provided for herein shall be made by either Party without the prior
approval of the other Party, except as required by law.
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
BETHLEHEM RADIO, INC.
BY: _____________________________
TITLE:
BUYER
MOUNTAIN RADIO CORPORATION
BY: _____________________________
TITLE: President
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ASSET PURCHASE AGREEMENT
AND
AMENDMENT TO PROGRAM SERVICE AGREEMENT dated as of February 12, 1996
by and among
GREAT AMERICAN EAST, INC.
(Seller),
OSBORN COMMUNICATIONS CORPORATION
(Guarantor),
WFXC AND WDUR, INC.
(Programmer)
and
PINNACLE MYRTLE CORP.
(Buyer)
TABLE OF CONTENTS
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ARTICLE I - ASSIGNMENT AND PURCHASE OF ASSETS
1.1 Assignment of Assets 2
1.2 Excluded Assets 4
1.3 Liabilities to be Assumed 5
1.4 Purchase Price 5
1.5 Proration of Income and Expenses 6
1.6 Allocation of Purchase Price 7
ARTICLE II - CLOSING, TERMINATION, AND RISK OF LOSS
2.1 Closing 7
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2.2 Transactions at the Closing 7
2.3 Termination 10
2.4 Breach by Buyer 12
2.5 Risk of Loss 12
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation 13
3.2 Authority; No Conflict 13
3.3 Government Authorizations 13
3.4 Taxes and Regulatory Fees 14
3.5 Personal Property 14
3.6 Real Property 15
3.7 Consents 17
3.8 Contracts 17
3.9 Environmental 18
3.10 Intangibles 20
3.11 Personnel Information; Labor Contracts 21
3.12 Employee Benefit Plans 21
3.13 Litigation 21
3.14 Compliance with Laws 22
3.15 Insurance 22
3.16 Instruments of Conveyance; Good Title 22
3.17 Insolvency Proceedings 23
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation 23
4.2 Authority; No Conflict 23
4.3 Consents 24
4.4 Litigation 24
4.5 Compliance with Laws 24
4.6 Qualification 24
ARTICLE V - COVENANTS OF SELLER
5.1 Continued Operation of Station 25
5.2 Reasonable Access 25
5.3 Notification of Developments 25
5.4 Payment of Taxes 25
5.5 Third Party Consents 25
5.6 Encumbrances 25
5.7 Assignment of Assets 26
5.8 Commission Licenses and Authorizations 26
5.9 Insurance 26
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5.10 Negotiations with Third Parties 26
ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application 26
6.2 Performance 27
6.3 Conditions 27
6.4 Confidentiality 27
6.5 Cooperation 27
6.6 Escrow Agreement 28
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals 28
7.2 Performance 28
7.3 Representations and Warranties 28
7.4 Consents 28
7.5 No Litigation 29
7.6 Documents 29
7.7 Opinions of Counsel 29
7.8 Title Insurance Policies 29
7.9 Surveys 29
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance 30
8.2 Representations and Warranties 30
8.3 Government Approvals 30
8.4 Documents 30
8.5 Opinion of Counsel 30
8.6 No Litigation 30
ARTICLE IX - INDEMNIFICATION
9.1 Indemnification by Seller 31
9.2 Guarantee 32
9.3 Indemnification by Buyer 33
9.4 Notification of Claims 33
ARTICLE X - MISCELLANEOUS
10.1 Assignment 34
10.2 Survival of Representations and Warranties 35
10.3 Brokerage 35
10.4 Expenses of the Parties 35
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10.5 Entire Agreement 35
10.6 Headings 36
10.7 Governing Law 36
10.8 Counterparts 36
10.9 Notices 36
10.10 Specific Performance 37
10.11 Consent to Jurisdiction 37
10.12 Further Assurances 38
10.13 Public Announcements 38
10.14 Severability 38
</TABLE>
DISCLOSURE SCHEDULE
1.1(a) Licenses
1.1(b) Personal Property
1.1(d) Leased Real Property and Owned Real Property
1.1(e) Intellectual Property
1.1(f) Contracts
1.1(h) Future Contracts
1.2(h) Other Excluded Assets
3.6(a) Title Defects
3.6(d) Real Property Permits
3.7 Seller's Consents
3.9 Hazardous Substances
3.11 Personnel Information
3.12 Employee Benefit Plans
3.13 Litigation
3.15 Insurance
4.3 Consents Required for Buyer's Performance
EXHIBITS
A Assignment and Assumption of Contracts and Leases
B Non-Compete Agreement
C Escrow Agreement
D Form of Opinion of Seller's Counsel
E Form of Opinion of Seller's FCC Counsel
F Form of Opinion of Buyer's Counsel
This ASSET PURCHASE AGREEMENT AND AMENDMENT
TO PROGRAM SERVICE AGREEMENT is entered into this 12th day of February, 1996 by
and among Great American East, Inc., a corporation formed under the laws of the
State of North Carolina ("Seller"), Osborn Communications
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Corporation ("Guarantor"), WFXC and WDUR, Inc., a corporation formed under the
laws of the State of Delaware ("Programmer"), and Pinnacle Myrtle Corp., a
corporation formed under the laws of the State of Delaware ("Buyer") (Seller and
Buyer sometimes being referred to herein individually as a "Party" and jointly
as "Parties").
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 WFXK-FM, Tarboro, North Carolina (the "Station");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase,
the assets utilized or held for use 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;
WHEREAS, Guarantor, which is the corporate parent of Seller, wishes to
guarantee certain of Seller's obligations hereunder as an inducement to Buyer
and Programmer to enter into this Agreement;
WHEREAS, pursuant to that certain Program Service Agreement of April 3,
1992 ("Program Service Agreement"), Programmer has the right to provide
programming over the Station, holds a right of first refusal with respect to the
sale of the Station and has deposited the sum of Thirty-Three Thousand Dollars
($33,000.00) with Seller (the "Deposit"); and
WHEREAS, Programmer wishes to amend the Program Service Agreement in
accordance herewith as an inducement to Seller and Guarantor to enter into this
Agreement.
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 AND PURCHASE OF ASSETS
1.1 Assignment 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 (as defined herein), all of Seller's right, title and
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interest in and to all of the assets used or held for use in connection with the
Station including, but not limited to, the following 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 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").
(b) Tangible Personal Property. All of the tangible personal property
owned by Seller and used or usable 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 and licenses
in real property leased or licensed by Seller and used or held for use in the
business and operations of the Station (the "Real Estate Contracts"), which Real
Estate Contracts are described in Section 1.1(d) of the Disclosure Schedule (the
land, buildings, structures, transmitter sites, towers, antennae and other
improvements covered by the Real Estate 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, transmitter sites, towers, antennae 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) Intangibles. The good will of the Station and other intangible
assets used or useful in the operation of the Station, including all of Seller's
rights in the trade names, copyrights, trademarks, service marks, patents,
patent applications, slogans, jingles, logos or other similar rights relating to
the 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
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"Intangibles").
(f) Leases and Contracts. All leases, contracts, agreements and
franchises relating to the operation of the Station (other than contracts 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(h) of this Agreement (the "Contracts"). Buyer shall assume, pay and
perform all obligations under such Contracts accruing after the Closing Date to
the extent such obligations relate to the period after the Closing Date.
(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 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(h) of the Disclosure
Schedule.
(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 usable 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, usable 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),
pre-paid and security deposits 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 Closing Date (as that term
is defined therein).
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(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(d) and (f) 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 Excluded Assets. Those assets, if any, listed in Section
1.2(h) of the Disclosure Schedule.
1.3 Liabilities to be Assumed. Except as otherwise expressly provided in
an assumption agreement, in the form of Exhibit A, setting forth the obligations
being assumed by Buyer and to be executed at Closing (the "Assumed Contracts"),
Buyer assumes no liabilities or obligations of Seller of any nature whatsoever,
contingent or otherwise. Without limiting the generality of the foregoing, the
Parties particularly agree that Buyer should have no responsibility or liability
regarding (i) federal, state or local tax liability of any kind whatsoever
incurred by Seller, (ii) any employee benefit plan maintained by Seller or (iii)
severance payments, and Seller expressly agrees to defend and indemnify Buyer
against same. On or prior to the Closing Date, Seller shall pay or else have
made arrangements, satisfactory to Buyer, to assume all liabilities, debts and
other obligations of the Station arising prior to the Closing Date or otherwise
not assigned to and specifically assumed by Buyer.
1.4 Purchase Price. In consideration of Seller's performance of this
Agreement, Buyer shall pay to Seller the sum of Five Million, Nine Hundred
Thousand Dollars ($5,900,000.00) (the "Purchase Price"), plus the Deposit of
Thirty-Three Thousand Dollars ($33,000.00) under the Program Service Agreement
and any accrued interest on the Deposit shall be remitted to Seller, as follows:
(a) Escrow Deposit. As security for Buyer's failure to
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close, and as an inducement for Seller to perform its obligations under this
Agreement, Buyer, upon execution of this Agreement, shall deposit with Star
Media Group, Inc. (the "Escrow Agent") the sum of Three Hundred Thousand Dollars
($300,000.00) (the "Escrow Deposit") to be invested in accordance with the terms
of the Escrow Agreement into which the Parties are entering concurrently
herewith. At the Closing, the Escrow Deposit shall be delivered to Seller and
credited against the Purchase Price and any interest that has accrued on the
Escrow Deposit shall be remitted to Buyer. If the Closing fails to occur because
Buyer is in material breach of this Agreement, the Escrow Deposit and any
interest that has accrued thereon shall be paid to Seller. If the Closing fails
to occur for any other reason, the Escrow Deposit and any interest that has
accrued thereon shall be paid to Buyer.
(b) On the Closing Date at the Closing, Buyer shall pay the Purchase
Price, minus any sums that have been credited against the Purchase Price
pursuant to Section 1.4(a), above, by wire transfer of federal funds. In
addition, the Deposit of Thirty-Three Thousand Dollars ($33,000.00) plus any
interest that has accrued thereon, will be released to Seller free of any claim
by Buyer thereto and the Program Service Agreement will be deemed to be amended
to provide for such payment of the Deposit, plus accrued interest, to Seller. In
consideration for the receipt of the Deposit, and the interest accrued thereon,
Seller relinquishes any rights it may have to, and releases Programmer in
respect of, any additional fees that may have been payable to Seller by
Programmer under paragraph A.4 of Schedule A to the Program Service Agreement.
1.5 Proration of Income and Expenses. Except as otherwise provided
herein or in the Program Service Agreement, 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(a)), 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, rents and similar prepaid deferred items attributable to the
ownership and operation of the Station.
(a) Time for Payment. The prorations and adjustments contemplated by
this Section 1.5, to the extent practicable, shall be made on the
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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.
(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
jointly 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.
ARTICLE II
CLOSING, TERMINATION, AND RISK OF LOSS
2.1 Closing. Unless otherwise agreed upon by the Parties, the purchase
and sale of the Station Assets contemplated by this Agreement (the "Closing")
shall take place at the offices of Haley Bader & Potts P.L.C., 4350 North
Fairfax Drive, Suite 900, Arlington, VA at 10:00 a.m. on the fifth business day
after the Commission's approval of the Assignment Application, as defined in
Section 6.1 below, becomes a Final Order (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.
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
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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 consummation
of the transactions contemplated hereby, 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 warranty deed (or its equivalent in the State of North Carolina), in
proper statutory form for recording, and otherwise reasonably satisfactory in
form and substance to Buyer's counsel, sufficient to vest in Buyer good,
marketable and insurable title to each parcel of Owned Real Property;
(v) 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;
(vi) 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.
(vii) 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;
(viii) written consents of the respective lessors, landowners, and any other
persons or entities whose consents may be required to permit Seller to assign
and Buyer to assume the Assumed Contracts;
(ix) evidence satisfactory to Buyer's counsel that no financing statements are
outstanding on the Station Assets;
(x) all files, records, logs, and program materials relating to the Station; and
all other records required to be maintained by the FCC with respect to the
Station, including the
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Station's local public inspection file, which shall be left at the station and
thereby delivered to Buyer.
(xi) the opinion of counsel for Seller, dated the Closing Date, as described in
Section 7.7;
(xii) assignments to Buyer of all the Contracts and Real Estate Contracts in
form satisfactory to Buyer;
(xiii) certificates from each of the lessors of the Leased Real Property, dated
not more than thirty (30) days prior to the Closing, certifying (1) that the
lease is in good standing and in full force and effect in accordance with its
terms and has not been modified (except for modifications set forth therein),
(2) the date(s) to which rent and all other charges thereunder have been paid,
(3) that there is no default thereunder on the part of any party thereto, and
(4) to such other matters as Buyer shall reasonably request;
(xiv) such documentation as may be necessary to release to Buyer the escrow
deposit, including any accrued interest, that has been deposited with the Bank
of New York pursuant to paragraph A.5 to Schedule A to the Program Service
Agreement to secure Programmer's performance under the Program Service
Agreement;
(xv) a Non-Compete Agreement substantially in the form of Exhibit B hereto; and
(xvi) such other documents and instruments as Buyer may reasonably request to
consummate the transactions contemplated hereby, including, without limitation,
title affidavits and such evidence as may be required by Buyer or its title
insurer of the due authorization, execution and delivery of this Agreement and
the consummation of the transfers of Real Property contemplated hereunder.
(b) At the Closing, Buyer shall deliver or cause to be delivered to
Seller the following:
(i) the Purchase Price less any sums that have been credited against the
Purchase Price pursuant to Section 1.4(a) of this Agreement;
(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, together with a certificate of the
Secretary of Buyer dated as of the 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;
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(iv) the opinion of counsel for Buyer, dated the Closing Date, as described in
Section 8.5; and
(v) 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 December 1,
1996, provided, however, that the Party seeking termination under this Section
2.3(a)(ii) shall not be in breach of this Agreement in any material respect;
(iii) either Buyer or Seller if the Assignment Application (as that term is
defined herein) is not granted within nine (9) months from the date the Form 314
is placed on the Commission's public notice (through no fault of the terminating
Party) or is denied by the Commission by a Final Order;
(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 (as
provided for in Section 10.9 herein) 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. Subject to Section 2.4, 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.
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(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 ("Hearing Designation Order"), 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 to consummate the Closing
hereunder and the Escrow Deposit and all accrued interest 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.
(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.
2.4 Breach by Buyer. If the Closing shall fail to occur due to a breach
in any material respect by Buyer of its representations, warranties or
obligations and Seller terminates this Agreement pursuant to Section 2.3(a)(v),
the right of first refusal granted to Buyer in the Program Service Agreement
will automatically terminate and Seller may, at its option, terminate the
Program Service Agreement. In the event of such termination of the Program
Service Agreement by Seller, the Deposit of Thirty-Three Thousand Dollars
($33,000.00) that has been established pursuant to Schedule A of the Program
Service Agreement, along with any interest that has accrued thereon, will be
released to Seller, free of any claim by Buyer thereto. The release of the
Escrow Deposit (plus the interest that has accrued thereon) and the relief
afforded by this Section 2.4 shall constitute Seller's exclusive remedy, and
Buyer's sole liability, for Buyer's breach, on or before the Closing, of its
representations, warranties or obligations hereunder.
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
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reimbursed under any insurance policy with respect thereto. In the event the
loss is less than Fifty-Thousand Dollars ($50,000.00), Seller shall repair or
replace the property on or before the Closing, or shall grant Buyer an
adjustment to the Purchase Price to compensate Buyer for such loss. In the event
the loss exceeds Fifty Thousand Dollars ($50,000.00) 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. Anything
to the contrary in this section notwithstanding, however, if any loss, damage or
destruction to any of the Station Assets is caused prior to the Closing Date by
Buyer or its agents, Buyer may not terminate this Agreement but shall proceed to
Closing at the time and on the date prescribed in Section 2.1 of this Agreement
and shall accept the property in its damaged condition and receive an assignment
of any insurance proceeds.
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 North Carolina, and
is duly qualified to do business in the State of North Carolina. 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, the Non-Compete Agreement, the Escrow Agreement, the bill of sale,
the deed and the assignment agreements (the "Transaction Documents") 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
the Transaction Documents 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 thereof 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
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(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, mortgage, deed of trust, permit, easement, license, 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.
Each of the Transaction Documents has been, or will be, duly executed and is
enforceable in accordance with its terms.
3.3 Government Authorizations. Section 1.1(a) of the Disclosure Schedule
contains a true and complete list of all the Licenses, which Licenses are those
permits, licenses and authorizations necessary 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. The Licenses are in good standing
and are in full force and effect and have been renewed by Final Order without
condition for a license term expiring no earlier than December 1, 2002. Seller
is in material compliance with the terms and conditions of the Licenses. To the
knowledge of Seller, there are no facts which, under the Communications Act of
1934, as amended, or the rules and regulations of the Commission, in each case
as in effect on the date hereof, would disqualify Seller as assignor, and Buyer
as assignee, in connection with the Assignment Application.
3.4 Taxes and Regulatory Fees. 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
regulatory fees, 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
regulatory fees or taxes of any nature payable by Seller which in any event
could materially adversely affect the Station Assets or operation of the
Station.
3.5 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(f) of the Disclosure Schedule as being subject
to
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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 shall be in good operating condition, normal wear and tear excepted, on
the Closing Date.
3.6 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 Disclosure Schedule and to
all of the buildings, structures, transmitter sites, towers, antennae and other
improvements located thereon (collectively, the "Owned Real Property") free and
clear of all Title Defects (as hereinafter defined) except for (i) the matters
listed on Section 3.6(a) of the Disclosure Schedule and (ii) encumbrances on
real estate for real estate taxes, assessments, governmental charges or levies
not yet delinquent (collectively, the "Permitted Owned Real Property
Exceptions"). Section 1.1(d) of the Disclosure Schedule sets forth complete and
correct legal descriptions (including lot and block number, if any) of the Owned
Real Property. The Owned Real Property constitutes all of the real property
owned by Seller, or held for the benefit of Seller under a title-holding
agreement, on the date hereof in connection with the operation of the Station.
Other than as set forth in Section 1.1(f) of the Disclosure Schedule, there are
no leases/subleases, licenses or other agreements or instruments granting to any
person other than Seller any right to the possession, use or 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 Estate 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 (i) 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
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as part of the Station Assets and (ii) estoppel certificates in the form
described in Section 2.2(a)(xiii) hereof. Subject to any required third-party
consents, Seller will have full legal power and authority to assign its rights
under the Real Estate Contracts to Buyer in accordance with this Agreement on
terms and conditions no less favorable than those in effect on the date hereof,
and such assignment shall not affect the validity, enforceability and continuity
of any of the Real Estate Contracts.
(c) Entire Premise. All of the land, buildings, structures, transmitter
sites, towers, and antennae and other improvements used by Seller in the conduct
of the Business or involved in the Real Property are listed in Section 1.1(d) of
the Disclosure Schedule.
(d) Real Property Permits and Insurance. All certificates of occupancy,
permits, licenses, franchises, approvals and authorizations including, without
limitation, those required pursuant to environmental laws (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, and shall be on the Closing Date, in full force and effect, no
appeal or any other action is pending to revoke any such Real Property Permits,
and Seller is in full compliance with all terms and conditions of all such Real
Property Permits. Section 3.6(d) of the Disclosure Schedule sets forth all Real
Property Permits and all reports of inspection of the Station Assets to the date
hereof under all applicable laws. Seller has heretofore delivered to Buyer
complete and correct copies of all of the foregoing and applications relating
thereto.
(e) Condemnation. Seller has not received notice and has no knowledge of
any pending, threatened or contemplated appropriation or 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.
(f) Seller has complete and good and valid rights of ingress and egress
to and from the Real Property from and to the public street systems for all
usual street, road and utility purposes. Seller has not received and does not
know of any non-conformance or violation of any applicable zoning law,
regulation or other law, order, regulation or requirement relating to or
affecting any of the operations and business of the Station and the Real
Property. All of the buildings, structures, transmitter sites, towers, antennae
and other improvements which constitute part of the Real Property (i) are
located within the boundary lines and applicable set back lines of the
respective properties, (ii) do not encroach on any easements or on any real
property not
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constituting Real Property, and (iii) comply with all local zoning requirements
and conform with the uses permitted thereunder and do not constitute "non-
conforming uses". All parcels of Real Property used by Seller as units are
contiguous to one another and no strips or gores intervene between any such
parcels.
(g) All of the buildings, structures, transmitter sites, towers,
antennae and other improvements which constitute part of the Real Property are
in a good state of repair, maintenance and operating condition, ordinary wear
and tear excepted, and there are no defects with respect thereto which would
impair the day-to-day use of any such buildings, structures, transmitter sites,
towers, antennae and other improvements or which would subject Buyer to
liability under applicable law.
(h) Seller has delivered to Buyer complete and correct copies of each
and every of the following in possession of Seller: (i) title report, title
binder, survey document and datum affording information or opinions with respect
to, certifying to, or evidencing the extent of, current title, title history,
title marketability, use, possession, restriction or regulation, if any
(governmental or otherwise), conformance to and compliance with applicable laws
of the Real Property, (ii) deed or title-holding or trust agreement, if any,
under which any of the Real Property may have been conveyed to Seller or under
which the same may be held for the benefit of Seller, (iii) Real Estate
Contracts, and (iv) certificates of occupancies.
3.7 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 other than approval by the Commission of the
Assignment Application as contemplated hereby. Except as set forth in Section
3.7 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 Non-Compete Agreement.
3.8 Contracts. Section 1.1(f) of the Disclosure Schedule contains a true
and complete list of all Contracts. Seller has delivered to Buyer true and
complete copies of all written Contracts and descriptions of terms of any oral
Contracts, including any and all amendments and other modifications to same. All
such Contracts 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 and Seller is not in default beyond any applicable grace
periods under any of same, and no other contracting party is in material default
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under any of same. Seller has full legal power and authority to assign its
respective rights under such Contracts to Buyer in accordance with this
Agreement on terms and conditions no less favorable than those in effect on the
date hereof, and such assignment will not materially affect the validity,
enforceability and continuity of any such Contracts.
3.9 Environmental.
(a) Except as disclosed in Section 3.9 of the Disclosure Schedule,
Seller has not, and to Seller's best knowledge, no other person has, released,
placed, stored, buried or dumped any Hazardous Substances or other wastes
produced by, or resulting from any business, commercial or industrial activity,
operation or process, on, beneath, or adjacent to the Real Property (or any
other property or facility formerly owned, operated or leased by Seller) except
for Hazardous Substances and inventories or such substances to be used or
generated therefrom in the ordinary course of business of Seller (which
Hazardous Substances, inventories and wastes, if any, were and are stored or
disposed of in accordance with applicable laws and regulations and in a manner
that there has been no release of any such substances into the environment).
(b) The technical equipment included in the Personal Property does not
contain any Hazardous Substances, including any Polychlorinated Biphenyls
("PCBs") that are required by law to be removed, and if any equipment does
contain Hazardous Substances that are not required by law to be removed,
including any PCBs, that such equipment is stored and maintained in compliance
with applicable law.
(c) Seller has complied, and is in compliance, in all material respects
with all federal, state and local environmental laws, rules and regulations
applicable to the Station and its operations, and the Station Assets, including
but not limited to (i) all orders, decrees, judgments, plan, notice or demand
letter issued, entered, promulgated or approved thereunder, and (ii) the
Commission's guidelines regarding radio frequency radiation.
(d) Except as disclosed in Section 3.9 of the Disclosure Schedule, the
operations and activities of the Station and the Station Assets have complied
and are in compliance in all material respects with all applicable federal,
state and local laws and regulations.
(e) Except as disclosed in Section 3.9 of the Disclosure Schedule, no
release or cleanup has occurred at the Real Property (or any other property or
facility formerly owned, operated or leased by Seller) which could result in the
assertion or creation of a lien on the Station Assets by any governmental body
or agency with respect thereto, nor to the Seller's best knowledge has any
assertion of a lien been made by any governmental body or agency with respect
thereto.
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(f) Except as disclosed in Section 3.9 of the Disclosure Schedule, no
employee of Seller in the course of his or her employment with Seller has been
exposed to any Hazardous Substances or other substances generated, produced or
used by Seller which could give rise to any claim against the Station Assets.
(g) To the extent within Seller's possession or control, Seller has
heretofore delivered to Buyer true and complete copies of all (i) environmental
studies relating to the Real Property, and (ii) all material reports of
inspection of the Station and/or the Station Assets pursuant to applicable
federal, state and local laws and regulations.
(h) Except as disclosed in Section 3.9 of the Disclosure Schedule, the
Real Property does not contain any: (i) underground storage tanks, (ii)
asbestos, (iii) PCBs, (iv) underground injection wells, or (v) septic tanks in
which process waste water or any Hazardous Substances have been disposed and no
such tanks, asbestos, equipment, wells or septic tanks have been removed from
any of the Real Property.
(i) Except as disclosed in Section 3.9 of the Disclosure Schedule, with
respect to Seller and the Real Property (or any other property or facility
formerly owned, operated or leased by Seller), there are no past or present (or,
to Seller's best knowledge, future) events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent compliance with any environmental laws as in effect on the date hereof
or with any regulation, code, plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved thereunder, or which
may give rise to any common law or legal liability under any environmental laws,
or otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, notice of violation, study or investigation, based on or related to the
manufacture, generation, processing, distribution, use, treatment, storage,
place of disposal, transport or handling, or the release or threatened release
into the indoor or outdoor environment at or from the Real Property, or any
Hazardous Substances.
(j) Except as set forth in Section 3.9 of the Disclosure Schedule,
Seller has not received any notice or order from any governmental agency or
private or public entity advising it that Seller is responsible for or
potentially responsible for cleanup or paying for the cost of cleanup of any
Hazardous Substances or any other wastes or substances, and Seller has not
entered into any agreements concerning such cleanup, nor is Seller aware of any
facts which might reasonably give rise to such notice, order or agreement.
(k) Seller has not entered into any agreement that may
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require it to pay, reimburse, guarantee, pledge, defer, indemnify or hold
harmless any person for or against liabilities and costs relating to
environmental matters concerning the Station Assets.
(l) As used herein, the term "Hazardous Substances" shall mean all
materials, substances, oils, pollutants, contaminants and wastes regulated by
any applicable 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).
(m) 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 3.9, Seller shall, unless such breach is caused by Buyer, begin
remedial action promptly and shall use reasonable efforts to complete such
remedial action to the satisfaction of Buyer and applicable governmental
authorities before the Closing Date. In the event that such breach is caused by
Buyer, Buyer shall be responsible for the costs of any such remediation and the
fact of such breach shall not excuse Buyer from closing on the sale of the
Station Assets as provided for in this Agreement.
3.10 Intangibles. Section 1.1(e) of the Disclosure Schedule is a true
and complete list of all trade names, copyrights, trademarks, service marks,
patents or applications therefor (the "Intellectual Property") that have been
duly registered by, filed by, or issued to the Seller. Seller has not granted
any license or other rights with respect to the Intangibles (including the
Intellectual Property). Seller has not received any written notice of any
infringement or unlawful use of the Intangibles 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.
3.11 Personnel Information; Labor Contracts.
(a) Section 3.11 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 3.12 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
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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.
3.12 Employee Benefit Plans. Section 3.12 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.
3.13 Litigation. Except as set forth in Section 3.13 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.
3.14 Compliance with Laws. Seller has not received any notice asserting
any non-compliance with, or any non-conformance to, 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. The Real Property is in full compliance with, and conforms
to, 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 (i) violation, claimed violation, or non-conformance
or
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claimed non-conformance with any Real Property Law or (ii) remediation required
to be performed pursuant to environmental laws with respect to any of the Real
Property. To the best knowledge of Seller, Seller is in compliance with all
applicable laws.
3.15 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, summaries of which are contained in Section 3.15 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.
3.16 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, marketable, and with respect to the Real
Property, insurable title to the Station Assets, including without limitation
the Owned Real Property, free and clear of all liabilities, obligations and
encumbrances, except as provided herein and otherwise reasonably satisfactory in
form and substance to Buyer's counsel.
3.17 Insolvency Proceedings. No insolvency proceedings of any character
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Seller 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 North Carolina.
4.2 Authority; No Conflict. The execution and delivery of this Agreement
has been duly and validly authorized and approved by the board of
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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 and provisions hereof 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, 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
Non-Compete Agreement.
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
and financially qualified to be the assignee of the Licenses and the other
Station Assets under the Communications Act of 1934, as amended, and the FCC's
rules, regulations and policies, in each case as in effect on the date hereof,
and, prior to the Closing Date, Buyer will exercise its reasonable efforts to
refrain from doing any act which would disqualify Buyer under such Act, rules,
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regulation or policies 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. 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 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.
5.3 Notification of Developments. Seller shall 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.
5.4 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.
5.5 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, including,
without limitation, approval from the Commission of the Assignment Application
contemplated hereby.
5.6 Encumbrances. Seller shall not suffer or permit the creation of any
mortgage, conditional sales agreement, security interest, lease, license, lien,
hypothecation, deed of trust or pledge, encumbrance, restriction, liability,
charge, or imperfection of title with respect to the Station Assets.
5.7 Assignment of Assets. Seller shall not sell, assign, lease or
otherwise transfer or dispose of any Station Assets, whether now owned or
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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.
5.8 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 respect to the Licenses at the Commission or any other applicable
governmental authority.
5.9 Insurance. Seller shall maintain at all times between the date
hereof and the Closing Date, those insurance policies listed in Section 3.15 of
the Disclosure Schedule.
5.10 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 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
reasonable efforts to obtain prompt Commission grant of the Assignment
Application filed at the Commission. Without in any way limiting the foregoing,
the Parties agree to promptly furnish, file and make available to the Commission
such information as the Commission may request and not to take action for the
purpose of delaying the Commission's decision or determination respecting the
Assignment Application.
6.2 Performance. Buyer and Seller shall perform all acts required of
them under this Agreement and shall refrain from taking or omitting
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to take any action that would violate their representations and warranties
hereunder or render those representations and warranties 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 reasonable 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 con- templated 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 law or regulation or 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 Escrow Agreement. Seller and Buyer shall enter into an Escrow
Agreement substantially in the form attached hereto as Exhibit C.
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:
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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 and become Final Orders. The Licenses shall be in
unconditional full force and effect and shall be valid for the balance of the
current license term applicable generally to radio stations licensed to
communities located in the State of North Carolina.
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.
7.4 Consents. Seller shall have received all consents specified in
Section 3.7 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.
7.7 Opinions of Counsel. Seller shall have delivered to Buyer an opinion
of counsel to Seller, addressed to Buyer and in the form attached hereto as
Exhibit D. 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 E.
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7.8 Title Insurance Policies. Buyer shall have obtained, at its expense,
binding commitments for owner's and mortgagee's title insurance policies (fee
and leasehold) with respect to the Real Property, in form reasonably acceptable
to Buyer, at standard rates, together with copies of all documents affecting
title. The policies shall be issued and/or reinsured by companies reasonably
acceptable to Buyer and Buyer's lender, in an amount not less than the full
replacement value of each of the Real Property, insuring that title to the Real
Property is good and marketable and free and clear of all Title Defects except
for the matters listed on Section 3.6(a) of the Disclosure Schedule. The
policies shall contain extended coverage and, if required by Buyer, contain
zoning, contiguity, access, encroachment, easement and comprehensive
endorsements and such other affirmative insurance as Buyer shall reasonably
require and shall insure all appurtenant easements or servitudes.
7.9 Surveys. Buyer and Seller shall have obtained, at Buyer's expense,
an "As Built" survey of each of the Real Property certified to Buyer, Buyer's
lender and the title insurance company issuing the applicable policy in a manner
reasonably acceptable to Buyer, Buyer's lender and the title insurance company
by a registered land surveyor, dated not more than forty-five (45) days prior to
the Closing, and complying with the minimum detail requirements for land title
surveys as adopted by the American Land Title Association and American Congress
on Surveying and Mapping. The "As Built" surveys received by Buyer hereto shall
have indicated that the radio transmitter sites, towers and antennae used or
held for use in the business and operation of the Station are located on real
property constituting Owned Real Property.
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
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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, addressed to Seller and in the form attached hereto as
Exhibit F.
8.6 No Litigation. No litigation, proceeding, or investigation of any
kind shall have been instituted or, to Buyer's knowledge, threatened which would
materially adversely affect the ability of Buyer to comply with the provisions
of this Agreement.
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, its
affiliates and their respective successors and assigns harmless, and 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, the Non-Compete 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 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;
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(d) Any liabilities of any kind or nature, absolute or contingent not
expressly assumed by Buyer pursuant to this Agreement including, without
limitation, any liabilities relating to or arising from the business and
operation of the Station by Seller prior to the Closing Date;
(e) The actual, alleged or threatened release, storage, transportation,
treatment or generation of Hazardous Substances generated, stored, used,
disposed of, treated, handled or shipped by Seller or any prior owner or lessee
of any of the Real Property on or before the Closing Date, but regardless of
whether discovered on, before or after the Closing Date;
(f) Any cleanup of Hazardous Substances released, disposed of or
discharged: (A) on, beneath or adjacent to any of the Real Property prior to or
on the Closing Date, but regardless of whether discovered on, before or after
the Closing Date; or (b) at any other location if such substances were
generated, used, stored, disposed of, treated, transported or released by Seller
or any prior owner of the Real Property prior to or on the Closing Date, but
regardless of whether discovered on, before or after the Closing Date; and
(g) The installation of any pollution control equipment or other
equipment to bring the Station and the Station Assets into compliance with any
environmental laws as of the Closing Date if such equipment was installed
because the Station or the Station Assets were not in compliance with any
then-current environmental laws as of the Closing Date.
(h) The enforcement of this Article IX.
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 Guarantee. Osborn Communications Corporation hereby irrevocably and
unconditionally guarantees to Buyer the prompt and complete performance of the
obligations imposed upon Seller under Section 9.1. Guarantor consents and agrees
that Buyer and Seller may, at any time and from time to time, without notice or
demand, whether before or after any actual or purported termination, repudiation
or revocation of this Agreement by the Guarantor, and without affecting the
enforceability or continuing effectiveness hereof as to Guarantor:
(a) Supplement, restate, modify, amend, increase, decrease, extend,
renew or otherwise change the time for payment or the terms of this Agreement or
any part thereof;
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(b) Supplement, restate, modify, amend, increase, decrease or waive, or
enter into or give any agreement, approval or consent with respect to, this
Agreement or any part thereof, or any of the Transaction Documents, or any
condition, covenant, default, remedy, right, representation or term thereof or
thereunder;
(c) Accept partial payments;
(d) Release any person from any personal liability with respect to this
Agreement or any part thereof; or
(e) Consent to the merger, change or any other restructuring or
termination of the corporate or partnership existence of Buyer or any other
person, and correspondingly restructure the obligations evidenced hereby, and
any such merger, change, restructuring or termination shall not affect the
liability of Guarantor or the continuing effectiveness hereof, or the
enforceability hereof with respect to all or any part of the obligations
evidenced hereby.
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, 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 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, 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.
(d) The enforcement of this Article IX.
9.4 Notification of Claims.
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(a) A Party entitled to be indemnified pursuant to Sections 9.1 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 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. The failure of the Indemnified Party to provide notice as
required under this Section 9.4(a) shall not affect the liability of the
Indemnifying Party under this Article IX unless the failure to give such notice
materially adversely affects the Indemnifying Party's ability to defend against
the claim giving rise to the Indemnified Party's claim.
(b) If the Indemnified Party shall notify the Indemnifying Party of any
claim or demand pursuant to Section 9.4(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 Sections 9.1 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 Section
9.4(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 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. This Agreement shall not be assigned or
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conveyed by either Party hereto to any other person or entity without the prior
written consent of the other Party hereto; provided, however, that Buyer may
assign this Agreement without Seller's prior consent (i) to one or more
corporations or other entities affiliated with Buyer if such assignment does not
delay the Closing Date, and (ii) to Buyer's lender for security purposes.
Subject to the foregoing, this Agreement shall be binding and shall inure to the
benefit of the Parties hereto, their successors and assigns.
10.2 Survival of Representations and Warranties. The representations and
warranties made by the Parties herein or pursuant hereto shall survive the
Closing Date for a period of twelve (12) months notwithstanding any
investigation made by Buyer with respect thereto.
10.3 Brokerage. Seller and Buyer warrant and represent to one another
that, with the exception of Star Media Group, Inc., broker for the Buyer, there
has been no broker in any way involved in the transactions contemplated hereby
and that no one other than Star Media Group, Inc. 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. Buyer shall be wholly responsible for any
brokerage or other fee due to Star Media Group, Inc.
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
disclosure schedule 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
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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.
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 or Guarantor:
Osborn Communications Corporation
Attn: Frank D. Osborn
130 Mason Street
Greenwich, CT 06830
Fax: (203) 629-1749
Phone: (203) 629-0905
With a copy (which shall not constitute notice) to:
John M. Pelkey
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive
Suite 900
Arlington, Virginia 22203-1633
Fax: (703) 841-2345
Phone: (703) 841-0606
If to Buyer or Programmer:
Pinnacle Broadcasting Company, Inc.
Attn: Edward J. Ferreri
2505 N. Highway 360
Suite 620
Grand Prairie, TX 75050-7801
Fax: (817) 649-1707
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Phone: (817) 649-0184
With a copy (which shall not constitute notice) to:
David Ambrosia, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1500
Fax: (212) 858-1500
Phone: (212) 858-1208
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 and in lieu of any other remedy available to it,
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.
10.11 Consent to Jurisdiction. Seller and Buyer hereby submit to the
nonexclusive jurisdiction of the courts of the State of New York 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 the 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.
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10.13 Public Announcements. No public announcement (including an
announcement to employees) or press release concerning the transactions provided
for herein shall be made by either Party without the prior approval of the other
Party, except as required by law.
10.14 Severability. In case any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality, and enforceability of the remaining provisions
will not in any way be affected or impaired.
[Remainder of Page Intentionally Left Blank]
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
GREAT AMERICAN EAST, INC.
By:
Title:
BUYER
PINNACLE MYRTLE CORP.
By:
Title: President
For purposes of Section 9.2 of this Asset Purchase Agreement
OSBORN COMMUNICATIONS CORPORATION
By:
Title:
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For purposes of Sections 1.4, 2.2 and 2.4 of this Asset Purchase Agreement
insofar as they amend the Program Service Agreement
WFXC AND WDUR, INC.
By:
Title:
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ASSET PURCHASE AGREEMENT dated as of February 20, 1996 by and between
WKWK RADIO, INC.
(Seller)
and
MOUNTAIN RADIO CORPORATION
(Buyer)
TABLE OF CONTENTS
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ARTICLE I - ASSIGNMENT AND PURCHASE OF ASSETS
1.1 Assignment of Assets 1
1.2 Excluded Assets 4
1.3 Liabilities to be Assumed 4
1.4 Purchase Price 5
1.5 Proration of Income and Expenses 5
1.6 Allocation of Purchase Price 6
1.7 Submission of Schedules; Due Diligence by Buyer 6
ARTICLE II - CLOSING, TERMINATION, AND RISK OF LOSS
2.1 Closing 7
2.2 Transactions at the Closing 7
2.3 Termination 10
2.4 Risk of Loss 12
2.5 Interruption of Broadcast Transmissions 12
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
</TABLE>
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3.1 Due Incorporation 13
3.2 Authority; No Conflict 13
3.3 Government Authorizations 13
3.4 Compliance with Regulations 14
3.5 Taxes and Regulatory Fees 14
3.6 Personal Property 15
3.7 Real Property 15
3.8 Consents 17
3.9 Contracts 17
3.10 Environmental 18
3.11 Intangibles 18
3.12 Financial Statements 18
3.13 Personnel Information; Labor Contracts 19
3.14 Employee Benefit Plans 19
3.15 Litigation 20
3.16 Compliance with Laws 20
3.17 Insurance 21
3.18 Undisclosed Liabilities 21
3.19 Instruments of Conveyance; Good Title 21
3.20 Absence of Certain Changes 21
3.21 Insolvency Proceedings 23
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation 23
4.2 Authority; No Conflict 23
4.3 Consents 23
4.4 Litigation 24
4.5 Compliance with Laws 24
4.6 Qualification 24
ARTICLE V - COVENANTS OF SELLER
5.1 Continued Operation of Stations 25
5.2 Financial Obligations 25
5.3 Reasonable Access 25
5.4 Maintenance of Assets 25
5.5 Notification of Developments 25
5.6 Payment of Taxes 25
5.7 Third Party Consents 26
5.8 Encumbrances 26
5.9 Assignment of Assets 26
5.10 Commission Licenses and Authorizations 26
5.11 Technical Equipment 26
5.12 Compensation Increases 26
</TABLE>
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5.13 Sale of Broadcast Time 26
5.14 Insurance 27
5.15 Negotiations with Third Parties 27
ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application; Local Marketing Agreement 27
6.2 Performance 28
6.3 Conditions 28
6.4 Confidentiality 28
6.5 Cooperation 28
6.6 Environmental Reports 28
6.7 Consents to Assignment 29
6.8 Employee Matters 30
6.9 Survey 30
6.10 Escrow Agreement 31
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals 31
7.2 Performance 31
7.3 Failure of Transfer 32
7.4 Representations and Warranties 32
7.5 Consents 32
7.6 No Litigation 32
7.7 No Adverse Change 32
7.8 Documents 32
7.9 Opinions of Counsel 32
7.10 Survey 33
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance 33
8.2 Representations and Warranties 33
8.3 Government Approvals 33
8.4 Documents 33
8.5 Opinion of Counsel 33
ARTICLE IX - INDEMNIFICATION
9.1 Indemnification by Seller 34
9.2 Indemnification by Buyer 34
9.3 Notification of Claims 35
9.4 Limitation with Respecdt to Indemnification 36
</TABLE>
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<TABLE>
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ARTICLE X - MISCELLANEOUS
10.1 Assignment 36
10.2 Survival of Indemnification 37
10.3 Brokerage 37
10.4 Expenses of the Parties 37
10.5 Entire Agreement 38
10.6 Headings 38
10.7 Governing Law 38
10.8 Counterparts 38
10.9 Notices 38
10.10 Specific Performance 40
10.11 Consent to Jurisdiction 40
10.12 Further Assurances 41
10.13 Public Announcements 41
10.14 Accounts Receivable 41
</TABLE>
DISCLOSURE SCHEDULE
1.1(a) Licenses and Authorizations
1.1(b) Tangible Personal Property
1.1(d) Real Estate Assets
1.1(e) Intangibles
1.1(f) Leases and Contracts
1.1(g) Contracts for Sale of Broadcast Time
1.1(i) Future Contracts
1.2(h) Excluded Assets
3.7 Title Defects
3.8 Consents Required by Seller
3.12 Financial Statements
3.13 Personnel
3.14 Employee Benefit Plans
3.15 Litigation
3.17 Insurance
3.20 Certain Changes
4.3 Consents Required by Buyer
THIS ASSET PURCHASE AGREEMENT is entered into this 20th day of February,
1996 by and between WKWK Radio, Inc., a corporation formed under the laws of the
State of West Virginia ("Seller"), and MOUNTAIN RADIO CORPORATION, a corporation
formed under the laws of the State of Delaware ("Buyer") (Seller and Buyer
sometimes being referred to herein individually as a "Party" and jointly as
"Parties").
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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 stations WKWK-AM/FM, Wheeling, West Virginia (the "Stations"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase,
the assets utilized in connection with the operation of the Stations, 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 Stations; and
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 AND PURCHASE OF ASSETS
1.1 Assignment 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 (as defined herein), all of Seller's right, title and interest
in and to the following assets relating to the Stations (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 Stations, 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
Stations, including but not limited to the call letters WKWK.
(b) Tangible Personal Property. All of the tangible personal property
owned by Seller and used or useable in the operation of the Stations, 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
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of this Agreement and the Closing Date, as hereafter defined (the "Personal
Property").
(c) Intentionally Left Blank.
(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" or "Real Property").
(e) Intangibles. The good will of the Stations and other intangible
assets used or useful in the operation of the Stations, including all of
Seller's rights in the trade names, copyrights, trademarks, service marks,
patents, patent applications, slogans, jingles, logos or other similar rights
relating to the operation of the Stations 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 "Intangibles").
(f) Leases and Contracts. All leases, contracts, agreements and
franchises relating to the operation of the Stations (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 Stations 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 pursuant to which payment is
to be received in whole or in part in services, merchandise or other non-cash
considerations ("Trade Agreements") entered into prior to the date of this
Agreement, 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 Stations required to be maintained
and kept under the rules of the Commission and such other files and
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records as Buyer shall reasonably require for the continuing business and
operation of the Stations. 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
(other than Broadcast Agreements, which are governed by Section 5.13 hereof)
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.
(j) Inventory and Computer Software. All of Seller's items of inventory
related to the business of the Stations, including, without limitation,
broadcast programs, as well as all computer software used or useable by the
Stations.
(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 Stations.
1.2 Excluded Assets. There shall be excluded from the sale transaction
described herein the following assets relating to the Stations:
(a) Cash and Deposits. Cash-on-hand or in banks (or their equivalents),
pre-paid deposits, and other investments belonging to Seller and relating to the
operation of the Stations as of the Closing Date.
(b) Accounts Receivable. All accounts receivable of the Seller with
regard to the operation of the Stations prior to the Closing Date (as that term
is defined therein), although Buyer agrees to collect such accounts pursuant to
the terms of Section 10.14 of this Agreement.
(c) Property Consumed. All property of the Stations 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
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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 post-closing obligations related to Real
Estate Contracts, Contracts, Broadcast Agreements and Trade Agreements (the
"Assumed Contracts") assigned to and specifically assumed by Buyer. Without
limiting the generality of the foregoing, the Parties particularly agree that
Buyer should have no responsibility or liability regarding (i) federal, state or
local tax liability of any kind whatsoever incurred by Seller or (ii) any
employee benefit plan maintained by Seller, and Seller expressly agrees to
defend and indemnify Buyer against same. On or prior to the Closing Date Seller
shall pay or else have made arrangements, satisfactory to Buyer, to assume all
liabilities, debts and other obligations of the Stations arising prior to the
Closing Date and not assigned to and specifically assumed by Buyer.
1.4 Purchase Price. In consideration of Seller's performance of this
Agreement, Buyer shall pay to Seller the sum of Two Million, Six Hundred Fifty
Thousand Dollars($2,650,000) (the "Purchase Price") as follows:
(a) Escrow Deposit. As security for Buyer's failure to close, and as an
inducement for Seller to perform its obligations under this Agreement, Buyer,
upon execution of this Agreement, shall deposit, in accordance with Paragraph
1.7 of this Agreement, the sum of One Hundred Thirty-Thousand Dollars
($130,000.00) (the "Escrow Deposit") in the One Valley Bank to be invested in
accordance with the terms of the Escrow Agreement into which the Parties are
entering concurrently herewith. John Allen, Esq., and Harry Buch, Esq., shall
act as escrow agents (the "Escrow Agents") with respect to such Escrow Deposit
and any interest accrued thereon. At the Closing, the Escrow Deposit, and any
interest that has accrued thereon, shall be delivered to Seller and credited
against the Purchase Price. If the Closing fails to occur because Buyer is in
material breach of this Agreement, the Escrow Deposit shall be paid to Seller as
liquidated damages and as Seller's exclusive remedy for such breach and any
interest on the Escrow Deposit shall be paid to Buyer. If the Closing fails to
occur for any other reason, the Escrow Deposit and any interest
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that has accrued thereon shall be paid to Buyer.
(b) On the Closing Date at the Closing, Buyer shall pay the Purchase
Price, minus any sums that have been credited against the Purchase Price
pursuant to Subparagraph 1.4(a), above, by wire transfer of federal funds.
1.5 Proration of Income and Expenses. Except as otherwise provided
herein and in the Local Marketing Agreement ("LMA") to be entered into by Buyer
and Seller pursuant to Section 6.1 of this Agreement, all income and expenses
arising from the conduct of the business and operations of the Stations 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(a)), 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 1.1(g) hereof, rents and
similar prepaid deferred items attributable to the ownership and operation of
the Stations.
(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.
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.
(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. 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
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claim, in any litigation, or otherwise.
1.7 Submission of Schedules; Due Diligence by Buyer. Seller agrees that,
no later than February 23, 1996, it shall provide Buyer with all sections of the
Disclosure Schedule called for in this Agreement other than Section 4.3. Buyer
shall then have a period of fourteen (14) days, i.e., until March 8, 1996, to
complete its due diligence inspection of the Stations and the Station Assets and
to designate those Assumed Contracts that Buyer deems to be material ("Material
Contracts"). If that due diligence inspection reveals that the representations
and warranties of Seller are not true, complete and correct in all material
respects including, without limitation, if that due diligence inspection reveals
a material adverse change in the working capital, financial condition, business,
results of operations, assets or liabilities of Seller in comparison to the
Financial Statements provided to Buyer up to the date of execution of this
Agreement (but taking into account the seasonal differences in the financial
condition of the Stations as experienced by the Station in the past), Buyer may
terminate this Agreement by providing written notice of such termination to
Seller no later than March 13, 1996. In the event of such termination, the
Escrow Deposit and any interest accrued thereon shall be immediately returned to
Buyer.
ARTICLE II
CLOSING, TERMINATION, AND RISK OF LOSS
2.1 Closing. Unless otherwise agreed upon by the Parties, the purchase
and sale of the Station Assets contemplated by this Agreement (the "Closing")
shall take place at 10:00 a.m. on the fifth business day after the Commission's
approval of the Assignment Application, as defined in Section 6.1 below, becomes
a Final Order (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:
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(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 7.4;
(iii) a copy of the resolutions of the board of directors of Seller authorizing
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby and the unanimous consent of the
Seller's stockholders to the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, together
with a certificate of the Secretary of Seller, dated as of the Closing Date,
that such resolutions were duly adopted, that the consent was duly given and
that the resolutions and consent are in full force and effect;
(iv) a special warranty deed (or its equivalent in the State of West Virginia),
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, but which
shall not exceed the sum allocated to the Owned Real Property pursuant to this
Agreement, 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 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 unde
(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
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interests, mortgages, liens, pledges, attachments, conditional sales contracts,
claims, charges or encumbrances of any kind whatsoever;
(ix) 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;
(x) evidence satisfactory to Buyer's counsel that no financing statements are
outstanding on the Station Assets except for financing statements related to
obligations that Buyer expressly assumes;
(xi) all files, records, logs, and program materials relating to the Stations;
and all other records required to be maintained by the FCC with respect to the
Stations, including the Stations' public file, which shall be left at the
Stations and thereby delivered to Buyer.
(xii) the opinion of counsel for Seller, dated the Closing Date, as described in
Section 7.9;
(xiii) assignments to Buyer of all the Material Contracts in form satisfactory
to Buyer; and
(xiv) 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 any sums that have been credited against the
Purchase Price pursuant to Section 1.4(a) of this Agreement;
(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, 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 opinion of counsel for Buyer, dated the Closing Date, as described in
Section 8.5; and
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(v) 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 December 31,
1997, 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 Form 314 is placed on the Commission's public
notice (through no fault of the terminating Party) or is denied by the
Commission by a Final Order;
(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 that the Local Marketing Agreement ("LMA") into which
the Parties are entering pursuant to Paragraph 6.1 of this Agreement is
terminated upon the occurrence of an event of default under the LMA, the
non-defaulting party may, by providing written notice to the defaulting party
within five (5) business days of the termination of the LMA, terminate this
Agreement.
(c) 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
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specific performance of Seller of its obligations under this Agreement.
(d) 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.
(e) 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.
(f) 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.
2.4 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
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
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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.
2.5 Interruption of Broadcast Transmissions. Notwithstanding any other
provision hereof, if prior to the Closing any event occurs which prevents the
broadcast transmission by either of the Stations 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 five (5) days, or if either of
the Stations is off the air more than three (3) times for a period in each case
exceeding six (6) hours other than for planned routine maintenance which the
Parties agree shall be scheduled between the hours of midnight and 6 AM to the
extent feasible, Buyer shall have the right, by giving written notice to Seller
of its election to do so, within five (5) business days of Buyer's becoming
entitled 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 West Virginia.
Seller has the corporate power and authority to own and to operate the Stations
and the Station Assets.
3.2 Authority; No Conflict. The execution and delivery of this Agreement
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 to consummate the transactions contemplated hereby.
Neither such execution, delivery or performance nor compliance by Seller with
the terms and provisions hereof 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
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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 Licenses are
sufficient for the lawful conduct of the business and operation of the Stations
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 Stations as now operated. Except for the application seeking
the renewal of the licenses for the Stations, 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 Stations, 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 Stations' 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 Stations 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 Stations as they are 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 Stations 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.
3.4 Compliance with Regulations. The operation of the Stations 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,
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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 and Regulatory Fees. 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 Stations. Each of the parcels included in the Owned
Real Property is assessed for real estate purposes as a wholly independent tax
lot, separate from any adjoining lot or improvements not constituting a part of
such parcel. Seller has paid all FCC Regulatory Fees required to be paid by
Seller with respect to the Stations.
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 Stations. 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 Stations as now conducted and in material
compliance with the terms and conditions of the Licenses.
3.7 Real Property.
(a) Seller is the owner of good, marketable and insurable fee title to
the Owned Real Property free and clear of all Title Defects (as hereinafter
defined) except for encumbrances of a minor nature that do not, in the
reasonable opinion of Buyer's counsel, individually or in the aggregate (i)
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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 Stations.
There are no leases/subleases or other agreements granting to any person other
than Seller any right to the possession, use or 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.
Notwithstanding the foregoing, Buyer recognizes that certain radials
constituting a portion of the antenna system used by WKWK(AM) extend slightly
beyond the surveyed boundaries of the real property owned by Seller, but are
permitted by virtue of an easement granted by the landowner of the property into
which the radials extend. This encroachment shall be deemed a Permitted Owned
Real Property Exception.
(b) Entire Premises. All of the land, buildings, structures and other
improvements used by Seller in the conduct of the business of the Stations or
involved in the Real Property are listed in the Disclosure Schedule.
(c) 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.
(d) 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, 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 so-called hook-up fees or other associated charges have been
fully paid.
(e) 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
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issued and are, as of the date hereof, in full force and effect.
(f) 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.
(g) 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, 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.
3.9 Contracts. Section 1.1(f) of the Disclosure Schedule contains a true
and complete list of all Contracts, including all such Contracts necessary to
permit continued operation of the Stations in the manner in which they are being
operated as of the date of this Agreement, 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 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.
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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, and if any equipment does contain Hazardous Waste
that is not required by law to be removed, 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 Stations 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 Intangibles. Section 1.1(e) of the Disclosure Schedule is a true
and complete list of all trade names, copyrights, trademarks, service marks,
patents or applications therefor (the "Intellectual Property") that have been
duly registered by, filed by, or issued to the Seller. Seller has not granted
any license or other rights with respect to the Intangibles (including the
Intellectual Property). Seller has not received any written notice of any
infringement or unlawful use of the Intangibles 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. Seller previously has provided Buyer with
complete copies of the audited statements of income, and the related balance
sheets, for the years ended December 31, 1993 and December 31, 1994 and
unaudited statements of income and related balance sheets through November 30,
1995. These financial statements are included in Section 3.12 of the Disclosure
Schedule. Pursuant to Paragraph 1.7 of this Agreement, Seller will supplement
Section 3.12 of the Disclosure Schedule with complete unaudited copies (or
audited copies, if available) of the statements of income, and the related
balance sheets for Seller, for the period after November, 1995. The schedules
supplied, and to be supplied, in Section 3.12 of the Disclosure Schedule have
been prepared in accordance with generally accepted accounting principles and in
accordance with the policies and procedures of the Seller
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applicable thereto, consistently applied, and present fairly the financial
condition and results of operations of the Stations 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 Stations, including the date of hire and a
description of material compensation arrangements (other than employee benefit
plans set forth in Section 3.14 of the Disclosure Schedule). Seller has not
entered into any employment agreements with any of its employees.
(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 Stations. 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. The only employee benefit plan (as that
term is defined in Section 3(3) of ERISA) is the 401(k) plan summarized in
Section 3.14 of the Disclosure Schedule. Seller maintains no other employee
benefit plan. Seller's employee benefit plan 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. 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 Stations 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 Stations
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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,
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 Stations, 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
Stations 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, regulations and
governmental orders whether or not applicable to the conduct of the business and
operation of the Stations 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, true and complete copies of which are 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 November 30, 1995 (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
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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 Real Property, free and clear of
all liabilities, obligations and encumbrances, except as provided herein.
3.20 Absence of Certain Changes. 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 not
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materially greater than during the twelve months prior to the Balance Sheet
Date;
(i) The disposition, lapse or termination of any Intellectual Property;
(j) The increase or promise to increase the rate of commissions, fixed
salary or wages, draw, bonus or other compensation payable to any employee of
Seller, except in the ordinary and usual course of business consistent with past
practice;
(k) Any default under any contract or lease to which Seller is a party;
(l) Any change in any method of accounting or accounting practice used
by Seller; or
(m) Any other event or condition of any character materially and
adversely affecting the business or properties of Seller or the Stations.
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 West Virginia.
4.2 Authority; No Conflict. 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
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contemplated hereby. The execution, delivery, performance hereof, and compliance
by Buyer with the terms and provisions hereof 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, 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.
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, other than with
respect to the ownership limitations set forth in current FCC regulations which
must be revised by the Telecommunications Act of 1966 in such a way as to remove
the ownership limitation currently imposed on the Buyer by the FCC, 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 which would
disqualify Buyer from being the assignee of the Licenses and the other Station
Assets.
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ARTICLE V
COVENANTS OF SELLER
Between the date of this Agreement and the Closing Date, Seller shall
have complete control of the Stations and its operations, and Seller covenants
as follows with respect to such period:
5.1 Continued Operation of Stations. Seller shall continue to operate
the Stations under the terms of the Licenses in the manner in which the Stations
have 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 Stations 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 Stations.
5.2 Financial Obligations. Seller shall continue to conduct the
financial operations of the Stations, including their 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
Stations; 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
$5,000 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 Stations
and shall furnish such additional information concerning the Stations 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 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
Intangibles.
5.5 Notification of Developments. Seller shall provide Buyer
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with prompt written notice of any material 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 Stations, the Real Property and the assets
and employees of the Stations 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, 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 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, except in the ordinary course of business consistent
with Seller's past business practice.
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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. In addition Seller shall not enter into, extend or renew any
Broadcast Agreement exceeding $10,000 in amount unless such Broadcast Agreement
is terminable on 30 days' notice, and 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 Stations, any Station Assets or any controlling stock
interest in Seller to any third party, nor shall Seller offer the Stations, any
Station Assets or any controlling stock interest in 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; Local Marketing Agreement. No later than ten
(10) days after the date of this Agreement, Buyer and Seller shall join in and
file with the FCC an application on FCC Form 314 requesting the Commission's
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. Buyer and Seller acknowledge
that the revisions to the FCC's broadcast ownership rule mandated by the
Telecommunications Act of 1996, PL 104-104, have, as of the date of this
Agreement, not yet been implemented. Buyer and Seller agree to promptly amend or
refile the Assignment Application as necessary in light of the revisions to the
FCC's regulations and policies that are adopted by the FCC in implementation of
the Telecommunications Act of 1996.
Contemporaneously with the execution of this Agreement, Buyer and Seller
shall execute an LMA in substantially the form of the agreement attached hereto
as Exhibit E.
6.2 Performance. Buyer and Seller shall perform all acts required of
them under this Agreement and shall refrain from taking or omitting
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to take any action that would violate their representations and warranties
hereunder or render those representations and warranties 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.
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 con- templated 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 "Act 307" 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
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subject to Real Estate Contracts requiring remediation, encapsulation or removal
under applicable laws relating to 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 Phase I 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. The Parties recognize, however, that
the FCC licenses to be assigned under this Agreement may not be assigned without
the prior approval of the FCC and will not attempt to effectuate such an
assignment without the FCC's prior approval.
6.8 Employee Matters. While under no obligation to hire any employees of
the Stations, Buyer shall make reasonable efforts to offer employment at will to
certain employees of the Stations. 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 soon as practicable and (ii) those
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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 Stations 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 Stations 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 West Virginia. 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 except that Seller shall have no obligation to remove
a defect that is a Permitted Owned Real Property Exception.
6.10 Escrow Agreement. Seller and Buyer shall enter into an Escrow
Agreement substantially in the form attached hereto as Exhibit A.
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, (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, it being agreed, however,
that any condition requiring Buyer to divest itself of an interest in WHLX(FM)
shall not be deemed to be unreasonably burdensome or to have a materially
adverse effect on Buyer) and (c) grant by the Commission of the renewal
applications pending for the Stations without condition and for a minimum
license term of seven years. 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 and become Final
Orders. The Licenses shall be in unconditional full force and effect and shall
be unimpaired by any acts or omissions of Seller or Seller's employees or
agents.
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 Failure of Transfer. Notwithstanding anything to the contrary
contained in this Agreement, in the event that any law, regulation or official
policy prevents the transfer or assignment of the Station Assets from Seller to
Buyer or any Buyer affiliate, the Parties shall have amended this Agreement
and/or executed such supplemental agreements, as necessary, to achieve for both
Buyer and Seller, to the maximum extent possible, the benefits of the
transactions contemplated by this Agreement in a manner consistent with
applicable law.
7.4 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.
7.5 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. With respect to consents for Assumed Contracts,
however, only the obtaining of consents for Material Contracts is a condition
precedent to the Buyer's obligation to purchase the Stations.
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7.6 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 Stations.
7.7 No Adverse Change. Buyer shall have completed its due diligence
which shall, in its sole judgment, be satisfactory and no material adverse
change shall have occurred with respect to the operation of the Stations since
the conclusion of such due diligence.
7.8 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.
7.9 Opinions of Counsel. Seller shall have delivered to Buyer an opinion
of Bachman, Hess, Bachman and Garden, counsel to Seller, addressed to Buyer and
in the form attached hereto as Exhibit B. 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 C.
7.10 Survey. Buyer shall have received the survey of the Real Property
in accordance with Section 6.9 herein.
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,
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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, addressed to Seller and in the form attached hereto as
Exhibit D.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Seller. From and after the Closing Date, Seller
agrees to, and shall, indemnify, defend and hold Buyer harmless, and 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 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 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 Stations by Seller prior to the
Closing Date.
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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 Stations 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 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 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 Stations
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
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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 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.
9.4 Limitation with Respect to Indemnification. Notwithstanding the
foregoing, an Indemnifying Party shall not be under any obligation to indemnify,
defend and hold the Indemnified Party harmless or to reimburse the Indemnified
Party until and unless the amount that otherwise would be due to the Indemnified
Party pursuant to this Article IX equals or exceeds Twenty-Five Thousand Dollars
($25,000.00), in which event the Indemnifying Party shall indemnify, defend and
hold the Indemnified Party harmless and reimburse the Indemnified Party for all
amounts (including such amounts up to Twenty-Five Thousand Dollars ($25,000.00))
without regard to the indemnification floor established by this Paragraph 9.4.
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 Party 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; or as needed to ensure that the transactions contemplated
by this Agreement comply with applicable law, regulations or policy provided,
further, that Seller shall have recourse to Buyer in the event Buyer's assignee
defaults hereunder. Subject to the foregoing, this Agreement
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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 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 1.3
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 of three (3) years following
the date hereof.
10.3 Brokerage. Seller and Buyer warrant and represent to one another
that there has been no broker in any way involved in the transactions
contemplated hereby and that no one 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.
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.
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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 West Virginia.
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:
James Glassman
President
WKWK Radio, Inc.
22484 Groschenbach Road
Washington, IL 61571
Fax: (309) 694-2233
Phone: (309) 694-6262
and
Fred W. Schwarz
The Hawthorne Group
500 Greentree Commons
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381 Mansfield Avenue
Pittsburgh, PA 15220
Fax: (412) 928-7715
Phone: (412) 928-7703
With a copy to:
G. W. Howard III
Howard, Leggans, Piercy & Howard
1008 Main Street
Howard Building, Drawer U
Mt. Vernon, IL 62864
Fax: (618) 244-7197
Phone: (618) 242-6594
and
Louis J. Moraytis
Eckert Seamans Cherin Mellott
42nd Floor
USX Tower
600 Grant Street
Pittsburgh, PA 15219
Fax: (412) 566-6099 & 5952
Phone: (412) 566-6141
and
John C. Quale
Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
Fax: (202) 429-7049
Phone: (202) 429-7032
If to Buyer:
Frank D. Osborn
Osborn Communications Corporation
130 Mason Street
Greenwich, CT 06830
Fax: (203) 629-1749
Phone: (203) 629-0905
With a copy to:
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John M. Pelkey
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive
Arlington, Virginia 22203-1633
Fax: (703) 841-2345
Phone: (703) 841-0606
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 Stations are 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 West Virginia 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 the 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 shall be made by either Party without the prior
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approval of the other Party, except as required by law.
10.14 Accounts Receivable. Subject to the terms of the LMA, Buyer,
commencing on the Closing Date and continuing for a period of six (6) months
following the Closing Date, shall collect all of Seller's accounts receivable
arising from the operation of the Stations in the same manner and with the same
diligence that Buyer uses to collect its own accounts receivable. This
obligation, however, shall not extend to the institution of litigation,
employment of any collection agency, legal counsel, or other third party, or any
other extraordinary means of collection. During the sixth-month period following
the Closing Date, neither Seller nor its agents shall make any solicitation of
these accounts for collection purposes and shall not institute litigation for
the collection of any amounts due. Every thirty (30) days after the Closing
Date, Buyer shall account to Seller in writing for and pay over to Seller the
amount of the collections made on Seller's behalf.
Except as is set forth in the last sentence of this paragraph, all
payments received by Buyer during the sixth-month period following the Closing
Date from any person obligated with respect to any of such accounts receivable
shall be allocated so that the oldest such account receivable shall be paid
first and the most recent last. Notwithstanding the foregoing, no payments shall
be applied to obligations disputed by any account debtor. Upon the provision of
notice to Seller, in the manner specified in Section 10.9, above, that an
account debtor disputes an account receivable of Seller, Buyer may cease efforts
to collect such account receivable and thereafter any amounts received by Buyer
from the disputed account debtor may be applied to Buyer's account with such
debtor and Seller may take whatever steps it deems necessary to attempt to
collect its account(s) receivable from such account debtor. Buyer shall not have
the right to compromise, settle, or adjust the amounts of any of Seller's
accounts receivable without Seller's written consent. Any amounts received by
Buyer in payment of any account receivable (without time limitation) which can
be identified as a payment on a specific account, whether by accompanying
invoice or otherwise, shall be promptly paid over to the owner of that account,
regardless of whether the account debtor has an outstanding balance on older
accounts.
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
WKWK RADIO, INC.
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BY:
TITLE:
BUYER
MOUNTAIN RADIO CORPORATION
BY:
TITLE: President
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___________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of March 1, 1996
by and between
ATLANTIC CITY BROADCASTING CORP.
(Seller)
and
EQUITY COMMUNICATIONS, L.P.
(Buyer)
___________________________________________________________
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF ASSETS
1.1 Transfer of Assets 1
1.2 Excluded Assets 3
1.3 Liabilities to be Assumed 4
1.4 Purchase Price 4
1.5 Allocation of Purchase Price 4
1.6 Escrow Deposit 4
ARTICLE II CLOSING AND TERMINATION
2.1 Closing 5
2.2 Transactions at the Closing 5
2.3 Proration of Expenses 7
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2.4 Termination 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation 10
3.2 Authority; No Conflict 10
3.3 Government Authorizations 10
3.4 Compliance with Regulations 11
3.5 Personal Property 11
3.6 Real Property 12
3.7 Real Estate Contracts 12
3.8 Consents 13
3.9 Contracts 13
3.10 Environmental 13
3.11 Intellectual Property 14
3.12 Financial Statements 15
3.13 Personnel Information; Labor Contracts 15
3.14 Employee Benefit Plans 15
3.15 Litigation 15
3.16 Compliance with Laws 16
3.17 Insurance 16
3.18 Instruments of Conveyance; Good Title 16
3.19 Absence of Certain Changes 16
3.20 Insolvency Proceedings 17
3.21 Location of Assets 18
3.22 Citizenship 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation 19
4.2 Authority; No Conflict 19
4.3 Consents 19
4.4 Litigation 19
4.5 Compliance with Laws 20
4.6 Qualification 20
4.7 Financing 20
ARTICLE V COVENANTS OF SELLER
5.1 Continued Operation of Station 20
5.2 Financial Obligations 20
5.3 Access 21
5.4 Maintenance of Assets 21
5.5 Notification of Developments 21
5.6 Updated Financial Statements 21
5.7 Encumbrances 21
5.8 Assignment of Assets 21
5.9 Commission Licenses and Authorizations 21
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5.10 Technical Equipment 22
5.11 Employees 22
5.12 Sale of Broadcast Time 22
5.13 Contracts 22
5.14 Taxes 22
5.15 Commission Action 22
5.16 Insurance 23
5.17 Negotiations with Third Parties 23
5.18 Third Party Consents 23
5.19 Normal Operation 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
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals 25
7.2 Performance 26
7.3 Representations and Warranties 26
7.4 Consents 26
7.5 Opinions of Counsel 26
7.6 Covenant Not to Compete 26
7.7 Release of Indebtedness 26
7.8 Environmental Audit 26
7.9 Occupancy Certificate 27
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance 28
8.2 Representations and Warranties 28
8.3 Government Approvals 28
8.4 Purchase Price 28
8.5 Closing Certificate 28
ARTICLE IX INDEMNIFICATION
9.1 Indemnification by Seller 28
9.2 Indemnification by Buyer 29
ARTICLE X MISCELLANEOUS
10.1 Damage and Failure of Transmissions 29
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10.2 Assignment 30
10.3 Survival of Representations 31
10.4 Brokerage 31
10.5 Expenses of the Parties 31
10.6 Entire Agreement 31
10.7 Headings 31
10.8 Governing Law 31
10.9 Counterparts 31
10.10 Notices 32
10.11 Specific Performance 33
10.12 Arbitration 33
10.13 Consent to Jurisdiction 34
10.14 Further Assurances 34
10.15 Amendments 34
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into this
first day of March, 1996 by and between ATLANTIC CITY BROADCASTING CORP., a
corporation formed under the laws of the State of Delaware ("Seller"), and
EQUITY COMMUNICATIONS, L.P., a limited partnership 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 WAYV- FM, Atlantic City, New Jersey on 95.1 MHz (the "Station");
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WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the assets used or useful 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, concurrently herewith, the parties are entering into a Time
Brokerage Agreement (the "Time Brokerage Agreement"), providing for the sale of
substantially all of the broadcast time of the Station to Buyer, subject to the
rules and policies of the FCC.
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 all of the
tangible and intangible assets and rights of every kind and nature, real,
personal and mixed, now or hereafter owned or held by Seller and used or useful
in the business and operation of the Station, wherever located, other than those
assets described in Section 1.2 below, free and clear of any and all claims,
liabilities, liens, encumbrances or conditions, including without limitation the
following (collectively, the "Station Assets"):
(a) Licenses and Authorizations. All licenses, permits and other
authorizations issued by the FCC or any other state or federal government or
agency thereof 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 WAYV-FM.
(b) Tangible Personal Property. All of the tangible personal property or
fixtures owned by Seller and used or useable in the operation of the Station,
including, without limitation, the 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 material
agreements, leases, and contracts of Seller relating to the tower, transmitter,
studio site, and offices of the Station (the "Real Estate Contracts"), 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 right, title and interest in
all trade names, copyrights, trademarks, service marks, slogan, logos, patents,
patent applications or other similar rights relating to or used in 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, syndication agreements,
programming agreements, franchises and all other agreements relating to the
business and 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
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"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 the sale of
broadcast time on the Station that are to be in effect on the Closing Date (the
"Broadcast Agreements"), including any contract for the sale of time pursuant to
which payment is to be received in whole or in part in services, merchandise or
other non-cash considerations ("Trade Agreements"). Broadcast Agreements in
effect as of the date hereof are set forth on Section 1.1(f) of the Disclosure
Schedule. Buyer shall assume, pay and perform all obligations under the
Broadcast Agreements arising after the Closing Date, provided, however, that
Buyer shall be obligated to assume only those Broadcast Agreements and Trade
Agreements that were entered into at the Station's then-prevailing rates and
that have terms consistent with the Station's past practice in the ordinary
course of business.
(g) Operating and Business Records. All files, records, logs, public
file materials, engineering records, program materials and other business
records of Seller pertaining to the operation of the Station, including but not
limited to those 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 three years after the
Closing Date.
(h) Future Contracts. All leases, contracts, agreements and franchises
entered into between the date hereof and the Closing Date (the "Post-signing
Contracts") in connection with the business and operation of the Station in
accordance with the provisions of Section 5.13.
(i) Inventory and Computer Software. All of Seller's items of inventory
related to the business of the Station, including, without limitation, broadcast
programs,
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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.
(k) Intangible Property. All of Seller's right, title and interest in
and to the goodwill and other intangible assets used or useful in or arising
from the business of the Station, including but not limited to all customer
lists, trade secrets, and sales, operating and business plans (the "Intangible
Property").
(l) Accounts Receivable. All of Seller's accounts receivable.
(m) Cash Proceeds. All proceeds generated from the sale of any Station
Assets by the Seller between the date hereof and the Closing Date.
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)
as of the date hereof.
(b) 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 in accordance with the terms of
this agreement; provided, however, that any proceeds of such sales shall not
constitute Excluded Property.
(c) 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 either case, in the ordinary
course of business.
(d) Pension and Profit-Sharing Plans. All pension and profit-sharing
plans, trusts established thereunder and assets thereof, if any, of Seller.
(e) Other Assets. Those assets, if any, listed in Section 1.2(e) of the
Disclosure Schedule.
1.3 Liabilities to be Assumed. Buyer assumes no liabilities or
obligations of
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Seller of any nature whatsoever, contingent or otherwise, except for (a) those
liabilities assumed under the Time Brokerage Agreement, including those
liabilities listed on Schedules 4.1 and 4.1A thereto; and (b) obligations
accruing after the Closing under Real Estate Contracts, Contracts, Broadcasting
Agreements, Trade Agreements and Post-signing Contracts (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 assume the liabilities in Section 1.3 and pay on the Closing Date, by wire
transfer, the sum of Three Million One Hundred Thousand Dollars ($3,100,000.00),
subject to adjustment as provided in Section 2.3 (the "Purchase Price"). Of such
amount, $200,000 shall be paid by wire transfer to such account as Seller shall
designate to Buyer prior to the Closing Date. The balance shall be paid by wire
transfer to such account as Granite Equities, Inc. ("Granite") shall designate
to Buyer prior to the Closing Date.
1.5 Allocation of Purchase Price. Buyer and Seller agree that the
Purchase Price shall be allocated among the Station Assets prior to the Closing
Date and to cooperate in all respects with regard to such allocation. 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. If Buyer and Seller are unable to agree on such allocation, they
shall hire an appraiser to make such allocation, the cost of which appraisal
shall be borne equally by Seller and Buyer.
1.6 Escrow Deposit. As security for Buyer's failure to Close and as an
inducement for Seller to perform its obligations hereunder Buyer shall deposit
within two (2) business days of the date hereof with Media Venture Partners (the
"Escrow Agent") a $200,000
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irrevocable letter of credit in substantially the form attached hereto as
Exhibit A issued by Fleet Bank of Massachusetts, N.A. (the "Escrow Deposit"),
which Escrow Deposit shall be held and disbursed by the Escrow Agent pursuant to
the Escrow Agreement of even date herewith as follows: if this Agreement is
terminated pursuant to Section 2.4(a)(iv) by reason of a breach by Buyer and if
all conditions to Buyer's obligations to close shall have been satisfied or
waived, (i) the Escrow Deposit shall be released to Granite, (ii) title to all
of the Station's accounts receivable shall become vested in Seller, pursuant to
Section 4.1 of the Time Brokerage Agreement, and (iii) all severance obligations
(other than severance obligations assumed pursuant to Section 4.1 of the Time
Brokerage Agreement and severance obligations to Gary Fisher), accrued expenses
and trade payables relating to the operation of the Station (not to exceed in
the aggregate, the amount of the Station's accounts receivable) shall be assumed
by Seller, which together shall be deemed liquidated damages and shall
constitute Seller's and Granite's sole remedy at law or in equity and Seller and
Granite shall have no other recourse against Buyer or any of its affiliates
under or on account of this Agreement. In all other cases, if this Agreement is
terminated or if the transactions contemplated herein are consummated, then the
Escrow Deposit shall be delivered to the Buyer.
ARTICLE II
CLOSING 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 day 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 at such place as shall be mutually agreed upon by the
parties (the "Closing Date"). For purposes of this Agreement, a "Final Order"
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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, 7.3 and the
affidavit contemplated by Section 3.22;
(iii) a copy of the resolutions of the board of directors and
stockholders of Seller authorizing the execution, delivery and performance of
this Agreement, the Time Brokerage Agreement and the Escrow Agreement, 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
of transfer 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;
(v) written consents (including satisfactory estoppel language as to the
absence of defaults and the completeness of documentation) of the respective
lessors, landowners, and any other persons or entities whose consents may be
required to permit Seller to assign or Buyer to assume the liabilities,
contracts, leases, licenses, understandings and
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agreements constituting the Assumed Contracts;
(vi) evidence satisfactory to Buyer's counsel that no financing
statements or other liens or encumbrances are outstanding on the Station Assets;
(vii) all files, records, logs, and program materials relating to the
Station and the Station Assets;
(viii) the opinion of general counsel and FCC counsel for Seller, dated
the Closing Date, as described in Section 7.5;
(ix) assignments to Buyer of all the Assumed Contracts (including
assignment of the Real Estate Contracts in recordable form); and
(x) a copy of the lease or memorandum of lease pertaining to the
transmitter site (and all amendments thereto) executed by Seller and the
landlord and duly recorded with the recorder's office in the jurisdiction where
the property is located.
(xi) a Non-Compete Agreement in the form attached hereto as Exhibit B
executed by Frank D. Osborn, individually, and in his capacity as president of
Osborn Communications Corp., and Atlantic City Broadcasting Corp. (the
"Non-Compete Agreement"); and
(xii) such other documents and instruments as Buyer may reasonably
request to consummate the transactions contemplated hereby; and
(xiii) instructions releasing the Escrow Deposit to Buyer.
(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's
general partner authorizing the execution, delivery and performance of this
Agreement, the Time Brokerage Agreement and the Escrow Agreement and the
consummation of the transactions contemplated hereby and thereby together with a
certificate of the Secretary of Buyer's general partner dated as of Closing
Date, that such resolutions were duly adopted and are in full force and
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effect;
(iii) the certificates contemplated by Sections 8.1 and 8.2; and
(iv) such other documents and instruments as Seller may reasonably
request to consummate the transactions contemplated hereby.
2.3 Proration of Expenses. (a) All costs and expenses arising from the
operations of the Station (other than costs and expenses incurred or assumed by
Buyer in its capacity as Time Broker under the Time Brokerage Agreement) up to
and including 11:59 p.m. of the day prior to the Closing Date (the "Cut Off
Time"), will be prorated between Buyer and Seller so that Seller shall be
responsible for all expenses, costs, liabilities and obligations allocable to
the conduct of the business and the operation of the Station (other than Buyer's
expenses as Time Broker) for the period prior to the Cut-Off Time; and Buyer (x)
shall be entitled to receive all income and revenues and all refunds from and
after the commencement of Buyer's activities under the Time Brokerage Agreement
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. 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); wages, salaries and benefits of employees
(including accruals up to the Cut-Off Time for insurance premiums, bonuses,
commissions, sick pay, vacation 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;
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(iv) sewer rents and charges for water, electricity and other utility
expenses and fuel;
(v) 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 2.3 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
remain the property of Seller, whether such refund is paid before or after the
Closing Date.
(b) Time for Payment. The prorations and adjustments contemplated by
this Section 2.3, 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 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
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Section 2.3(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.
2.4 Termination.
(a) 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 Date does not occur on or
before December 31, 1996;
(iii) Buyer, if any of the conditions set forth in Article VII shall not
have been either fulfilled or waived by Buyer on or before the Closing Date, or
if Seller shall have breached any of its representations, warranties or
obligations hereunder which are qualified by a standard of materiality or words
of similar import, or if Seller shall have breached in any material respect any
other representation, warranty or obligation hereunder and, in either case, such
breach shall not have been cured in all material respects or waived prior to the
earlier of the Closing Date and fifteen (15) days after the Buyer has given
notice to Seller of such breach; or
(iv) Seller, if any of the conditions set forth in Article VIII shall
not have been either fulfilled or waived by Seller, or if Buyer shall have
breached any of its representations, warranties or obligations hereunder which
are qualified by a standard of materiality or words of similar import, or if
Seller shall have breached in any material respect any other representation,
warranty or obligation hereunder and, in either case, such breach shall not have
been cured in all material respects or waived prior to the earlier of the
Closing Date and fifteen (15) days after Seller has given notice to Buyer of
such breach.
(b) In the event of the termination of this Agreement by Buyer or Seller
pursuant to this Section 2.4, written notice thereof shall promptly be given to
the other
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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 2.4 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 this Agreement
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 2.4(c), the parties shall be released and discharged from any
further obligation hereunder and the Escrow Deposit shall be returned to the
Buyer.
(d) Notwithstanding the provisions of Section 2.4(a) - (c) above, 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.
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 conduct business and is in good standing in the State of New
Jersey, and in any other jurisdiction in which the nature of its business or the
ownership or leasing of its properties requires such qualifications. Seller has
the corporate power and authority to (i) own, lease, and use the Station Assets
and properties as now used, owned, and leased; and (ii) to conduct the business
of operating the Station as now conducted.
3.2 Authority; No Conflict. The execution and delivery of this
Agreement, the Escrow Agreement and the Time Brokerage Agreement and any other
agreements and instruments contemplated herein or executed in connection
herewith (collectively, the "Seller Agreements") have been duly and validly
authorized and approved by the board of directors and stockholders of Seller,
and Seller has the corporate power and authority to execute, deliver and perform
all the Seller 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 Seller
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 law, judgment, order, injunction, decree, regulation or ruling of any court
or other governmental authority to which Seller is subject or applicable to
Seller or the Station, or (c) any agreement, lease or contract, written or oral,
to which Seller is subject. This Agreement, the Escrow Agreement and the Time
Brokerage Agreement constitute and as of the Closing Date, all other Seller
Agreements will constitute, the legal, valid and binding obligations of the
Seller, enforceable against it in accordance with their terms.
3.3 Government Authorizations. Section 1.1(a) of the Disclosure Schedule
contains a true and complete list of all the Licenses, which Licenses and
government
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authorizations of any kind held or used in the operation of the Station 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 (judicial, administrative or otherwise) pending or, to the best
of Seller's knowledge, threatened before the Commission or any other
governmental authority relating to the business or operations of the Station,
other than rule making and similar 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 and authorizations 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 best of Seller's knowledge, 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 as it is currently operated.
Seller has not taken any action which 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 reports, forms and
statements required to be filed with the Commission with respect to the Station
since Seller has owned WAYV-FM have been filed and
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are complete and accurate. Without limiting the generality of the foregoing, all
ownership reports, renewal applications, equal employment opportunity reports
and other reports and documents required to be filed by Seller with the FCC have
been properly filed. Since Seller has owned WAYV-FM the FCC's renewal of the
Station Licenses has not been challenged by a petition to deny, or by a
competing application. Seller has not entered into any agreement with any
community group, governmental authority or other third party restricting
programming or other aspects of the operation of the Station which would or
could restrict Buyer's discretion to operate the Station when licensed to Buyer,
and there has been no dispute with any community group, governmental authority
or other third party as to the manner of operation of the Station. Seller is not
aware of any reason why the FCC would deny its consents to the assignment of the
Station Licenses to Buyer hereunder. 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, in connection with the
Assignment Application.
3.4 Compliance with Regulations. The operation of the Station is in
compliance with (i) all standards of good engineering practice, (ii) all
applicable engineering standards required to be met under Commission rules, and
(iii) 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; and there are no existing claims,
citations or notices of any governmental authority to the contrary.
3.5 Personal Property. Except for those assets subject to lease
agreements (but not excepting the lease agreements themselves), Seller owns and
has good and marketable title to the Station Assets, and none of the Station
Assets on the Closing Date will be subject to any security interest, mortgage,
pledge, conditional sales agreement or other lien or encumbrance.
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The Personal Property is all the tangible personal property used in or
necessary for the lawful operation of the Station as presently operated by
Seller. Except as specifically indicated to the contrary in Section 1.1(b) of
the Disclosure Schedule, all Personal Property is serviceable and in good
operating condition (reasonable wear and tear excepted). All items of
transmitting and studio equipment included in the Personal Property (i) have
been maintained in a manner consistent with generally accepted standards of good
engineering practice and (ii) permit the Station to operate in accordance with
the terms of the Licenses.
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. Seller has a valid
leasehold interest in the real property subject to the Real Estate Contracts.
The present use by the Station of all real property leased pursuant to the Real
Estate Contracts conforms with all applicable building, zoning, land use,
environmental and other laws, ordinances, codes, orders and regulations and all
other governmental regulations, including, without limitation, the standards,
rules and regulations of the FCC. The transmitter for the Station is operating
in accordance with and within the parameters established by the FCC and the
Station's Licenses. The broadcast tower for the Station is in compliance with
the Federal Aviation Act, and all rules and regulations promulgated thereunder
and all other applicable laws, including, without limitation, all applicable
building, zoning, land use and environmental laws, ordinances, codes and
regulations.
(b) As of the date hereof, Seller has complied with all of the Real
Estate Contracts and has not received or given oral or written notice of any
default thereunder from or to any of the other parties thereto. Seller shall use
its best efforts to obtain valid and binding
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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.
(c) The real property subject to the Real Estate Contracts is all of the
real property used in or necessary for the lawful operation of the Station as
presently operated by Seller. Seller has and, after the Closing Date, Buyer will
have, full legal and practical access to such real property pursuant to valid
easements or pursuant to public rights of way. All utilities servicing the
Station have access to such real property pursuant to valid easements or
pursuant to public rights of way. There are no encroachments upon such real
property by any buildings, structures, or improvements located on adjoining real
estate. None of the buildings, structures, or improvements that are constructed
on the real property and used in the present operation of the Station (including
without limitation all guy wires and guy anchors) encroaches upon adjoining real
estate, and all such buildings, structures, and improvements are constructed in
conformity with all "set-back" lines, easements and other restrictions or rights
of record, and all applicable building or safety codes and zoning ordinances.
There are no pending or, to the best of Seller's knowledge, threatened
condemnation or eminent domain proceedings that may affect such real property,
nor has any of such real property been condemned. There are no structural
defects in the towers, buildings, structures and other improvements located on
such real property that are used in the operation of the Station. The Real
Estate Contracts (or memoranda thereof) have been duly recorded in the land
records of the jurisdictions where such real estate is located, or will be so
recorded prior to Closing. True and correct copies of the Real Estate Contracts
have been provided to Buyer.
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
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for the execution, delivery and performance by Seller of this Agreement or the
Seller Agreements, 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 the Seller Agreements.
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, including the
dollar amount of the broadcasting time owed by the Station under each such
agreement as of the date of this Agreement. Seller has delivered to Buyer true
and complete copies (or, in the case of unwritten Broadcast Agreements and Trade
Agreements, accurate written summaries of all material provisions thereof) of
all Contracts, Broadcast Agreements and Trade Agreements, and prior to the
Closing Date Seller will have delivered to Buyer all Post-signing Contracts,
including any and all amendments and other modifications to same. As of the date
hereof, all of the Assumed Contracts are in full force and effect and
enforceable in accordance with their terms, and the sale of the Assets as
contemplated herein will in no way affect the validity, enforceability and
continuity of any such contracts or agreements if properly assigned to Buyer as
contemplated hereby. Seller has complied with the Assumed Contracts, and to the
knowledge of Seller no other contracting party is in default under any of same.
The Assumed Contracts include all agreements to which Seller is a party or by
which it is bound relating to the ownership or operation of the Station.
3.10 Environmental.
(a) Seller has not unlawfully disposed of any Hazardous Waste in a
manner which has caused, or could cause, Buyer to incur a liability under
applicable law in connection therewith;
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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 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. Without limiting the generality of the
foregoing, (i) no Hazardous Waste has been disposed of by Seller on the real
property subject to the Real Estate Contracts, (ii) no "underground storage
tank" (as that term is defined in regulations promulgated by the federal
Environmental Protection Agency) is used in the operation of the Station or is
located on such real property; (iii) no Hazardous Waste is located on or about
such real property and such real property has not previously been used for the
manufacture, refining, treatment, storage, or disposal of any Hazardous Waste;
(iv) none of the soil, ground water, or surface water of such real property is
contaminated by any Hazardous Waste and there is no reasonable potential for
such contamination from neighboring real estate, (v) no Hazardous Waste is being
emitted, discharged or released from such real property, directly or indirectly,
into the environment; and (vi) Seller is not liable for cleanup or response
costs with respect to any present or past emission, discharge, or release of any
Hazardous Waste. 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
best efforts to
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complete such remedial action to the satisfaction of Buyer before the Closing
Date. Buyer shall not be obligated to close until any such condition is
corrected.
(b) No notice of violation, lien, complaint, suit, order or other notice
or communication concerning any alleged violation of any environmental standard,
rules, regulations and laws in, on, under or about any of the real property
subject to the Real Estate Contracts has been received by Seller or its
affiliates, or to the best of Seller's knowledge, any owner or prior owner or
occupant of any of the real property which has not been fully satisfied and
complied with all federal, state and local environmental laws, standards, rules
and regulations.
(c) Seller has all permits and licenses required under any federal,
state and local environmental laws, rules and regulations to be issued to it by
any governmental authority on account of any or all of its activities on any of
the real property and is in material compliance with the terms and conditions of
such permits and licenses. Any and all such permits and licenses are described
in Section 1.1(a) of the Disclosure Schedule. To the best of Seller's knowledge,
no change in the facts or circumstances reported or assumed in the application
for granting of such permits or licenses exist, and such permits and licenses
are in full force and effect.
(d) To the best of Seller's knowledge, no portion of any of the real
property subject to the Real Estate Contracts has been listed, designed or
identified in the National Priorities List (NPL) or the CERCLA Information
System (CERCLIS), both as published by the United States Environmental
Protection Agency, or any similar list of sites published by any federal, state
or local authority proposed for or requiring cleanup, or remedial or corrective
action under any federal, state or local environmental laws, rules and
regulations.
(e) Exceptions, if any, to the foregoing representations are set forth
in Section 3.10 to the Disclosure Schedule.
3.11 Intellectual Property. Section 1.1(d) of the Disclosure Schedule is
a true and complete list of all the material Intellectual Property used in
connection with the operation of
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the Station, all of which are in good standing and uncontested. 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 and has no knowledge 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 as at December 31, 1994 and December 31, 1995 and for the
fiscal years then ended and statements of income for each month during 1995 (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles, consistently applied.
The Financial Statements present fairly the financial condition and results of
operations of the Station for the periods indicated, and there has been no
material adverse change in Seller's financial condition between December 31,
1995 and the date of this Agreement.
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 compensation arrangements and a list of any and
all agreements affecting such persons. Seller has provided Buyer with true and
correct copies of all such agreements.
(b) Seller is not a party to any contract with any labor organization,
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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 labor difficulties of any
nature.
(c) Seller has complied 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. Seller maintains no employee benefit plan
(as that term is defined in Section 3(3) of ERISA).
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, action, suit,
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 the FCC or any other 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 Station Assets 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
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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 (i) impair Seller's ability to perform
its obligations under this Agreement, (ii) in any way adversely affect Buyer's
ability to operate the Station as heretofore operated, or (iii) be expected to
have any adverse effect upon the Station Assets, other than rule making or
similar proceedings which affect the broadcast industry generally.
3.16 Compliance with Laws. Seller is in compliance with, and 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, non-compliance with which would have a
material adverse effect on the Station Assets. 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. Neither any shareholder of Seller or any entity which
shares an officer, director, shareholder or partner with Seller, nor any parent
or subsidiary corporation of Seller has had an adverse finding made or final
action taken by any court or administrative body in a civil or criminal
preceding relating to (1) a felony, (2) an antitrust or unfair competition
claim, (3) criminal violations involving false statements or dishonesty, (4)
misrepresentation to any governmental unit resulting in civil or criminal
violations, or (5) employment discrimination, nor to the best of Seller's
knowledge is any such proceeding threatened or in progress.
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. True and complete copies of Seller's insurance policies have
been provided to Buyer.
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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 liens, pledges, collateral
assignments, security interests, capital or financing leases, easements,
covenants, restrictions and encumbrances or other defects of title except the
lien of any real estate or personal property taxes that will not become due
until after the Closing Date and that will be prorated between Seller and Buyer
pursuant to Section 2.3.
3.19 Absence of Certain Changes. Except as disclosed in Section 3.19 of
the Disclosure Schedule, and except for those changes or actions expressly
implemented by or at the written request of Buyer following the date hereof
pursuant to the Time Brokerage Agreement, between the Balance Sheet Date and the
Closing Date there has not been:
(a) Any material adverse change in the Station Assets;
(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 material 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;
(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
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accounts receivable or portion thereof, except for write-offs in the ordinary
course of business consistent with past practice;
(i) The cancellation of any debts or claims, or waiver of any rights,
having an aggregate value in excess of $5,000;
(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
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 Seller.
3.20 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.
3.21 Location of Assets. The addresses of Seller's chief executive
office and all of Seller's additional places of business, and of all places
where any of the tangible personal property included in the Station Assets is
now located, or has been located during the past six (6) months, are listed in
Section 3.21 of the Disclosure Schedule. Except as set forth in Section 3.21 of
the Disclosure Schedule, during the past five (5) years, Seller has not nor, to
the best of Seller's knowledge, has any prior owner of the Station been known by
or used any corporate, partnership, fictitious or other name in the conduct of
the Station's business or in connection with the use or operation of the Station
Assets.
3.22 Citizenship. Seller is not a "foreign person" as defined in
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Section 1445(f)(3) of the Internal Revenue Code. On the Closing Date, Seller
will deliver to Buyer an affidavit to that effect, verified as true and sworn to
under penalty of perjury by a duly authorized officer of Seller. The affidavit
shall also set forth Seller's name, address, taxpayer identification number, and
such additional information as may be required to exempt the Transaction from
the withholding provisions of Section 1445 of the Internal Revenue Code. Buyer
shall have the right to furnish copies of the affidavit to the Internal Revenue
Service.
3.23 Tax Matters. All federal, state, county and local tax returns,
reports and declarations of estimated tax or estimated tax deposit forms
required to be filed by Seller in connection with its operations, personal
property or payroll have been duly and timely filed; Seller has paid all taxes
which have become due pursuant to such returns or pursuant to any assessment
received by it, and has paid all installments of estimated taxes due; and all
taxes, levies and other assessments which Seller is required by law to withhold
or collect have been duly withheld and collected and have been paid over to the
proper governmental authorities or are held by Seller for such payment.
3.24 Material Facts. No representation or warranty made by Seller in
this Agreement and no statement made by Seller in (a) any certificate, exhibit,
schedule, or other writing executed and delivered by Seller in connection
herewith, (b) any other agreement, document or writing furnished in connection
with the transactions herein contemplated and referred to herein or in the
Disclosure Schedule attached hereto, or (c) in any document or other writing
delivered to Buyer after the date hereof and on or prior to the Closing Date, by
or on behalf of the Seller, knowingly contains or will knowingly contain any
untrue statement of a material fact, or knowingly omits or will knowingly omit
to state any material fact necessary in order to make the statements contained
herein or therein not misleading.
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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 limited partnership 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 New Jersey.
4.2 Authority; No Conflict. The execution and delivery of this
Agreement, the Time Brokerage Agreement, the Escrow Agreement and other
agreements and instruments contemplated herein or executed in connection
herewith (collectively, the "Buyer Agreements") have been duly and validly
authorized and approved by the board of directors of Buyer, and Buyer has the
partnership power and authority to execute, deliver and perform the Buyer
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance hereof, and compliance by Buyer with the
terms and provisions hereof, or with respect to the Buyer Agreements, 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 Limited Partnership or Agreement of Limited Partnership 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, the Escrow Agreement and the Time Brokerage constitute and as of the
Closing Date all other Buyer Agreements will constitute the valid and binding
obligations of Buyer with respect to the terms hereof.
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 Escrow
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Agreement, 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 and except for consents from parties to agreements with
Seller, which consents are required to transfer the Station Assets to Buyer, no
consent of any other party is required for the execution, delivery and
performance by Buyer of the Buyer Agreements.
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's 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 which would disqualify Buyer from
being the assignee of the Licenses and the other Station Assets.
4.7 Financing. Buyer believes in good faith that by the Closing Date it
will have sufficient financing to consummate the transactions contemplated
hereby.
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ARTICLE V
COVENANTS OF SELLER
Except to the extent that certain changes with respect to the business
and operation of the Station are expressly implemented by or at the written
request of Buyer pursuant to the Time Brokerage Agreement, Seller covenants and
agrees that from the date hereof until the Closing Date:
5.1 Continued Operation of Station. 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. 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
practices and shall provide Buyer on or before the Closing Date with evidence
reasonably satisfactory to the Buyer demonstrating the satisfaction of all
expenses, liabilities and obligations of the Seller to persons or entities doing
business with the Station. Seller shall not enter into or amend any contracts or
commitments involving expenditures by Seller in an aggregate amount in excess of
$5,000
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without the prior written consent of Buyer.
5.3 Access. Seller shall provide Buyer, and representatives of Buyer,
with access to the Station 24 hours per day and shall furnish such additional
information concerning the Station and the Station Assets as Buyer from time to
time may reasonably request.
5.4 Maintenance of Assets. Seller shall maintain 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 claims or rights of substantial value, transfer or otherwise
dispose of 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 Updated Financial Statements. As soon as practicable but in any
event within 21 days of the end of each month, Seller shall, at its own expense,
deliver to Buyer an unaudited balance sheet and income statement of the Station
(excluding revenues and expenses of Buyer pursuant to the Time Brokerage
Agreement) for the month then ended. Such financial statements shall be prepared
in accordance with generally accepted accounting principles, consistently
applied and shall fairly represent the results of the operation of the Station
for the period covered by such statement.
5.7 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.
5.8 Assignment of Assets. Without limiting Seller's obligations
hereunder or
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under the Time Brokerage Agreement, Seller shall not sell, assign, lease or
otherwise transfer or dispose of any Station Assets or modify, alter or
terminate any other right relating to or included in the Station Assets, whether
now owned or hereafter acquired, without the prior written approval of Buyer,
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.
5.9 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 respect to the Licenses at the Commission or any other applicable
governmental authority.
5.10 Technical Equipment. Seller shall repair, maintain or replace, as
necessary, all equipment transferred hereunder in accordance with the normal
standards of maintenance applicable in the broadcast industry.
5.11 Employees. 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 without the prior written consent of Buyer. Seller shall
refrain from hiring, firing, releasing or transferring any employee of the
Station without the prior written approval of Buyer and shall promptly notify
Buyer upon Seller's becoming aware of the resignation or contemplated
resignation of any employee.
5.12 Sale of Broadcast Time. Seller shall not enter into, extend or
renew any Broadcast Agreement or Trade Agreement.
5.13 Contracts. (a) Seller shall not modify, amend, alter or terminate
any of the Contracts or waive any default or breach thereunder without the prior
approval of Buyer; (b) Seller shall not enter into any contract or agreement not
in effect on the date hereof and listed in
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Sections 1.1(c), (e) or (f) of the Disclosure Schedule, except for contracts
entered into in the ordinary course of business which do not involve
consideration having an aggregate value in excess of $5,000 and which may be
terminated on ninety (90) days' notice without premium or penalty; and (c)
Seller shall promptly comply with Buyer's requests, between the date hereof and
the Closing, to (i) enter into any contracts or agreements not in effect on the
date hereof; (ii) modify, amend, alter or terminate any Contracts; or (iii) take
any and all other action with respect to the Contracts or the Station Assets
which Buyer deems necessary or appropriate for the operation of the Station
pursuant to the Time Brokerage Agreement; provided that the requested action is
not inconsistent with customary broadcasting practices in similar situations.
5.14 Taxes. Seller shall pay or cause to be paid or provided for when
due all income, property, use, franchise, excise, social security, withholding,
worker's compensation and unemployment insurance taxes and all other taxes of or
relating to Seller, the Station Assets and the employees of Seller required to
be paid to city, county, state, federal and other governmental units up to the
Closing Date.
5.15 Commission Action. Seller shall provide to Buyer, promptly upon
receipt thereof by Seller, a copy of (i) any notice from the FCC or any other
governmental authority of the revocation, suspension, or limitation of the
rights under, or of any proceeding for the revocation, suspension, or limitation
of the rights under (or that such authority may in the future, as the result of
failure to comply with laws or regulations or for any other reason, revoke,
suspend or limit the rights under) any License, or any other license or permit
held by Seller respecting the Station, and (ii) copies of all protests,
complaints, challenges or other documents filed with the FCC by third parties
concerning the Station and, promptly upon the filing or making thereof, copies
of Seller's responses to such filings. Seller shall notify Buyer in writing
immediately upon
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learning of the institution or written threat of any action against Seller
involving the Station in any court, or any action against Seller before the FCC
or any other governmental agency, and notify Buyer in writing promptly upon
receipt of any administrative or court order relating to the Station Assets or
the Station.
5.16 Insurance. Seller shall maintain at all times between the date
hereof and the Closing Date, all policies listed in Section 3.17 of the
Disclosure Schedule or else replace such policies with comparable policies.
5.17 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.
5.18 Third Party Consents. Seller shall use its best efforts to obtain
the consents listed in Section 3.8 of the Disclosure Schedule.
5.19 Normal Operation. Seller shall operate the Station in the normal
and usual manner, consistent with the rules, regulations, and policies of the
Commission, and conduct the Station's business only in the ordinary course.
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 five (5) business 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
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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 the Time Brokerage 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. Buyer and Seller shall use all reasonable efforts to
cause all of the conditions set forth in Articles VII and VIII of this Agreement
to be fulfilled. 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.
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
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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 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
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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. The provisions of this Section shall
not be construed to limit Seller's obligations under Section 5.18 or Buyer's
rights under Section 7.4.
6.7 Bulk Sales Laws. Seller shall be responsible for compliance with the
provisions of the "bulk sales" or similar laws of any state applicable to this
transaction. 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. Until the Closing Date, all Station's employees
(other than those who are actually placed on Buyer's payroll pursuant to the
Time Brokerage Agreement) remain the employees of the Seller and Seller shall
have full authority and control over such employees and their actions, and Buyer
shall not assume the status of an employer or a joint employer of, or incur or
be subject to any liability or obligation of an employer with respect to, any
such employees unless and until actually hired by Buyer. Seller shall comply
with the provisions of the Worker Adjustment and Retraining and Notification Act
and similar laws, if applicable, and, except as specifically provided in the
Time Brokerage Agreement, shall be solely responsible for any and all
liabilities, penalties, fines, or other sanctions that may be assessed or
otherwise due under such laws on account of this transaction and the dismissal
or termination of any Station employees by Seller. Buyer may, after Closing,
employ those of Seller's employees as Buyer may elect on terms and conditions
determined by Buyer in Buyer's sole discretion. Except as specifically provided
in the Time Brokerage Agreement, Seller shall remain solely responsible for all
severance pay, accrued vacation time and sick leave of those of Seller's
employees who do
<PAGE>
<PAGE>
not enter into Buyer's employ after Closing.
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 the Commission
having granted the Assignment Application without any conditions and such grant
having become a Final Order. 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 and become Final
Orders. 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 New Jersey, and shall
be unimpaired by any acts or omissions of Seller's employees or agents, or
Seller, and neither Seller nor Buyer shall have received any notice that any
governmental authority may institute any proceedings for the revocation,
suspension or modification of the Licenses.
7.2 Performance. The Station Assets shall have been transferred to Buyer
by Seller free and clear of all liens, encumbrances and claims, 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, and
Buyer shall have received from Seller a certificate or certificates to such
effect, from a senior officer of Seller, in form and substance reasonably
satisfactory to Buyer.
7.3 Representations and Warranties. Except for changes expressly
implemented by or at the written request of the Buyer under the Time Brokerage
Agreement,
<PAGE>
<PAGE>
each of the representations and warranties of Seller to Buyer shall be true,
complete and correct 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, from a senior officer of Seller in form and
substance reasonably satisfactory to Buyer.
7.4 Consents. Seller shall have received and delivered to Buyer all
consents of third parties (including landlords' consents to the assignments of
the leases for the studio and tower sites) specified in Section 3.8 of the
Disclosure Schedule, such that Buyer will, after the Closing Date, enjoy all of
the rights and privileges of Seller under the Assumed Contracts subject only to
the present obligations of Seller hereunder.
7.5 Opinions of Counsel. Seller shall have delivered to Buyer an opinion
of Haley, Bader & Potts general counsel to Seller, dated the Closing Date, in
the form attached hereto as Exhibit C. In addition, Seller shall have delivered
to Buyer a written opinion of Haley, Bader & Potts, Seller's FCC counsel, dated
the Closing Date, in the form attached hereto as Exhibit D.
7.6 Covenant Not to Compete. Seller shall have obtained and delivered to
Buyer, an executed original of the Non-Compete Agreement.
7.7 Release of Indebtedness. Granite Equities, Inc. shall have released
all liens against the Station Assets and all claims against Seller.
7.8 Environmental Audit. Buyer shall have received within thirty (30)
days from the date hereof, at Buyer's expense, a "Phase One" environmental site
assessment of the real property subject to the Real Property Contracts (the
"Environmental Site Assessment"). The Environmental Site Assessment shall be
conducted by a qualified environmental engineer or consulting firm in accordance
with Part X of the Federal National Mortgage Association's Delegated
Underwriting and Servicing Guide. The Environmental Site Assessment shall show
no
<PAGE>
<PAGE>
environmental condition on or affecting such real property that would (i)
impair the use or value of such real property for the continued operation of the
Station as operated by Seller on the Closing Date, (ii) subject Buyer to any
liability for fines, penalties, or cleanup or response costs if Buyer
consummates this Agreement, or (iii) cause a reasonable purchaser to perform
further investigation or testing before proceeding with the transfer of the Real
Estate Contracts. The Environmental Site Assessment shall be deemed satisfactory
to Buyer and this condition satisfied, if Buyer fails to notify Seller of such
environmental condition on or affecting the real property within ten (10)
business days after having received such Environmental Site Assessment, or
Seller remedies any environmental condition on or affecting such real property
prior to the Closing Date.
7.9 Occupancy Certificates. At Closing, Seller shall deliver to Buyer
true and complete copies of any certificates of occupancy, certificates of land
use compliance, or equivalent instruments ("Occupancy Certificates") issued by
the appropriate governmental authority, that are required to permit the present
use of the real property subject to the Real Property Contracts by Seller prior
to Closing and by Buyer after Closing. No proceedings to amend, cancel, or
revoke any such Occupancy Certificates shall be pending or threatened as of the
Closing Date. If no Occupancy Certificate is required to continue the present
use of such real property after Closing, then Seller shall deliver to Buyer a
written opinion of Seller's counsel, dated the Closing Date, to that effect,
which opinion shall explain why no occupancy certificate is required and shall
include the citation of any applicable statute or regulation.
7.10 Litigation. No action or proceeding shall have been instituted or
threatened against Buyer, any of Buyer's affiliates or Seller before any court
or governmental agency or commission or any board of arbitration seeking to
restrain or prohibit, or to obtain substantial damages against Buyer or any of
Buyer's affiliates in respect of this Agreement or the consummation of the
transactions contemplated hereby.
<PAGE>
<PAGE>
7.11 Closing Certificate. Seller shall have delivered to Buyer a
Certificate of Seller's Secretary certifying as to the due adoption by its Board
of Directors and stockholders of resolutions authorizing the transactions
contemplated by this Agreement.
7.12 Title Insurance. Buyer shall have obtained, at Buyer's expense, a
written commitment to issue a lessee's policy of title insurance naming Buyer as
the insured, written by a responsible title insurance company authorized to
write title insurance with respect to New Jersey real estate, which policy shall
guarantee Seller's title in connection with the Real Estate Contracts to be in
the condition called for by this Agreement and shall show no rights of occupancy
or use by third parties, no gaps in the chain of title, no intervening liens and
no violations of any applicable zoning or other ordinance, statute, rule or
regulation.
7.13 Amendment of Lease. The lease pertaining to the transmitter site in
the State of New Jersey shall have been amended in the form of Exhibit E
attached hereto, executed by Seller and the landlord and duly recorded (or a
memorandum) with the recorder's office in the jurisdiction where the property is
located prior to the Closing Date.
7.14 Escrow Deposit. Seller shall have instructed the Escrow Agent to
deliver to Buyer the Escrow Deposit.
7.15 Satisfaction of Expenses. Seller shall have provided to Buyer
evidence reasonably satisfactory to Buyer demonstrating the satisfaction of all
expenses, liabilities and obligations of the Seller to persons and entities
doing business with the Station.
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:
<PAGE>
<PAGE>
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 from a senior officer of Buyer, 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 contem- plated hereby shall have been granted.
8.4 Purchase Price. Buyer shall have delivered to Seller the Purchase
Price.
8.5 Closing Certificate. Buyer shall have delivered to Seller a
Certificate of the Buyer's Secretary certifying as to the due adoption by the
Buyer's Board of Directors of resolutions authorizing the transactions
contemplated by this Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Seller. From and after the Closing Date, Seller
agrees to and shall indemnify, defend and hold Buyer harmless, and 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 any
liabilities of any kind or nature, absolute or contingent, relating to or
arising from (i) any breach, misrepresentation, or violation of any of Seller's
representations, warranties,
<PAGE>
<PAGE>
covenants, or other obligations contained in this Agreement; (ii) all
liabilities of Seller not assumed by Buyer; and (iii) any claims by third
parties against Buyer attributable to Seller's operation of the Station prior to
Closing. Notwithstanding anything else in this Agreement, Buyer shall have no
other recourse to Seller, its shareholders, officers, directors or any other
party with respect to indemnification claims hereunder except (i) Buyer shall
have the right to assert a claim for Seller's assets after the Closing Date in
any action, suit or proceeding to recover any indemnity hereunder; provided,
however, that Buyer shall have no right to claim Seller's assets pursuant to the
foregoing clause in the event the enforcement of such claim would prevent Seller
from meeting any third-party obligation of Seller.
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 any
liabilities of any kind or nature, absolute or contingent, relating to or
arising from the business and operation of the Station (i) prior to the Closing
Date and which have been assumed by Buyer under the Time Brokerage Agreement and
(ii) subsequent to the Closing Date.
ARTICLE X
MISCELLANEOUS
10.1 Damage and Failure of Transmissions.
(a) Risk of Loss. The risk of loss or damage to the Station Assets shall
be borne by Seller at all times prior to Closing. In the event of material loss
or damage, Seller shall promptly notify Buyer thereof and use its best efforts
to repair, replace or restore the lost or damaged property to its former
condition as soon as possible. All insurance proceeds shall
<PAGE>
<PAGE>
be applied to or reserved for any replacement, restoration or repair. If the
cost of repairing, replacing or restoring any lost or damaged property is Five
Thousand Dollars ($5,000) or less, and Seller has not repaired, replaced or
restored such property prior to the Closing Date, the Closing shall occur as
scheduled and Seller shall pay to Buyer the amount necessary to restore the lost
or damaged property to its former condition. If the cost to repair, replace, or
restore the lost or damaged property exceeds Five Thousand Dollars ($5,000), and
Seller has not repaired, replaced or restored such property prior to the Closing
Date, Buyer may, at its option:
(1) elect to consummate the Closing in which event Seller shall pay to
Buyer the amount necessary to restore the lost or damaged property to its former
condition or against such obligation shall assign to Buyer all of Seller's
rights under any applicable insurance policies plus the amount of the
deductible; or
(2) elect to postpone the Closing, with the prior consent of the
Commission, if necessary, for such reasonable period of time (not to exceed
ninety (90) days) as is necessary for Seller to repair, replace or restore the
lost or damaged property to its former condition. If, after the expiration of
that extension period the lost or damaged property has not been fully repaired,
replaced or restored, Buyer may terminate this Agreement, in which event the
Escrow Deposit shall be returned to Buyer and the parties shall be released and
discharged from any further obligation hereunder.
(b) Failure of Broadcast Transmissions. Seller shall give prompt written
notice to Buyer if any of the following (a "Specified Event") shall occur: (i)
the transmission of the regular broadcast programming of the Station in the
normal and usual manner is interrupted or discontinued and the Station is unable
to broadcast pursuant to its auxiliary power for more than four (4) hours; or
(ii) the Station is operated at less than its licensed antenna
<PAGE>
<PAGE>
height above average terrain or at less than ninety percent (90%) of its
licensed effective radiated power for more than four (4) hours. If, prior to
Closing, the Station is not operated at its licensed operating parameters for
more than twenty-four (24) hours (or, in the event of force majeure or utility
failure affecting generally the market served by the Station, forty-eight (48)
hours, whether or not consecutive, during any period of thirty (30) consecutive
days, or if there are three (3) or more Specified Events each lasting more than
four (4) consecutive hours, then Buyer may, at its options, terminate this
Agreement. In the event of termination of this Agreement by Buyer pursuant to
this paragraph, the Escrow Deposit shall be returned to Buyer and the parties
shall be released and discharged from any further obligation hereunder.
(c) Resolution of Disagreements. If the parties are unable to agree upon
the extent of any loss or damage, the cost to repair, replace or restore any
lost or damaged property, the adequacy of any repair, replacement, or
restoration of any lost or damaged property, or any other matter arising under
this Section, the disagreement shall be referred to a qualified consulting
communications engineer mutually accepted to Seller and Buyer who is a member of
the Association of Federal Communications Consulting Engineers, whose decision
shall be final, and whose fees and expenses shall be allocated between and paid
by Seller and Buyer, respectively, to the extent that such party does not
prevail on the disputed matters decided by the engineer.
10.2 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
controlling, controlled by, or under common control with Buyer. Subject to the
foregoing, this Agreement shall be binding and shall inure to the benefit of
<PAGE>
<PAGE>
the parties hereto, their successors and assigns.
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 Escrow Agreement, 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.
10.3 Survival of Representations. Except for the representations and
warranties of Seller contained in Sections 3.7, 3.9, 3.10 and the first sentence
of Section 3.5, which shall survive the Closing permanently, the representations
and warranties contained in this Agreement shall survive the Closing for a
period of one year.
10.4 Brokerage. Seller and Buyer warrant and represent to one another
that, there has been no broker or agent in any way involved in the transactions
contemplated hereby and that no one 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.
10.5 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
<PAGE>
<PAGE>
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 by Seller.
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.
10.6 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.
10.7 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.
10.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of New York.
10.9 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.
10.10 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
<PAGE>
<PAGE>
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:
Mr. Frank D. Osborn
Osborn Communications Corp.
130 Mason Street
Greenwich, CT 06830
Fax: (203) 629-1749
Phone: (203) 629-0905
With a copy which shall not constitute notice to:
Ted Bartley
AMRESCO
1845 Woodall Rodgers Freeway
Dallas, TX 75201
Fax: (214) 953-8325
Phone: (214) 953-8323
and to:
Patricia H. Lyon, Esq.
Young, French, Young & Lyon
One Market
3950 Spear Street Tower
San Francisco, CA 94105
Fax: (415) 243-8200
Phone: (415) 597-7849
and to:
Michael H. Bader, Esq.
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive, Suite 900
Arlington, VA 22203
Fax: (703) 841-2345
Phone: (703) 841-0606
If to Buyer:
<PAGE>
<PAGE>
Stephen F. Gormley
Equity Communications, L.P.
c/o M/C Partners
75 State Street
Suite 2500
Boston, MA 02109
Fax: (617) 345-7201
Phone: (617) 345-7210
With a copy which shall not constitute notice to:
Stephen O. Meredith, Esq.
Edwards & Angell
101 Federal Street
Boston, MA 02110
Fax: (617) 439-4170
Phone: (617) 951-2233
Any party may at any time change the place of receiving notice by giving
notice of such change to the other as provided herein.
10.11 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 breach under this Agreement by Seller, including, without limitation,
a breach of Seller's representations, warranties, covenants and agreements under
this Agreement, 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.
10.12 Arbitration. Other than with respect to Sections 2.3(b) 9.1 and
10.1(c) hereof, any dispute arising out of or related to this Agreement that
Seller and Buyer are unable to resolve by themselves shall be settled by
arbitration in New York, NY, by a panel of three arbitrators. In such event,
Seller and Buyer shall each designate one disinterested arbitrator, and the two
arbitrators so designated shall select the third arbitrator. The persons
selected as
<PAGE>
<PAGE>
arbitrators need not be professional arbitrators, but shall be persons with no
less than ten year's experience relating to the acquisition of radio stations
and persons such as lawyers, accountants, brokers, and bankers having such
experience shall be acceptable. Before undertaking to resolve the dispute, each
arbitrator shall be duly sworn faithfully and fairly to hear and examine the
matters in controversy and to make a just award according to the best of his or
her understanding. The arbitration hearing shall be conducted in accordance with
the rules of the American Arbitration Association. The written decision of a
majority of the arbitrators shall be final and binding on Seller and Buyer. The
costs and expenses of the arbitration proceeding shall be borne equally by
Seller and Buyer, provided, however, that each party shall bear the expense of
its own counsel, experts, witnesses, and preparation of proofs. Judgment on the
award, if it is not paid within thirty (30) days, may be entered in any court
having jurisdiction over the matter. No action at law or suit in equity based
upon any claim arising out of or related to this Agreement shall be instituted
in any court by Seller or Buyer against the other except (i) an action to compel
arbitration pursuant to this Section, (ii) an action to enforce the award of the
arbitration panel rendered in accordance with this Section, or (iii) a suit for
specific performance pursuant to Section 10.10.
10.13 Consent to Jurisdiction. Seller and Buyer hereby submit to the
nonexclusive jurisdiction of the courts of the State of New York 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
<PAGE>
<PAGE>
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.
10.14 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.
10.15 Amendments. At any time prior to the Closing, this Agreement may
be amended with the written consent of the Seller and the Buyer.
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
ATLANTIC CITY BROADCASTING CORP.
By
Name: Frank D. Osborn
Title: President
BUYER
EQUITY COMMUNICATIONS, L.P.
By: Equity Communications, Inc.,
its General Partner
<PAGE>
<PAGE>
By
Name: Stephen F. Gormley
Title: Chairman
The undersigned agree to execute and deliver the Non-Compete Agreement
at the Closing.
OSBORN COMMUNICATIONS CORP.
By_____________________________________
Name: Frank D. Osborn
Title: President
________________________________________
Frank D. Osborn
Consent of Granite Equities, Inc.
The undersigned, being the holder of all indebtedness of Seller under a
Credit Agreement between Seller and National Westminster Bank USA dated as of
March 30, 1994, hereby (i) consents to and approves Seller's execution of the
foregoing Agreement; (ii) concurrently with the wiring of funds pursuant to
Section 1.4 of this Agreement, agrees to release all liens on the Station Assets
securing the aforementioned indebtedness and all claims against Seller on or
before the Closing Date; and (iii) agrees not to assign or transfer any interest
in any portion of the aforementioned indebtedness unless the transferee agrees
in writing to be bound by the provisions of this Consent.
GRANITE EQUITIES, INC.
By AMRESCO Institutional, Inc., as Servicer
and as duly authorized agent for Granite
Equities, Inc.
<PAGE>
<PAGE>
By:_______________________________________
Name:
Title:
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
OSBORN COMMUNICATIONS CORPORATION
SUBSIDIARY LISTING
12/31/95
State of
Name of Subsidiary Incorporation Parent Company
OCC, Inc. Delaware Osborn Communications Corporation
SNG Holdings, Inc. Delaware Osborn Communications Corporation
Southeast Radio Holding Corp. Delaware Osborn Communications Corporation
Osborn Entertainment Enterprises Corporation Delaware Osborn Communications Corporation
Atlantic City Broadcasting Corp. Delaware Osborn Communications Corporation
Breadbasket Broadcasting Corporation Delaware Osborn Communications Corporation
Orange Communications, Inc. Delaware OCC, Inc.
Yellow Brick Radio Corporation Delaware OCC, Inc.
RKZ Television, Inc. Delaware OCC, Inc.
Mountain Radio Corporation Delaware OCC, Inc.
Ladner Communications Holding Corp. Delaware OCC, Inc.
Jamboree in the Hills, Inc. Delaware Osborn Entertainment Enterprises
Corp.
Music Hall Club, Inc. Delaware Osborn Entertainment Enterprises
Corp.
Beatrice Broadcasting Corp. Delaware Ladner Communications Holding Corp.
Waite Broadcasting Corp. Delaware Ladner Communications Holding Corp.
Osborn Sound & Communications Corp. Delaware Ladner Communications Holding Corp.
Currey Broadcasting Corporation Delaware Ladner Communications Holding Corp.
Short Broadcasting Corporation Delaware SNG Holdings, Inc.
Nelson Broadcasting Corporation Delaware SNG Holdings, Inc.
Great American East, Inc. North Carolina SNG Holdings, Inc.
Nelson Tower Corporation Delaware SNG Holdings, Inc.
Asheville Broadcasting Corp. Delaware Southeast Radio Holding Corp.
Daytona Beach Broadcasting Corp. Delaware Southeast Radio Holding Corp.
Corkscrew Broadcasting Corp. Delaware Southeast Radio Holding Corp.
Rainbow Broadcasting Corporation Delaware Southeast Radio Holding Corp.
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 12,994,779
<SECURITIES> 0
<RECEIVABLES> 6,277,719
<ALLOWANCES> 518,157
<INVENTORY> 889,942
<CURRENT-ASSETS> 21,169,591
<PP&E> 33,982,091
<DEPRECIATION> 18,624,021
<TOTAL-ASSETS> 77,634,093
<CURRENT-LIABILITIES> 8,946,427
<BONDS> 44,482,000
0
0
<COMMON> 52,764
<OTHER-SE> 21,444,275
<TOTAL-LIABILITY-AND-EQUITY> 77,634,093
<SALES> 39,100,496
<TOTAL-REVENUES> 39,100,496
<CGS> 0
<TOTAL-COSTS> 36,885,438
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,212,999
<INCOME-PRETAX> 7,399,731
<INCOME-TAX> 775,982
<INCOME-CONTINUING> 6,623,749
<DISCONTINUED> 0
<EXTRAORDINARY> (3,921,061)
<CHANGES> 0
<NET-INCOME> 2,702,688
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0.50
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
Additions Deductions
--------------------- ------------
Balance at Operating Accounts Balance at
beginning companies Charged written-off, end of
of period acquired to income net period
---------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Deductions from accounts receivable:
Year ended December 31, 1995 $370,317 - $489,097 (341,257) $518,157
Year ended December 31, 1994 276,153 - 475,082 (380,918) 370,317
Year ended December 31, 1993 271,818 - 447,905 (443,570) 276,153
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