UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to _______
Commission file number 0-16841
OSBORN COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1142367
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
130 Mason Street, Greenwich, Connecticut 06830
(Address of principal executive offices)(Zip Code)
(203) 629-0905
Registrant's telephone number, including area code
________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X
No______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE LAST FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes_____ No______
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding in each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding
Class at August 9, 1996
Common stock, $.01 par value 5,413,014
Non-voting common stock, $.01 par value -
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
(1) Consolidated Balance Sheets at June 30, 1996 (unaudited) and
December 31, 1995
(2) Consolidated Statements of Operations for the three and six months
ended June 30, 1996 and 1995 (unaudited)
(3) Consolidated Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 (unaudited)
(4) Consolidated Statement of Changes in Stockholders' Equity for the
six months ended June 30, 1996 (unaudited)
(5) Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
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June 30, December 31,
1996 1995
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $1,948,720 $12,994,779
Accounts receivable, less allowance for
doubtful accounts of $645,163 in 1996
and $518,157 in 1995 5,535,667 5,759,562
Inventory 1,011,049 889,942
Prepaid expenses and other current assets 854,406 1,525,308
Total current assets 9,349,842 21,169,591
Investment in affiliated companies 529,032 524,084
Property, plant and equipment, at cost,
less accumulated depreciation of
$15,311,369 in 1996 and $18,624,021
in 1995 16,414,563 15,358,070
Intangible assets, net of accumulated
amortization of $14,481,331 in 1996
and $15,238,193 in 1995 37,145,604 40,463,595
Other noncurrent assets 118,120 118,753
Total assets $63,557,161 $77,634,093
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $6,300,862 $4,509,292
Accrued wages and sales commissions 338,354 434,309
Accrued interest payable 174,137 459,114
Accrued income taxes 1,475,435 825,712
Current portion of long-term debt - 2,718,000
Total current liabilities 8,288,788 8,946,427
Long-term debt 22,800,000 44,482,000
Deferred income taxes 2,275,711 2,275,711
Other noncurrent liabilities 1,363,113 432,916
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: 5,423,014 and
5,413,014, respectively, in 1996;
5,286,347 and 5,276,347, respectively,
in 1995 54,131 52,764
Non-voting common stock, par value $.01
per share; authorized 75,000 shares,
none issued and outstanding - -
Additional paid-in capital 40,829,403 39,694,601
Accumulated deficit (12,053,985) (18,250,326)
Total stockholders' equity 28,829,549 21,497,039
Total liabilities and stockholders'
equity $63,557,161 $77,634,093
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
Net revenues $8,459,742 $9,128,860 $15,274,398 $16,800,455
Operating expenses:
Selling, technical and
program 2,504,042 3,167,607 4,438,311 6,052,500
Direct programmed music
and entertainment 2,468,054 1,842,105 4,680,703 3,375,289
General and administrative 1,806,497 1,883,821 3,490,779 3,759,461
Depreciation and
amortization 1,199,571 1,460,704 2,410,109 2,916,735
Corporate expenses 468,994 423,762 925,786 849,377
Total operating expenses 8,447,158 8,777,999 15,945,688 16,953,362
Operating income (loss) 12,584 350,861 (671,290) (152,907)
Other income 262,950 125,347 170,268 1,898,979
Interest expense 577,062 1,433,490 1,212,243 2,847,010
Other gain (loss) 1,985,043 - 8,859,477 -
Income (loss) before
income taxes 1,683,515 (957,282) 7,146,212 (1,100,938)
Provision for income taxes 98,643 98,125 949,871 191,330
Net income (loss) $1,584,872 ($1,055,407) $6,196,341 ($1,292,268)
Primary earnings per common share:
Net income (loss) per
common share $0.28 ($0.20) $1.11 ($0.25)
Fully diluted earnings per common share:
Net income (loss) per
common share $0.28 ($0.20) $1.10 ($0.25)
Weighted average common shares outstanding:
Primary shares 5,672,572 5,252,688 5,599,760 5,259,194
Fully diluted shares 5,685,584 5,252,688 5,640,152 5,259,194
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1996 and 1995
(Unaudited)
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1996 1995
Cash flows from operating activities:
Net income (loss) $6,196,341 ($1,292,268)
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,410,109 2,916,735
Other gain (loss) (8,859,477) -
Deferred income taxes - 100,000
Non-cash interest expense 118,662 208,760
Distributions from affiliated companies - (1,653,634)
Decrease (increase) in accounts receivable 223,895 (163,116)
Increase in inventory (121,107) (90,118)
Decrease (increase) in prepaid expenses
and other current assets 670,902 (187,158)
Increase in accounts payable and
accrued expenses 1,791,570 384,787
Decrease in accrued wages and sales
commissions (95,955) (101,363)
Decrease in accrued interest payable (284,977) (1,792,083)
Increase (decrease) in accrued income
taxes 649,723 (43,084)
Total adjustments (3,496,655) (420,274)
Net cash provided by (used in) operating
activities 2,699,686 (1,712,542)
Cash flows from investing activities:
Payments for acquisition of stations (12,392,250) -
Net proceeds from sale of stations 24,168,614 -
Distributions from affiliated
companies - 3,918,186
Proceeds from note receivable - 1,620,455
Capital expenditures (1,071,702) (771,472)
Expenditures for intangible assets - (218,219)
Reclassification of other noncurrent 633 95,530
assets
Net cash provided by investing
activities 10,705,295 4,644,480
Cash flows from financing activities:
Proceeds from exercise of stock options 28,667 -
Purchase and retirement of treasury
stock - (642,354)
Expenditures on deferred financing
costs (79,707) -
Principal payments on long-term debt (24,400,000) -
Net cash used in financing activities (24,451,040) (642,354)
Net (decrease) increase in cash and cash
equivalents (11,046,059) 2,289,584
Cash and cash equivalents at beginning of
period 12,994,779 6,368,473
Cash and cash equivalents at end of
period $1,948,720 $8,658,057
Supplemental cash flow information:
Cash paid for interest $1,378,558 $4,430,333
Cash paid for income taxes $300,148 $134,414
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the six months ended June 30, 1996
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Voting Non-voting Additional
Par Par paid-in Accumulated
Shares value Shares value capital deficit
Balance at December
31, 1995 5,276,347 $52,764 - - $39,694,601 ($18,250,326)
Exercise of stock
options 4,167 42 - - 28,627 -
Issuance of common
stock 132,500 1,325 - - 1,106,175 -
Net income - - - - - 6,196,341
Balance at June 30,
1996 5,413,014 $54,131 - - $40,829,403 ($12,053,985)
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
1. Basis of presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) that are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations, and cash
flows for the interim periods presented. Prior year amounts have been
reclassified to conform with the current year's presentation.
2. Plan of merger
On July 23, 1996, the Company entered into an agreement and plan of
merger with a subsidiary of Capstar Broadcasting Partners, Inc. ("Capstar")
whereby Capstar will acquire all of the Company's common stock for $15.375
per share. Consummation of the merger is conditioned upon, among other
things, approval of the transaction by the holders of a majority of the
Company's common stock and the Federal Communications Commission ("FCC").
The merger is expected to be completed in February 1997.
Concurrently with the execution of the merger agreement and as
security for liquidated damages that may be payable by Capstar to the
Company for Capstar's failure to consummate the merger, Capstar has
deposited in an escrow account an irrevocable letter of credit in favor of
the Company for the sum of $5.0 million. If the Company terminates the
merger agreement by reason of receiving an alternative proposal which is
deemed more favorable to the Company's stockholders, the Company must pay a
termination fee of $3,750,000 to Capstar.
3. Acquisitions and dispositions
On March 29, 1996, the Company acquired substantially all the assets
of radio station WRIR-FM (formerly WHLX-FM), Wheeling, West Virginia for
$0.8 million plus transaction costs. On June 11, 1996, the Company acquired
substantially all the assets of radio stations WBBD-AM/WKWK-FM (formerly
WKWK-AM/FM), Wheeling, West Virginia from WKWK Radio, Inc. for $2.7
million plus transaction costs. The Company managed WBBD-AM/WKWK-FM
pursuant to a local marketing agreement ("LMA") from March 1996 through the
closing of the acquisition. The Company already owns radio stations WWVA-
AM/WOVK-FM in Wheeling and has agreed to acquire an additional FM radio
station in the market (see Note 4).
On April 1, 1996, the Company acquired substantially all the assets of
radio stations WKII-AM/WFSN-FM (formerly WKII-AM/WEEJ-FM), Port Charlotte,
Florida for $2.85 million plus transaction costs. In the event that the
Company is able to relocate WFSN-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
additional consideration is included in other noncurrent liabilities in the
consolidated balance sheet at June 30, 1996. Pending the closing of the
acquisition, the stations were managed by the Company pursuant to an LMA
since September 1995. The Company already owns radio station WOLZ-FM, Ft.
Myers and has a 50% non-voting ownership interest in radio station WDRR-FM,
San Carlos Park/Ft. Myers.
On May 3, 1996, the Company acquired substantially all the assets of
radio stations KNAX-FM/KRBT-FM, Fresno, California. Consideration for the
acquisition consisted of $6.0 million plus 120,000 shares of the Company's
common stock. In addition, the seller received an option to purchase shares
of the Company's common stock at $8.00 per share contingent upon future
increases in operating cash flow by KNAX-FM/KRBT-FM. Pending the closing
of the acquisition, the stations were managed by the Company since January
1996 pursuant to an LMA. The Company plans to dispose of these radio
stations in the fourth quarter of 1996 (see Note 4).
On January 31, 1996, the Company sold substantially all the assets of
radio station WWRD-FM, Jacksonville, Florida/Brunswick, Georgia for $2.5
million, resulting in a pre-tax gain of approximately $0.8 million. The net
cash proceeds were used principally to repay long-term debt and fund
transaction costs.
On February 2, 1996, the Company sold substantially all the assets of
radio stations WNDR-AM/WNTQ-FM, Syracuse, New York for $12.5 million,
resulting in a pre-tax gain of approximately $6.0 million. Pending the
closing of the disposition, the stations were managed by the purchaser
pursuant to an LMA. The net cash proceeds were used principally to repay
long-term debt and fund transaction costs.
On June 5, 1996, the Company sold substantially all the assets of
radio station WFXK-FM, Raleigh/Tarboro, North Carolina to Pinnacle
Broadcasting Corporation for $5.9 million, resulting in a pre-tax gain of
approximately $2.2 million. Pending the closing of the transaction, the
purchaser managed the station pursuant to an LMA. The net cash proceeds
were used principally to repay long-term debt and fund transaction costs.
On June 21, 1996, the Company sold substantially all the assets of
radio station WAYV-FM, Atlantic City, New Jersey to Equity Communications,
L.P. for $3.1 million, resulting in a pre-tax gain of approximately $0.2
million. Pending the closing of the transaction, the purchaser managed the
station pursuant to an LMA since March 1996. The net cash proceeds were
used principally to repay long-term debt and fund transaction costs.
On June 28, 1996, the Company sold substantially all the assets of
radio station WFKS-FM, Daytona Beach/Palatka, Florida to Renda Broadcasting
Corporation, the purchaser of radio station WWRD-FM, for $4.0 million,
resulting in a pre-tax gain of approximately $0.8 million. Pending the
closing of the transaction, the purchaser managed the station pursuant to
an LMA. The net cash proceeds were used principally to repay long-term debt
and fund transaction costs.
On December 22, 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.
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.
4. Pending transactions
In July 1996, the Company agreed to acquire substantially all the
assets of radio station WEGW-FM, Wheeling, West Virginia from Wheeling
Radio Company for $0.8 million, subject to FCC approval. The transaction
is expected to close in the fourth quarter of 1996.
In July 1996, the Company agreed to acquire substantially all the
assets of radio station WYNU-FM, Jackson/Milan, Tennessee from Ohio
Broadcast Associates for $3.6 million, subject to FCC approval. The
transaction is expected to close in the first quarter of 1997. The Company
already owns one FM and one AM radio station in the market.
In July 1996, the Company agreed to sell substantially all the assets
of radio stations KNAX-FM/KRBT-FM, Fresno, California to American Radio
Systems, Inc. for $11.0 million, subject to FCC approval. Pending the
closing of the transaction, which is expected in the fourth quarter of
1996, the purchaser is managing the stations pursuant to an LMA since
August 1, 1996.
5. Osborn Healthcare
Osborn Healthcare continues to experience operating losses.
Consistent with the Company's previously stated intention to evaluate
options to increase shareholder value, management has reviewed the
strategic direction and long-term prospects of the Osborn Healthcare
operations and has restructured the operations. The Company plans to focus
resources on only the more profitable product lines. In conjunction with
these plans, the Company has combined the Osborn Healthcare operations and
the Company's programmed music operations, terminating certain employees of
the Osborn Healthcare operations, and consolidating certain overhead. The
Company has accrued costs of approximately $0.3 million, principally
severance costs, in connection with the consolidation of operations. In
addition, the Company has reduced goodwill by approximately $0.9 million to
reflect the anticipated discounted cash flow from the remaining healthcare
operations. The charges, totalling $1.2 million, are included in other
gain (loss) in the consolidated statement of operations.
6. Pro forma financial information (unaudited)
<TABLE>
<S> <C> <C>
Six months ended June 30,
1996 1995
Net revenues $15,568,000 $13,919,000
Net loss (1,848,000) (1,897,000)
Net loss per share ($0.34) ($0.35)
</TABLE>
The unaudited pro forma information for the six months ended June 30, 1996
and 1995 assumes that the acquisitions and dispositions as described in
Note 3 had occurred at the beginning of each respective period. The gains
on the sales of stations and the loss from Osborn Healthcare's
restructuring in 1996 and the distribution from Northstar Television Group
in 1995 are excluded from the pro forma results because of their
nonrecurring nature. 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 Fresno aggregated $7.1
million at June 30, 1996, consisting of net property, plant and equipment
of $2.5 million and net intangible assets of $4.6 million.
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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.
Plan of merger
On July 23, 1996, the Company entered into an agreement and plan of merger
with a subsidiary of Capstar Broadcasting Partners, Inc. ("Capstar")
whereby Capstar will acquire all of the Company's common stock for $15.375
per share. Consummation of the merger is conditioned upon, among other
things, approval of the transaction by the holders of a majority of the
Company's common stock and the Federal Communications Commission ("FCC").
The merger is expected to be completed in February 1997.
Concurrently with the execution of the merger agreement and as
security for liquidated damages that may be payable by Capstar to the
Company for Capstar's failure to consummate the merger, Capstar has
deposited in an escrow account an irrevocable letter of credit in favor of
the Company for the sum of $5.0 million. If the Company terminates the
merger agreement by reason of receiving an alternative proposal which is
deemed more favorable to the Company's stockholders, the Company must pay a
termination fee of $3,750,000 to Capstar.
Acquisitions and Dispositions
Given the less restrictive regulatory environment following the passage of
the Telecommunications Act of 1996, 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 existing 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 numerous transactions for
the acquisition or disposition of broadcast properties in 1995 and early
1996.
On March 29, 1996, the Company acquired substantially all the assets
of radio station WRIR-FM, Wheeling, West Virginia for $0.8 million plus
transaction costs. On June 11, 1996, the Company acquired substantially all
the assets of radio stations WBBD-AM/WKWK-FM, Wheeling for $2.7 million
plus transaction costs. The Company managed WBBD-AM/WKWK-FM pursuant to a
local marketing agreement ("LMA") from March 1996 through the closing of
the acquisition. The Company already owns radio stations WWVA-AM/WOVK-FM in
Wheeling and, in July 1996, agreed to acquire an additional FM radio
station in the market, WEGW-FM, for $800,000, subject to FCC approval.
On April 1, 1996, the Company acquired substantially all the assets of
radio stations WKII-AM/WFSN-FM, Port Charlotte, Florida for $2.85 million
plus transaction costs. In the event that the Company is able to relocate
WFSN-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
acquisition, the stations were managed by the Company pursuant to an LMA
since September 1995. The Company already owns radio station WOLZ-FM, Ft.
Myers and has a 50% non-voting ownership interest in radio station WDRR-FM,
San Carlos Park/Ft. Myers.
On May 3, 1996, the Company acquired substantially all the assets of
radio stations KNAX-FM/KRBT-FM, Fresno, California. Consideration for the
acquisition consisted of $6.0 million plus 120,000 shares of the Company's
common stock. In addition, the seller received an option to purchase shares
of the Company's common stock at $8.00 per share contingent upon future
increases in operating cash flow by KNAX-FM/KRBT-FM. Pending the closing
of the acquisition, the stations were managed by the Company since January
1996 pursuant to an LMA. In July 1996, the Company agreed to sell
substantially all the assets of these two radio stations to American Radio
Systems, Inc. for $11.0 million, subject to FCC approval. Pending the
closing of the transaction, which is expected in the fourth quarter of
1996, the purchaser is managing the stations pursuant to an LMA since
August 1, 1996.
On January 31, 1996, the Company sold substantially all the assets of
radio station WWRD-FM, Jacksonville, Florida/Brunswick, Georgia for $2.5
million, resulting in a pre-tax gain of approximately $0.8 million. The net
cash proceeds were used principally to repay long-term debt and fund
transaction costs.
On February 2, 1996, the Company sold substantially all the assets of
radio stations WNDR-AM/WNTQ-FM, Syracuse, New York for $12.5 million,
resulting in a pre-tax gain of approximately $6.0 million. Pending the
closing of the disposition, the stations were managed by the purchaser
pursuant to an LMA. The net cash proceeds were used principally to repay
long-term debt and fund transaction costs.
On June 5, 1996, the Company sold substantially all the assets of
radio station WFXK-FM, Raleigh/Tarboro, North Carolina to Pinnacle
Broadcasting Corporation for $5.9 million, resulting in a pre-tax gain of
approximately $2.2 million. Pending the closing of the transaction, the
purchaser managed the station pursuant to an LMA. The net cash proceeds
were used principally to repay long-term debt and fund transaction costs.
On June 21, 1996, the Company sold substantially all the assets of
radio station WAYV-FM, Atlantic City, New Jersey to Equity Communications,
L.P. for $3.1 million, resulting in a pre-tax gain of approximately $0.2
million. Pending the closing of the transaction, the purchaser managed the
station pursuant to an LMA since March 1996. The net cash proceeds were
used principally to repay long-term debt and fund transaction costs.
On June 28, 1996, the Company sold substantially all the assets of
radio station WFKS-FM, Daytona Beach/Palatka, Florida to Renda Broadcasting
Corporation, the purchaser of radio station WWRD-FM, for $4.0 million,
resulting in a pre-tax gain of approximately $0.8 million. Pending the
closing of the transaction, the purchaser managed the station pursuant to
an LMA. The net cash proceeds were used principally to repay long-term debt
and fund transaction costs.
On December 22, 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.
Pending Transactions
In July 1996, the Company agreed to acquire substantially all the
assets of radio station WEGW-FM, Wheeling, West Virginia from Wheeling
Radio Company for $0.8 million, subject to FCC approval. The transaction
is expected to close in the fourth quarter of 1996.
In July 1996, the Company agreed to acquire substantially all the
assets of radio station WYNU-FM, Jackson/Milan, Tennessee from Ohio
Broadcast Associates for $3.6 million, subject to FCC approval. The
transaction is expected to close in the first quarter of 1997. The Company
already owns one FM and one AM radio station in the market.
In July 1996, the Company agreed to sell substantially all the assets
of radio stations KNAX-FM/KRBT-FM, Fresno, California to American Radio
Systems, Inc. for $11.0 million, subject to FCC approval. Pending the
closing of the transaction, which is expected in the fourth quarter of
1996, the purchaser is managing the stations pursuant to an LMA since
August 1, 1996.
Results of Operations
Three months ended June 30, 1996 and 1995
Net revenues of $8,460,000 in the second quarter of 1996 represent a 7%
decrease from 1995 quarterly net revenues of $9,129,000. Total operating
expenses decreased 4%, from $8,778,000 in 1995 to $8,447,000 in 1996. The
reduction in net revenues and operating expenses is attributable to the
disposition of the Syracuse, Anniston, and Jacksonville properties and the
Daytona Beach and Atlantic City LMAs, partially offset by the Port
Charlotte, Wheeling and Fresno acquisitions and the increased level of
activity at the programmed music division.
Operating cash flow (operating income before depreciation,
amortization and corporate expenses) decreased 25%, to $1,681,000 in 1996
from $2,235,000 in 1995. The decrease is primarily attributable to the
disposition of the Syracuse and Anniston properties, the Atlantic City LMA,
and start-up costs associated with the Port Charlotte acquisition, offset
by stronger performance at the Asheville, Gadsden and Jackson radio
stations and the Fresno acquisition. EBITDA (earnings before interest,
taxes, depreciation and amortization) of $1,212,000 in the second quarter
of 1996 decreased 33%, from $1,812,000 in 1995.
Operating income of $13,000 in 1996 compares to $351,000 in 1995.
Interest expense decreased $856,000, or 60%, to $577,000 in 1996 from
$1,433,000 in 1995, primarily attributable to the repayment of debt and
lower cost of capital related to the August 1995 debt refinancing. Interest
expense in 1996 includes $58,000 of non-cash interest relating to deferred
financing cost amortization.
Results include pre-tax gains on the sales of the assets of the
Raleigh, Daytona Beach and Atlantic City radio stations totalling $3.2
million, classified as other gain (loss) in the consolidated statement of
operations. Other gain (loss) also includes a charge of $1.2 million
representing the restructuring charge for Osborn Healthcare (see Note 5 to
the consolidated financial statements). Net income of $1,585,000 in 1996,
or $0.28 per share on a fully diluted basis, compares to net loss of
$1,055,000, or $0.20 per share, in 1995.
Six months ended June 30, 1996 and 1995
Net revenues of $15,274,000 in the first half of 1996 represent a 9%
decrease from 1995 net revenues of $16,800,000. Total operating expenses
decreased 6%, from $16,953,000 in 1995 to $15,946,000 in 1996. The
reduction in net revenues and operating expenses is attributable to the
disposition of the Syracuse, Anniston, and Jacksonville properties and the
Daytona Beach and Atlantic City LMAs, partially offset by growth by the
Asheville and Gadsden radio stations, the Port Charlotte, Wheeling and
Fresno acquisitions, and the increased level of activity at the programmed
music division.
Operating cash flow (operating income before depreciation,
amortization and corporate expenses) decreased 26%, to $2,665,000 in 1996
from $3,613,000 in 1995. The decrease is primarily attributable to the
disposition of the Syracuse and Anniston properties, the Atlantic City LMA,
and start-up costs associated with the Port Charlotte acquisition,
partially offset by growth by the Asheville, Jackson and Gadsden radio
stations, the Fresno acquisition, and the increased level of activity at
the programmed music division. EBITDA (earnings before interest, taxes,
depreciation and amortization) of $1,739,000 in the first half of 1996
decreased 37%, from $2,764,000 in 1995.
Operating loss of $671,000 in 1996 compares to $153,000 in 1995. Other
income in 1995 includes a distribution from Northstar Television Group of
$1,572,000 (see Management Agreements). Interest expense decreased
$1,635,000, or 57%, to $1,212,000 in 1996 from $2,847,000 in 1995,
primarily attributable to the repayment of debt and lower cost of capital
related to the August 1995 debt refinancing. Interest expense in 1996
includes $118,000 of non-cash interest relating to deferred financing cost
amortization.
Results include pre-tax gains on the sales of the assets of the
Syracuse, Jacksonville, Raleigh, Daytona Beach and Atlantic City radio
stations totalling $10.1 million, classified as other gain (loss) in the
consolidated statement of operations. Other gain (loss) also includes a
charge of $1.2 million representing the restructuring charge for Osborn
Healthcare (see Note 5 to the consolidated financial statements). Net
income of $6,196,000 in 1996, or $1.10 per share on a fully diluted basis,
compares to net loss of $1,292,000, or $0.25 per share, in 1995.
Liquidity and Capital Resources
Cash flows from operating activities
In 1996, net cash provided by operating activities was $2,700,000, compared
to net cash used by operating activities of $1,713,000 in 1995 (see Results
of Operations). The difference is primarily attributable to the amount and
timing of interest payments.
Cash flows from investing activities
The Company made payments of approximately $12.4 million relating to the
acquisition of radio stations and received net proceeds of approximately
$24.2 million for the sales of radio stations in the first half of 1996
(see Acquisitions and dispositions).
The Company received distribution payments in the first quarter of
1995 from Fairmont Communications Corporation and Northstar Television
Group totalling $3,918,000, of which $2,265,000 related to income accrued
in 1994 (see Results of Operations). The note receivable of $1,620,000
relating to the 1988 disposition of the Toledo, Ohio radio station and
Muzak franchise was received in the first half of 1995.
In addition to debt service requirements, the Company's remaining
liquidity demands will be for capital expenditures and to meet working
capital needs. The Company made capital expenditures of $1,072,000 and
$771,000 in the first six months of 1996 and 1995, respectively, which are
primarily attributable to equipment installations related to its programmed
music franchises and improvements to technical facilities of certain of the
radio stations.
For the remainder of 1996, capital expenditures made by the Company
will be a function of the number of installations by the programmed music
franchises, as well as routine expenditures for the Company's broadcasting
properties. In addition, the Company is in the process of relocating the
newly-acquired FM radio station in Port Charlotte to its studios in Ft.
Myers, and the radio station acquisitions in Wheeling to its owned facility
in that market. For those acquisitions, the Company expects to make
additional capital expenditures as necessary.
Cash flows from financing activities
The Company made net principal payments of long-term debt totalling
approximately $24.4 million in the first half of 1996, primarily with the
proceeds from the Anniston, Syracuse, Jacksonville, Raleigh, Daytona Beach
and Atlantic City dispositions.
In January 1995, the Company repurchased and subsequently retired
107,059 unregistered shares of its common stock which were held by an
institution for $642,000. Also in January 1995, the Company paid $107,000
for the common shares repurchased in December 1994.
Long-term debt
Long-term debt to total capitalization decreased between December 31, 1995
and June 30, 1996 from 69% to 44%. The repayments of senior bank debt
associated with the Anniston and Syracuse transactions permanently reduced
the Company's credit facility from $56.0 million to $36.0 million.
Working capital
At June 30, 1996, cash and cash equivalents totalled $1,949,000, compared
to $12,995,000 at December 31, 1995. Working capital decreased from
$12,223,000 to $1,061,000 during the period, primarily due to the repayment
of long-term debt.
The Company believes that cash flows from operations and existing funds
will be sufficient to meet its current cash requirements in the ordinary
course of business. It is not possible to ascertain the effect on the
Company's liquidity that would result from potential future acquisitions,
dispositions or debt repayments. Subject to limitations imposed by the
proposed merger, the Company expects to evaluate all viable forms of
financing when examining potential future acquisitions or its capital
structure. This could take the form of, among other things, additional
sales of stock or notes, bank and/or institutional borrowings, or seller
financing, as well as internally generated funds.
Management Agreements
The Company currently owns 25% of the stock of Fairmont Communications
Corporation ("Fairmont"). Fairmont is currently managed by the Company
pursuant to a management agreement, for which the Company receives a modest
management fee plus reimbursement of out-of-pocket expenses and allocated
overhead costs. All of Fairmont's stations were sold by the second quarter
of 1994. The Company will continue to manage Fairmont pursuant to the
management agreement which expires upon the liquidation of Fairmont, which
is expected to occur in 1996.
The Company held a 32% interest in Northstar Television Group, Inc.
("Northstar") and managed Northstar's four television stations pursuant to
a management agreement in return for reimbursement of out-of-pocket
expenses and allocated overhead costs. In 1994, Northstar's creditors and
equity investors reached an agreement with respect to restructuring
Northstar's highly leveraged capital structure pursuant to which, among
other things, the Company received a portion of accrued and unpaid
management fees and retains an economic interest. The Company's management
agreement with Northstar terminated following the restructuring. In
January 1995, three of Northstar's four television stations were sold and
the Company received a distribution of approximately $1.6 million (see
Results of Operations).
Osborn Healthcare
Osborn Healthcare continues to experience operating losses.
Consistent with the Company's previously stated intention to evaluate
options to increase shareholder value, management has reviewed the
strategic direction and long-term prospects of the Osborn Healthcare
operations and has restructured the operations. The Company plans to focus
resources on only the more profitable product lines. In conjunction with
these plans, the Company has combined the Osborn Healthcare operations and
the Company's programmed music operations, terminating certain employees of
the Osborn Healthcare operations, and consolidating certain overhead. The
Company has accrued costs of approximately $0.3 million, principally
severance costs, in connection with the consolidation of operations. In
addition, the Company has reduced goodwill by approximately $0.9 million to
reflect the anticipated discounted cash flow from the remaining healthcare
operations. The charges, totalling $1.2 million, are included in other
gain (loss) in the consolidated statement of operations.
Seasonality
For broadcasting properties, the first quarter is expected to reflect the
lowest revenues and net income of the year, while the fourth quarter has
historically had the highest revenues and net income. This is due in part
to increases in retail advertising in the fall in preparation for the
holiday season, with a subsequent reduction of business after the holidays.
The Company's entertainment properties are expected to reflect the lowest
revenues and net income of the year in the first quarter due to the planned
scheduling of the most popular performers during the peak spring, summer
and fall seasons. Also, the Company's country music festival, Jamboree in
the Hills, takes place in the third quarter.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a defendant in a purported class action filed on July
30, 1996, in the Court of Chancery of the State of Delaware in and for
Newcastle County against the Company and all its directors and
executive officers (the "Individual Defendants"). The complaint
alleges principally that (i) the merger consideration is unfair and
does not constitute a maximization of shareholder value and (ii) the
Individual Defendants breached their fiduciary duties by failing to
take responsible steps to maximize shareholder value. The plaintiff
seeks injunctive relief to enjoin the consummation of the merger, but
as of the date of this filing has not moved for preliminary injunctive
relief and has not sought expedited proceedings. Alternatively, in
the event that the merger is consummated, the plaintiff seeks damages
caused by the alleged breach of fiduciary duties by the Individual
Defendants. The Company believes, based on the facts, that it has
valid defenses to the plaintiff's claims and intends to vigorously
defend the action.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities Holders
The annual meeting of shareholders was held on May 22, 1996.
Frank D. Osborn, Brownlee O. Currey, Jr., H. Anthony Ittleson, Edward
G. Nelson, William G. Spears, and Robert K. Zelle were re-elected as
the six directors of the Company.
The tabulation of votes cast for each director is as follows:
Votes For Votes Against Votes Abstained
F.D. Osborn 4,148,994 5,930 -
B.O. Currey, Jr. 4,148,994 5,930 -
H.A. Ittleson 4,148,994 5,930 -
E.G. Nelson 4,148,994 5,930 -
W.G. Spears 4,148,994 5,930 -
R.K. Zelle 4,148,994 5,930 -
The shareholders approved the selection of Ernst & Young LLP as the
Company's independent auditors for the year ended December 31, 1996.
The tabulation of votes cast for the selection of Ernst & Young LLP is
as follows:
Votes For Votes Against Votes Abstained
4,153,410 1,214 300
Item 5. Other information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(2) Agreement and Plan of Merger dated as of July 23, 1996 among
OCC Acquisition Company, Inc., Osborn Communications Corporation and
OCC Holding Corporation previously filed as Exhibit 2 to Form 8-K
dated July 23, 1996 and incorporated herein by reference.
(4) Form of Voting Agreement dated as of July 23, 1996 previously
filed as Exhibit 4 to Form 8-K dated July 23, 1996 and incorporated
herein by reference.
(10.1) Amendment No.1 dated July 1, 1996 to the employment
agreement dated July 1, 1994 between Osborn Communications Corporation
and Frank D. Osborn
(10.2) Amendment No.2 dated July 23, 1996 to the employment
agreement dated July 1, 1994 between Osborn Communications Corporation
and Frank D. Osborn
(10.3) Asset Purchase Agreement dated as of July 2, 1996 by and
among Ohio Broadcast Associates, Currey Broadcasting, Osborn
Communications Corporation, Audrey Malkan, and Matthew Malkan
(10.4) Asset Purchase Agreement dated as of July 8, 1996 by and
between Wheeling Radio Company and Mountain Radio Corporation
(10.5) Asset Purchase Agreement dated as of July , 1996
between Breadbasket Broadcasting Corporation and American Radio
Systems Corporation
(b) Reports on Form 8-K
Form 8-K dated May 3, 1996 and amended on Form 8-K/A-1 on
July 15, 1996
Form 8-K dated July 23, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OSBORN COMMUNICATIONS CORPORATION
(Registrant)
Date: August 12, 1996 /s/ Frank D. Osborn
(Signature)
Frank D. Osborn
President and Chief Executive Officer
Date: August 12, 1996 /s/ Thomas S. Douglas
(Signature)
Thomas S. Douglas
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,948,720
<SECURITIES> 0
<RECEIVABLES> 6,180,830
<ALLOWANCES> 645,163
<INVENTORY> 1,011,049
<CURRENT-ASSETS> 9,349,842
<PP&E> 31,725,932
<DEPRECIATION> 15,311,369
<TOTAL-ASSETS> 63,557,161
<CURRENT-LIABILITIES> 8,288,788
<BONDS> 22,800,000
0
0
<COMMON> 54,131
<OTHER-SE> 28,775,418
<TOTAL-LIABILITY-AND-EQUITY> 63,557,161
<SALES> 15,274,398
<TOTAL-REVENUES> 15,274,398
<CGS> 0
<TOTAL-COSTS> 15,945,688
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,212,243
<INCOME-PRETAX> 7,146,212
<INCOME-TAX> 949,871
<INCOME-CONTINUING> 6,196,341
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,196,341
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.10
</TABLE>
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT No. 1 TO EMPLOYMENT AGREEMENT (this "Amendment"),
made as of May 22, 1996, between Osborn Communications Corporation, a
Delaware corporation (the "Company"), and Frank D. Osborn (the
"Employee").
RECITALS
WHEREAS, the Company and the Employee are parties to that
certain Employment Agreement, effective as of July 1, 1994 (the
"Employment Agreement"), and the parties hereto desire to amend certain
provisions of the Employment Agreement; and
WHEREAS, on May 22, 1996, the Compensation Committee of the
Board of Directors of the Company approved this Amendment to the
Employment Agreement to provide for a compensation bonus to the Employee
effective as of such date and computed in accordance with clause (d) of
paragraph 1 hereof.
NOW, THEREFORE, in consideration of the premises set forth
herein and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. AMENDMENT OF EMPLOYMENT AGREEMENT.
Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Employment Agreement.
<PAGE>
Section 4 of the Employment Agreement relating to the
Employee's compensation is amended to include the following:
(d) Upon the occurrence of a Triggering Event (as hereinafter
defined) prior to the end of the Term, the Employee shall
be entitled to receive an amount equal to one year's Base
Salary ($375,000) (a "Triggering Event Payment") on the
date of such occurrence (the "Scheduled Payment Date").
If the Triggering Event yields a price per share of $10.00
to holders of the Company common stock, the Employee shall
be entitled to receive an additional amount equal to
one year's Base Salary. For each 12.5% of a dollar above
a per share price of $10.00 up to and including a per
share price of $12.00, the Employee shall be entitled to
receive an additional amount equal to 12.5% of Base
Salary. The Employee shall be entitled to receive an
additional amount equal to 25% of Base Salary for each
12.5% of a dollar above the per share price of $12.00 up
to and including a per share price of $14.00. In the
event the per share price is above $14.00, the Employee
shall be entitled to receive an additional amount equal to
50% of Base Salary for each 12.5% of a point above the per
share price of $14.00; PROVIDED, HOWEVER, that
notwithstanding any other provision in this Agreement:
(i) In the event it is determined pursuant to clause
(ii) below, that part or all of the consideration,
compensation or benefits to be paid to Employee under this
Agreement constitute "parachute payments" under Section
280G(b)(2) of the Internal Revenue Code of 1986, as
amended, then, if the aggregate present value of such
parachute payments, singularly or together with the
aggregate present value of any consideration, compensation
or benefits to be paid to Employee under any other plan,
arrangement or agreement which constitute "parachute
payments" (collectively, the "Parachute Amount") exceeds
2.99 times the Employee's "base amount", as defined in
Section 280G(b)(3) of the Code (the "Employee Base
Amount"), the amounts constituting "parachute payments"
which would otherwise be payable to or for the benefit of
Employee shall be reduced to the extent necessary so that
the Parachute Amount is equal to 2.99 times the Employee
Base Amount (the "Reduced Amount"); PROVIDED that such
amounts shall not be so reduced if the Employee
determines, based upon the advice of an independent
nationally recognized public accounting firm (which
<PAGE>
may, but need not be the independent public accountants of
the Company), that without such reduction Employee would be
entitled to receive and retain, on a net after tax basis
(including, without limitation, any excise taxes payable
under Section 4999 of the Code), an amount which is
greater than the amount, on a net after tax basis, that
the Employee would be entitled to retain upon his receipt
of the Reduced Amount.
(ii) Any determination that a payment constitutes a
"parachute payment" and any calculation described in this
Section 4(d), other than the determination described in
the proviso in clause (i) above, ("determination") shall
be made by the independent public accountants for the
Company. Such determination shall be furnished by the
accountants in writing to each of the Company and the
Employee no later than 10 days after the Scheduled Payment
Date and the payment of the Triggering Event Payment may
be deferred until twenty days following the date of such
determination.
(iii)If the determination made pursuant to clause
(ii) of this Section 4(d) results in a reduction of the
payments that would otherwise be paid to Employee except
for the application of clause (i) of this Section 4(d),
Employee may then elect, in his sole discretion, which and
how much of any particular entitlement shall be eliminated
or reduced and shall advise the Company in writing of his
election within ten days of the determination of the
reduction in payments. If no such election is made by
Employee within such ten-day period, the Company may elect
which and how much of any entitlement shall be eliminated
or reduced and shall notify Employee promptly of such
election. Within ten days following such determination
and the elections hereunder, the Company shall pay to or
distribute to or for the benefit of Employee such amounts
as are then due to Employee under this Agreement and shall
promptly pay to or distribute to or for the benefit of
Employee in the future such amounts as become due to
Employee under this Agreement.
(iv) As a result of the uncertainty in the
application of Section 280G of the Code at the time of a
determination hereunder, it is possible that payments will
be made by the Company which should not have been made
under clause (i) of this Section 4(d) ("Overpayment") or
that additional payments which are not made by the Company
pursuant to clause (i) of this Section 4(d) should have
been made ("Underpayment"). In
<PAGE>
the event that there is a
final determination by the Internal Revenue Service, or a
final determination by a court of competent jurisdiction,
that an Overpayment has been made, any such Overpayment
shall be treated for all purposes as a loan to Employee
which Employee shall repay to the Company together with
interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code. In the event that there
is a final determination by the Internal Revenue Service,
a final determination by a court of competent jurisdiction
or a change in the provisions of the Code or regulations
pursuant to which an Underpayment arises under this
Agreement, any such Underpayment shall be promptly paid by
the Company to or for the benefit of Employee, together
with interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Code.
(e) A "Triggering Event" shall mean a merger or consolidation,
tender offer, recapitalization, spin-off, extraordinary
dividend or similar transaction in which the public
shareholders of the Company receive proceeds in the form
of cash or marketable securities. The value of any
marketable securities received in a Triggering Event shall
for purposes of clause (d) above be determined by the
Board of Directors of the Company in good faith.
2. This Amendment shall be governed by and construed and
enforced in all respects in accordance with the laws of the State of New
York.
<PAGE>
3. Except as modified by this Amendment, the Employment
Agreement remains in full force and effect and unchanged.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of July 1, 1996
OSBORN COMMUNICATIONS CORPORATION
By: /s/ MICHAEL F. MANGAN
----------------------------
Michael F. Mangan
Secretary
EMPLOYEE
/s/ FRANK D. OSBORN
---------------------------
Frank D. Osborn
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
AMENDMENT No. 2 TO EMPLOYMENT AGREEMENT (this "Amendment"),
made as of July 22, 1996, between Osborn Communications Corporation, a
Delaware corporation (the "Company"), and Frank D. Osborn (the
"Employee").
RECITALS
WHEREAS, the Company and the Employee are parties to that
certain Employment Agreement, effective as of July 1, 1994 (the
"Employment Agreement"), and the parties hereto desire to amend certain
provisions of the Employment Agreement; and
WHEREAS, on May 22, 1996, the Company and the Employee amended
the Employment Agreement ("Amendment No. 1") to reflect the Company's
agreement to pay a compensation bonus to the Employee upon the occurrence
of a Triggering Event (as defined in Amendment No. 1); and
WHEREAS, in connection with the proposed merger (the "Merger")
between the Company and OCC Acquisition Company, Inc., the Compensation
Committee of the Company's Board of Directors approved on July 22, 1996,
a modification of Amendment No. 1 providing for the payment to the
Employee of an aggregate amount of compensation bonus upon the
consummation of the Merger less
<PAGE>
than and in lieu of the amount contemplated and agreed to pursuant to Amendment
No. 1.
WHEREAS, the Employee has accepted such modification of the
aggregate amount of compensation bonus contemplated by Amendment No. 1.
NOW, THEREFORE, in consideration of the premises set forth
herein and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. AMENDMENT OF EMPLOYMENT AGREEMENT.
Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Employment Agreement.
Section 4 of the Employment Agreement relating to the
Employee's compensation is amended by adding the following clause (f)
thereto:
(f) If the Merger is consummated, the Employee shall be
entitled to receive on the date the Merger is consummated,
in lieu of any payment under clause (d) above, an amount
equal to one year's Base Salary ($375,000) plus a
Triggering Event bonus equal to $2,545,000; provided,
HOWEVER, that if the Merger is not consummated, the
provisions of clause (d) of Amendment No. 1 will be
applicable.
2. This Amendment shall be governed by and construed and
enforced in all respects in accordance with the laws of the State of New
York.
3. Except as modified by this Amendment, the Employment
Agreement remains in full force and effect and unchanged.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first written above.
OSBORN COMMUNICATIONS CORPORATION
By:/s/ MICHAEL F. MANGAN
----------------------------
Michael F. Mangan
Secretary
EMPLOYEE
/s/ FRANK D. OSBORN
---------------------
Frank D. Osborn
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated _______________, 1996, by and
between American Radio Systems Corporation, a Delaware corporation
("Buyer"), and Breadbasket Broadcasting Corporation, a Delaware
corporation ("Seller") and Osborn Communications Corporation, a
Delaware corporation and Seller's sole shareholder ("OCC").
P R E M I S E S:
A. Seller is the licensee of and operates radio stations KNAX(FM)
and KRBT(FM), Fresno, California (each a "Station" and together, the
"Stations") and pursuant to licenses issued by the Federal Communications
Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially
all of Seller's assets used or useful in the operation of the Stations
and the broadcast business made possible thereby for the price and on the
terms and conditions hereafter set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and
agreements contained herein, Buyer and Seller agree as follows:
Section 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1
<PAGE>
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Stations for
cash) by Seller prior to the Closing Date as reflected on the billing
records of Seller relating to the Stations.
2
<PAGE>
1.2 "Assets" means the tangible and intangible assets owned and
used or useful in connection with the conduct of the business or
operations of the Stations, which assets are being sold, transferred, or
otherwise conveyed to Buyer hereunder, as specified in detail in Section
2.1.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule
3.7, (ii) any Contracts entered into by Seller in the ordinary course of
business between the date hereof and the Closing Date which would have
been listed on Schedule 3.7 had they been in existence on the date hereof
and which Buyer agrees in writing to assume, (iii) all Contracts, in
existence on the Closing Date which meet the criteria set forth in
Section 3.7 (i) - (iii) for exclusion from Schedule 3.7, and (iv) all
Contracts with advertisers for the sale of time or talent on the Stations
for cash or in exchange for goods or services entered into in the
ordinary course of business.
1.4 "Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of
Section 8.
1.5 "Closing Date" means the date of the Closing specified in
Section 8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the
Assets to Buyer or otherwise to consummate the transactions contemplated
hereby, including without limitation the consents of the parties to those
Contracts designated in Schedule 3.7 with an asterisk.
1.7 "Contracts" means all agreements and leases (except for any
Real Property Contracts as set forth herein), written or oral (including
any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and affect the assets or the
business or operations of the Stations, and (i) which are in effect on
the date hereof, or (ii) which are entered into by Seller in the ordinary
course of business between the date hereof and the Closing Date.
3
<PAGE>
1.8 "Escrow Deposit" shall mean the sum of One Million Dollars
($1,000,000) held by Media Venture Partners as Escrow Agent pursuant to
an Escrow Agreement of even date, by and among Buyer, Seller, and Escrow
Agent.
1.9 "Excluded Assets" shall mean those assets described or set
forth in Section 2.2 herein and on Schedule 2.2 hereto.
1.10 "FCC Consent" means action by the FCC granting its consent to
the assignment of the FCC Licenses to Buyer as contemplated by this
Agreement.
1.11 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct
of the business or operations of the Stations.
1.12 "Final Order" means a written action, order or public notice
issued by the FCC, setting forth the FCC Consent and (a) which has not
been reversed, stayed, enjoined, set aside, annulled or suspended, and
(b) with respect to which (i) no requests have been filed for
administrative or judicial review, reconsideration, appeal or stay, and
the time for filing any such requests and for the FCC to review the
action on its own motion has expired, or (ii) in the event of review,
reconsideration or appeal that does not result in the FCC consent being
reversed, stayed, enjoined, set aside, annulled or suspended, the time
for further review, reconsideration or appeal has expired.
1.13 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, the
Federal Aviation Administration ("FAA"), and any other federal, state or
local governmental authorities to Seller in connection with the conduct
of the business or operations of the Stations.
1.14 "Personal Property" means all of the machinery, equipment,
tools, vehicles, furniture, leasehold improvements, office equipment,
plant, spare parts, and
4
<PAGE>
other tangible personal property which are owned or leased by Seller and used or
useful as of the date hereof in the conduct of the business or operations of
the Stations, plus such additions thereto and deletions therefrom arising in
the ordinary course of business between the date hereof and the Closing Date.
1.15"Purchase Price" means the purchase price specified in Section
2.3.
1.16 "Real Estate Assets" means all of Seller's interest in the real
property owned by Seller and listed on Schedule 3.5(b) 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.
1.17 "Real Estate Contracts" means 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"), all as described in
Schedule 3.5(a) (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.
1.17 "TBA Date" means the date of commencement of effectiveness of
the Time Brokerage Agreement.
1.18 "Time Brokerage Agreement" means the Time Brokerage Agreement
entered into by Seller and Buyer in substantially the form set forth in
Schedule 6.11 hereto.
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SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 AGREEMENT TO SELL AND BUY. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to transfer and deliver
to Buyer on the Closing Date, and Buyer agrees to purchase, all of the
Assets, free and clear of any claims, liabilities, mortgages, liens,
pledges, conditions, charges, or encumbrances of any nature whatsoever
(except for those permitted in accordance with Section 2.5, 3.5 or 3.6
below), more specifically described as follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) All trademarks, trade names, service marks and all other
information and similar intangible assets relating to the Stations,
including those listed in Schedule 3.9 hereto;
(f) All of the Seller's proprietary information, which relate
to the Stations, including without limitation, technical information
and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including
filings with the FCC which relate to the Stations, if any;
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(g) All choses in action and rights under warranties of Seller
relating to the Stations or the Assets, if any;
(h) All books and records relating exclusively to the business
or operations of the Stations, including executed copies of the
Assumed Contracts, and all records required by the FCC to be kept,
subject to the right of Seller to have such books and records made
available to Seller for a reasonable period, not to exceed three (3)
years; and
(i) All intangible assets of Seller relating to the Stations
not specifically described above.
2.2 EXCLUDED ASSETS. The Assets shall exclude the following
assets.
(a) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; any and all
insurance policies, letters of credit, or other similar items and
any cash surrender value in regard thereto; and any stocks, bonds,
certificates of deposit and similar investments.
(b) Any Contracts other than the Assumed Contracts;
(c) All books and records of Seller, subject to the right of
Buyer to have access and to copy for a period of three (3) years
from the Closing Date, and Seller's partnership records and other
books and records related to internal partnership matters and
financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of
any nature whatsoever for periods prior to the Closing Date;
(e) The Accounts Receivable;
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(f) Any pension, profit-sharing or employee benefit plans, and
any employment or collective bargaining agreement, except to the extent
specifically assumed in Section 2.4, 2.5 or 6.10 of this Agreement; and
(g) The assets, if any, listed on Schedule 2.2 hereto.
2.3 PURCHASE PRICE. The Purchase Price shall be Eleven Million Two
Hundred and Fifty Thousand Dollars ($11,250,000), of which One Hundred and
Fifty Thousand ($150,000) shall be paid at the time of execution of this
Agreement as a non-refundable advance of the Purchase Price. The Purchase
Price shall be adjusted to reflect any adjustments or prorations made and
agreed to as of the TBA Date as provided in Section 2.4 hereof. The
Purchase Price shall be allocated between the Stations and their respective
tangible and intangible assets, including goodwill and license value, in
accordance with the results of an independent appraisal undertaken by Buyer
at its expense.
2.4 ADJUSTMENTS AND PRORATIONS. All revenues arising from the Stations up
until midnight on the day prior to the TBA Date (the "Revenues"), and all
expenses arising from the Stations up until midnight on the day prior to the
TBA Date, including business and license fees (including any retroactive
adjustments thereof), utility charges, real and personal property taxes and
assessments levied against the Assets, accrued employee benefits such as
vacation time and sick time, property and equipment rentals, applicable
copyright or other fees, sales and service charges, taxes (except for taxes
arising from the transfer of the Assets hereunder), and similar prepaid and
deferred items (the "Expenses"), shall be prorated between Buyer and Seller
in accordance with the principle that Seller shall receive all Revenues,
and Seller shall be responsible for all Expenses, allocable to the conduct
of the business or operations of the Stations for the period prior to the
TBA Date, and Buyer shall receive all Revenues and shall be responsible for
all Expenses, on the
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TBA Date and for the period thereafter. Buyer shall
receive credit to the extent of the value (as calculated in Seller's
financial statements consistent with past practice) of any and all
advertising time to be run following the TBA Date for which trade or barter
consideration has been received by the Seller prior to the TBA Date and
which in
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the aggregate exceeds One Hundred and Fifty Thousand Dollars ($150,000).
Notwithstanding the foregoing, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not
included in the Assumed Contracts, or any other obligation or liability
not being assumed by Buyer in accordance with Section 2.5.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the TBA Date, with final settlement and payment
being made in accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the TBA Date, Buyer shall deliver
to Seller a certificate (the "Closing Certificate"), signed by a senior
officer of Buyer after due inquiry by such officer but without any
personal liability to such officer, providing a compilation of the
adjustments and prorations to be made pursuant to this Section 2.4,
including any adjustments and prorations made at Closing, together with a
copy of any working papers relating to such Adjustment Certificate and
such other supporting evidence as Seller may reasonably request. If
Seller shall conclude that the Adjustment Certificate does not accurately
reflect the adjustments and prorations to be made pursuant to this
Section 2.4, Seller shall, within thirty (30) days after its receipt of
the AdjustmentCertificate, provide to Buyer its written statement of any
discrepancies believed to exist. Joseph L. Winn on behalf of Buyer, and
Michael F. Mangan on behalf of Seller, or their respective designees,
shall attempt jointly to resolve the discrepancies within fifteen (15)
days after receipt of Seller's discrepancy statement, which resolution,
if achieved, shall be binding upon all parties to this Agreement and not
subject to dispute or review. If such representatives cannot resolve the
discrepancy to their mutual
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satisfaction within such fifteen (15) day period, Buyer and Seller shall,
within the following ten (10) days, jointly designate a nationally known
independent public accounting firm to be retained to review the Adjustment
Certificate together with Seller's discrepancy statement and any other
relevant documents. The cost of retaining such independent public
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accounting firm shall be borne equally by Buyer and Seller. Such firm
shall report its conclusions as to adjustments pursuant to this Section
2.4, which report shall be conclusive on all parties to this Agreement
and not subject to dispute or review. If, after adjustment as
appropriate with respect to the amount of the aforesaid adjustments paid
or credited at the TBA Date Buyer is determined to owe an amount to
Seller, Buyer shall pay such amount to Seller, and if Seller is
determined to owe an amount to Buyer, Seller shall pay such amount
thereof to Buyer, in each case within ten (10) days of such
determination.
2.5 ASSUMPTION OF LIABILITIES AND OBLIGATIONS. Except to the extent
the parties otherwise agree to pursuant to the Time Brokerage Agreement,
as of the Closing Date, Buyer shall pay, discharge and perform (i) all of
the obligations and liabilities of Seller under the Licenses and the
Assumed Contracts and the Real Estate Contracts insofar as they relate to
the time period on and after the Closing Date, and arising out of events
occurring on or after the Closing Date, (ii) all obligations and
liabilities arising out of events occurring on or after the Closing Date
related to Buyer's ownership of the Assets, including the Real Property
or its conduct of the business or operations of the Stations on or after
the Closing Date, and (iii) all obligations and liabilities for which
Buyer receives a proration adjustment hereunder. All other obligations
and liabilities of Seller, including (i) any obligations under any
Contract not included in the Assumed Contracts, (ii) any obligations
under the Assumed Contracts relating to the time period prior to the
Closing Date, (iii) any claims or pending litigation or proceedings
relating to the operation of the
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Stations prior to the Closing Date, and
(iv) those related to employees as set forth in Section 6.9 herein shall
remain and be the obligations and liabilities solely of Seller.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION, STANDING AND AUTHORITY. Seller is a corporation duly
formed, validly existing and in good standing under the laws of the State
of Delaware and is duly qualified to conduct its business in California,
which is the only jurisdiction where the conduct of the business or
operations of the Stations requires such qualification. Seller has all
requisite corporate power and authority (i) to own, lease, and use the
Assets as presently owned, leased, and used, and (ii) to conduct the
business or operations of the Stations as presently conducted. Seller
has all requisite corporate power and authority to execute and deliver
this Agreement and the documents contemplated hereby, and to perform and
comply with all of the terms, covenants and conditions to be performed
and complied with by Seller, hereunder and thereunder. Seller is not a
participant in any joint venture or partnership with any other person or
entity with respect to any part of the Stations' operations or the
Assets.
3.2 AUTHORIZATION AND BINDING OBLIGATION. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has
been duly executed and delivered by Seller and constitutes the legal,
valid, and binding obligation of Seller, enforceable against Seller in
accordance with its terms except as the enforceability hereof
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may be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally, or by court-applied equitable remedies.
3.3 ABSENCE OF CONFLICTING AGREEMENTS. Subject to obtaining the
Consents, the execution, delivery, and performance of this Agreement and
the documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) does not require the consent of any
third party; (ii) will not conflict with any provision of the Articles of
Incorporation or By-Laws of Seller; (iii) will not conflict with, result
in a breach of, or constitute a default under, any law, judgment, order,
ordinance, decree, rule, regulation or ruling of any court or
governmental instrumentality, which is applicable to Seller; (iv) will
not conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of, any material
agreement, instrument, license or permit to which Seller is a party or by
which Seller may be bound; or (v) will not create any claim, liability,
mortgage, lien, pledge, condition, charge, or encumbrance of any nature
whatsoever upon the Assets.
3.4 LICENSES. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the
Licenses (including any and all amendments and other modifications
thereto). The Licenses have been validly issued with the Seller
designated thereon being the authorized legal holder thereof. The
Licenses comprise all of the material licenses, permits and other
authorizations required from any governmental or regulatory authority for
the lawful conduct of the business or operations of the Stations as
presently operated.
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3.5 TITLE TO AND CONDITION OF REAL PROPERTY.
(a) Schedules 3.5 (a) and (b) contains descriptions of all the Real
Property , which comprises all real property interest necessary to
conduct the business or operations of the Stations as now conducted.
Seller does not hold fee title to any real property as described on
Schedule 3.5(b), in connection with the operation of the Stations.
(b) Schedule 3.5(b) contains a 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 liens, encumbrances and other claims except for any Real
Estate Permitted Exceptions as set forth on Schedule 3.5(c). 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 perons
purported to be parties thereto. To the best of Seller's knowledge, all
towers, guy anchors, and buildings and other improvements, included in
the owned Assets are located entirely on the Real Property listed in
Schedule 3.5(a).
(c) Seller has delivered to Buyer true and complete copies of all
leases or other material instruments pertaining to the Real Property
(including any and all amendments and other modifications of such
instruments). As of the date hereof, Seller is not in material breach,
nor to Seller's knowledge is any other party in material breach, of the
terms of any of such leases or other instruments. All Real Property
(including the improvements thereof) (i) is in good condition and repair
consistent with its present use
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reasonable wear and tear excepted, (ii)is available for immediate use in
the conduct of the business or operations of the Stations, and (iii) to
Seller's knowledge materially complies with all applicable building,
electrical and zoning codes and all regulations of any governmental authority
having jurisdiction. To the best of Seller's knowledge, Seller has full legal
and practical access to the Real Property.
3.6 TITLE TO AND CONDITION OF PERSONAL PROPERTY. Schedule 3.6 contains
descriptions of all material items of the Personal Property, which
comprise all personal property used to conduct the business or operations
of the Stations as now conducted. Except as described in Schedule 3.6,
Seller owns and has good title to all Personal Property. None of the
Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for (i) liens for current taxes not yet due and
payable, and (ii) any other claims or encumbrances which are described in
Schedule 3.6. Except as shown in Schedule 3.6, the Personal Property
taken as a whole is in good operating condition and repair (ordinary wear
and tear excepted), and is available for immediate use in the business or
operations of the Stations, and the transmitting and studio equipment
included in the Personal Property (i) has been maintained consistent with
FCC rules and regulations, and (ii) will permit the Stations and any unit
auxiliaries thereto to operate in accordance with the terms of the FCC
Licenses and the rules and regulations of the FCC, and with all other
applicable federal, state and local statutes, ordinances, rules and
regulations.
3.7 CONTRACTS. Schedule 3.7 contains descriptions of all the Contracts
necessary to conduct the business or operations of the Stations as now
conducted except for: (i)
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contracts with advertisers for the sale of time or talent on the Stations
for cash or in exchange for goods or services and substantially at rate card
and which are not prepaid and which may be cancelled by the Stations without
penalty on not more than thirty (30) days notice, (ii) miscellaneous service
contracts terminable at will without penalty, and (iii) other contracts, the
aggregate liabilities of which do not exceed Five Thousand Dollars ($5,000)
or any material nonmonetary obligation. Seller has delivered to Buyer true and
complete copies of all written Contracts, and true and complete memoranda
of all oral Contracts (including any and all amendments and other
modifications to such Contracts).. All of the Assumed Contracts are in
full force and effect, and are valid, binding and enforceable in
accordance with their terms, except as the enforceability thereof may be
affected by bankruptcy, insolvency or similar laws affecting creditors'
rights generally, or by court-applied equitable remedies. Seller is not
in material breach, nor to Seller's knowledge is any other party in
material breach, of the terms of any such Assumed Contracts. Except as
expressly set forth in Schedule 3.7, the Seller is not aware of any
intention by any party to any Assumed Contract (i) to terminate such
Assumed Contract or amend the terms thereof, (ii) to refuse to renew the
same upon expiration of its term, or (iii) to renew the same upon
expiration only on terms and conditions which are more onerous than those
pertaining to such existing Assumed Contract. Except for the Consents,
Seller has full legal power and authority to assign its rights under the
Assumed Contracts to Buyer in accordance with this Agreement, and such
assignment will not affect the validity, enforceability and continuation
of any of the Assumed Contracts.
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3.8 CONSENTS. Except for the FCC Consent provided for in Section 6.1
and the other Consents indicated in Schedule 3.7, no consent, approval,
permit or authorization of, or declaration to or filing with any
governmental or regulatory authority, or any other third party is
required (i) to consummate this Agreement and the transactions
contemplated hereby, (ii) to permit Seller to assign or transfer the
Assets to Buyer, or (iii) to enable Buyer to conduct the business or
operations of the Stations in essentially the same manner as such
business or operations are presently conducted.
3.9 TRADEMARKS, TRADE NAMES AND COPYRIGHTS. Schedule 3.9 is a true and
complete list of all copyrights, trademarks, trade names, licenses,
patents, permits, jingles, privileges and other similar intangible
property rights and interests (exclusive of those required to be listed
in Schedule 3.4) applied for, issued to or owned by Seller, or under
which Seller is licensed or franchised, and used or useful in the conduct
of the business or operations of the Stations, all of which are valid and
in good standing and uncontested. Seller has delivered to Buyer copies
of all documents establishing such rights, licenses, or other authority.
Seller is not aware that it is infringing upon or otherwise acting
adversely to any trademarks, trade names, copyrights or patents, owned
by any other person or persons, and there is no claim or action pending,
or to the knowledge of Seller threatened, with respect thereto.
3.10 FINANCIAL STATEMENTS. Based solely on the representation and
warranties of EBE Communications Limited Partnership and EBE
Broadcasting, L.P. (the "Former Sellers") contained in two Asset Purchase
Agreements, each dated December 31, 1995 between Seller and the Former
Sellers, true and complete copies of unaudited financial statements
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of Seller containing balance sheets and statements of income as at and for
Seller's fiscal years ended December 31, 1993, 1994 and 1995
(collectively, the "Financial Statements") have been supplied to Buyer.
The Financial Statements are prepared in accordance with generally
accepted accounting principles consistently applied, are true and correct
and present fairly in all material respects, the operating income and
financial condition of the Stations as at their respective dates and the
results of operations for the periods then ended.
3.11 INSURANCE. All of the tangible property included in the Assets is
insured against loss or damage in amounts generally customary in the
broadcast industry. Schedule 3.11 comprises a true and complete list of
all insurance policies of Seller which insure any part of the Assets.
All policies of insurance listed in Schedule 3.11 are in full force and
effect.
3.12 REPORTS. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Stations: all
material returns, reports and statements which the Stations are currently
required to file with the FCC or with any other governmental agency have
been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction thereof have been complied
with in all material respects; all of such reports, returns and
statements are in all material respects substantially complete and
correct as filed; and each Stations' public inspection file is located at
the main studio and is in material compliance with the FCC's rules and
regulations.
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3.13 EMPLOYEE BENEFIT PLANS. Schedule 3.7 or Schedule 3.13 contains a
true and complete list as of the date of this Agreement of all employee
benefit plans or arrangements applicable to the employees of Seller
employed at the Stations, and all fixed or contingent liabilities or
obligations of Seller with respect to any person now or formerly employed
by Seller at the Stations, including pension or thrift plans, individual
or supplemental pension or accrued compensation arrangements,
contributions to hospitalization or other health or life insurance
programs, incentive plans, bonus arrangements and vacation, sick leave,
disability and termination arrangements or policies, including workers'
compensation policies. Seller has furnished or made available to Buyer
true and complete copies of all written documents or information with
respect to employee matters and arrangements at the Stations, including
without limitation, all employee handbooks, rules and policies, plan
documents, trust agreements, employment agreements, summary plan
descriptions, and descriptions of any unwritten plans listed in Schedule
3.13. Any employee benefits and welfare plans or arrangements listed in
Schedule 3.13 were established and have been executed, managed and
administered without material exception in accordance with all applicable
requirements of the Internal Revenue Code of 1986, as amended, of the
Employee Retirement Income Security Act of 1974, as amended, and of other
applicable laws. Seller is not aware of the existence of any
governmental audit or examination of any of such plans or arrangements or
of any facts which would lead it to believe that any such audit or
examination is pending or threatened. There exists no action, suit or
claim (other than routine claims for benefits) with respect to any of
such plans or arrangements pending or,
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to the knowledge of Seller, threatened against any of such plans or
arrangements, and Seller possesses no knowledge of any facts which could give
rise to any such action, suit or claim.
3.14 LABOR RELATIONS. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Stations except as
described in Schedule 3.7 hereto. Seller has no written or oral
contracts of employment with any employee of the Stations, other than
those listed in Schedule 3.7. Seller has provided Buyer with true and
complete copies of all such written contracts of employment and true and
complete memoranda of any such oral contracts. Seller, in the operation
of the Stations, has complied in all material respects with all
applicable laws, rules and regulations relating to the employment of
labor, including those related to wages, hours, collective bargaining,
occupational safety, discrimination, and the payment of social security
and other payroll related taxes, and it has not received any notice
alleging that it has failed to comply in any material respect with any
such laws, rules or regulations. No material controversies, disputes, or
proceedings are pending or, to the best of its knowledge, threatened,
between it and employees (collectively) of the Stations. No labor union
or other collective bargaining unit represents any of the employees of
the Stations. To the best knowledge of Seller, there is no union
campaign being conducted to solicit cards from employees to authorize a
union to request a National Labor Relations Board certification election
with respect to any of Seller's employees at the Stations.
3.15 TAXES. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local or city tax
returns which are required to be filed, and it
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has paid or caused to be paid all taxes shown on said returns or on any tax
assessment received by it to the extent that such taxes have become due, or
has set aside on its books reserves (segregated to the extent required by
sound accounting practice) deemed by it to be adequate with respect thereto.
No events have occurred which could impose on Buyer any transferee liability
for any taxes, penalties or interest due or to become due from Seller.
3.16 CLAIMS, LEGAL ACTIONS. Except as set forth in Schedule 3.16, and
except for any investigations and rule-making proceedings generally
affecting the broadcasting industry, there is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other
legal, administrative or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Seller
threatened, against or relating to Seller, the Assets, or the business or
operations of the Stations, nor does Seller know of any basis for the
same, except, in each case, for such claims, legal actions,
counterclaims, suits, arbitrations, governmental investigations, other
proceedings, orders, decrees or judgments as would not reasonably be
expected to have a material adverse effect upon the business, property,
assets or condition (financial or otherwise) of the Assets. In
particular, except as set forth in Schedule 3.16, but without limiting
the generality of the foregoing, there are no applications, complaints or
proceedings pending or, to the best of its knowledge, threatened (i)
before the FCC relating to the business or operations of the Stations
other than applications, complaints or proceedings which affect the radio
industry generally, (ii) before any federal or state agency involving
charges of illegal discrimination by the Stations under any federal or
state employment laws or regulations,
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or (iii) against Seller or the Stations before any federal, state or local
agency involving environmental or zoning laws or regulations, except in each
case for such applications, complaints or proceedings as would not reasonably
be expected to have a material adverse effect upon the business, property,
assets or condition (financial or otherwise) of the Assets.
3.17 COMPLIANCE WITH LAWS. To the best knowledge of Seller, Seller is
in compliance in all material respects with (i) the Licenses, and (ii)
all applicable federal, state and local laws, rules, regulations and
ordinances. To the best knowledge of Seller, neither the ownership or
use, nor the conduct of the business or operations, of the Stations
conflicts with rights of any other person, firm or corporation.
3.18 ENVIRONMENTAL MATTERS. During Seller's period of ownership and, to
the best knowledge of Seller, during those of its predecessor, there has
been no production, storage, treatment, recycling, disposal, use,
generation, discharge, release or other handling or disposition of any
kind by Seller or its predecessor (collectively, "Handling") of any toxic
or hazardous wastes, substances, products, pollutants or materials of any
kind, including, without limitation, petroleum and petroleum products and
asbestos, or any other wastes, substances, products, pollutants or
material regulated under any Environmental Laws (as defined below)
(collectively, "Hazardous Materials") at, in, on, from or under the
property subject to the Real Property Contracts or any structure or
improvement on the property subject to the Real Property Contracts which
in any event is in material violation of Environmental Law. The
operations of Seller and, to Seller's best knowledge, those of its
predecessor, are and have been conducted, as the case may be,
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in material compliance with all applicable Environmental Laws. There are no
pending or threatened actions, suits, claims, demands, legal proceedings,
administrative proceedings, requests for information, or other notices,
proceedings or requests (collectively, "Claims") against or upon Seller
based on or relating to any Pre-Closing Environmental Matters (as defined
below), and Seller has no knowledge that any such Claims will be
asserted, except, in each case, for such actions, suits, claims, demands,
legal or administrative proceedings, requests for information, or other
notices, proceedings or requests as would not reasonably be expected to
have a material adverse effect upon the business, property, assets or
condition (financial or otherwise) of the Assets. Environmental Laws
means any and all Federal, state or local laws, statutes, rules,
regulations, plans, ordinances, codes, licenses or other restrictions
relating to employee health and safety or the environment, including
without limitation the Comprehensive Environmental Response, Compensation
and Liability Act, the Clean Air Act, the Safe Drinking Water Act, the
Toxic Substances Control Act and the Occupational Safety and Health Act.
Pre-Closing Environmental Matters means (i) the Handling of any Hazardous
Materials on, at, in, from or under the property subject to the Real
Property Contracts prior to the Closing Date, including without
limitation, the effects of any Handling of Hazardous Materials within or
outside the boundaries of Real Property, the presence of any Hazardous
Materials in, on or under the Real Property or any improvements or
structures thereon regardless of how such Hazardous Materials came to
rest there, (ii) the failure of Seller to be in compliance with any
Environmental Law or (iii) any other act, omission, event or condition
which could give rise to liability or
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potential liability under any Environmental Law with respect to the Real
Property or the present or prior business of Seller.
3.19 CONDUCT OF BUSINESS IN ORDINARY COURSE. Since January 1, 1996,
Seller has conducted the business and operations of the Stations only in
the ordinary course and has not:
(a) Suffered any material adverse change in the physical
facilities of the
Station;
(b) Made any sale, assignment, lease or other transfer of any
of Seller's properties other than in the normal and usual course of
business.
3.20 FULL DISCLOSURE. No representation or warranty made by Seller
herein nor any certificate, document or other instrument furnished or to
be furnished by Seller pursuant hereto contains or will contain any
untrue statement of a material fact made intentionally or in bad faith,
or intentionally or in bad faith omits or will omit to state any material
fact known to Seller and required to make the statements herein or
therein not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of Delaware, and is and shall be, at Closing, qualified to
conduct business in the State of California. Buyer has all requisite
corporate power and authority to execute and deliver this
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Agreement and the documents contemplated hereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Buyer hereunder and thereunder.
4.2 AUTHORIZATION AND BINDING OBLIGATION. The execution, delivery
and performance of this Agreement by Buyer have been duly authorized by
all necessary corporate action on the part of Buyer. This Agreement has
been duly executed and delivered by Buyer and constitutes the legal,
valid, and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms except as the enforceability hereof may be
affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally, or by court-applied equitable remedies.
4.3 ABSENCE OF CONFLICTING AGREEMENTS. Subject to obtaining the
Consents, the execution, delivery, and performance of this Agreement and
the documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) does not require the consent of any
third party; (ii) will not conflict with the Articles of Incorporation or
Bylaws of Buyer; (iii) will not conflict with, result in a breach of, or
constitute a default under, or accelerate or permit the acceleration of
any performance required by the terms of, any material agreement,
instrument, licenses, or permit to which Buyer is a party or by which
Buyer may be bound.
4.4 FCC QUALIFICATION. Buyer has no knowledge of any facts which
would, under present law (including the Communications Act of 1934, as
amended) and present rules, regulations and practices of the FCC,
disqualify Buyer as an assignee of the
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licenses, permits and authorizations listed on Schedule 3.4 hereto, or as an
owner and/or operator of the Stations' Assets.
4.5 FINANCING. Buyer further represents and warrants that it
possesses adequate financial resources to meet all terms, conditions and
undertakings contemplated by this Agreement.
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SECTION 5
COVENANTS OF SELLER
5.1 PRE-CLOSING COVENANTS. Except as contemplated by this
Agreement, or by the Time Brokerage Agreement, or with the prior written
consent of Buyer, not to be unreasonably withheld, between the date
hereof and the Closing Date, Seller shall operate the Stations in the
ordinary course of business in accordance with its past practices (except
where such would conflict with the following covenants or with Seller's
other obligations hereunder), and abide by the following negative and
affirmative covenants:
A. NEGATIVE COVENANTS. Seller shall not do any of the
following:
(1) COMPENSATION. Increase the compensation, bonuses or
other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the
Stations, except in the ordinary course of business consistent with
past practices since January 1, 1996;
(2) CONTRACTS. Enter into any trade or barter contracts;
modify or amend any of the Assumed Contracts; enter into any new
Contracts except in the ordinary course of business, provided that
all new Contracts (other than Contracts for the sale of broadcast
time) shall not involve either aggregate liabilities exceeding Five
Thousand Dollars ($5,000), or any material nonmonetary obligation;
(3) DISPOSITION OF ASSETS. Sell, assign, lease, or otherwise
transfer or dispose of any of the Assets, except for assets consumed
or disposed of in the ordinary course of business, where no longer
used or useful in the business or operations of the Stations or in
connection with the acquisition of replacement property of
equivalent kind and value;
(4) ENCUMBRANCES. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) those in
existence on the date of this Agreement, disclosed in Schedules
3.5(c) and 3.6 and 3.7, or permitted by Section 2.5, 3.5 or 3.6 and
(ii) mechanics' liens and other similar liens which will be removed
prior to the Closing Date;
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(5) PROGRAMMING. Make any material changes in the broadcast
hours or in the percentages of types of programming broadcast by the
Stations, or make any other material changes in the Stations's
programming policies, except such changes as in the good faith
judgment of the Seller are required in the public interest;
(6) LICENSES. Do any act or fail to do any act which might
result in the expiration, revocation, suspension or modification of
any of the Licenses, or fail to prosecute with due diligence any
applications to any governmental authority in connection with the
operation of the Stations;
(7) RIGHTS. Waive any material right relating to the Stations
or the Assets; or
(8) NO INCONSISTENT ACTION. Knowingly take any action which
is inconsistent with its obligations hereunder or which could hinder
or delay the consummation of the transaction contemplated by this
Agreement.
B. AFFIRMATIVE COVENANTS. Seller shall do the following:
(1) ACCESS TO INFORMATION. Upon prior notice, allow
Buyer and its authorized representatives reasonable access at
mutually agreeable times at Buyer's expense during normal business
hours to the Assets and to all other properties, equipment, books,
records, Contracts and documents relating to the Stations for the
purpose of audit and inspection, and furnish or cause to be
furnished to Buyer or its authorized representatives all information
with respect to the affairs and business of the Stations as Buyer
may reasonably request, it being understood that the rights of Buyer
hereunder shall not be exercised in such a manner as to interfere
with the operations of the business of Seller; provided that neither
the furnishing of such information to Buyer or its representatives
nor any investigation made heretofore or hereafter by Buyer shall
affect Buyer's rights to rely on any representation or warranty made
by Seller in this Agreement, each of which shall survive any
furnishing of information or any investigation;
(2) MAINTENANCE OF ASSETS. Maintain all of the Assets or
replacements thereof and improvements thereon in current condition
(ordinary wear and tear excepted), and use, operate and maintain all
of the above assets in a reasonable manner, with inventories or
spare parts and expendable supplies being maintained at levels
consistent with past practices since January 1, 1996;
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(3) INSURANCE. Maintain the existing insurance policies
on the Stations and the Assets or otherwise replace such policies
with comparable policies;
(4) CONSENTS. Use its reasonable efforts to obtain the
Consents;
(5) BOOKS AND RECORDS. Maintain its books and records in
accordance with past practices since January 1, 1996;
(6) NOTIFICATION. Promptly notify Buyer in writing of
any unusual or material developments with respect to the assets of
the Stations, and of any material change in any of the information
contained in Seller's representations and warranties contained in
Section 3 hereof or in the schedules hereto, provided that such
notification shall not relieve Seller of any obligations hereunder;
(7) TRADE AND BARTER AGREEMENTS. Provide prior to the
TBA Date the advertising time due under any trade and barter
agreements listed in Schedule 3.7;
(8) CONTRACTS. Prior to the Closing Date, deliver to
Buyer a list of all Contracts entered into between the date hereof
and the Closing Date of the type required to be listed in Schedule
3.7, together with the copies of such Contracts; and
(9) COMPLIANCE WITH LAWS. Comply in all material
respects with all rules and regulations of the FCC, and all other
laws, rules and regulations to which Seller, the Stations and the
Assets are subject.
5.2 POST-CLOSING COVENANTS. After the Closing, Seller will take
such actions, and execute and deliver to Buyer such further deeds, bills
of sale, or other transfer documents as, in the reasonable opinion of
counsel for Buyer and Seller, may be necessary to ensure, complete and
evidence the full and effective transfer of the Assets to Buyer pursuant
to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
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6.1 FCC CONSENT. The assignment of the FCC Licenses as
contemplated by this Agreement is subject to the prior consent and
approval of the FCC.
A. Within ten (10) days after the execution of this
Agreement, Buyer and Seller shall file with the FCC an appropriate
application for FCC Consent. The parties shall prosecute said
application with all reasonable diligence and otherwise use their best
efforts to obtain the grant of such application as expeditiously as
practicable. If the FCC Consent imposes any condition on any party
hereto, such party shall use its best efforts to comply with such
condition unless compliance would be unduly burdensome or would have a
material adverse effect upon it. If reconsideration or judicial review
is sought with respect to the FCC Consent, Buyer and Seller shall oppose
such efforts to obtain reconsideration or judicial review (but nothing
herein shall be construed to limit any party's right to terminate this
Agreement pursuant to Section 9 of this Agreement).
B. The transfer of the Assets hereunder is expressly
conditioned upon (i) the grant of the FCC Consent without any materially
adverse conditions on Buyer, and (ii) compliance by the parties hereto
with the condition (if any) imposed in the FCC Consent.
6.2 CONTROL OF THE STATIONS. Buyer shall not, directly or
indirectly, control, supervise, direct, or attempt to control, supervise
or direct, the operations of the Stations; such operations, including
complete control and supervision of all of the Stations' programs,
employees, and policies, shall be the sole responsibility of Seller until
the completion of the Closing hereunder.
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6.3 TAXES, FEES AND EXPENSES. Buyer shall pay all sales, real
estate, transfer and similar taxes and fees, if any, arising out of the
transfer of the Assets pursuant to this Agreement. All filing fees
required by the FCC or any other governmental entity shall be paid
equally by Seller and Buyer. Except as otherwise provided in this
Agreement, each party shall pay its own expenses incurred in connection
with the authorization, preparation, execution, and performance of this
Agreement, including all fees and expenses of counsel, accountants,
agents, and other representatives.
6.4 BROKERS. Buyer and Seller each represents and warrants that
neither it nor any person or entity acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection
with the transaction contemplated by this Agreement, except for Media
Venture Partners, whose fee shall be solely the responsibility of Buyer.
6.5 NONCOMPETITION AGREEMENT. Buyer and Seller shall enter into at
Closing a Noncompetition Agreement substantially in the form set forth in
Schedule 6.5.
6.6 CONFIDENTIALITY. Except as necessary for the consummation of
the transaction contemplated hereby, including Buyer's obtaining
financing in any form or means of its choosing related hereto, each party
hereto will keep confidential any information which is obtained from the
other party in connection with the transaction contemplated hereby and
which is not readily available to members of the general public, and will
not use such information for any purpose other than in furtherance of the
transactions contemplated hereby. In the event this Agreement is
terminated and the purchase and sale contemplated hereby abandoned, each
party will return to the other
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party all documents, work papers and other written material obtained by it
in connection with the transaction contemplated hereby.
6.7 COOPERATION. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations
under this Agreement, and Buyer and Seller shall execute such other
documents as may be necessary and desirable for the implementation and
consummation of this Agreement, and otherwise use their reasonable best
efforts to consummate the transactions contemplated hereby and to fulfill
their obligations hereunder. Notwithstanding the foregoing, except as
otherwise set forth herein, Buyer shall have no obligation (i) to expend
funds to obtain the Consents, or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
6.8 RISK OF LOSS.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be
borne by Seller at all times prior to the completion of the Closing.
B. If the cost of repairing, replacing or restoring any
damaged or destroyed Assets is $50,000 or less, Seller shall pay to Buyer
the amount necessary to repair, replace or restore such damaged or
destroyed Assets to its former condition. If the cost of such repair,
replacement or restoration exceeds $50,000 and Seller has not repaired,
replaced or restored such damaged or destroyed Assets prior to the
Closing Date, Buyer may, at its option: (i) postpone the Closing Date
with the prior consent of
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the Commission if necessary, for a period of up to one hundred and twenty
(120) days, to permit the repair or replacement of the damage or loss; or
(ii) proceed to close this Agreement and complete the restoration and
replacement of such damaged Assets after the Closing Date, in which event
Seller shall deliver to Buyer all insurance proceeds received in connection
with such damage or destruction of the Assets to the extent not already
expended by Seller arising in connection with such restoration and
replacement; provided, however that if such Assets have not been restored
or replaced and the Stations's normal and usual transmission resumed within
the one hundred and twenty (120) day period pursuant to (i) above, Buyer may
terminate this Agreement forthwith without any further obligation hereunder by
written notice to Seller. -,
C. Notwithstanding any of the foregoing, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by
written notice to Seller if any event occurs which prevents signal
transmission by either Stations in a manner generally equivalent to its
current operations for a consecutive period of five (5) or a cumulative
period of fourteen (14) days after the date hereof.
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6.9 EMPLOYEE MATTERS.
A. Within five (5) business days after execution of this
Agreement, Seller shall provide to Buyer an accurate list of all current
employees of the Stations together with a description of the terms and
conditions of their respective employment (including salary, bonus and
other benefit arrangements) and their duties as of the date of this
Agreement, as well as the annual salaries thereof. Seller shall promptly
notify Buyer of any changes that occur prior to Closing with respect to
such information.
B. Nothing contained in this Agreement shall confer upon any
employee of Seller any right with respect to continued employment by
Buyer, nor shall anything herein interfere with any right the Buyer may
have after the Closing Date to (i) terminate the employment of any of the
employees at any time, with or without cause, or (ii) establish or modify
any of the terms and conditions of the employment of the employees in the
exercise of its independent business judgment.
C. Except as otherwise set forth herein, Buyer will not incur
any liability on account of Seller's employees in connection with the
transaction, including, without limitation, any liability on account of
unemployment insurance contributions, termination payments, retirement,
pension, profit-sharing, bonus, severance pay, disability, health,
accrued vacation, accrued sick leave (unless a pro-rated adjustment is
made as to vacation or sick leave) or other employee benefit plans,
practices, agreements, or understandings.
6.10 AUDIT COOPERATION. Seller agrees to fully cooperate, and use
reasonable efforts to cause their accounting firms to reasonably
cooperate with Buyer and at Buyer's
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expense, to the extent required for the Buyer to prepare audited financial
statements for the Stations for the period of Seller's ownership thereof.
Seller further agrees to authorize the disclosure of such audited information
as required by applicable law, regulations or rules of any governmental or
administrative agency, stock exchange or self-regulatory agency.
6.11 TIME BROKERAGE AGREEMENT. Buyer and Seller shall enter into a
Time Brokerage Agreement in the form set forth in Schedule 6.11 hereto,
to be effective as of the date of this Agreement or as of such other date
as the parties mutually agree.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 CONDITIONS OF OBLIGATIONS OF BUYER. All obligations of Buyer
at the Closing hereunder are subject to the fulfillment prior to and at
the Closing Date of each of the following conditions, any of which may be
waived by Buyer in writing in whole or in part in its sole discretion:
A. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes
contemplated by this Agreement, as though such representations and
warranties were made at and as of such time.
B. COVENANTS AND CONDITIONS. Seller shall have in all
material respects performed and complied with the covenants, agreements,
and conditions
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required by this Agreement to be performed or complied with by it prior to
or on the Closing Date.
C. CONSENTS. Each of the Consents marked as "material" on
Schedule 3.7 shall have been duly obtained and delivered to Buyer with no
material adverse change to the terms of the License or Assumed Contract
with respect to which such Consent is obtained.
D. LICENSES. Seller shall be the holder of the Licenses, and
there shall not have been any modification of any of such Licenses which
has an adverse effect on the Stations or the conduct of its business or
operations. No proceeding shall be pending the effect of which would be
to revoke, cancel, fail to renew, suspend or modify adversely any of the
Licenses.
E. DELIVERIES. Seller shall have made or stand willing and
able to make all the deliveries to Buyer set forth in Section 8.2
F. ADVERSE CHANGE. Between the date of this Agreement and
the Closing Date, there shall have been no material adverse change in the
physical facilities of the Stations (as set forth in Section 3.19 (a)).
7.2 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
at the Closing hereunder are subject to the fulfillment prior to and at
the Closing Date of each of the following conditions, any of which may be
waived by Seller in writing, in whole or in part, in its sole discretion:
A. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement shall be true and
complete in all
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material respects at and as of the Closing Date, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
B. COVENANTS AND CONDITIONS. Buyer shall have in all
material respects performed and complied with the covenants, agreements,
and conditions required by this Agreement to be performed or complied
with by it prior to or on the Closing Date.
C. DELIVERIES. Buyer shall have made or stand willing and
able to make all the deliveries set forth in Section 8.3
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 CLOSING. The closing shall take place at 10:00am on a date, to
be set by Buyer, upon five (5) days written notice to Seller, no later
than five (5) business days following the date upon which the FCC Consent
has become a Final Order (the "Closing Date"), provided, however, that
Buyer may waive the requirement for a Final Order and schedule the
Closing Date, with five (5) days written notice to Seller, at any time
after receipt of the FCC Consent. In no event, however, shall the
Closing Date occur prior to January 1, 1997. Closing shall be held at
the offices of Buyer or such other place as shall be mutually agreed to
by Buyer and Seller.
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8.2 DELIVERIES BY SELLER. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) TRANSFER DOCUMENTS. Duly executed bills of sale, motor
vehicle titles, assignments and other transfer documents which shall
be sufficient to vest good and marketable title to the Assets in the
name of Buyer or its permitted assignees, free and clear of any
claims, liabilities, mortgages, liens, pledges, conditions, charges,
or encumbrances of any nature whatsoever (except for those permitted
in accordance with Sections 2.5, 3.5 or 3.6 hereof and as set forth
in Schedule 3.5(c));
(b) CONSENTS. The original of each Consent marked as
"material" with an asterisk on Schedule 3.7;
(c) OFFICER'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by a duly authorized officer of Seller,
certifying: (i) that the representations and warranties of Seller
contained in this Agreement are true and complete in all material
respects as of the Closing Date, except for changes contemplated by
this Agreement, as though made on and as of that date; and (ii) that
Seller has, in all material respects, performed its obligations and
complied with its covenants set forth in this Agreement to be
performed and complied with prior to or on the Closing Date;
(d) SECRETARY'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by Seller's Secretary: (i) certifying that
the resolutions, as attached to such certificate, were duly adopted
by such Seller's Board of Directors, authorizing and approving the
execution of this Agreement by Seller and the consummation of the
transaction contemplated hereby and that such resolutions remain in
full force and effect; and (ii) providing, as attachments thereto, a
certificate of legal existence certified by an appropriate Delaware
state official; as of a date not more than fifteen (15) days before
the Closing Date and by Seller's Secretary as of the Closing Date,
and a copy of Seller's Certificate of Incorporation and Bylaws as in
effect on the date hereof, certified by Seller's Secretary as of the
Closing Date;
(e) LICENSES, CONTRACTS, BUSINESS RECORDS, ETC. Copies, if
available, of all licenses, Assumed Contracts, blueprints,
schematics, working drawings, plans, projections, statistics,
engineering records, and all files and records used by Seller in
connection with its operations of the Stations;
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(f) NONCOMPETITION AGREEMENT. The Noncompetition Agreement as
set forth in Schedule 6.5; and
(g) OPINIONS OF COUNSEL. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed
to Buyer and at Buyer's directions, to Buyer's lenders,
substantially in the form of Schedule 8.2 hereto.
8.3 DELIVERIES BY BUYER. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) PURCHASE PRICE. The Purchase Price as provided in Section
2.3;
(b) ASSUMPTION AGREEMENTS. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts
arising on or after the Closing Date;
(c) OFFICER'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the President or Vice President of Buyer,
certifying (i) that the representations and warranties of Buyer
contained in this Agreement are true and complete in all material
respects as of the Closing Date, except for changes contemplated by
this Agreement, as though made on and as of that date, and (ii) that
Buyer has, in all material respects, performed its obligations and
complied with its covenants set forth in this Agreement to be
performed or complied with on or prior to the Closing Date;
(d) SECRETARY'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by Buyer's Secretary: (i) certifying that
the resolutions, as attached to such certificate, were duly adopted
by Buyer's Board of Directors, authorizing and approving the
execution of this Agreement and the consummation of the transaction
contemplated hereby and that such resolutions remain in full force
and effect; and (ii) a copy of the corporate charter, articles of
incorporation and Bylaws of Buyer as in effect on the date hereof,
certified by Buyer's secretary as of the Closing Date;
(e) OPINION OF COUNSEL. An opinion of Buyer's General Counsel
dated as of the Closing Date, substantially in the form of Schedule
8.3 hereto.
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(f) NONCOMPETITION AGREEMENT. The Noncompetition Agreement as
set forth in Section 6.5.
SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 TERMINATION RIGHTS. This Agreement may be terminated by the
mutual written consent of the parties, or by either Buyer or Seller if
the terminating party is not then in breach of any material provision of
this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent
to the obligations of the terminating party set forth in Section 7
of this Agreement shall not have been materially satisfied, and (ii)
satisfaction of such condition shall not have been waived by the
terminating party;
(b) If the application for FCC Consent shall be set for
hearing by the FCC for any reason; or
(c) If the Closing shall not have occurred on or before March
1, 1997 for any reason other than that the condition that the FCC
Consent shall not have been issued for reasons not due to the fault
of either Buyer or Seller.
Upon termination: (i) if neither party hereto is in breach of any
material provision of this Agreement, the parties hereto shall not have
any further liability to each other; (ii) if Seller shall be in breach of
any material provision of this Agreement, Buyer shall have
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only the rights and remedies provided in Section 9.3 or (iii) if Buyer shall
be in breach of any material provision of this Agreement, Seller shall be
entitled only to liquidated damages as provided in Section 9.2 hereof.
If, upon termination, Buyer shall not be in breach of any material
provision of this Agreement, the Escrow Deposit, plus all interest or
other proceeds from the investment thereof, less any compensation due the
Escrow Agent, shall be paid to Buyer.
9.2 LIQUIDATED DAMAGES. In the event this Agreement is terminated
by Seller due to a material breach by Buyer of its representations,
warranties, covenants and other obligations under this Agreement, then
the Escrow Deposit shall be paid to Seller as liquidated damages, it
being agreed that the Escrow Deposit shall constitute full payment for
any and all damages suffered by Seller by reason of Buyer's failure to
close this Agreement. Buyer and Seller agree in advance that actual
damages would be difficult to ascertain and that the amount of the Escrow
Deposit is a fair and equitable amount to reimburse Seller for damages
sustained due to Buyer's failure to consummate this Agreement for the
above-stated reason. All interest or other proceeds from the investment
of the Escrow Deposit, less any compensation due the Escrow Agent, shall
be paid to Seller.
9.3 SPECIFIC PERFORMANCE. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Buyer shall therefore be
entitled, in addition to any other remedies which may be available,
including money damages, to seek specific
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performance of the terms of this Agreement. In the event of any action to
enforce this Agreement, Seller hereby waives the defense that there is an
adequate remedy at law.
9.4 EXPENSES UPON DEFAULT. In the event of a default by a party
hereto (the "Defaulting Party") which results in the filing of a lawsuit
for damages, specific performance, or other remedy the other party (the
Nondefaulting Party) shall be entitled to reimbursement by the Defaulting
Party of reasonable legal fees and expenses incurred by the Nondefaulting
Party in the event the Nondefaulting Party prevails.
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SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
AND INDEMNIFICATION
10.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties, and shall survive the Closing Date for a
period of twelve (12) months (the "Survival Period"). No claim for
indemnification may be made under this Section 10 (except for section
10.3(a) or related claims under Section 10.3(c)) after the expiration of
the Survival Period. Any investigations by or on behalf of any party
hereto shall not constitute a waiver as to enforcement of any
representation or warranty contained herein, except that insofar as any
party has knowledge of any misrepresentation or breach of warranty at
Closing and such knowledge is documented in writing at Closing, such
party shall be deemed to have waived such misrepresentation or breach.
10.2 INDEMNIFICATION BY SELLER. Seller and OCC shall jointly and
severally indemnify and hold Buyer harmless against and with respect to,
and shall reimburse Buyer for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of
any covenants by Seller contained herein or in any certificate,
delivered to Buyer hereunder.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to the terms hereof;
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(c) Any and all losses, liabilities or damages resulting from
Seller's operation or ownership of the Stations prior to the Closing
Date, including any and all liabilities arising under the Licenses
or the Assumed Contracts which relate to events occurring prior to
the Closing Date; and
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(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident
to any of the foregoing or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof.
10.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller
for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of
any covenants by Buyer contained herein or in any certificate
delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from
Buyer's operation or ownership of the Stations on or after the
Closing Date, including any and all liabilities or obligations
arising under the Licenses or the Assumed Contracts which relate to
events occurring after the Closing Date or otherwise assumed by
Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof.
10.4 PROCEDURES FOR INDEMNIFICATION. The procedures for
indemnification shall be as follows:
A. The party claiming the indemnification (the "Claimant")
shall promptly give notice to the party from whom indemnification is
claimed (the "Indemnifying Party") of any claim, whether between the
parties or brought by a third party, specifying (i) the factual basis for
such claim, and (ii) the amount of the claim. If the claim relates to an
action, suit or proceeding filed by a third party against Claimant, such
notice shall be given by Claimant within five (5) days after written
notice of such action, suit or proceeding was given to Claimant.
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B. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty (30) days to make such
investigation of the claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees
to make available to the Indemnifying Party and/or its authorized
representative(s) the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnifying Party agree
at or prior to the expiration of said thirty (30) day period (or any
mutually agreed upon extension thereof) to the validity and amount of
such claim, or if the Indemnifying Party does not respond to such notice,
the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. Buyer shall be entitled to apply any or all of the
Accounts Receivable collected on behalf of Seller to a claim as to which
Buyer is entitled to indemnification hereunder. If the Claimant and the
Indemnifying Party do not agree within said period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal
remedy.
C. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party
shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate
fully with the Indemnifying Party, subject to reimbursement for
reasonable actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnifying Party. If the Indemnifying Party
elects to assume control of the defense of any third-party claim, the
Claimant shall have the right to participate in the defense of such claim
at its own expense.
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D. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make all reasonable
efforts to reach a decision with respect thereto as expeditiously as
possible.
E. If the Indemnifying Party does not elect to assume control
or otherwise participate in the defense of any third party claim, it
shall be bound by the results obtained in good faith by the Claimant with
respect to such claim.
F. The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, partners
employees and representatives of the Claimant although for the purpose of
the procedures set forth in this Section 10.4, any indemnification claims
by such parties shall be made by and through the Claimant.
SECTION 11
MISCELLANEOUS
11.1 NOTICES. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (i)
in writing, (ii) delivered by personal delivery, or sent by commercial
delivery service or registered or certified mail, return receipt
requested, or by facsimile transmission, with receipt confirmation, (iii)
deemed to have been given on the date of personal delivery or the date
set forth in the records of the delivery service or on the return
receipt, and (iv) addressed as follows:
If to Seller: Breadbasket Broadcasting Corporation
c/o Osborn Communications Corporation
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130 Mason Street
Greenwich, CT 06830
Attn: Frank Osborn, President
Fax: (203) 629-1749
with a copy (which
shall not constitute
notice) to: Kofi Asante, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of Americas
New York, NY 10019-0604
If to Buyer: American Radio Systems
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
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with a copy
(which shall not
constitute notice) to: Michael B. Milsom, Vice President & General Counsel
American Radio Systems, Inc.
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
or to such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with
this Section 11.2.
11.2 BENEFIT AND BINDING EFFECT. Neither party hereto may assign
this Agreement without the prior written consent of the other party
hereto, except that Buyer may assign its rights and obligations under
this Agreement to any affiliated or unaffiliated entity, following which
assignment Buyer shall remain liable to Seller for all of Buyer's
obligations hereunder. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
permitted assigns.
11.3 GOVERNING LAW. This Agreement shall be governed, construed,
and enforced in accordance with the laws of the State of New York.
11.4 HEADINGS. The headings herein are included for ease of
reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
11.5 GENDER AND NUMBER. Words used herein, regardless of the gender
and number specifically used, shall be deemed and construed to include
any other gender,
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masculine, feminine or neuter, and any other number, singular or plural,
as the context required.
11.6 ENTIRE AGREEMENT. This Agreement, all schedules hereto, and
all documents and certificates to be delivered by the parties pursuant
hereto collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. All
schedules attached to this Agreement shall be deemed part of this
Agreement and incorporated herein, where applicable, as if fully set
forth herein. This Agreement supersedes all prior negotiations between
Buyer and Seller, and all letters of intent and other writings related to
such negotiations, and cannot be amended, supplemented or modified except
by an agreement in writing which makes specific reference to this
Agreement or an agreement delivered pursuant hereto, as the case may be,
and which is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement or condition
herein may be waived by the party entitled to the benefits thereof only
by a written instrument signed by the party granting such waiver, but
such waiver or failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits
consent by or on behalf of any party
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hereto, such consent shall be given in writing in a manner consistent with
the requirements for a waiver of compliance as set forth in this Section 11.7.
11.8 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable or any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not
be affected thereby and shall be enforced to the greater extent permitted
by law.
11.9 COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such
counterpart were upon the same instrument.
54
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer and
Seller as of the date first above written.
SELLER: BREADBASKET BROADCASTING
CORPORATION
By: ______________________________________
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: ______________________________________
Title:
FOR THE PURPOSES OF SECTION 10 ONLY:
OSBORN COMMUNICATIONS CORPORATION
By: ______________________________________
Title:
ASSET13.DOC
55
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SCHEDULES TO ASSET PURCHASE AGREEMENT
2.2 Excluded Assets
3.4 Licenses
3.5 Real Property
3.6 Personal property
3.7 Assumed Contracts
3.8 Consents required
3.9 Trademarks; trade names; copyrights
3.11 Insurance policies
3.13 Employee benefits; health insurance; vacation policy
3.16 Claims; legal actions
6.5 Non-Competition Agreement
6.11 Time Brokerage Agreement
8.2 Opinion of Seller's General and FCC Counsels
8.3 Opinion of Buyer's General Counsel
56
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this 8th
day of July, 1996 by and between WHEELING RADIO COMPANY, a
limited partnership formed under the laws of the Commonwealth of
Pennsylvania ("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
WHEREAS, Seller owns and operates and has been duly
licensed by the Federal Communications Commission (the "FCC" or
the "Commission") to operate radio station WEGW(FM), Wheeling,
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;
PROVISION OF STUDIO SPACE
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 all of the assets used or held for use in connection with the
Station including, without limitation, 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 useable in
the operation of the Station, including but not limited to the
items of personal property listed in Section 1.1(b) of the
Disclosure Schedule, together with all additions, modifications
or replacements thereto made in the ordinary course of business
between the date of this Agreement and the Closing Date, as
hereafter defined (the "Personal Property").
(c) Real Estate Contracts. All of the leasehold
interests in real property leased by Seller and used by the
Station, including all agreements, leases, and contracts of
Seller relating to the tower, transmitter, studio site, and
offices of the Station (the "Real Estate Contracts"), including
all security or other deposits made with respect to such Real
Estate Contracts, all as described in Section 1.1(c) 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) 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(d) of the Disclosure
Schedule, together with any necessary additions or modifications
thereto between the date hereof and the Closing Date and any and
all rights the Seller possesses to use the call letters
"WEGW(FM)", but not including Seller's rights to the trademarks,
software or other intellectual property rights associated with
Seller's "ACTIONFONE" service (collectively referred to as the
"Intangibles").
(e) 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(e)
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.
(f) Contracts for Sale of Broadcast Time for
Cash. 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(f) of the Disclosure Schedule (the
"Broadcast Agreements"). Buyer shall assume, pay and perform all
obligations under the Broadcast Agreements arising after the
Closing Date. Those contracts for sale of broadcast time for cash
that are entered into, extended or renewed after the date of this
Agreement will be assigned to Buyer by Seller and assumed by
Buyer from Seller only to the extent that they are in accordance
with the terms of Section 5.13 of this Agreement.
(g) Trade Agreements. 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 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. Those leases, contracts,
agreements and franchises (other than Broadcast Agreements and
Trade Agreements, which are governed by Section 5.13 hereof)
entered into between the date hereof and the Closing Date that
(1) are entered into in the usual and ordinary course of
business; (2) are two (2) months or less in duration; (3) impose
upon Seller an obligation of Five Thousand Dollars ($5,000.00) or
less for each such lease, contract, agreement or franchise; and
(4) impose upon Seller an obligation of Seven Thousand, Five
Hundred Dollars ($7,500.00) in the aggregate for all such leases,
contracts, agreements and franchises. No other leases, contracts,
agreements and franchises entered into by Seller between the date
hereof and the Closing Date will 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,
other than the software used by Seller for its "ACTIONFONE"
service.
(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 herein. Buyer agrees
to collect those accounts receivable being retained by Seller in
accordance with the terms of Section 10.14 of this Agreement.
(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(e), (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 shall 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; (iii)
severance payments to Seller's employees; or (iv) any vacation
accrued by Seller's employees, 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.
Notwithstanding the foregoing, Buyer agrees to assume Seller's
liabilities under the lease between Seller and Anthony Wayne
Investments insofar as the lease applies to the equipment
specified in "Exhibit A" to Schedule 2.2(a)(viii) and to assume
Seller's liabilities under the lease between PBBC Inc. and
Nations Financial Capital Corporation insofar as it applies to
the equipment specified in "Exhibit B" to Schedule 2.2(a)(viii),
provided, however, that, in no event shall Buyer assume
liabilities in excess of Three Thousand, Nine Hundred Eleven
Dollars and ten cents ($3,911.10) under Seller's lease with
Anthony Wayne Investments and One Thousand, Seven Hundred Sixty-
Three Dollars and eighty-three cents ($1,763.83) under the lease
between PBBC Inc. and Nations Financial Capital Corporation.
Seller shall use its best efforts to have Anthony Wayne
Investments enter into a new lease with Buyer that will apply
exclusively to the equipment specified in Exhibit "A" to Schedule
2.2(a)(viii) and to have Nations Financial Capital Corporation
enter into a new lease with Buyer that will apply exclusively to
the equipment specified in Exhibit "B" to Schedule 2.2(a)(viii).
1.4 Purchase Price. In consideration of Seller's
performance of this Agreement, Buyer shall pay to Seller the sum
of Eight Hundred Thousand Dollars($800,000.00) (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 Seventy-Five Thousand Dollars
($75,000.00) (the "Escrow Deposit") in the Signet Bank. John M.
Pelkey, Esq., and Robert L. Olender, 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
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) Payment at Closing. On the Closing Date at
the Closing, Buyer shall pay to Seller the Purchase Price, minus
any sums that have been credited against the Purchase Price
pursuant to Section 1.4(a), and as further adjusted for
prorations as provided in Section 1.5 hereof, 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
purposes. Buyer and Seller further agree that they shall not
take any position inconsistent with such allocation upon
examination of any return, in any refund claim, in any
litigation, or otherwise.
1.7 Studio Space. Buyer agrees to provide to Seller
studio space free of charge to Seller for Seller's use as the
main studio for WOHZ(AM) until the earlier of (a) the date that
Seller closes on the sale or other disposition of WOHZ(AM) or (b)
twelve (12) months from Closing (as that term is defined in
Section 2.1, infra).
1.8 "ACTIONFONE" License. At the Closing, Seller
shall issue to Buyer a non-exclusive license, substantially in
the form of Exhibit A hereto, to use indefinitely Seller's
"ACTIONFONE" software in the Wheeling, West Virginia radio
market, as that market is defined by The Arbitron Company. The
Parties recognize that such license will not entitle Buyer to any
of Seller's support services with respect to such software or
hardware.
ARTICLE II
CLOSING, TERMINATION, RISK OF LOSS
AND INTERRUPTION OF BROADCAST TRANSMISSIONS
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. 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) certificates from Seller's
general partner authorizing the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby;
(iv) a license authorizing Buyer's use
of the "ACTIONFONE" software, as specified in Section 1.9,
hereof;
(v) a lessee's extended coverage policy
of leasehold title insurance with respect to each parcel of
Leased 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 title with respect
to the Leased 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. Seller will pay the cost of such
policy up to a maximum of Eight Hundred Dollars ($800), with any
amount in excess of Eight Hundred Dollars ($800) to be paid by
Buyer;
(vi) all 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) an affidavit of Seller's
general partner, sworn to under penalty of perjury, setting forth
Seller's name, address and Federal tax identification number and
stating that Seller is not a "foreign person" within the meaning
of Section 1445 of the Internal Revenue Code of 1986 (the
"Code"). If, on or before the Closing Date, Buyer shall not have
received such affidavit, Buyer may withhold from the Purchase
Price payable at Closing to Seller pursuant hereto such sums as
are required to be withheld therefrom under Section 1445 of the
Code.
(viii)a bill of sale and all other
appropriate documents and instruments assigning to Buyer good and
marketable title to the Station Assets free and clear of any
security interests, mortgages, liens, pledges, attachments,
conditional sales contracts, claims, charges or encumbrances of
any kind whatsoever, except for the encumbrances listed in
Section 2.2(a)(viii) of the Disclosure Schedule;
(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, other than the encumbrances listed in Section
2.2(a)(viii) of the Disclosure Schedule;
(xi) 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.
(xii) the opinion of counsel for
Seller, dated the Closing Date, as described in Section 7.8;
(xiii)assignments to Buyer of all the
Contracts and Real Estate Contracts in form satisfactory to
Buyer;
(xiv) 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; and
(xv) 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, minus any sums
that have been credited against the Purchase Price pursuant to
Section 1.4(a) of this Agreement and as adjusted for prorations
pursuant to Section 1.5, hereof;
(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
(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 June 1, 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 FCC 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;
(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; or
(vi) Seller, pursuant to Section 3.10 of
this Agreement.
(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, other than as set forth in
Section 6.4, 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; or (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, other than as set forth in Section 6.4.
(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 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 $50,000, 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 a
period of time in excess of six (6) hours in a twenty-four (24)
hour period, 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
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Due Incorporation. Seller is a limited
partnership, with a single general partner, duly organized,
validly existing and in good standing under the laws of
Commonwealth of Pennsylvania, and is duly qualified to do
business in and is in good standing in the State of West
Virginia. Seller has the requisite 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 have been duly and validly authorized
and approved by its sole general partner, and Seller has the
power and authority to execute, deliver and perform this
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
(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) Seller's partnership agreement,
(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 partners 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.
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. 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 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 except for the
encumbrances listed in Section 2.2(a)(viii) of the Disclosure
Schedule. THE PERSONAL PROPERTY IS BEING SOLD IN "AS IS"
CONDITION. 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 and in
material compliance with the terms and conditions of the
Licenses.
3.7 Real Property.
(a) Seller owns no real property used in
connection with the operation of the Station.
(b) Section 1.1(c) of the Disclosure Schedule
contains a true and complete list and summary of all the Real
Estate Contracts. To the best of Seller's knowledge, 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
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 Premises. The Leased Real Property
constitutes all the real property used by Seller in the conduct
of the business of the Station.
(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 sublease or otherwise
dispose of its interest in the Leased Real Property or any
portion thereof.
(e) Condition and Operation of Improvements.
All components of all buildings, structures and other
improvements included within the Leased Real Property (the
"Improvements") are in 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 Leased Real Property are installed and operating and
are sufficient to enable the Leased 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 Leased Real Property, required or appropriate to have
been issued to Seller to enable the Leased 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 Leased Real Property or any
part thereof or of any sale or other disposition of the Leased
Real Property or any part thereof in lieu of condemnation.
(h) Casualty. No portion of the Leased 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 Leased
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(e) of the Disclosure
Schedule contains a true and complete list of all Contracts,
including all such Contracts necessary to permit continued
operation of the Station in the manner in which it is being
operated as of the date of this Agreement, and Sections 1.1(f)
and 1.1(g) contain 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 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 real property used by the Station. Except as
disclosed in Section 3.10 of the Disclosure Schedule, to the best
of Seller's knowledge, no employee of Seller in the course of his
or her employment with Seller has been exposed to any Hazardous
Waste or other substances generated, produced or used by Seller
that could give rise to any claim against the Station Assets. To
the extent within Seller's possession or control, Seller has
heretofore delivered to Buyer true and complete copies of all
environmental studies relating to the real property used by the
station and all material reports of inspections of the Station
and/or the Station Assets pursuant to applicable federal, state
or local laws or regulations. Except as set forth in Section 3.10
of the Disclosure Schedule, Seller has not received any notice
from any governmental agency or public or private entity advising
it that Seller is responsible for or potentially responsible for
cleanup or paying for the cost of cleanup of any Hazardous Waste
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. 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
and if (a) the estimated cost of the remediation required to
bring Seller into compliance with the representation and warranty
set forth in this Section 3.10 is Twenty-Five Thousand Dollars
($25,000) or less and (b) the property with respect to which the
remediation is to take place is owned by Seller, 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. The costs of such remediation
shall be paid by Seller. If the estimated cost of the remediation
required to bring Seller into compliance with the representation
and warranty set forth in this Section 3.10 is greater than
Twenty-Five Thousand Dollars ($25,000) or if the property with
respect to which the remediation is to take place is not owned by
Seller, Seller may terminate this Agreement unless Buyer chooses
to waive the representation and warranty set forth in this
Section 3.10, which it may do in its sole discretion.
3.11 Intangibles. Section 1.1(d) of the Disclosure
Schedule is a true and complete list of all trade names,
copyrights, trademarks, service marks, patents or applications
therefor that have been duly registered by, filed by, or issued
to the Seller other than the trademark issued to Seller for
"ACTIONFONE" (the "Intellectual Property"). 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 audited copies of the
statements of income and the related balance sheets for Seller
for the period ending December 31, 1995 and unaudited financial
statements as of April 30, 1996 (collectively referred to as 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 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 applicable statute,
rule or regulation (federal, state or local) whether or not
related to the business or operation of the Station. Seller is
not in default with respect to any judgment, order, injunction or
decree of any court, administrative agency or other governmental
authority or to any other tribunal duly authorized to resolve
disputes in any respect material to the transactions contemplated
hereby. Seller is in compliance in all material respects with
all laws, regulations and governmental orders whether or not
applicable to the conduct of the business and operation of the
Station and any other business or operations conducted by Seller.
To the best of Seller's knowledge, the Leased 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 use of the Leased Real Property.
3.17 Insurance. Seller has in full force and effect
insurance on all of the Leased 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 April 30, 1996
(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, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material
fact necessary to make such representation or warranty or any
such statement not misleading.
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, marketable, and, with respect to the
Leased Real Property, insurable title to the Station Assets, 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.
3.20 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 Seller's partnership
agreement;
(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;
(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 any partnership interests in
Seller, or rights, warrants or options to acquire, any such
interests;
(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
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 is duly qualified to do business in,
and is 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 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. Buyer's obtaining of the
consent set forth in Section 4.3 of the Disclosure Schedule shall
not be a condition to Buyer's obligation to perform under 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,
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. 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 Seven Thousand Five Hundred Dollars ($7,500) 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
Leased Real Property, the Personal Property and all other
tangible assets in their present 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 Leased
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 material 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 Leased 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
other than in the ordinary course of business and consistent with
Seller's past business practices.
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
Station, any Station Assets or any partnership interest of Seller
to any third party, nor shall Seller offer the Station, any
Station Assets or any partnership interest of Seller to any third
party.
5.16. Financial Statements. Seller shall provide
Buyer with copies of its monthly financial statements each month
until the Closing Date, with such statements to be provided to
Buyer within twenty (20) days of the end of the relevant calendar
month.
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. Within five (5) business
days of the effective date 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 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
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. Seller agrees that, for a
period of forty-five (45) days after the date of this Agreement,
Buyer, if it so desires, may arrange for the preparation, at its
expense, of appropriate environmental reports for the Leased Real
Property. Such environmental reports shall conclude that: (i) the
real property used in connection with the operation of the
Station 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 used in
connection with the operation of the Station 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 used in connection
with the operation of the Station 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 used in connection with the
operation of the Station 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 of such investigations to be paid by
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. 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 and
benefits, including, without limitation, vacation benefits, 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 and benefits 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. If needed to obtain leasehold title
insurance, Buyer and Seller shall obtain, at Buyer's expense, a
survey of each parcel of Leased 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.
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 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.
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.
7.8 Opinions of Counsel. Seller shall have delivered
to Buyer an opinion of Laubach & Fulton, 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.
7.9 Environmental. Buyer shall have received the
environmental reports specified in Section 6.6, provided that
Buyer has complied with the requirements of Section 6.6 with
respect to the timeliness of such reports.
7.10 Survey. Buyer shall have received the survey of
the Leased Real Property in accordance with Section 6.9 herein.
7.11 Material Adverse Change. No material adverse
change shall have occurred with respect to the operation of the
station.
7.12. Compliance with Agreements. Buyer shall have
received from Seller, with respect to each agreement, other than
Broadcast Agreements and Trade Agreements, to which Seller is a
party and which is in effect on the date hereof, a certificate
signed by an officer of the other party or parties thereto, and
dated not more than thirty (30) days prior to the Closing,
certifying (1) that such agreement is 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 all
payments required to be made by Seller under such agreement 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.
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 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, 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 material 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 material non-fulfillment or breach by
Seller of any covenant, agreement, term or condition contained in
this or in any certificate, exhibit, schedule, or other document
furnished or to be furnished pursuant hereto or in connection
with the transactions contemplated hereby;
(c) Any material inaccuracy in any covenant,
representation, agreement or warranty by Seller including all
material statements or figures contained in the Financial
Statements heretofore furnished to Buyer; and
(d) Any liabilities of any kind or nature,
absolute or contingent not assumed by Buyer including, without
limitation, any liabilities relating to or arising from the
business and operation of the Station by Seller prior to the
Closing Date.
Notwithstanding any other provision contained herein,
Seller shall be solely responsible for any fine or forfeiture
imposed by the Commission relating to the operation of the
Station prior to the Closing Date.
9.2 Indemnification by Buyer. From and after the
Closing Date, Buyer agrees to and shall indemnify, defend and
hold Seller harmless, and shall reimburse Seller for and against
any and all actions, losses, expenses, damages, liabilities,
taxes, penalties or assessments, judgments and costs (including
reasonable legal expenses related thereto), resulting from or
arising out of:
(a) Any material 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 material 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 by Buyer subsequent to the Closing
Date.
9.3 Notification of Claims.
(a) A Party entitled to be indemnified pursuant
to Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the
Party liable for such indemnification (the "Indemnifying Party")
in writing of any claim or demand which the Indemnified Party has
determined has given or could give rise to a right of
indemnification under this Agreement. Subject to the
Indemnifying Party's right to defend in good faith third party
claims as hereinafter provided, the Indemnifying Party shall
satisfy its obligations under this Article IX within thirty (30)
days after the receipt of a written notice thereof from the
Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section
9.3(a), and if such claim or demand relates to a claim or demand
asserted by a third party against the Indemnified Party which the
Indemnifying Party acknowledges is a claim or demand for which it
must indemnify or hold harmless the Indemnified Party under
Sections 9.1 or 9.2, the Indemnifying Party shall have the right
to employ counsel 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. 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 Failure to Close. This Article 9 shall not be
construed to apply to actions brought as a result of the breach
by either Party of its obligation to close on the sale and
purchase of the Station Assets and the assignment of the Licenses
under this Agreement. Such actions are governed by Section 10.10
of this Agreement.
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 affiliated with Buyer if such assignment does not delay
the Closing Date; 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 Seller shall expressly consent
to such assignment, provided that the assignee is qualified to be
an FCC licensee. 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.
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:
Mr. Nicholas A. Galli
President, Burbach Broadcasting Company
Managing General Partner
Wheeling Radio Company
2350 One PPG Place
Pittsburgh, PA 15222
Fax: 412-263-6737
Phone: 412-263-6716
With a copy to:
Robert L. Olender, Esq.
Baraff Koerner & Olender PC
Three Bethesda Metro Center
Suite 640
Bethesda, MD 20814
Fax: 301-986-4844
Phone: 301-986-0500
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:
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; Damages; Attorneys'
Fees.
(i) 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 obligation to close on the sale of the Station
Assets and the assignment of the Licenses under this Agreement,
Buyer may sue at law for damages or, at Buyer's sole election,
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. The
Parties agree that, in the event that, upon material breach by
Seller, Buyer sues at law for damages, Buyer's damages shall be
deemed to be, and be limited to, the sum of Seventy-Five Thousand
Dollars ($75,000.00), which does not constitute a penalty, but
the Parties' reasonable estimate of Buyer's expenses incurred in
this transaction, without regard to other damages that would be
suffered by Buyer in the event of a breach by Seller but that
would be waived by Buyer in the event that Buyer chooses to sue
at law rather than in equity.
(ii) In the event of a breach by Buyer of its obligation to
close on the purchase of the Station Assets and the assignment of
the Licenses under this Agreement, Seller's exclusive remedy for
such breach shall be the payment of the Escrow Deposit to Seller,
with any interest on such Escrow Deposit being paid to Buyer.
(iii) The prevailing Party in any action brought under this
Agreement shall be entitled to its reasonable attorney's fees and
disbursements in addition to the other relief to which it might
be entitled.
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 approval of the other Party,
except as required by law.
10.14 Accounts Receivable. Commencing on the
Closing Date and continuing for a period of three (3) months
following the Closing Date, Buyer shall collect all of Seller's
accounts receivable arising from the operation of the Station 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 three-
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. Within fifteen days of the end of
each calendar month, 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 three-
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
WHEELING RADIO COMPANY
BY: _____________________________
Nicholas A. Galli
President, Burbach Broadcasting Company
Managing General Partner
Wheeling Radio Company
BUYER
MOUNTAIN RADIO CORPORATION
BY: _____________________________
TITLE: President
TABLE OF CONTENTS
Page
ARTICLE I - ASSIGNMENT AND PURCHASE OF ASSETS;
PROVISION OF STUDIO SPACE
1.1 Assignment of Assets 1
1.2 Excluded Assets 4
1.3 Liabilities to be Assumed 5
1.4 Purchase Price 6
1.5 Proration of Income and Expenses 6
1.6 Allocation of Purchase Price 7
1.7 Studio Space 7
1.8 "ACTIONFONE" License 7
ARTICLE II - CLOSING, TERMINATION, RISK OF LOSS
AND INTERRUPTION OF BROADCAST TRANSMISSIONS
2.1 Closing 8
2.2 Transactions at the Closing 8
2.3 Termination 11
2.4 Risk of Loss 12
2.5 Interruption of Broadcast Transmissions 13
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation 14
3.2 Authority; No Conflict 14
3.3 Government Authorizations 14
3.4 Compliance with Regulations 15
3.5 Taxes and Regulatory Fees 15
3.6 Personal Property 15
3.7 Real Property 16
3.8 Consents 17
3.9 Contracts 18
3.10 Environmental 18
3.11 Intangibles 19
3.12 Financial Statements 20
3.13 Personnel Information; Labor Contracts 20
3.14 Employee Benefit Plans 20
3.15 Litigation 21
3.16 Compliance with Laws 21
3.17 Insurance 22
3.18 Undisclosed Liabilities 22
3.19 Instruments of Conveyance; Good Title 22
3.20 Absence of Certain Changes 22
3.21 Insolvency Proceedings 24
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation 24
4.2 Authority; No Conflict 24
4.3 Consents 25
4.4 Litigation 25
4.5 Compliance with Laws 25
4.6 Qualification 25
ARTICLE V - COVENANTS OF SELLER
5.1 Continued Operation of Station 26
5.2 Financial Obligations 26
5.3 Reasonable Access 26
5.4 Maintenance of Assets 26
5.5 Notification of Developments 27
5.6 Payment of Taxes 27
5.7 Third Party Consents 27
5.8 Encumbrances 27
5.9 Assignment of Assets 27
5.10 Commission Licenses and Authorizations 27
5.11 Technical Equipment 28
5.12 Compensation Increases 28
5.13 Sale of Broadcast Time 28
5.14 Insurance 28
5.15 Negotiations with Third Parties 28
5.16 Financial Statements 28
ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application 29
6.2 Performance 29
6.3 Conditions 29
6.4 Confidentiality 29
6.5 Cooperation 29
6.6 Environmental Reports 30
6.7 Consents to Assignment 30
6.8 Employee Matters 31
6.9 Survey 31
6.10 Escrow Agreement 31
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals 32
7.2 Performance 32
7.3 Failure of Transfer 32
7.4 Representations and Warranties 32
7.5 Consents 33
7.6 No Litigation 33
7.7 Documents 33
7.8 Opinions of Counsel 33
7.9 Environmental 33
7.10 Survey 33
7.11 Material Adverse Change 33
7.12 Compliance with Agreements 33
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance 34
8.2 Representations and Warranties 34
8.3 Government Approvals 34
8.4 Documents 34
8.5 Opinion of Counsel 34
ARTICLE IX - INDEMNIFICATION
9.1 Indemnification by Seller 35
9.2 Indemnification by Buyer 35
9.3 Notification of Claims 36
9.4 Failure to Close 37
ARTICLE X - MISCELLANEOUS
10.1 Assignment 37
10.2 Survival of Indemnification 38
10.3 Brokerage 38
10.4 Expenses of the Parties 38
10.5 Entire Agreement 38
10.6 Headings 39
10.7 Governing Law 39
10.8 Counterparts 39
10.9 Notices 39
10.10 Specific Performance; Damages; Attorneys' Fees 40
10.11 Consent to Jurisdiction 41
10.12 Further Assurances 41
10.13 Public Announcements 42
10.14 Accounts Receivable 42
DISCLOSURE SCHEDULE
1.1(a) Licenses and Authorizations
1.1(b) Tangible Personal Property
1.1(c) Real Estate Contracts
1.1(d) Intellectual Property
1.1(e) Leases and Contracts
1.1(f) Contracts for Sale of Broadcast Time
1.1(g) Trade Agreements
1.1(i) Future Contracts
1.2(h) Excluded Assets
2.2(a)(viii)Encumbrances
3.7 Title Defects
3.8 Seller's Consents
3.12 Financial Statements
3.13 Personnel & Personnel Contracts
3.14 Employee Benefit Plans
3.15 Litigation
3.17 Insurance
3.20 Certain Changes
4.3 Buyer's Consents
___________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of July 8, 1996
by and between
WHEELING RADIO COMPANY
(Seller)
and
MOUNTAIN RADIO CORPORATION
(Buyer)
___________________________________________________________
Disclosure Schedule 1.1(a)
Licenses and Authorizations
1. BLH-940119KA
2. Aural STL WGX-294
Disclosure Schedule 1.1(b)
Tangible Personal Property
See attached.
Disclosure Schedule 1.1(c)
Real Estate Contracts
1. Studio Lease, dated February 22, 1996, between Brissette TV
of Wheeling, Inc. and Wheeling Radio Company, Inc.
2. WEGW-FM Transmitter Building and Tower Lease Agreement, dated
January 1, 1996, between Brissette TV of Wheeling, Inc. and
Wheeling Radio Company, Inc.
Disclosure Schedule 1.1(d)
Intellectual Property
None.
Disclosure Schedule 1.1(e)
Leases and Contracts
1. ASCAP Agreement, dated January 1, 1996.
2. BMI Agreement, dated February 2, 1994.
3. Christal Radio Sales, Inc. National Broadcast Agreement,
dated December 27, 1993.
4. Five-O'clock Funnies Agreement, dated March 1, 1996, between
MJI Broadcasting and WEGW.
5. License Agreement, dated February 7, 1996, between Gowdy
Printcraft Press, Inc. and Wheeling Radio Company.
6. Liners Agreement, dated November 1, 1995, between Joe
Kelly/AvDeli and WEGW.
7. License Agreement, dated November 30, 1992, between The
Premiere Rock Comedy Network and WEGW-FM.
8. Rock Comedy Network Library Service Program Agreement, dated
October 18, 1990.
9. Radio Licensing Agreement, dated October 23, 1995, between
Regional Sports Radio Network and Wheeling Radio Co.
10. Today's Rock Fax Agreement, dated September 6, 1995, between
MJI Broadcasting and WEGW.
11. UNISTAR Radio Network Affiliation Agreement, dated February
8, 1991.
12. Agreement of September 23, 1988 between Radio Computing
Services, Inc., and Burbach Broadcasting Co.
13. Sesac.
14. Coca Cola Lake Amphitheater 1996 Season Agreement, dated
January 1996.
15. Comdoc - Photocopier.
16. Special Supplemental Affiliation Agreement of October 22,
1990 between Metronews and Wheeling Radio, Inc. (right to
purchase time only; no affiliation)
Disclosure Schedule 1.1(f)
Contracts for Sale of Broadcast Time
See attached.
Disclosure Schedule 1.1(g)
Trade Agreements
See attached.
Disclosure Schedule 1.1(i)
Future Contracts
Disclosure Schedule 1.2(h)
Excluded Assets
Seller's "ACTIONFONE" service, including, without limitation, any
of Seller's rights to the trademarks, software or other
intellectual property rights associated with Seller's
"ACTIONFONE" service.
Disclosure Schedule 2.2(a)(viii)
Encumbrances
1. Lease between Seller and Anthony Wayne Investments insofar as
the lease applies to the equipment specified in "Exhibit A"
hereto.
2. Lease between PBBC Inc. and Nations Financial Capital
Corporation insofar as it applies to the equipment specified in
"Exhibit B" hereto.
Disclosure Schedule 3.7
Title Defects
None
Disclosure Schedule 3.8
Seller's Consents
1. Consent of Brissette TV of Wheeling, Inc., to the assignment
of the leases described in Section 1.1(c) of the Disclosure
Schedule.
2. ASCAP Agreement.
3. BMI Agreement.
4. Five O'clock Funnies Agreement, dated March 1, 1996, between
MJI Broadcasting and WEGW(FM).
5. Today's Rock Fax Agreement, dated September 6, 1995, between
MJI Broadcasting and WEGW(FM).
6. Unistar Agreement, dated February 8, 1991, between Unistar
Radio Networks Inc. and Burbach Broadcasting.
7. Agreement of September 23, 1988, between Radio Computing
Services and Burbach Broadcasting.
Disclosure Schedule 3.12
Financial Statements
See attached.
Disclosure Schedule 3.13
Personnel & Personnel Contracts
See attached.
Disclosure Schedule 3.14
Employee Benefit Plans
See attached.
Disclosure Schedule 3.15
Litigation
None.
Disclosure Schedule 3.17
Insurance
See attached.
Disclosure Schedule 3.20
Certain Changes
None.
Disclosure Schedule 4.3
Buyer's Consents
Consent of KeyBank National Association.
EXHIBIT B
[FORM OF ESCROW AGREEMENT]
This ESCROW AGREEMENT is dated this 8th day of July,
1996, by and among WHEELING RADIO COMPANY, a limited partnership
formed under the laws of the Commonwealth of Pennsylvania
("Seller"), and MOUNTAIN RADIO CORPORATION, a Delaware
corporation ("Buyer"), John M. Pelkey, Esq., and Robert L.
Olender, Esq., (Messrs. Pelkey and Olender being jointly
referred to as "Escrow Agents" or "Agents").
Recitals
Seller and Buyer have entered into an Asset Purchase
Agreement (the "Purchase Agreement") of even date herewith, by
which Seller has agreed to sell, transfer and deliver to Buyer
certain assets used in the operation of Radio Station WEGW(FM),
Wheeling, West Virginia, licensed to Seller.
The Purchase Agreement provides that, to secure the
obligations of Buyer under the Purchase Agreement, a deposit in
the amount of Seventy-Five Thousand Dollars ($75,000.00) (the
"Escrow Deposit") is to be delivered to Escrow Agents by Buyer to
be held and disbursed by Escrow Agents in accordance with the
terms of this Agreement.
In consideration of the foregoing and of the covenants
and agreements contained herein, Buyer, Seller and Escrow Agents
agree as follows:
Section I
ESCROW DEPOSIT
1.1 Delivery. Simultaneously with the execution of
this Agreement, Buyer is delivering the Escrow Deposit to the
Escrow Agents. The Escrow Deposit and the interest or other
proceeds from the investment thereof (the "Earnings") shall be
referred to collectively herein as the "Escrow Amount."
1.2 Receipt. The Escrow Agents hereby acknowledge
receipt of the Escrow Deposit and agree to hold and disburse the
Escrow Amount in accordance with the terms and conditions of this
Agreement and for the uses and purposes stated herein.
1.3 Investment and Income. The Escrow Agents shall,
pending the disbursement of the Escrow Amount pursuant to this
Agreement, invest the Escrow Amount in accordance with the
Buyer's instructions in an FDIC-insured bank in an interest-
bearing account permitting immediate withdrawal of funds.
Section II
DISBURSEMENT OF ESCROW AMOUNT
Agents shall distribute the Escrow Deposit as follows:
2.1 Closing. In the event the purchase and sale
closes in the manner contemplated by the Purchase Agreement, the
Escrow Deposit and any Earnings shall be delivered to Seller and
credited against the Purchase Price.
2.2 Material Breach. In the event the Closing (as
defined in the Purchase Agreement) fails to occur because Buyer
is in material breach of the Purchase Agreement, then the Escrow
Deposit shall be paid over to the Seller and the Earnings shall
be turned over to Buyer. In the event the purchase and sale does
not close for any other reason, the Escrow Deposit and the
Earnings shall be returned to Buyer.
2.3 Conflict with Purchase Agreement. If any
provision of this paragraph with respect to the disposition of
the escrow fund is in conflict with any provision of the Purchase
Agreement with respect of such disposition, then such provisions
in the Purchase Agreement shall control.
2.4 Controversies with Respect to Escrow Deposit.
Escrow Agents shall dispose of the Escrow Deposit upon the joint
written instructions of the Seller and Buyer or their fully
designated representatives. Agents shall have no duty or
obligation to any third party claiming the Escrow Deposit in the
absence of joint written instructions directing Agents to pay
said third party. If Agents shall not have received joint
written instructions, Agents shall continue to hold the Escrow
Deposit and the Earnings until:
(a) The receipt by Agents of the joint written
instructions of the Seller and Buyer as to the disposition of the
Escrow Deposit and the Earnings; or
(b) Agents shall have, at their option, filed an
action or bill in interpleader, or similar action for such
purpose, in a court of competent jurisdiction and paid the Escrow
Amount into said court, in which event, Agents' duties,
responsibilities and liabilities with respect to the Escrow
Amount and this Escrow Agreement shall terminate.
Section III
ESCROW AGENTS
3.1 Appointment and Duties. Buyer and Seller hereby
appoint Escrow Agents to serve hereunder and the Escrow Agents
hereby agree to perform all duties which are expressly set forth
in this Agreement.
3.2 Expenses of Escrow Agents. One-half of the
expenses incurred by the Escrow Agents in carrying out their
duties under this Agreement will be paid to the Escrow Agents by
Seller and one-half of such expenses shall be paid by Buyer.
3.3 Indemnification. Both Seller and Buyer will, at
their expense, indemnify the Escrow Agents, hold them harmless
from any and all claims, regardless of nature, arising out of or
because of this Agreement, and exonerate the Escrow Agents from
any liability in connection with this Agreement except as such
may arise because of the Escrow Agents' gross negligence or
willful misconduct in performing their specified duties as Escrow
Agents.
3.4 Resignation. Escrow Agents may resign at any time
upon giving the other parties hereto thirty (30) days' prior
written notice to that effect. In such event, the successor
shall be such person, firm or corporation as shall be mutually
selected by Buyer and Seller. It is understood and agreed that
such resignation shall not be effective until a successor agrees
to act hereunder; provided, however, if no successor is appointed
within thirty (30) days after such notice is given, Escrow Agents
may pay and deliver the Escrow Amount into a court of competent
jurisdiction.
Section IV
LIABILITIES OF ESCROW AGENTS
4.1 Limitations. The Escrow Agents shall be liable
only to accept, hold and deliver the Escrow Amount in accordance
with the provisions of this Agreement and amendments thereto,
provided, however, that the Escrow Agents shall not incur any
liability with respect to (a) any action taken or omitted in good
faith or upon the advice of their counsel given with respect to
any questions relating to their duties and responsibilities as
Escrow Agents under this Agreement, or (b) any action taken or
omitted in reliance upon any instrument which the Escrow Agents
shall in good faith believe to be genuine (including the
execution, the identity, or authority of any person executing
such instrument, its validity and effectiveness, and the truth
and accuracy of any information contained therein), to have been
signed by a proper person or persons, and to conform to the
provisions of this Agreement.
Section V
TERMINATION
5.1 This Agreement shall be terminated (i) upon
disbursements of the Escrow Amount by the Escrow Agents, (ii) by
written mutual consent signed by all parties, or (iii) payment of
the Escrow Amount into a court of competent jurisdiction in
accordance with Section 2.4 hereof. This Agreement shall not be
otherwise terminated.
Section VI
OTHER PROVISIONS
6.1 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 Buyer:
Mr. Frank D. Osborn
Osborn Communications
130 Mason Street
Greenwich, CT 06830
Fax: 203-629-1749
Phone: 203-629-0905
with copy to:
John M. Pelkey
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive, Suite 900
Arlington, VA 22203-1633
Fax: 703-841-2345
Phone: 703-841-0606
If to Seller:
Mr. Nicholas A. Galli
President, Burbach Broadcasting Company
Managing General Partner
Wheeling Radio Company
2350 One PPG Place
Pittsburgh, PA 15222
Fax: 412-263-6737
Phone: 412-263-6716
With a copy to:
Robert L. Olender, Esq.
Baraff Koerner & Olender PC
Three Bethesda Metro Center
Suite 640
Bethesda, MD 20814
If to John M. Pelkey, Esq.:
John M. Pelkey, Esq.
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive, Suite 900
Arlington, VA 22203-1633
Fax: 703-841-2345
If to Robert L. Olender, Esq.:
Robert L. Olender, Esq.
Baraff Koerner & Olender PC
Three Bethesda Metro Center
Suite 640
Bethesda, MD 20814
Fax: 301-986-4844
Phone: 301-986-0500
or to any such other or additional persons and addresses as the
parties may from time to time designate in a writing delivered in
accordance with this Section 6.1.
6.2 Benefit and Assignment. The rights and
obligations of each Party under this Agreement may not be
assigned without prior written consent of all other parties
unless the assignment is to a permitted assignee under the
Purchase Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns.
6.3 Entire Agreement; Amendment. This Agreement and
the Purchase Agreement contain all the terms agreed upon by the
parties with respect to the subject matter hereof. This
Agreement may be amended only by a written instrument signed by
the Party against which enforcement of any waiver, change,
modification, extension or discharge is sought.
6.4 Headings. The headings of the sections and
subsections of this Agreement are for ease of reference only and
do not evidence the intentions of the parties.
6.5 Governing Law. This Agreement shall be governed
by, and construed according to, the laws of the State of West
Virginia.
6.6 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
on all counterparts are upon the same instrument.
IN WITNESS WHEREOF, the Parties hereto have
executed or have caused this Agreement to be executed by a duly
authorized officer or partner on the day and year first above
written.
WHEELING RADIO COMPANY
___________________________________________
Nicholas A. Galli
President, Burbach Broadcasting Company
Managing General Partner
Wheeling Radio Company
MOUNTAIN RADIO CORPORATION
___________________________________________
BY:
TITLE:
JOHN M. PELKEY, ESQ.
___________________________________________
ROBERT L. OLENDER
___________________________________________
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO THE SELLER]
Capitalized terms will have the respective meanings
assigned them in the Asset Purchase Agreement unless otherwise
defined herein.
Documents to be covered, shall include, without
limitation, the Seller's partnership agreement ("Charter
Documents"), and the Asset Purchase Agreement and any ancillary
agreements (the "Transaction Documents").
Opinions (subject to customary assumptions, exceptions and
qualifications):
The Seller is a limited partnership duly
organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania is qualified to do business
in the State of West Virginia and has all requisite partnership
power and authority to own or lease its assets and properties, as
the case may be, and to carry on its business as presently
conducted.
The Seller has full power and authority to enter
into, execute, deliver and perform its obligations under the
Transaction Documents and to consummate the transactions
contemplated thereby.
The execution and delivery by the Seller and the
consummation by the Seller of the transactions contemplated
thereby have been duly and validly authorized by all necessary
action on the part of the Seller.
The Transaction Documents have been duly executed
and delivered by the Seller and constitute a legal, valid and
binding obligation of the Seller, enforceable against the Seller
in accordance with its terms, except that enforceability may be
subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, transfer, moratorium or other laws relating to or
affecting creditors' rights generally and to general principles
of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
The execution and delivery by the Seller of the
Transaction Documents, the performance by the Seller of its
obligations thereunder and the consummation of the transactions
contemplated thereby will not conflict with or result in any
breach of any of the terms and conditions of, or constitute a
default under (a) the Charter Documents of the Seller (b) any
material agreement, lease or contract, written or oral, to which
the Seller is a party of which we are aware or (c) any judgment,
decree, award, injunction or governmental order of which we are
aware and by which any of the assets or properties of the Seller
are bound.
The execution and delivery by the Seller of the
Asset Purchase Agreement, the performance by the Seller of its
obligations thereunder and the consummation of the transactions
contemplated thereby are not prohibited by nor do they require
the Seller to obtain any consent, approval or action of, or make
any filing with or give any notice to, (i) any judicial body or
Governmental or Regulatory Body, other than the Federal
Communications Commission, or (ii) any other Person, except in
either case for consents, approvals, actions, filings or notices
that would not, individually or in the aggregate, have a material
adverse effect.
This opinion may also be relied upon by each party
to the Agreement and may be relied upon by the financial
institution that is loaning Buyer the funds to effectuate the
Agreement
EXHIBIT D
[FCC Counsel Letterhead]
[Closing Date]
MOUNTAIN RADIO CORPORATION
130 Mason Street
Greenwich, CT 06830
Dear ____________ :
This opinion is furnished to you pursuant to Section 7.8 of
the Asset Purchase Agreement ("Agreement"), dated as of July 8,
1996 between Wheeling Radio Company. ("Seller") and Mountain
Radio Corporation ("Buyer"). The terms used but not defined in
this letter shall have the same meanings given to such terms in
the Agreement.
We have acted as communications counsel for Seller in
connection with the assignment to Buyer of the licenses, permits,
and other authorizations issued by the Federal Communications
Commission (hereinafter, the "FCC" or "Commission") for the
operation of radio broadcast station WEGW(FM), Wheeling, West
Virginia, and associated auxiliary broadcast station facilities
(hereinafter referred to collectively as the "Station").
As communications counsel for Seller, we are engaged in the
representation of Seller before the Commission in connection with
the operation of the Station. We have examined executed copies
of the Agreement and related documents, including the schedules
and exhibits thereto. We have also examined such other records,
certificates, licenses, permits, notices, and other documents,
and have considered such other questions of law as relate to
Seller and the Station as we have deemed necessary or appropriate
for purposes of this opinion.
In rendering this opinion, we have assumed the genuineness
of signatures on documents and the conformity to originals of all
copies examined by or submitted to us, including photocopies and
conformed copies. As to various questions of fact in connection
with this opinion, we have relied upon the examination of
available files in our offices, those of the Commission, and
statements and representations of employees of the Commission, as
well as those of the general partner and responsible
representatives of Seller.
Based upon the foregoing, we are of the opinion that, as of
the date hereof:
1. Seller is the authorized holder of the licenses, permits and
authorizations listed on Schedule 1 to this letter and issued by
the Commission for the operation of the Station ("FCC Licenses")
and the FCC Licenses are valid and in full force and effect;
2. The FCC Licenses constitute all the licenses, permits and
authorizations required for the lawful operation of the Station;
3. Each FCC License has been granted or issued by an action of
the FCC as to which all applicable administrative and judicial
appeal, review, and reconsideration periods have expired without
such appeal, review, or reconsideration having been taken or
instituted by any party or by the FCC on its own motion, and
there are no pending, ungranted applications for the modification
or assignment of the FCC Licenses or transfer of control of the
Seller;
4. There are no conditions imposed by the FCC on any of the FCC
Licenses which are missing from the faces thereof as issued by
the FCC or not set forth in the FCC's rules, regulations, and
policies (the "FCC's Rules") that are applicable generally to
stations of the type, nature, class, or location of the Station;
5. We have no reason to believe that any FCC License will not,
subject to the filing of a license renewal application and
payment of any applicable filing fee, be renewed for a full term
in the ordinary course;
6. To the best of our knowledge, after inquiry of the
Commission, (a) there is not any Commission judgment or decree,
investigation, notice of apparent liability or order of
forfeiture pending or outstanding against the Station respecting
any violation or allegation of the Communications Act of 1934, as
amended (the "Act"), or of any FCC Rule and (b) there is no
action, suit, investigation or complaint before the Commission as
a result of which an investigation, judgment, or decree, notice
of apparent liability or order of forfeiture could issue from the
Commission relating to the Station;
7. No events have occurred that could result in (a) the
termination, revocation, or adverse modification of any FCC
License, (b) the imposition of any material financial penalty by
the FCC upon Seller, or (c) a material adverse effect upon, or
cause material disruption to, the business, operations, or future
prospects of the Station;
8. Upon applications duly made, the Commission on
________________, 1996, granted its consent to the assignment of
the FCC Licenses by Seller to Buyer (the "Consents");
9. To the best of our knowledge, no other consent of any agency
of the federal government is required to permit Seller and Buyer
to consummate the transactions described in the Agreement;
10. The Consents remain in full force and effect, and have not
been reversed, stayed, enjoined, set aside, annulled, or
suspended.
11. No request seeking reconsideration, review, or appeal from
the Consents by the FCC has been filed with the FCC or the United
States Court of Appeals for the District of Columbia Circuit
within the time periods specified in the Act or the FCC's Rules,
and the time periods specified in the Act and the FCC's Rules for
the filing of such request for reconsideration, review, or
appeal, or for review by the Commission on its own motion, have
expired.
12. The execution, delivery, and performance of the Agreement on
the Closing Date will not cause a violation of or a default under
any of the FCC Licenses.
13. The Seller has filed with the FCC all reports, documents,
instruments, information, regulatory fee payments, and
applications required to be filed pursuant to the Act and the
FCC's Rules or upon the request of the FCC. The Station has been
operated at all times by the Seller in accordance with the terms
of the FCC Licenses, the Act, and the FCC's Rules, and Seller is
in compliance with the Act and the FCC's Rules.
The foregoing opinions are subject to the following
further qualifications. We have not independently verified the
manner in which the Station is currently being operated or their
compliance with engineering standards, and could not do so
without physically inspecting the Station. Our opinion as to the
sufficiency of the FCC Licenses is based solely on our inspection
of the Commission's records and our files and upon the
representations of the general partner and responsible
representatives of Seller. However, nothing has come to our
attention that leads us to question the accuracy of such
representations.
As aforesaid, this opinion is furnished to you solely
pursuant to Section 7.8 of the Agreement. It may not be used,
circulated, quoted or otherwise relied upon by any other person
or entity or for any other purpose, provided, however, that this
opinion may also be relied upon by each party to the Agreement
and may be relied upon by the financial institution that is
loaning Buyer the funds to effectuate the Agreement. The
opinions expressed herein are based on our knowledge and
understanding of the facts as they exist on the date hereof and
we assume no obligation to you or to any other person to revise
those opinions on the basis of possible changes in fact occurring
or first coming to our attention after the consummation of the
transactions described in the Agreement.
Very truly yours,
[Name of Firm of Seller's FCC Counsel]
By:____________________________
EXHIBIT E
[Letterhead of Counsel]
[Date of Closing]
Wheeling Radio Company
c/o Mr. Nicholas A. Galli
President, Burbach Broadcasting Company
Managing General Partner
2350 One PPG Place
Pittsburgh, PA 15222
Dear Mr. Galli:
We have acted as counsel for MOUNTAIN RADIO CORPORATION, a
Delaware corporation ("Buyer"), in connection with the Asset
Purchase Agreement (the "Asset Purchase Agreement") dated as of
July 8, 1996 by and among Buyer and Wheeling Radio Company.
Unless otherwise defined herein, capitalized terms used herein
have the same meanings ascribed to them in the Asset Purchase
Agreement. This opinion is being furnished to you at the request
of the Buyer pursuant to Section 8.5 of the Asset Purchase
Agreement.
In connection with rendering this opinion we have examined
originals, or copies certified or otherwise identified to our
satisfaction, of the following documents, each dated July 8, 1996
(collectively, the "Documents"):
1. The Asset Purchase Agreement; and
2. The Escrow Agreement by and among WHEELING RADIO
COMPANY, a limited partnership formed under the laws of the
Commonwealth of Pennsylvania ("Seller"), Buyer, John M. Pelkey,
Esq., and Robert L. Olender, Esq.
In addition, we have examined (i) such corporate records of
the Buyer as we have considered appropriate, including copies of
the Certificate of Incorporation of the Buyer, the Bylaws of the
Buyer, and certified copies of resolutions of the board of
directors of the Buyer, and (ii) any such other certificates,
agreements and documents as we have deemed relevant and necessary
as a basis for the opinions hereunder expressed.
In our examination of the aforesaid documents, we have
assumed, without independent investigation, the genuineness of
all signatures, the enforceability of the Documents against each
party thereto other than the Buyer, the legal capacity of all
individuals who have executed any of the documents, the
authenticity of all documents submitted to us as originals, and
the conformity with the original of all documents submitted to us
as certified or photostatic or reproduced copies.
In expressing the opinions set forth herein, we have relied
upon the factual matters contained in the representations and
warranties of the Buyer made in the Documents and upon
certificates of public officials and officers of the Buyer.
Based upon the foregoing, and subject to the assumptions,
exceptions and qualifications set forth herein, we are of the
opinion that:
(i) Buyer is a duly organized and validly existing
corporation in good standing under the laws of the State of
Delaware, and is qualified to do business as a foreign
corporation and is in good standing in the State of West
Virginia;
(ii) Buyer has full corporate power and authority to enter
into the Asset Purchase Agreement and to consummate the
transactions contemplated thereby; the execution, delivery and
performance by Buyer of the Asset Purchase Agreement has been
duly authorized by all requisite corporate action on the part of
Buyer; the Asset Purchase Agreement has been duly executed and
delivered by Buyer and (assuming due execution and delivery by
the other parties thereto) constitutes a valid and binding
obligation of Buyer, enforceable in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and
general principles of equity;
(iii) Buyer is not subject to or bound by any charter or
by-law provision or any statute, rule, regulation or judicial or
administrative decision or, to the best of our knowledge, any
agreement or any judgment, award, order, writ, injunction or
decree of any court or of any governmental body or of any
arbitrator which, by operation of law, or pursuant to its terms,
would be violated or breached, or which would terminate, lapse or
be subject to termination, upon the consummation of the
transactions contemplated herein absent the consent or other
action of any third party or agency; and
(iv) The FCC has granted its consent to the assignment of
the Licenses from Seller to Buyer and the consummation of the
transactions contemplated by the Asset Purchase Agreement, and
such consent is the only consent or authorization of the FCC
necessary for the assignment of the Licenses of Seller to Buyer
and the consummation of the transactions, contemplated by the
Asset Purchase Agreement.
Our opinion expressed above is limited to the laws of the
Commonwealth of Virginia, the General Corporation Law of the
State of Delaware and the Federal laws of the United States. Our
opinion is rendered only with respect to the laws, and the rules,
regulations and orders thereunder, that are currently in effect.
Please be advised that no member of this firm is admitted to
practice in the State of Delaware. We assume no obligation to you
or to any person to revise this opinion on the basis of possible
changes in fact occurring or first coming to our attention after
the date hereof.
This letter is furnished by us solely for your benefit in
connection with the transactions referred to in the Asset
Purchase Agreement and may not be circulated to, or relied upon
by, any other person or entity or used in any other context.
Very truly yours,
EXHIBIT A
ESCROW AGREEMENT
This ESCROW AGREEMENT is dated this 8th day of July,
1996, by and among WHEELING RADIO COMPANY, a limited partnership
formed under the laws of the Commonwealth of Pennsylvania
("Seller"), and MOUNTAIN RADIO CORPORATION, a Delaware
corporation ("Buyer"), John M. Pelkey, Esq., and Robert L.
Olender, Esq., (Messrs. Pelkey and Olender being jointly
referred to as "Escrow Agents" or "Agents").
Recitals
Seller and Buyer have entered into an Asset Purchase
Agreement (the "Purchase Agreement") of even date herewith, by
which Seller has agreed to sell, transfer and deliver to Buyer
certain assets used in the operation of Radio Station WEGW(FM),
Wheeling, West Virginia, licensed to Seller.
The Purchase Agreement provides that, to secure the
obligations of Buyer under the Purchase Agreement, a deposit in
the amount of Seventy-Five Thousand Dollars ($75,000.00) (the
"Escrow Deposit") is to be delivered to Escrow Agents by Buyer to
be held and disbursed by Escrow Agents in accordance with the
terms of this Agreement.
In consideration of the foregoing and of the covenants
and agreements contained herein, Buyer, Seller and Escrow Agents
agree as follows:
Section I
ESCROW DEPOSIT
1.1 Delivery. Simultaneously with the execution of
this Agreement, Buyer is delivering the Escrow Deposit to the
Escrow Agents. The Escrow Deposit and the interest or other
proceeds from the investment thereof (the "Earnings") shall be
referred to collectively herein as the "Escrow Amount."
1.2 Receipt. The Escrow Agents hereby acknowledge
receipt of the Escrow Deposit and agree to hold and disburse the
Escrow Amount in accordance with the terms and conditions of this
Agreement and for the uses and purposes stated herein.
1.3 Investment and Income. The Escrow Agents shall,
pending the disbursement of the Escrow Amount pursuant to this
Agreement, invest the Escrow Amount in accordance with the
Buyer's instructions in an FDIC-insured bank in an interest-
bearing account permitting immediate withdrawal of funds.
Section II
DISBURSEMENT OF ESCROW AMOUNT
Agents shall distribute the Escrow Deposit as follows:
2.1 Closing. In the event the purchase and sale
closes in the manner contemplated by the Purchase Agreement, the
Escrow Deposit and any Earnings shall be delivered to Seller and
credited against the Purchase Price.
2.2 Material Breach. In the event the Closing (as
defined in the Purchase Agreement) fails to occur because Buyer
is in material breach of the Purchase Agreement, then the Escrow
Deposit shall be paid over to the Seller and the Earnings shall
be turned over to Buyer. In the event the purchase and sale does
not close for any other reason, the Escrow Deposit and the
Earnings shall be returned to Buyer.
2.3 Conflict with Purchase Agreement. If any
provision of this paragraph with respect to the disposition of
the escrow fund is in conflict with any provision of the Purchase
Agreement with respect of such disposition, then such provisions
in the Purchase Agreement shall control.
2.4 Controversies with Respect to Escrow Deposit.
Escrow Agents shall dispose of the Escrow Deposit upon the joint
written instructions of the Seller and Buyer or their fully
designated representatives. Agents shall have no duty or
obligation to any third party claiming the Escrow Deposit in the
absence of joint written instructions directing Agents to pay
said third party. If Agents shall not have received joint
written instructions, Agents shall continue to hold the Escrow
Deposit and the Earnings until:
(a) The receipt by Agents of the joint written
instructions of the Seller and Buyer as to the disposition of the
Escrow Deposit and the Earnings; or
(b) Agents shall have, at their option, filed an
action or bill in interpleader, or similar action for such
purpose, in a court of competent jurisdiction and paid the Escrow
Amount into said court, in which event, Agents' duties,
responsibilities and liabilities with respect to the Escrow
Amount and this Escrow Agreement shall terminate.
Section III
ESCROW AGENTS
3.1 Appointment and Duties. Buyer and Seller hereby
appoint Escrow Agents to serve hereunder and the Escrow Agents
hereby agree to perform all duties which are expressly set forth
in this Agreement.
3.2 Expenses of Escrow Agents. One-half of the
expenses incurred by the Escrow Agents in carrying out their
duties under this Agreement will be paid to the Escrow Agents by
Seller and one-half of such expenses shall be paid by Buyer.
3.3 Indemnification. Both Seller and Buyer will, at
their expense, indemnify the Escrow Agents, hold them harmless
from any and all claims, regardless of nature, arising out of or
because of this Agreement, and exonerate the Escrow Agents from
any liability in connection with this Agreement except as such
may arise because of the Escrow Agents' gross negligence or
willful misconduct in performing their specified duties as Escrow
Agents.
3.4 Resignation. Escrow Agents may resign at any time
upon giving the other parties hereto thirty (30) days' prior
written notice to that effect. In such event, the successor
shall be such person, firm or corporation as shall be mutually
selected by Buyer and Seller. It is understood and agreed that
such resignation shall not be effective until a successor agrees
to act hereunder; provided, however, if no successor is appointed
within thirty (30) days after such notice is given, Escrow Agents
may pay and deliver the Escrow Amount into a court of competent
jurisdiction.
Section IV
LIABILITIES OF ESCROW AGENTS
4.1 Limitations. The Escrow Agents shall be liable
only to accept, hold and deliver the Escrow Amount in accordance
with the provisions of this Agreement and amendments thereto,
provided, however, that the Escrow Agents shall not incur any
liability with respect to (a) any action taken or omitted in good
faith or upon the advice of their counsel given with respect to
any questions relating to their duties and responsibilities as
Escrow Agents under this Agreement, or (b) any action taken or
omitted in reliance upon any instrument which the Escrow Agents
shall in good faith believe to be genuine (including the
execution, the identity, or authority of any person executing
such instrument, its validity and effectiveness, and the truth
and accuracy of any information contained therein), to have been
signed by a proper person or persons, and to conform to the
provisions of this Agreement.
Section V
TERMINATION
5.1 This Agreement shall be terminated (i) upon
disbursements of the Escrow Amount by the Escrow Agents, (ii) by
written mutual consent signed by all parties, or (iii) payment of
the Escrow Amount into a court of competent jurisdiction in
accordance with Section 2.4 hereof. This Agreement shall not be
otherwise terminated.
Section VI
OTHER PROVISIONS
6.1 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 Buyer:
Mr. Frank D. Osborn
Osborn Communications
130 Mason Street
Greenwich, CT 06830
Fax: 203-629-1749
Phone: 203-629-0905
with copy to:
John M. Pelkey
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive, Suite 900
Arlington, VA 22203-1633
Fax: 703-841-2345
Phone: 703-841-0606
If to Seller:
Mr. Nicholas A. Galli
President, Burbach Broadcasting Company
Managing General Partner
Wheeling Radio Company
2350 One PPG Place
Pittsburgh, PA 15222
Fax: 412-263-6737
Phone: 412-263-6716
With a copy to:
Robert L. Olender, Esq.
Baraff Koerner & Olender PC
Three Bethesda Metro Center
Suite 640
Bethesda, MD 20814
If to John M. Pelkey, Esq.:
John M. Pelkey, Esq.
Haley Bader & Potts P.L.C.
4350 North Fairfax Drive, Suite 900
Arlington, VA 22203-1633
Fax: 703-841-2345
If to Robert L. Olender, Esq.:
Robert L. Olender, Esq.
Baraff Koerner & Olender PC
Three Bethesda Metro Center
Suite 640
Bethesda, MD 20814
Fax: 301-986-4844
Phone: 301-986-0500
or to any such other or additional persons and addresses as the
parties may from time to time designate in a writing delivered in
accordance with this Section 6.1.
6.2 Benefit and Assignment. The rights and
obligations of each Party under this Agreement may not be
assigned without prior written consent of all other parties
unless the assignment is to a permitted assignee under the
Purchase Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns.
6.3 Entire Agreement; Amendment. This Agreement and
the Purchase Agreement contain all the terms agreed upon by the
parties with respect to the subject matter hereof. This
Agreement may be amended only by a written instrument signed by
the Party against which enforcement of any waiver, change,
modification, extension or discharge is sought.
6.4 Headings. The headings of the sections and
subsections of this Agreement are for ease of reference only and
do not evidence the intentions of the parties.
6.5 Governing Law. This Agreement shall be governed
by, and construed according to, the laws of the State of West
Virginia.
6.6 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
on all counterparts are upon the same instrument.
IN WITNESS WHEREOF, the Parties hereto have
executed or have caused this Agreement to be executed by a duly
authorized officer or partner on the day and year first above
written.
WHEELING RADIO COMPANY
___________________________________
Nicholas A. Galli
President, Burbach Broadcasting Company
Managing General Partner
Wheeling Radio Company
MOUNTAIN RADIO CORPORATION
BY: ___________________________________
TITLE:
JOHN M. PELKEY, ESQ.
_______________________________________
ROBERT L. OLENDER
_______________________________________
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this 2nd
day of July, 1996 (the "Effective Date") by and among OHIO
BROADCAST ASSOCIATES, a partnership formed under the laws of the
State of Texas ("Seller"), CURREY BROADCASTING CORPORATION, a
corporation formed under the laws of the State of Delaware
("Buyer"), OSBORN COMMUNICATIONS CORPORATION, a corporation
formed under the laws of the state of Delaware ("Osborn"), Audrey
Malkan, an individual, and Matthew Malkan, an individual (Seller
and Buyer sometimes being referred to herein individually as a
"Party" and jointly as "Parties" and Osborn, Audrey Malkan and
Matthew Malkan sometimes being referred to herein individually as
a "Guarantor" and jointly as the "Guarantors").
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 WYNU(FM), Milan,
Tennessee (the "Station");
WHEREAS, Guarantors wish to guarantee the performance
of certain of the obligations hereunder as an inducement to the
Parties to enter into this Agreement; and
WHEREAS, Seller desires to sell to Buyer, and Buyer,
which is the licensee of radio stations in Jackson, Tennessee,
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 and the Guarantors 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 all of the assets used or held for use in connection with the
Station including, without limitation, 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 Licenses include the right to use the call
letters of the Station, including but not limited to the call
letters WYNU (FM).
(b) Tangible Personal Property. All of the
tangible personal property owned by Seller and used or useable in
the operation of the Station, including but not limited to the
items of personal property listed in Section 1.1(b) of the
Disclosure Schedule, together with all additions, modifications
or replacements thereto made in the ordinary course of business
between the date of this Agreement and the Closing Date, as
hereafter defined (the "Personal Property").
(c) Real Estate Contracts. All of the leasehold
interests in real property leased by Seller and used by the
Station, including all agreements, leases, and contracts of
Seller relating to the tower, transmitter, studio site, and
offices of the Station (the "Real Estate Contracts"), including
all security or other deposits made with respect to such Real
Estate Contracts, all as described in Section 1.1(c) 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 or described in Section 1.1(j) 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 for
Cash. 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 arising after the Closing Date under the Broadcast
Agreements. Those contracts for sale of broadcast time for cash
that are entered into, extended or renewed after the date of this
Agreement will be assigned to Buyer by Seller and assumed by
Buyer from Seller only to the extent that they are in accordance
with the terms of Section 5.13 of this Agreement.
(h) Trade Agreements. 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(h) 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. Notwithstanding the foregoing, Buyer
will assume, in addition to those Trade Agreement obligations set
forth in Section 1.1(h) of the Disclosure Schedule, up to a
maximum of Ten Thousand Dollars ($10,000) of Seller's aggregate
Trade Agreement obligations net of any credits owed to Seller
under its Trade Agreements.
(i) 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(i) upon Seller's request for five years after the
Closing Date.
(j) Future Contracts. Those leases, contracts,
agreements and franchises (other than contracts for the sale of
broadcast time for cash and Trade Agreements, which are governed
by Sections 1.1(g) and 1.1(h) hereof) entered into between the
date hereof and the Closing Date that (1) are entered into in the
usual and ordinary course of business; (2) are two (2) months or
less in duration; (3) impose upon Seller an obligation of Five
Thousand Dollars ($5,000.00) or less for each such lease,
contract, agreement or franchise; and (4) impose upon Seller an
obligation of no more than Seven Thousand, Five Hundred Dollars
($7,500.00) in the aggregate for all such leases, contracts,
agreements and franchises. No other leases, contracts, agreements
and franchises entered into by Seller between the date hereof and
the Closing Date will be assumed by Buyer unless consented to by
Buyer in advance in writing and set forth in Section 1.1(j) of
the Disclosure Schedule.
(k) 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.
(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) 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), 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
Station disposed of or consumed (including ordinary wear and
tear) in the ordinary course of business between the date hereof
and the Closing Date.
(d) Expired Leases, Contracts and Agreements.
All contracts described in Sections 1.1(f), (g), (h) and (j) 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 shall 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, (iii)
severance payments to Seller's employees; or (iv) any vacation
accrued by Seller's employees, 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 Agreement, Buyer shall pay to Seller the sum
of Three Million, Five Hundred Thousand Dollars ($3,500,000.00),
plus the sum set forth in paragraph 1.4(c), below, (the sum of
Three Million, Five Hundred Thousand Dollars ($3,500,000.00) and
the sum to be paid pursuant to paragraph 1.4(c) being
collectively referred to as 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 One Hundred Seventy-Five
Thousand Dollars ($175,000.00) (the "Escrow Deposit") in the
SunTrust NA Nashville bank. Bradley A. MacLean, Esq., and John
M. Pelkey, 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 Buyer is in material breach of
this Agreement, the Escrow Deposit shall be paid to Seller as
liquidated damages and as Seller's sole damages for such breach
(it being acknowledged by the Buyer, however, that the Seller may
also be entitled to specific performance pursuant to Section
10.10 of this Agreement) 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) Payment at Closing. On the Closing Date at
the Closing, Buyer shall pay to Seller the Purchase Price, as
adjusted for prorations as provided in Paragraph 1.5 hereof,
minus any sums that have been credited against the Purchase Price
pursuant to Subparagraph 1.4(a), by wire transfer of federal
funds.
(c) Adjustment. In the event the Broadcast Cash
Flow for the Station for the twelve-month period commencing
January 1, 1996 and ending December 31, 1996 (the "Measuring
Period") is greater than Four Hundred Eleven Thousand, Seven
Hundred Sixty-Five Dollars ($411,765.00) (such amount in excess
of Four Hundred Eleven Thousand, Seven Hundred Sixty-Five Dollars
($411,765.00) being referred to as the "Excess Cash Flow"), Buyer
shall pay to Seller an additional payment equal to the Excess
Cash Flow multiplied by 8.5, up to a maximum additional payment
of One Hundred Thousand Dollars ($100,000.00), for a total
maximum Purchase Price of Three Million, Six Hundred Thousand
Dollars ($3,600,000.00). For purposes of this Agreement,
"Broadcast Cash Flow" means the total of the net revenues (after
agency commissions and excluding barter transactions) of the
Station, less all operating expenses (excluding barter
transactions) of the Station as adjusted to reflect the add back
of all non-operating expenses including interest, depreciation,
amortization, taxes and corporate allocation.
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(h) 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
purposes. Buyer and Seller further agree that they shall not
take any position inconsistent with such allocation upon
examination of any return, in any refund claim, in any
litigation, or otherwise.
1.7 Submission of Schedules. Seller agrees that, no
later than July 18, 1996, it shall provide Buyer with copies of
all agreements and other materials necessary for the completion
of the Disclosure Schedule called for in this Agreement, other
than Section 4.3 of such Schedule.
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 January 31, 1997, or, if the
FCC's grant of the Assignment Application shall not have become a
Final Order as of January 31, 1997, five (5) business days after
the FCC's grant of the Assignment Application has become a Final
Order (the "Closing Date").
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) certificates from each of
Seller's partners authorizing the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby;
(iv) a special warranty deed (or its
equivalent in the State of Tennessee), 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) 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)).
The premium for such insurance shall be paid by Buyer;
(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. Buyer shall pay
the tax for the recording of the deed;
(vii) affidavit of one of Seller's
partners, sworn to under penalty of perjury, setting forth
Seller's name, address and Federal tax identification number and
stating that Seller is not a "foreign person" within the meaning
of Section 1445 of the Internal Revenue Code of 1986 (the
"Code"). If, on or before the Closing Date, Buyer shall not have
received such affidavit, Buyer may withhold from the Purchase
Price payable at Closing to Seller pursuant hereto such sums as
are required to be withheld therefrom under Section 1445 of the
Code;
(viii) a bill of sale and all other
appropriate documents and instruments assigning to Buyer good and
marketable title to the Station Assets free and clear of any
security interests, mortgages, liens, pledges, attachments,
conditional sales contracts, claims, charges or encumbrances of
any kind whatsoever;
(ix) 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;
(xi) 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;
(xii) the opinion of counsel for
Seller, dated the Closing Date, as described in Section 7.9;
(xiii) assignments to Buyer of all the Contracts and Real
Estate Contracts in form satisfactory to Buyer;
(xiv) 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; and
(xv) 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, as adjusted for
prorations pursuant to Paragraph 1.5, minus any sums that have
been credited against the Purchase Price pursuant to Subparagraph
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
(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 March 31, 1997, and if the Party
seeking to terminate the Agreement pursuant to this Section
2.3(a)(ii) has not prevented the Closing from occurring. Without
limiting the foregoing, no Party may terminate this Agreement
pursuant to this Section 2.3(a)(ii) if a material delay in any
decision or determination by the Commission respecting the
Assignment Application has been caused or materially contributed
to (x) by any failure of such Party to furnish, file or make
available to the Commission information within its control; (y)
by the willful furnishing by such Party of incorrect, inaccurate
or incomplete information to the Commission; or (z) by any other
action taken by such Party for the purpose of delaying the
Commission's decision or determination respecting the Assignment
Application. The Parties agree that neither Seller nor Buyer
shall be deemed to be in default of this Section 2.3(a)(ii) as
the result of the submission of a petition to deny or informal
objection with respect to the pending applications seeking the
renewal of the licenses for their respective stations. Upon
termination pursuant to this Paragraph 2.3(a)(ii), the Parties
shall be released and discharged from any further obligation
hereunder, other than as set forth in Paragraph 6.4.;
(iii) 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;
(iv) 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; or
(v) Buyer, pursuant to Paragraph 3.12.
(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 the Parties to compel specific performance
pursuant to Section 10.10 of this Agreement.
(c) 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. Upon termination pursuant to this
Section, the Parties shall be released and discharged from any
further obligation hereunder, other than as set forth in
Paragraph 6.4, and the Escrow Deposit and any accrued interest
shall be returned to the Buyer.
(d) 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 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 $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 a
period of time in excess of six (6) hours in a twenty-four (24)
hour period, 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 to terminate
this Agreement by giving written notice to Seller, within ten
(10) days of such interruption of service, of its election to do
so.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Due Incorporation. Seller is a partnership duly
organized, validly existing and in good standing under the laws
of the State of Texas, and is duly qualified to do business in
and is in good standing in the State of Tennessee. Seller has
the 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 have been duly and validly authorized
and approved by its partners, and Seller has the power and
authority to execute, deliver and perform this 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 (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 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. Seller has no partners other than those
signatories to this Agreement who are signing on Seller's behalf.
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.
Except for the application seeking the renewal of the license for
the Station, 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 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
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 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 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 described on
Section 1.1(d) of the Disclosure Schedule, including all of the
buildings, structures and other improvements located thereon,
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.
Other than the lease whereby Rainbow Media, Inc., leases space on
the Station's tower and in the Station's transmitter building and
that certain Tower Lease and Agreement of December 1, 1994 by and
between Ohio Broadcasting and Sprint Communications Company L.P.,
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.
(b) Section 1.1(c) 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 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 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.
(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.
(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, 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 Station in the manner in which it is being
operated as of the date of this Agreement; and Section 1.1(h) of
the Disclosure Schedule contains a true and complete list of all
currently-existing Trade Agreements that will be assumed by
Buyer, and the amounts owed to either the Station or the
advertiser under each such Trade Agreement. Seller has delivered
to Buyer (or will deliver to Buyer, within twenty days of the
Effective Date) true and complete copies of all such written
Contracts and Trade Agreements in the possession of Seller,
including any and all amendments and other modifications to same.
Prior to Closing, Seller will furnish to Buyer Section 1.1(g) of
the Disclosure Schedule, which will contain a true and complete
list of all Broadcast Agreements that Seller anticipates will be
in effect as of the Closing; and, prior to Closing, Seller will
furnish to Buyer an updated Section 1.1(h), which will contain a
true and complete list of all Trade Agreements that Seller
anticipates will be in effect as of the Closing. All such
Contracts, Broadcast Agreements and Trade Agreements are, or
(with respect to those Broadcast Agreements and Trade Agreements
not yet in effect, but which will be in effect as of the Closing)
will be as of the Closing, 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 or (with respect to
those Broadcast Agreements and Trade Agreements not yet in
effect, but which will be in effect as of the Closing) will have
complied as of the Closing, in all material respects with all
such Contracts, Broadcast Agreements and Trade Agreements, and
Seller is not in default or (with respect to those Broadcast
Agreements and Trade Agreements not yet in effect, but which will
be in effect as of the Closing) will not be in default as of the
Closing, beyond any applicable grace periods under any of same,
and no other contracting party is or (with respect to those
Broadcast Agreements and Trade Agreements not yet in effect, but
which will be in effect as of the Closing) will be as of the
Closing, in material default under any of same. Seller has or
(with respect to those Broadcast Agreements and Trade Agreements
not yet in effect, but which will be in effect as of the Closing)
will have as of the Closing, 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 or (with respect to those Broadcast
Agreements and Trade Agreements not yet in effect, but which will
be in effect as of the Closing) on the date that such Broadcast
Agreements and Trade Agreements are furnished to Buyer by Seller,
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, 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 Real Property. Except as disclosed in Section 3.10
of the Disclosure Schedule, to Seller's knowledge, no employee of
Seller in the course of his or her employment with Seller has
been exposed to any Hazardous Waste or other substances
generated, produced or used by Seller that could give rise to any
claim against the Station Assets. To the extent within Seller's
possession or control, Seller has heretofore delivered to Buyer
true and complete copies of all environmental studies relating to
the Real Property and all material reports of inspections of the
Station and/or the Station Assets pursuant to applicable federal,
state or local laws or regulations. Except as set forth in
Section 3.10 of the Disclosure Schedule, Seller has not received
any notice from any governmental agency or public or private
entity advising it that Seller is responsible for or potentially
responsible for cleanup or paying for the cost of cleanup of any
Hazardous Waste 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. 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. Within twenty (20) days of
the Effective Date, Seller will provide Buyer complete unaudited
copies of the statements of income, and the related balance
sheets, for Seller for the years ended December 31, 1994 and
December 31, 1995 and monthly statements for each month of
calendar year 1996 through May 1996 (the "Financial Statements").
These Financial Statements will constitute Section 3.12 of the
Disclosure Schedule. The Financial Statements present fairly and
accurately the financial condition and results of operations of
the Station for the periods indicated and have been prepared in
accordance with the accounting policies and procedures of the
Seller consistently applied. The Parties recognize that the
Financial Statements may not have been prepared in accordance
with generally accepted accounting principles. For a period of
sixty (60) days after the Effective Date, Buyer may, at its
expense, have an audit performed of the Financial Statements. If
such audit reveals that the Financial Statements do not
accurately reflect the financial condition of the Station and
that the financial condition of the Station is materially worse
than reflected in the Financial Statements, Buyer may, by written
notice provided in accordance with Section 10.9 hereof no later
than ten (10) business days after the expiration of such sixty-
day period, terminate this Agreement. In addition, Buyer may, at
its expense, have an audit performed of the Station's financial
statements for the year ending December 31, 1996 (or, if
necessary to permit a calculation of the Station's 1996 Broadcast
Cash Flow to permit the Closing to occur on the Closing Date
established by Section 2.1 herein, but before financial
statements for the year ending December 31, 1996 are available,
for such interim period in 1996 as the Buyer, in its reasonable
discretion, chooses) to permit a calculation of the Broadcast
Cash Flow of the Station for 1996. If such an audit for the
purpose of determining the 1996 Broadcast Cash Flow is conducted,
the calculation of Broadcast Cash Flow derived from such audit
shall be used for purposes of calculating the adjustment to the
Purchase Price pursuant to Section 1.4(c) hereof and the
satisfaction of the condition, set forth in Section 7.12 of this
Agreement, to Buyer's obligations hereunder, provided, however,
that, in the event of any disputes between the Parties as to the
calculation of Broadcast Cash Flow, such disputes shall be
resolved by the determination of Broadcast Cash Flow 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. To the extent there is no dispute regarding
the existence of Excess Cash Flow under Section 1.4(c), the Buyer
will pay at Closing the adjustment to the Purchase Price based
upon the undisputed Excess Cash Flow, and the balance of the
adjusted Purchase Price, if any, will be paid immediately after
the accountant determines the Broadcast Cash Flow.
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, which would
reasonably be expected to have any material adverse effect upon
the business, property, assets or condition (financial or
otherwise) of the Station or which seeks to enjoin or prohibit,
or otherwise questions the validity of, any action taken or to be
taken pursuant to or in connection with this Agreement. In
particular, but without limiting the generality of the foregoing,
except as set forth in Section 3.15 of the Disclosure Schedule,
there are no applications, complaints or proceedings pending or,
to the best of Seller's knowledge, threatened before the
Commission or any other governmental organization with respect to
the business or operation of the Station, other than
applications, complaints or proceedings which affect the
broadcast industry generally.
3.16 Compliance with Laws. Seller has not received any
notice asserting any non-compliance with any applicable statute,
rule or regulation (federal, state or local) whether or not
related to the business or operation of the Station or the Real
Property. Seller is not in default with respect to any judgment,
order, injunction or decree of any court, administrative agency
or other governmental authority or to any other tribunal duly
authorized to resolve disputes in any respect material to the
transactions contemplated hereby. Seller is in compliance in all
material respects with all laws, 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,
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 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, 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.
3.20 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 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 Seller's partnership
agreement;
(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, outside of the ordinary
course of business and beyond Seller's customary reserve for bad
debt, 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 any partnership interests in
Seller, or rights, warrants or options to acquire, any such
interests;
(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
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 is duly qualified to do business in,
and is in good standing in, the State of Tennessee.
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 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, and Buyer warrants that
the consents described in Section 4.3 of the Disclosure Schedule
will be obtained prior to Closing, and that failure to obtain
such consents shall constitute a default under this Asset
Purchase 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, 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. 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 Seven Thousand Five Hundred Dollars ($7,500) 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, including, but not limited to,
those contracts for sale of broadcast time for cash on the
Station that are not being assumed by Buyer.
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 provide
Buyer 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 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, without having
first received Buyer's written consent, shall not enter into,
extend or renew any contract for the sale of broadcast time for
cash on terms that are not consistent with the usual and ordinary
course of business. Without in any way limiting the foregoing
sentence, Seller shall not enter into any contract to sell
broadcast time for cash at less than Seller's normal and
customary rate without Buyer's written consent. Seller shall not
enter into any Trade Agreement outside of the ordinary course of
business or any Trade Agreement that requires performance by
Buyer beyond that specified in Section 1.1(h) 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 partnership interest of Seller
to any third party, nor shall Seller offer the Station, any
Station Assets or any partnership interest of Seller to any third
party.
5.16 Financial Statements. Seller shall provide Buyer
with copies of its monthly financial statements each month until
the Closing Date, with such statements to be provided to Buyer
within twenty (20) days of the end of the relevant calendar
month.
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. Within seven (7) business
days of the Effective Date 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 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
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. Seller and Buyer agree to
arrange for the preparation of, at the expense of Buyer,
appropriate environmental reports for the Real Property. Such
environmental reports shall conclude that: (i) the Real Property
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 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 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 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. Seller shall be responsible for
all salary and benefits, if any, 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
and benefits, including, without limitation, vacation benefits,
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 and benefits, including,
without limitation, vacation benefits, 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 Tennessee. 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 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
conditions precedent set forth in this Article VII. Unless
otherwise provided elsewhere in this Agreement, the failure of
any of these conditions shall not be deemed to constitute a
default by Seller.
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) and (c) grant by the Commission of a renewal
application for the Station without condition and for a minimum
license term of seven (7) 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 such approvals and the grant
of the renewal application for the Station shall have become
Final Orders. For purposes of this Agreement, a "Final Order"
shall mean any action of the relevant government agency,
including, without limitation, 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 agency 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 approvals of the Assignment Application and the
renewal application shall have 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
Tennessee, 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.
7.7 No Material Adverse Change. No material adverse
change, other than with respect to the cash flow of the Station
(which shall be governed by Section 7.12, below), shall have
occurred with respect to 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.
7.9 Opinions of Counsel. Seller shall have delivered
to Buyer an opinion of Farris, Warfield & Kanaday, 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.
7.11 Environmental. Buyer shall have received the
environmental reports specified in Paragraph 6.6
7.12 Broadcast Cash Flow Requirements. The
Broadcast Cash Flow for the Station for the Measuring Period
shall be no less than Four Hundred Eleven Thousand, Seven Hundred
Sixty-Five Dollars ($411,765.00). Without in any way limiting any
other rights held by the Buyer to waive the conditions imposed by
this Article VII, the Parties recognize that the condition
imposed by this Paragraph 7.13 may be waived by Buyer, at Buyer's
discretion.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The performance of the obligations of the Seller
hereunder is subject, at the election of the Seller, to the
conditions precedent set forth in this Article VIII. Unless
otherwise provided elsewhere in this Agreement, the failure of
any of these conditions shall not be deemed to constitute a
default by Buyer.
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 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, damages, liabilities, penalties or
assessments, and judgments, except as set forth in Sections 9.4
and 10.15, hereto, resulting from or arising out of:
(a) Any breach by Seller of any representation,
or warranty contained in Articles III, V or VI to this Agreement
or in any certificate, exhibit, schedule, or other document
furnished to or to be furnished pursuant thereto;
(b) Any non-fulfillment by Seller 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;
(c) Any material inaccuracy in any covenant,
representation, agreement or warranty by Seller including all
material statements or figures contained in the Financial
Statements heretofore furnished to Buyer; and
(d) Any liabilities of any kind or nature,
absolute or contingent not assumed by Buyer including, without
limitation, any liabilities relating to or arising from the
business and operation of the Station by Seller prior to the
Closing Date.
Notwithstanding any other provision contained herein,
Seller shall be solely responsible for any fine or forfeiture
imposed by the Commission relating to the operation of the
Station prior to the Closing Date.
9.2 Indemnification by Buyer. From and after the
Closing Date, Buyer agrees to, and shall, indemnify, defend and
hold Seller harmless, and shall reimburse Seller for and against
any and all actions, losses, damages, liabilities, penalties or
assessments, and judgments, except as set forth in Sections 9.4
and 10.15, hereto, resulting from or arising out of:
(a) Any breach by Buyer of any covenant,
agreement, term, condition, representation, or warranty contained
in Articles IV or VI to this Agreement or in any certificate,
exhibit, schedule, or any other document furnished or to be
furnished pursuant thereto;
(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 by the Buyer subsequent to the
Closing Date.
9.3 Notification of Claims.
(a) A Party entitled to be indemnified pursuant
to Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the
Party liable for such indemnification (the "Indemnifying Party")
in writing of any claim or demand which the Indemnified Party has
determined has given or could give rise to a right of
indemnification under this Agreement. Subject to the
Indemnifying Party's right to defend in good faith third party
claims as hereinafter provided, the Indemnifying Party shall
satisfy its obligations under this Article~IX within thirty (30)
days after the receipt of a written notice thereof from the
Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section
9.3(a), and if such claim or demand relates to a claim or demand
asserted by a third party against the Indemnified Party which the
Indemnifying Party acknowledges is a claim or demand for which it
must indemnify or hold harmless the Indemnified Party under
Sections 9.1 or 9.2, the Indemnifying Party shall have the right
to employ counsel 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. 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 Damages. Notwithstanding any other provision
contained herein, no obligation of a Party to respond in damages
under this Agreement shall include incidental, consequential,
punitive, exemplary or special damages of any kind even if the
Party has been advised by the other Party of the possibility of
such damages and without regard to the nature of the claim or the
underlying theory or cause of action (whether in contract, tort,
or otherwise). The damages to which either Party shall be
entitled under this Agreement shall not exceed One Hundred
Seventy-Five Thousand Dollars ($175,000).
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 Buyer's corporate parents or to one or
more corporations or other entities controlled by Buyer's
corporate parents; 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 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 twelve (12) months 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 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
Tennessee.
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:
Ms. Audrey Malkan
304 Crestwood Drive
Ft. Worth, TX 76107
Fax: 817-626-0931
Phone: 817-626-0931
With a copy to:
Brad MacLean
Farris Warfield & Kanaday
Suite 1900
424 Church Street
SunTrust Center
Nashville, TN 37219
Fax: 615-726-3185
Phone: 615-244-5200
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:
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. The property and assets
to be transferred pursuant to the terms of this Agreement are
unique and not readily available on the open market. For that
reason and others, Seller and Buyer will be damaged seriously
should this purchase not be consummated. Accordingly, in the
event of a material breach by a Party of its representations,
warranties, covenants and agreements under this Agreement, the
other Party may sue at law for damages or, at its sole election,
and in addition to any other remedy available to it, may also
seek a decree of specific performance requiring the breaching
Party to fulfill its obligations under this Agreement, and each
Party agrees to waive the 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 Tennessee 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 approval of the other Party,
except as required by law.
10.14 Accounts Receivable. Commencing on the
Closing Date and continuing for a period of six (6) months
following the Closing Date, Buyer shall collect all of Seller's
accounts receivable arising from the operation of the Station 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.
At the end of the six-month period documentation of Seller's
outstanding accounts receivable shall be delivered to Seller, who
may take whatever steps it deems necessary to attempt to collect
its account(s) receivable from such account debtors.
10.15 Costs. If any legal action or other
proceeding is brought for the enforcement of this Agreement or
because of an alleged dispute, breach, default or
misrepresentation in connection with this Agreement, each Party
shall bear its own costs and legal fees incurred in the action or
proceeding and shall not be entitled to reimbursement from the
unsuccessful Party.
10.16 Guarantees. Osborn hereby irrevocably and
unconditionally guarantees to Seller the prompt and complete
performance of the obligations imposed upon Buyer under this
Agreement. Audrey Malkan and Matthew Malkan hereby irrevocably
and unconditionally guarantee to Buyer the prompt and complete
performance of the obligations imposed upon Seller under this
Agreement. Guarantors consent and agree 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 Guarantors,
and without affecting the enforceability or continuing
effectiveness hereof as to the Guarantors:
(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;
(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 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, Seller 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 Guarantors or the continuing
effectiveness hereof, or the enforceability hereof with respect
to all or any part of the obligations evidenced hereby.
[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
OHIO BROADCAST ASSOCIATES
BY: _____________________________
Audrey Malkan
Partner
BY: _____________________________
Matthew Malkan
Partner
BUYER
CURREY BROADCASTING CORPORATION
BY: _____________________________
TITLE: President
GUARANTORS
OSBORN COMMUNICATIONS CORPORATION
BY: _____________________________
TITLE: ___________________________
AUDREY MALKAN
__________________________________
Audrey Malkan
MATTHEW MALKAN
___________________________________
Matthew Malkan
TABLE OF CONTENTS
Page
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 6
1.5 Proration of Income and Expenses 7
1.6 Allocation of Purchase Price 7
1.7 Submission of Schedules 8
ARTICLE II - CLOSING, TERMINATION, AND RISK OF LOSS
2.1 Closing 8
2.2 Transactions at the Closing 8
2.3 Termination 11
2.4 Risk of Loss 12
2.5 Interruption of Broadcast Transmissions 13
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation 13
3.2 Authority; No Conflict 14
3.3 Government Authorizations 14
3.4 Compliance with Regulations 15
3.5 Taxes and Regulatory Fees 15
3.6 Personal Property 15
3.7 Real Property 16
3.8 Consents 18
3.9 Contracts 18
3.10 Environmental 19
3.11 Intangibles 20
3.12 Financial Statements 21
3.13 Personnel Information; Labor Contracts 22
3.14 Employee Benefit Plans 22
3.15 Litigation 22
3.16 Compliance with Laws 23
3.17 Insurance 23
3.18 Undisclosed Liabilities 24
3.19 Instruments of Conveyance; Good Title 24
3.20 Absence of Certain Changes 24
3.21 Insolvency Proceedings 26
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation 26
4.2 Authority; No Conflict 26
4.3 Consents 26
4.4 Litigation 27
4.5 Compliance with Laws 27
4.6 Qualification 27
ARTICLE V - COVENANTS OF SELLER
5.1 Continued Operation of Station 27
5.2 Financial Obligations 28
5.3 Reasonable Access 28
5.4 Maintenance of Assets 28
5.5 Notification of Developments 28
5.6 Payment of Taxes 28
5.7 Third Party Consents 29
5.8 Encumbrances 29
5.9 Assignment of Assets 29
5.10 Commission Licenses and Authorizations 29
5.11 Technical Equipment 29
5.12 Compensation Increases 29
5.13 Sale of Broadcast Time 29
5.14 Insurance 30
5.15 Negotiations with Third Parties 30
5.16 Financial Statements 30
ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application 30
6.2 Performance 30
6.3 Conditions 31
6.4 Confidentiality 31
6.5 Cooperation 31
6.6 Environmental Reports 31
6.7 Consents to Assignment 32
6.8 Employee Matters 33
6.9 Survey 33
6.10 Escrow Agreement 33
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals 34
7.2 Performance 34
7.3 Failure of Transfer 35
7.4 Representations and Warranties 35
7.5 Consents 35
7.6 No Litigation 35
7.7 No Material Adverse Change 35
7.8 Documents 35
7.9 Opinions of Counsel 35
7.10 Survey 36
7.11 Environmental 36
7.12 Broadcast Cash Flow Requirements 36
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance 36
8.2 Representations and Warranties 36
8.3 Government Approvals 37
8.4 Documents 37
8.5 Opinion of Counsel 37
ARTICLE IX - INDEMNIFICATION
9.1 Indemnification by Seller 37
9.2 Indemnification by Buyer 38
9.3 Notification of Claims 38
9.4 Damages 39
ARTICLE X - MISCELLANEOUS
10.1 Assignment 39
10.2 Survival of Indemnification 40
10.3 Brokerage 40
10.4 Expenses of the Parties 40
10.5 Entire Agreement 41
10.6 Headings 41
10.7 Governing Law 41
10.8 Counterparts 41
10.9 Notices 41
10.10 Specific Performance 43
10.11 Consent to Jurisdiction 43
10.12 Further Assurances 43
10.13 Public Announcements 43
10.14 Accounts Receivable 43
10.15 Costs 44
10.16 Guarantees 45
DISCLOSURE SCHEDULE
1.1(a)Licenses and Authorizations
1.1(b)Tangible Personal Property
1.1(c)Real Estate Contracts
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(h)Trade Agreements to be Assumed by Buyer
1.1(j)Future Contracts
1.2(h)Excluded Assets
3.7 Title Defects
3.8 Seller's Consents
3.10 Environmental Disclosure
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
___________________________________________________________
ASSET PURCHASE AGREEMENT
dated as of July 2, 1996
by and among
OHIO BROADCAST ASSOCIATES
(Seller)
CURREY BROADCASTING CORPORATION
(Buyer)
OSBORN COMMUNICATIONS CORPORATION
(Guarantor)
AUDREY MALKAN
(Guarantor)
MATTHEW MALKAN
(Guarantor)
___________________________________________________________
Disclosure Schedule 1.1(a)
Licenses and Authorizations
1. WYNU (BLH-870825KE)
2. WHY-346
3. KEH-234
Disclosure Schedule 1.1(b)
Tangible Personal Property
Disclosure Schedule 1.1(c)
Real Estate Contracts
Disclosure Schedule 1.1(d)
Real Estate Assets
Disclosure Schedule 1.1(e)
Intangibles
Disclosure Schedule 1.1(f)
Leases and Contracts
[Lease of _______ between Rainbow Media, Inc., and
__________________]
Tower Lease Agreement of December 1, 1994 by and between Ohio
Broadcasting and Sprint Communications Company L.P.
Disclosure Schedule 1.1(g)
Contracts for Sale of Broadcast Time
Disclosure Schedule 1.1(h)
Trade Agreements to be Assumed by Buyer
Bridal Show Trade Agreement up to a maximum liability to be
assumed by Buyer under the Bridal Show Trade Agreement of Ten
Thousand Dollars ($10,000).
Victor's Auction Trade Agreement up to a maximum liability to be
assumed by Buyer under the Victor's Auction Trade Agreement of
Ten Thousand Dollars ($10,000).
Caldwell's Office Supply Trade Agreement to be assumed by Buyer
in the amount of Six Hundred Dollars ($600.00) per month of
advertising in exchange for a fax machine and copier together
with repairs and supplies.
Sentry Net Trade Agreement to be assumed by Buyer in the amount
of Fifty-Five Dollars and Fifty cents ($55.50) per month of
advertising in exchange for monitoring of the Station's alarm
system.
Disclosure Schedule 1.1(j)
Future Contracts
Disclosure Schedule 1.2(h)
Excluded Assets
Disclosure Schedule 3.7
Title Defects
A Perpetual Easement for Ingress and Egress executed by and
between Andrew Jackson Broadcasting Corporation and R. G. Cates
and wife, Pearl Cates, dated October 18, 1989, as recorded in
Official Record Book Volume 390, page 705, in the Register's
Office of Gibson County, Tennessee.
Disclosure Schedule 3.8
Seller's Consents
Disclosure Schedule 3.10
Environmental Disclosure
None.
Disclosure Schedule 3.12
Financial Statements
Disclosure Schedule 3.13
Personnel
Disclosure Schedule 3.14
Employee Benefit Plans
Disclosure Schedule 3.15
Litigation
None.
Disclosure Schedule 3.17
Insurance
Disclosure Schedule 3.20
Certain Changes
None.
Disclosure Schedule 4.3
Buyer's Consents
Consent of KeyBank National Association.
EXHIBIT A
[FORM OF ESCROW AGREEMENT]
This ESCROW AGREEMENT is dated this [__]th day of [
], 1996, by and among OHIO BROADCAST ASSOCIATES, a partnership
formed under the laws of the State of Texas ("Seller"), CURREY
BROADCASTING CORPORATION, a Delaware corporation ("Buyer"), John
M. Pelkey, Esq., and Bradley A. MacLean, Esq. (Messrs. Pelkey and
MacLean being jointly referred to as "Escrow Agents" or
"Agents").
Recitals
Seller and Buyer have entered into an Asset Purchase
Agreement (the "Purchase Agreement") of even date herewith, by
which Seller has agreed to sell, transfer and deliver to Buyer
certain assets used in the operation of Radio Station WYNU(FM),
Milan, Tennessee, licensed to Seller.
The Purchase Agreement provides that, to secure the
obligations of Buyer under the Purchase Agreement, a deposit in
the amount of One Hundred Seventy-Five Thousand Dollars
($175,000.00) (the "Escrow Deposit") is to be delivered to Escrow
Agents by Buyer to be held and disbursed by Escrow Agents in
accordance with the terms of this Agreement.
In consideration of the foregoing and of the covenants
and agreements contained herein, Buyer, Seller and Escrow Agents
agree as follows:
Section I
ESCROW DEPOSIT
1.1 Delivery. Simultaneously with the execution of
this Agreement, Buyer is delivering the Escrow Deposit to the
Escrow Agents. The Escrow Deposit and the interest or other
proceeds from the investment thereof (the "Earnings") shall be
referred to collectively herein as the "Escrow Amount."
1.2 Receipt. The Escrow Agents hereby acknowledge
receipt of the Escrow Deposit and agree to hold and disburse the
Escrow Amount in accordance with the terms and conditions of this
Agreement and for the uses and purposes stated herein.
1.3 Investment and Income. The Escrow Agents shall,
pending the disbursement of the Escrow Amount pursuant to this
Agreement, invest the Escrow Amount in accordance with the
Buyer's instructions in (a) direct obligations of, or obligations
fully guaranteed by, the United States of America or any agency
thereof, or (b) certificates of deposit issued by commercial
banks having a combined capital, surplus and undivided profits of
not less than One Hundred Million Dollars ($100,000,000), (c)
repurchase agreements collateralized by securities issued by the
United States of America or any agency thereof, or by any private
corporation the obligations of which are guaranteed by the full
faith and credit of the United States of America, (d) prime
banker's acceptances, (e) money market funds invested in any of
the above, or (f) other investments of equal or greater security
and liquidity.
Section II
DISBURSEMENT OF ESCROW AMOUNT
Agents shall distribute the Escrow Deposit as follows:
2.1 Closing. In the event the purchase and sale
closes in the manner contemplated by the Purchase Agreement, the
Escrow Deposit and any interest that has accrued thereon shall be
delivered to Seller and credited against the Purchase Price.
2.2 Material Breach. In the event the Closing (as
defined in the Purchase Agreement) fails to occur because Buyer
is in material breach of the Purchase Agreement, then the Escrow
Deposit shall be paid over to the Seller and all accrued interest
thereon shall be turned over to Buyer. In the event the purchase
and sale does not close for any other reason, the Escrow Deposit
shall be returned to Buyer together with all accrued interest
thereon.
2.3 Conflict with Purchase Agreement. If any
provision of this Section II with respect to the disposition of
the Escrow Amount is in conflict with any provision of the
Purchase Agreement with respect of such disposition, then such
provisions in the Purchase Agreement shall control.
2.4 Controversies with Respect to Escrow Deposit.
Escrow Agents shall dispose of the Escrow Deposit upon the joint
written instructions of the Seller and Buyer or their fully
designated representatives. Agents shall have no duty or
obligation to any third party claiming the Escrow Deposit in the
absence of joint written instructions directing Agents to pay
said third party. If Agents shall not have received joint
written instructions, Agents shall continue to hold the Escrow
Amount until:
(a) The receipt by Agents of the joint written
instructions of the Seller and Buyer as to the disposition of the
Escrow Amount; or
(b) Agents shall have, at their option, filed an
action or bill in interpleader, or similar action for such
purpose, in a court of competent jurisdiction and paid the Escrow
Deposit and all interest accrued thereon into said court, in
which event, Agents' duties, responsibilities and liabilities
with respect to the Escrow Deposit, the interest accrued thereon
and this Escrow Agreement shall terminate.
Section III
ESCROW AGENTS
3.1 Appointment and Duties. Buyer and Seller hereby
appoint Escrow Agents to serve hereunder and the Escrow Agents
hereby agree to perform all duties which are expressly set forth
in this Agreement. Buyer and Seller recognize that the Escrow
Agents are acting hereunder only as a conduit, for the
convenience of the parties, and have no legal or equitable
interest in, or control over, the Escrow Amount. The Escrow
Agents shall not be deemed to be the agent of either Buyer or
Seller, or their respective guarantors, and the Escrow Agents
shall not be liable to Buyer or Seller for any act or omission on
their part unless taken or suffered in bad faith, in willful
disregard of this Agreement or involving gross negligence. Under
no circumstances shall the Escrow Agents have liability for loss
of funds due to financial institution failure, suspension or
cessation of business or any other action or inaction on the part
of a financial institution.
3.2 Expenses of Escrow Agents. One-half of the
expenses incurred by the Escrow Agents in carrying out their
duties under this Agreement will be paid to the Escrow Agents by
Seller and one-half of such expenses shall be paid by Buyer.
3.3 Indemnification. Both Seller and Buyer will, at
their expense, indemnify the Escrow Agents, hold them harmless
from any and all claims, regardless of nature, arising out of or
because of this Agreement, and exonerate the Escrow Agents from
any liability in connection with this Agreement except as such
may arise because of the Escrow Agents' gross negligence or
willful misconduct in performing their specified duties as Escrow
Agents.
3.4 Resignation. Escrow Agents may resign at any time
upon giving the other parties hereto thirty (30) days prior
written notice to that effect. In such event, the successor
shall be such person, firm or corporation as shall be mutually
selected by Buyer and Seller. It is understood and agreed that
such resignation shall not be effective until a successor agrees
to act hereunder; provided, however, if no successor is appointed
within thirty (30) days after such notice is given, Escrow Agents
may pay and deliver the Escrow Amount into a court of competent
jurisdiction.
Section IV
LIABILITIES OF ESCROW AGENTS
4.1 Limitations. The Escrow Agents shall be liable
only to accept, hold and deliver the Escrow Amount in accordance
with the provisions of this Agreement and amendments thereto,
provided, however, that the Escrow Agents shall not incur any
liability with respect to (a) any action taken or omitted in good
faith or upon the advice of their counsel given with respect to
any questions relating to their duties and responsibilities as
Escrow Agents under this Agreement, or (b) any action taken or
omitted in reliance upon any instrument which the Escrow Agents
shall in good faith believe to be genuine (including the
execution, the identity, or authority of any person executing
such instrument, its validity and effectiveness, and the truth
and accuracy of any information contained therein), to have been
signed by a proper person or persons, and to conform to the
provisions of this Agreement.
Section V
TERMINATION
5.1 This Agreement shall be terminated (i) upon
disbursements of the Escrow Amount by the Escrow Agents, (ii) by
written mutual consent signed by all parties, or (iii) payment of
the Escrow Amount into a court of competent jurisdiction in
accordance with Sections 2.4 or 3.4 hereof. This Agreement shall
not be otherwise terminated.
Section VI
OTHER PROVISIONS
6.1 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 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:
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
If to Seller:
Ms. Audrey Malkan
304 Crestwood Drive
Ft. Worth, TX 76107
Fax: 817-626-0931
Phone: 817-626-0931
With a copy to:
Brad MacLean
Farris Warfield & Kanaday
Suite 1900
424 Church Street
SunTrust Center
Nashville, TN 37219
Fax: 615-726-3185
Phone: 615-244-5200
If to John M. Pelkey, Esq.:
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
If to Bradley A. MacLean, Esq.:
Brad MacLean
Farris Warfield & Kanaday
Suite 1900
424 Church Street
SunTrust Center
Nashville, TN 37219
Fax: 615-726-3185
Phone: 615-244-5200
or to any such other or additional persons and addresses as the
parties may from time to time designate in a writing delivered in
accordance with this Section 6.1.
6.2 Benefit and Assignment. The rights and
obligations of each party under this Agreement may not be
assigned without prior written consent of all other parties
unless the assignment is to a permitted assignee under the
Purchase Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns.
6.3 Entire Agreement; Amendment. This Agreement and
the Purchase Agreement contain all the terms agreed upon by the
parties with respect to the subject matter hereof. This
Agreement may be amended only by a written instrument signed by
the party against which enforcement of any waiver, change,
modification, extension or discharge is sought.
6.4 Headings. The headings of the sections and
subsections of this Agreement are for ease of reference only and
do not evidence the intentions of the parties.
6.5 Governing Law. This Agreement shall be governed
by, and construed according to, the laws of the State of
Tennessee.
6.6 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
on all counterparts are upon the same instrument.
6.7 Legal Representation. The parties hereto
acknowledge that Messrs. Pelkey and MacLean, and their respective
law firms, have represented Buyer and Seller, and their
respective guarantors, in connection with the Purchase Agreement
and related matters and agree that Messrs. Pelkey and MacLean,
and their respective law firms, may continue to represent Buyer
and Seller, and their respective guarantors, in the event of any
dispute between or among Buyer and Seller or otherwise. If the
Escrow Agents commence an interpleader action pursuant to
paragraph 2.4(b) above, Seller will consent to the representation
of Buyer and its guarantor in that action by Mr. Pelkey and his
law firm and Buyer will consent to the representation of Seller
and its guarantors in that action by Mr. MacLean and his law
firm.
IN WITNESS WHEREOF, the Parties hereto have executed or
have caused this Agreement to be executed by a duly authorized
officer or partner on the day and year first above written.
OHIO BROADCAST ASSOCIATES
___________________________________________
BY:
TITLE:
CURREY BROADCASTING CORPORATION
___________________________________________
BY:
TITLE:
JOHN M. PELKEY
___________________________________________
BRADLEY A. MACLEAN
___________________________________________
EXHIBIT B
[FORM OF OPINION OF COUNSEL TO THE SELLER]
Capitalized terms will have the respective meanings
assigned them in the Asset Purchase Agreement unless otherwise
defined herein.
Documents to be covered, shall include, without
limitation, the Seller's partnership agreement ("Charter
Documents"), and the Asset Purchase Agreement and any ancillary
agreements (the "Transaction Documents").
Opinions (subject to customary assumptions, exceptions and
qualifications):
The Seller is a partnership duly organized,
validly existing and in good standing under the laws of the State
of Texas, is qualified to do business in the State of Tennessee
and has all requisite partnership power and authority to own or
lease its assets and properties, as the case may be, and to carry
on its business as presently conducted.
The Seller has full power and authority to enter
into, execute, deliver and perform its obligations under the
Transaction Documents and to consummate the transactions
contemplated thereby.
The execution and delivery by the Seller and the
consummation by the Seller of the transactions contemplated
thereby have been duly and validly authorized by all necessary
action on the part of the Seller.
The Transaction Documents have been duly executed
and delivered by the Seller and constitute a legal, valid and
binding obligation of the Seller, enforceable against the Seller
in accordance with its terms, except that enforceability may be
subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, transfer, moratorium or other laws relating to or
affecting creditors' rights generally and to general principles
of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
The execution and delivery by the Seller, the
performance by the Seller of its obligations thereunder and the
consummation of the transactions contemplated thereby will not
conflict with or result in any breach of any of the terms and
conditions of, or constitute a default under (a) the Charter
Documents of the Seller (b) any material agreement, lease or
contract, written or oral, to which the Seller is a party of
which we are aware or (c) any judgment, decree, award, injunction
or governmental order of which we are aware and by which any of
the assets or properties of the Seller are bound.
The execution and delivery by the Seller of the
Asset Purchase Agreement, the performance by the Seller of its
obligations thereunder and the consummation of the transactions
contemplated thereby are not prohibited by nor do they require
the Seller to obtain any consent, approval or action of, or make
any filing with or give any notice to, (i) any judicial body or
Governmental or Regulatory Body or (ii) any other Person, except
in either case for consents, approvals, actions, filings or
notices that would not, individually or in the aggregate, have a
material adverse effect.
EXHIBIT C
[FCC Counsel Letterhead]
[Closing Date]
Currey Broadcasting Corporation
130 Mason Street
Greenwich, CT 06830
Dear ____________ :
This opinion is furnished to you pursuant to Paragraph 7.9
of the Asset Purchase Agreement ("Agreement"), dated as of July
2, 1996 between Ohio Broadcast Associates ("Seller") and Currey
Broadcasting Corporation ("Buyer"). The terms used but not
defined in this letter shall have the same meanings given to such
terms in the Agreement.
We have acted as communications counsel for Seller in
connection with the assignment to Buyer of the licenses, permits,
and other authorizations issued by the Federal Communications
Commission (hereinafter, the "FCC" or "Commission") for the
operation of radio broadcast station WYNU(FM), Milan, Tennessee,
and associated auxiliary broadcast station facilities
(hereinafter referred to collectively as the "Station").
As communications counsel for Seller, we are engaged in the
representation of Seller before the Commission in connection with
the operation of the Station. We have examined executed copies
of the Agreement and related documents, including the schedules
and exhibits thereto. We have also examined such other records,
certificates, licenses, permits, notices, and other documents,
and have considered such other questions of law as relate to
Seller and the Station as we have deemed necessary or appropriate
for purposes of this opinion.
In rendering this opinion, we have assumed the genuineness
of signatures on documents and the conformity to originals of all
copies examined by or submitted to us, including photocopies and
conformed copies. As to various questions of fact in connection
with this opinion, we have relied upon the examination of
available files in our offices, those of the Commission, and
statements and representations of employees of the Commission, as
well as those of officers and responsible representatives of
Seller.
Based upon the foregoing, we are of the opinion that, as of
the date hereof:
1. Seller is the authorized holder of the licenses, permits and
authorizations listed on Schedule 1 to this letter and issued by
the Commission for the operation of the Station ("FCC Licenses")
and the FCC Licenses are valid and in full force and effect;
2. The FCC Licenses constitute all the licenses, permits and
authorizations required for the lawful operation of the Stations;
3. Each FCC License has been granted or issued by an action of
the FCC as to which all applicable administrative and judicial
appeal, review, and reconsideration periods have expired without
such appeal, review, or reconsideration having been taken or
instituted by any party or by the FCC on its own motion, and
there are no pending, ungranted applications for the modification
or assignment of the FCC Licenses or transfer of control of the
Seller;
4. There are no conditions imposed by the FCC on any of the FCC
Licenses which are missing from the faces thereof as issued by
the FCC or not set forth in the FCC's rules, regulations, and
policies (the "FCC's Rules") that are applicable generally to
stations of the type, nature, class, or location of the Stations;
5. We have no reason to believe that any FCC License will not,
subject to the filing of a license renewal application and
payment of any applicable filing fee, be renewed for a full term
in the ordinary course;
6. To the best of our knowledge, after inquiry of the
Commission, (a) there is not any Commission judgment or decree,
investigation, notice of apparent liability or order of
forfeiture pending or outstanding against the Station respecting
any violation or allegation of the Communications Act of 1934, as
amended (the "Act"), or of any FCC Rule and (b) there is no
action, suit, investigation or complaint before the Commission as
a result of which an investigation, judgment, or decree, notice
of apparent liability or order of forfeiture could issue from the
Commission relating to the Station;
7. No events have occurred that could result in (a) the
termination, revocation, or adverse modification of any FCC
License, (b) the imposition of any material financial penalty by
the FCC upon Seller, or (c) a material adverse effect upon, or
cause material disruption to, the business, operations, or future
prospects of the Station;
8. Upon applications duly made, the Commission on
________________, 1996, granted its consent to the assignment of
the FCC Licenses by Seller to Buyer (the "Consents");
9. To the best of our knowledge, no other consent of any agency
of the federal government is required to permit Seller and Buyer
to consummate the transactions described in the Agreement;
10. The Consents remain in full force and effect, and have not
been reversed, stayed, enjoined, set aside, annulled, or
suspended.
11. No request seeking reconsideration, review, or appeal from
the Consents by the FCC has been filed with the FCC or the United
States Court of Appeals for the District of Columbia Circuit
within the time periods specified in the Act or the FCC's Rules,
and the time periods specified in the Act and the FCC's Rules for
the filing of such request for reconsideration, review, or
appeal, or for review by the Commission on its own motion, have
expired.
12. The execution, delivery, and performance of the Agreement on
the Closing Date will not cause a violation of or a default under
any of the FCC Licenses.
13. The Seller has filed with the FCC all reports, documents,
instruments, information, regulatory fee payments, and
applications required to be filed pursuant to the Act and the
FCC's Rules or upon the request of the FCC. The Stations have
been operated at all times by the Seller in accordance with the
terms of the FCC Licenses, the Act, and the FCC's Rules, and
Seller is in compliance with the Act and the FCC's Rules.
The foregoing opinions are subject to the following further
qualifications. We have not independently verified the manner in
which the Stations are currently being operated or their
compliance with engineering standards, and could not do so
without physically inspecting the Stations. Our opinion as to
the sufficiency of the FCC Licenses is based solely on our
inspection of the Commission's records and our files and upon the
representations of the officers and responsible representatives
of Seller. However, nothing has come to our attention that leads
us to question the accuracy of such representations.
As aforesaid, this opinion is furnished to you solely
pursuant to Paragraph 7.9 of the Agreement. It may not be used,
circulated, quoted or otherwise relied upon by any other person
or entity or for any other purpose, provided, however, that this
opinion may also be relied upon by each party to the Agreement
and may be relied upon by the financial institution that is
loaning Buyer the funds to effectuate the Agreement. The
opinions expressed herein are based on our knowledge and
understanding of the facts as they exist on the date hereof and
we assume no obligation to you or to any other person to revise
those opinions on the basis of possible changes in fact occurring
or first coming to our attention after the consummation of the
transactions described in the Agreement.
Very truly yours,
[Name of Firm of Seller's FCC Counsel]
By:____________________________
EXHIBIT D
[Letterhead of Counsel]
[Date of Closing]
OHIO BROADCAST ASSOCIATES
c/o Ms. Audrey Malkan
[_________________]
[_________________]
Dear Ms. Malkan:
We have acted as counsel for Currey Broadcasting
Corporation, a Delaware corporation ("Buyer"), in connection with
the Asset Purchase Agreement (the "Asset Purchase Agreement")
dated as of July 2, 1996 by and among Buyer and Ohio Broadcast
Associates. Unless otherwise defined herein, capitalized terms
used herein have the same meanings ascribed to them in the Asset
Purchase Agreement. This opinion is being furnished to you at
the request of the Buyer pursuant to Section 8.5 of the Asset
Purchase Agreement.
In connection with rendering this opinion we have examined
originals, or copies certified or otherwise identified to our
satisfaction, of the following documents, each dated July 2,
1996(collectively, the "Documents"):
1. The Asset Purchase Agreement; and
2. The Escrow Agreement by and among Seller, Buyer, John
M. Pelkey, Esq., and Bradley A. MacLean, Esq..
In addition, we have examined (i) such corporate records of
the Buyer as we have considered appropriate, including copies of
the Certificate of Incorporation of the Buyer, the Bylaws of the
Buyer, and certified copies of resolutions of the board of
directors of the Buyer, and (ii) any such other certificates,
agreements and documents as we have deemed relevant and necessary
as a basis for the opinions hereunder expressed.
In our examination of the aforesaid documents, we have
assumed, without independent investigation, the genuineness of
all signatures, the enforceability of the Documents against each
party thereto other than the Buyer, the legal capacity of all
individuals who have executed any of the documents, the
authenticity of all documents submitted to us as originals, and
the conformity with the original of all documents submitted to us
as certified or photostatic or reproduced copies.
In expressing the opinions set forth herein, we have relied
upon the factual matters contained in the representations and
warranties of the Buyer made in the Documents and upon
certificates of public officials and officers of the Buyer.
Based upon the foregoing, and subject to the assumptions,
exceptions and qualifications set forth herein, we are of the
opinion that:
(i) Buyer is a duly organized and validly existing
corporation in good standing under the laws of the State of
Delaware, and is qualified to do business as a foreign
corporation and is in good standing in the State of Tennessee;
(ii) Buyer has full corporate power and authority to enter
into the Asset Purchase Agreement and to consummate the
transactions contemplated thereby; the execution, delivery and
performance by Buyer of the Asset Purchase Agreement has been
duly authorized by all requisite corporate action on the part of
Buyer; the Asset Purchase Agreement has been duly executed and
delivered by Buyer and (assuming due execution and delivery by
the other parties thereto) constitutes a valid and binding
obligation of Buyer, enforceable in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and
general principles of equity;
(iii) Buyer is not subject to or bound by any charter or
by-law provision or any statute, rule, regulation or judicial or
administrative decision or, to the best of our knowledge, any
agreement or any judgment, award, order, writ, injunction or
decree of any court or of any governmental body or of any
arbitrator which, by operation of law, or pursuant to its terms,
would be violated or breached, or which would terminate, lapse or
be subject to termination, upon the consummation of the
transactions contemplated herein absent the consent or other
action of any third party or agency; and
(iv) The FCC has granted its consent to the assignment of
the Licenses from Seller to Buyer and the consummation of the
transactions contemplated by the Asset Purchase Agreement, and
such consent is the only consent or authorization of the FCC
necessary for the assignment of the Licenses of Seller to Buyer
and the consummation of the transactions, contemplated by the
Asset Purchase Agreement.
Our opinion expressed above is limited to the laws of the
Commonwealth of Virginia, the General Corporation Law of the
State of Delaware and the Federal laws of the United States. Our
opinion is rendered only with respect to the laws, and the rules,
regulations and orders thereunder, that are currently in effect.
Please be advised that no member of this firm is admitted to
practice in the State of Delaware. We assume no obligation to you
or to any person to revise this opinion on the basis of possible
changes in fact occurring or first coming to our attention after
the date hereof.
This letter is furnished by us solely for your benefit in
connection with the transactions referred to in the Asset
Purchase Agreement and may not be circulated to, or relied upon
by, any other person or entity or used in any other context.
Very truly yours,
ESCROW AGREEMENT
This ESCROW AGREEMENT is dated this 28th day of June,
1996, by and among OHIO BROADCAST ASSOCIATES, a partnership
formed under the laws of the State of Texas ("Seller"), CURREY
BROADCASTING CORPORATION, a Delaware corporation ("Buyer"), John
M. Pelkey, Esq., and Bradley A. MacLean, Esq. (Messrs. Pelkey and
MacLean being jointly referred to as "Escrow Agents" or
"Agents").
Recitals
Seller and Buyer have entered into an Asset Purchase
Agreement (the "Purchase Agreement") of even date herewith, by
which Seller has agreed to sell, transfer and deliver to Buyer
certain assets used in the operation of Radio Station WYNU(FM),
Milan, Tennessee, licensed to Seller.
The Purchase Agreement provides that, to secure the
obligations of Buyer under the Purchase Agreement, a deposit in
the amount of One Hundred Seventy-Five Thousand Dollars
($175,000.00) (the "Escrow Deposit") is to be delivered to Escrow
Agents by Buyer to be held and disbursed by Escrow Agents in
accordance with the terms of this Agreement.
In consideration of the foregoing and of the covenants
and agreements contained herein, Buyer, Seller and Escrow Agents
agree as follows:
Section I
ESCROW DEPOSIT
1.1 Delivery. Simultaneously with the execution of
this Agreement, Buyer is delivering the Escrow Deposit to the
Escrow Agents. The Escrow Deposit and the interest or other
proceeds from the investment thereof (the "Earnings") shall be
referred to collectively herein as the "Escrow Amount."
1.2 Receipt. The Escrow Agents hereby acknowledge
receipt of the Escrow Deposit and agree to hold and disburse the
Escrow Amount in accordance with the terms and conditions of this
Agreement and for the uses and purposes stated herein.
1.3 Investment and Income. The Escrow Agents shall,
pending the disbursement of the Escrow Amount pursuant to this
Agreement, invest the Escrow Amount in accordance with the
Buyer's instructions in (a) direct obligations of, or obligations
fully guaranteed by, the United States of America or any agency
thereof, or (b) certificates of deposit issued by commercial
banks having a combined capital, surplus and undivided profits of
not less than One Hundred Million Dollars ($100,000,000), (c)
repurchase agreements collateralized by securities issued by the
United States of America or any agency thereof, or by any private
corporation the obligations of which are guaranteed by the full
faith and credit of the United States of America, (d) prime
banker's acceptances, (e) money market funds invested in any of
the above, or (f) other investments of equal or greater security
and liquidity.
Section II
DISBURSEMENT OF ESCROW AMOUNT
Agents shall distribute the Escrow Deposit as follows:
2.1 Closing. In the event the purchase and sale
closes in the manner contemplated by the Purchase Agreement, the
Escrow Deposit and any interest that has accrued thereon shall be
delivered to Seller and credited against the Purchase Price.
2.2 Material Breach. In the event the Closing (as
defined in the Purchase Agreement) fails to occur because Buyer
is in material breach of the Purchase Agreement, then the Escrow
Deposit shall be paid over to the Seller and all accrued interest
thereon shall be turned over to Buyer. In the event the purchase
and sale does not close for any other reason, the Escrow Deposit
shall be returned to Buyer together with all accrued interest
thereon.
2.3 Conflict with Purchase Agreement. If any
provision of this Section II with respect to the disposition of
the Escrow Amount is in conflict with any provision of the
Purchase Agreement with respect of such disposition, then such
provisions in the Purchase Agreement shall control.
2.4 Controversies with Respect to Escrow Deposit.
Escrow Agents shall dispose of the Escrow Deposit upon the joint
written instructions of the Seller and Buyer or their fully
designated representatives. Agents shall have no duty or
obligation to any third party claiming the Escrow Deposit in the
absence of joint written instructions directing Agents to pay
said third party. If Agents shall not have received joint
written instructions, Agents shall continue to hold the Escrow
Amount until:
(a) The receipt by Agents of the joint written
instructions of the Seller and Buyer as to the disposition of the
Escrow Amount; or
(b) Agents shall have, at their option, filed an
action or bill in interpleader, or similar action for such
purpose, in a court of competent jurisdiction and paid the Escrow
Deposit and all interest accrued thereon into said court, in
which event, Agents' duties, responsibilities and liabilities
with respect to the Escrow Deposit, the interest accrued thereon
and this Escrow Agreement shall terminate.
Section III
ESCROW AGENTS
3.1 Appointment and Duties. Buyer and Seller hereby
appoint Escrow Agents to serve hereunder and the Escrow Agents
hereby agree to perform all duties which are expressly set forth
in this Agreement. Buyer and Seller recognize that the Escrow
Agents are acting hereunder only as a conduit, for the
convenience of the parties, and have no legal or equitable
interest in, or control over, the Escrow Amount. The Escrow
Agents shall not be deemed to be the agent of either Buyer or
Seller, or their respective guarantors, and the Escrow Agents
shall not be liable to Buyer or Seller for any act or omission on
their part unless taken or suffered in bad faith, in willful
disregard of this Agreement or involving gross negligence. Under
no circumstances shall the Escrow Agents have liability for loss
of funds due to financial institution failure, suspension or
cessation of business or any other action or inaction on the part
of a financial institution.
3.2 Expenses of Escrow Agents. One-half of the
expenses incurred by the Escrow Agents in carrying out their
duties under this Agreement will be paid to the Escrow Agents by
Seller and one-half of such expenses shall be paid by Buyer.
3.3 Indemnification. Both Seller and Buyer will, at
their expense, indemnify the Escrow Agents, hold them harmless
from any and all claims, regardless of nature, arising out of or
because of this Agreement, and exonerate the Escrow Agents from
any liability in connection with this Agreement except as such
may arise because of the Escrow Agents' gross negligence or
willful misconduct in performing their specified duties as Escrow
Agents.
3.4 Resignation. Escrow Agents may resign at any time
upon giving the other parties hereto thirty (30) days prior
written notice to that effect. In such event, the successor
shall be such person, firm or corporation as shall be mutually
selected by Buyer and Seller. It is understood and agreed that
such resignation shall not be effective until a successor agrees
to act hereunder; provided, however, if no successor is appointed
within thirty (30) days after such notice is given, Escrow Agents
may pay and deliver the Escrow Amount into a court of competent
jurisdiction.
Section IV
LIABILITIES OF ESCROW AGENTS
4.1 Limitations. The Escrow Agents shall be liable
only to accept, hold and deliver the Escrow Amount in accordance
with the provisions of this Agreement and amendments thereto,
provided, however, that the Escrow Agents shall not incur any
liability with respect to (a) any action taken or omitted in good
faith or upon the advice of their counsel given with respect to
any questions relating to their duties and responsibilities as
Escrow Agents under this Agreement, or (b) any action taken or
omitted in reliance upon any instrument which the Escrow Agents
shall in good faith believe to be genuine (including the
execution, the identity, or authority of any person executing
such instrument, its validity and effectiveness, and the truth
and accuracy of any information contained therein), to have been
signed by a proper person or persons, and to conform to the
provisions of this Agreement.
Section V
TERMINATION
5.1 This Agreement shall be terminated (i) upon
disbursements of the Escrow Amount by the Escrow Agents, (ii) by
written mutual consent signed by all parties, or
(iii) payment of the Escrow Amount into a court of competent
jurisdiction in accordance with Sections 2.4 or 3.4 hereof. This
Agreement shall not be otherwise terminated.
Section VI
OTHER PROVISIONS
6.1 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 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:
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
If to Seller:
Ms. Audrey Malkan
304 Crestwood Drive
Ft. Worth, TX 76107
Fax: 817-626-0931
Phone: 817-626-0931
With a copy to:
Brad MacLean
Farris Warfield & Kanaday
Suite 1900
424 Church Street
SunTrust Center
Nashville, TN 37219
Fax: 615-726-3185
Phone: 615-244-5200
If to John M. Pelkey, Esq.:
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
If to Bradley A. MacLean, Esq.:
Brad MacLean
Farris Warfield & Kanaday
Suite 1900
424 Church Street
SunTrust Center
Nashville, TN 37219
Fax: 615-726-3185
Phone: 615-244-5200
or to any such other or additional persons and addresses as the
parties may from time to time designate in a writing delivered in
accordance with this Section 6.1.
6.2 Benefit and Assignment. The rights and
obligations of each party under this Agreement may not be
assigned without prior written consent of all other parties
unless the assignment is to a permitted assignee under the
Purchase Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns.
6.3 Entire Agreement; Amendment. This Agreement and
the Purchase Agreement contain all the terms agreed upon by the
parties with respect to the subject matter hereof. This
Agreement may be amended only by a written instrument signed by
the party against which enforcement of any waiver, change,
modification, extension or discharge is sought.
6.4 Headings. The headings of the sections and
subsections of this Agreement are for ease of reference only and
do not evidence the intentions of the parties.
6.5 Governing Law. This Agreement shall be governed
by, and construed according to, the laws of the State of
Tennessee.
6.6 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
on all counterparts are upon the same instrument.
6.7 Legal Representation. The parties hereto
acknowledge that Messrs. Pelkey and MacLean, and their respective
law firms, have represented Buyer and Seller, and their
respective guarantors, in connection with the Purchase Agreement
and related matters and agree that Messrs. Pelkey and MacLean,
and their respective law firms, may continue to represent Buyer
and Seller, and their respective guarantors, in the event of any
dispute between or among Buyer and Seller or otherwise. If the
Escrow Agents commence an interpleader action pursuant to
paragraph 2.4(b) above, Seller will consent to the representation
of Buyer and its guarantor in that action by Mr. Pelkey and his
law firm and Buyer will consent to the representation of Seller
and its guarantors in that action by Mr. MacLean and his law
firm.
IN WITNESS WHEREOF, the Parties hereto have executed or have
caused this Agreement to be executed by a duly authorized officer
or partner on the day and year first above written.
OHIO BROADCAST ASSOCIATES
___________________________________________
BY:
TITLE:
CURREY BROADCASTING CORPORATION
___________________________________________
BY:
TITLE:
JOHN M. PELKEY
___________________________________________
BRADLEY A. MACLEAN
___________________________________________
