REGENT BROADCASTING OF BUFFALO,
INC.
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Page
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ARTICLE I
ASSETS TO BE CONVEYED
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1
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Station
Assets
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1
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Excluded
Assets
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3
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Assumption of
Obligations
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5
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Retained
Liabilities
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5
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Purchase
Price
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5
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Closing
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6
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General
Proration
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6
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Effect of Local
Marketing Agreement
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9
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
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9
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Existence and
Power
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9
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Corporate
Authorization
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10
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Governmental
Authorization
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10
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Noncontravention
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10
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Absence of
Litigation
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10
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Financial
Statements
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11
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FCC
Licenses
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11
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Tangible
Personal Property
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12
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Station
Contracts
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12
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Intangible
Property
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12
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Real
Property
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13
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Environmental
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13
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Employee
Information
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13
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Compliance with
Laws
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14
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Taxes
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14
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Sufficiency and
Title to Station Assets
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14
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No
Finder
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14
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
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14
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Existence
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14
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Corporate
Authorization and Power
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15
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Governmental
Authorization
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15
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Noncontravention
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15
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Absence of
Litigation
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15
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FCC
Qualifications
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15
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Financing
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16
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No
Finder
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16
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ARTICLE IV
COVENANTS
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16
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Governmental
Approvals
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16
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Conduct of
Business
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17
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Access to
Information; Inspections; Confidentiality; Publicity
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18
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Risk of
Loss
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20
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i
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Page
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Consents to
Assignment; Estoppel Certificates
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20
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Notification
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21
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Employee
Matters
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21
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Title
Insurance; Surveys
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23
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Environmental
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24
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Further
Assurances
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24
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No
Shop
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24
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No Inconsistent
Action; Notice
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25
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Seller’s
Actions
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25
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ARTICLE V
CONDITIONS PRECEDENT
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25
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To
Buyer’s Obligations
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25
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To
Seller’s Obligations
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26
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ARTICLE VI
DOCUMENTS TO BE DELIVERED AT THE CLOSING
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27
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Documents to be
Delivered by Both Parties
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27
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Documents to be
Delivered by Seller
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27
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Documents to be
Delivered by Buyer
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28
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ARTICLE VII
SURVIVAL INDEMNIFICATION
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28
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Survival
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28
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Indemnification
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28
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Procedures
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30
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Computation of
Indemnifiable Losses
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30
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Sole
Remedy
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31
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ARTICLE VIII
TERMINATION RIGHTS
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31
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Termination
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31
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Effect of
Termination
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33
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ARTICLE IX TAX
MATTERS
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33
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Bulk
Sales
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33
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Transfer
Taxes
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33
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Taxpayer
Identification Numbers
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33
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ARTICLE X OTHER
PROVISIONS
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33
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Expenses
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33
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Benefit and
Assignment
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33
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No Third Party
Beneficiaries
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34
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Entire
Agreement; Waiver; Amendment
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34
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Headings
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35
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Computation of
Time
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35
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Governing Law;
Waiver of Jury Trial
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35
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Construction
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35
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Notices
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35
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Severability
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36
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Counterparts
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36
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ii
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Page
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ARTICLE XI
DEFINITIONS
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37
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Defined
Terms
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37
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Terms
Generally
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42
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iii
This
ASSET PURCHASE AGREEMENT, made as of the ___day of September, 2006,
is between CBS Radio Stations Inc., a Delaware corporation (“
Seller ”), and Regent Broadcasting of Buffalo, Inc., a
Delaware corporation (“ Buyer ”).
Seller
is the licensee of and operates the following radio broadcast
stations (each a “ Station ,” and collectively,
the “ Stations ”), pursuant to licenses issued
by the Federal Communications Commission (the “ FCC
”):
WBLK(FM),
Depew, New York (Facility ID No. 71215)
WBUF(FM),
Buffalo, New York (Facility ID No. 53699)
WECK(AM),
Cheektowaga, New York (Facility ID No. 1914)
WJYE(FM),
Buffalo, New York (Facility ID No. 1915)
WYRK(FM),
Buffalo, New York (Facility ID No. 1908)
Seller
and Buyer have agreed that Seller will sell and Buyer will acquire
substantially all of the assets of the Stations on the terms and
subject to the conditions set forth in this Agreement, including
the FCC’s consent to the assignment of the FCC Licenses (as
defined below) to Buyer. Definitions of certain capitalized terms
used in this Agreement are set forth in Article XI
.
Seller
and Buyer are, simultaneously with the execution and delivery of
this Agreement, entering into a Local Marketing Agreement for the
Stations (the “ Local Marketing Agreement ”),
pursuant to which, commencing on the LMA Commencement Date (as
defined below), Buyer shall provide programming on the Stations
pursuant to the terms and conditions contained therein, pending the
Closing of the transactions contemplated by this
Agreement.
NOW,
THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
ASSETS TO BE CONVEYED
1.1 Station Assets. Pursuant to the terms and subject to the
conditions of this Agreement, at the Closing, Seller shall sell,
assign, transfer and convey to Buyer, and Buyer shall purchase from
Seller, all of Seller’s right, title and interest in, to and
under all of the assets, properties, interests and rights of Seller
of whatsoever kind and nature, real and personal, tangible and
intangible, which are used or held for use in the operation of the
Stations, but
excluding the
Excluded Assets as hereinafter defined. Except as provided in
Section 1.2 , the Station Assets include, but not be
limited to, the following:
(a)
all licenses, permits and other authorizations or approvals issued
to Seller by the FCC or any other Governmental Authority with
respect to the Stations, including (i) those items described
on Schedule 1.1(a) , (ii) any pending applications
before the FCC listed on Schedule 2.7(b) ,
(iii) any pending applications for or renewals, extensions or
modifications thereof filed between the date hereof and the Closing
and (iv) all public inspection files and other records of the
Seller pertaining to such items (the “ FCC Licenses
”);
(b)
all equipment, electrical devices, antennas, cables, tools,
hardware, office furniture and fixtures, office materials and
supplies , inventory, motor vehicles, spare parts and other
tangible personal property of every kind and description used or
held for use in the operation of the Stations, including, those
items described on Schedule 1.1(b) to the extent owned by
Seller and used or held for use in the operation of the Stations,
except any retirements or dispositions thereof made between the
date hereof and Closing in the ordinary course of business and
consistent with Section 4.2 (the “ Tangible
Personal Property ”);
(c)
all contracts, agreements, leases and licenses used in the
operation of the Stations that (i) are listed on
Schedule 1.1(c) , except to the extent otherwise
indicated on such Schedule, (ii) were entered into in the
ordinary course of business and are reflected on the Reference
Financial Statements, provided that such contracts do not require
Buyer to make annual payments of more than $100,000 in the
aggregate, (iii) were entered into in the ordinary course of
business and relate to marketing, promotions or contests, or
(iv) were or are made between July 31, 2006 and Closing
in the ordinary course of business consistent with
Section 4.2 (collectively, the “ Station
Contracts ”);
(d)
to the extent transferable, all of Seller’s rights in and to
the Stations’ call letters, registered and unregistered
trademarks and associated goodwill, trade names, franchises,
service marks, copyrights, jingles, logos, slogans, Internet domain
names, Internet URLs, Internet web sites, content and databases,
computer software, programs and programming material and other
intangible property rights and interests applied for, issued to or
owned by Seller that are used primarily in the operation of the
Stations, including those listed on Schedule 1.1(d)
(the “ Intangible Property ”);
(e)
all files, documents, records and books of account (or copies
thereof) relating primarily to the operation of the Stations,
including the Stations’ public inspection files, programming
information and studies, blueprints, technical information and
engineering data, advertising studies, marketing and demographic
data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports, filings with the FCC, logs,
payroll records for Transferred Employees, and all other records
relating primarily to the operation of the Stations, and rights
under manufacturers’ and vendors’ warranties and
similar claims against third parties relating to the assets
conveyed hereunder, but excluding any such documents relating to
Excluded Assets (as defined below);
2
(f)
all interests in real property, including any licenses to occupy,
used or held for use in the operation of the Stations described on
Schedule 1.1(f) (the “ Real Property
”); and
(g)
all assets, properties, interests and rights, of whatever nature,
owned by Seller that are located on the Real Property and all
assets, other than fixtures, owned by Seller and located at the
Stations’ studios.
The assets to
be transferred to Buyer hereunder are collectively referred to
herein as the “ Station Assets. ” The Station
Assets shall be delivered without any representation or warranty by
Seller except as expressly set forth in this Agreement, warranties
of title conveyed in any deed(s), the Schedules to this Agreement
or the Seller Ancillary Agreements, and Buyer acknowledges that it
has not relied on or been induced to enter into this Agreement by
any representation or warranty other than those expressly set forth
in this Agreement, warranties of title conveyed in any deed(s), the
Schedules to this Agreement or the Seller Ancillary Agreements. The
Station Assets shall be transferred to Buyer free and clear of
liens, mortgages, pledges, security interests, claims and
encumbrances (“ Liens ”) except for Permitted
Liens, if any, and except as otherwise expressly provided in this
Agreement.
1.2 Excluded Assets. Notwithstanding anything to the
contrary contained herein, Buyer expressly acknowledges and agrees
that the following assets and properties of Seller (the “
Excluded Assets ”) shall not be acquired by Buyer and
are excluded from the Station Assets:
(a)
Seller’s books and records pertaining to the corporate
organization, existence or capitalization of Seller;
(b)
all cash, cash equivalents, or similar type investments of Seller,
such as certificates of deposit, treasury bills, marketable
securities, asset or money market accounts or similar accounts or
investments;
(c)
(i) all accounts receivable existing at the earlier of
(A) the date the term of the Local Marketing Agreement
commences (the “ LMA Commencement Date ”) or
(B) the Effective Time, and (ii) notes receivable,
promissory notes or amounts due from employees;
(d)
intercompany accounts receivable and accounts payable;
(e)
all insurance policies or any proceeds payable thereunder, except
as otherwise contemplated by Section 4.4 ;
(f)
all pension, profit sharing or cash or deferred
(Section 401(k)) plans and trusts and the assets thereof and
any other employee benefit plan or arrangement;
(g)
all interest in and to refunds of Taxes relating to all periods
prior to the Effective Time;
3
(h)
all tangible and intangible personal property disposed of or
consumed between the date of this Agreement and the Closing Date,
as permitted under this Agreement;
(i)
all rights to the CBS Eye Design and the names “CBS”
and “CBS Radio” and logos or variations thereof,
including trademarks, trade names and domain names, and all
goodwill associated therewith;
(j)
all rights to marks not used primarily in the operation of the
Stations, whether or not previously used, and all goodwill
associated therewith;
(k)
(i) all rights to marks identified on
Schedule 1.2(k)(i) and all goodwill associated
therewith and (ii) all rights to marks used in the operation
of the Stations and in connection with the operation of another
station or business of Seller or any of its Affiliates other than
or in addition to the Stations and all goodwill associated with
such marks; provided that, in each case, unless such mark is
otherwise excluded under Section (i)1.2(i) or
Section 1.2(j) , Seller or one of its Affiliates shall
grant Buyer, at Buyer’s request, the right, at no cost to
Buyer, pursuant to a license the form of which is included at
Schedule 1.2(k)(ii) , to continue to use such mark at
the applicable Station on a basis exclusive to Buyer in the
relevant Arbitron Metro;
(l)
the Oracle Financial System and Infinium payroll system used by
Seller and its Affiliates, whether in hard copy, stored on a
computer, disk or otherwise;
(m)
Group Contracts, except to the extent that
Schedule 1.1(c) specifically provides for the partial
assignment and assumption of any such Group Contract;
(n)
any asset or property used or held for use by Seller or an
Affiliate of Seller not located at the Stations’ offices in
Buffalo, New York or the Stations’ transmitter sites, and not
used primarily in the operation of the Stations, unless
specifically identified on the Schedules to this
Agreement;
(o)
all ASCAP, BMI and SESAC licenses;
(p)
all items of personal property owned by personnel at the
Stations;
(q)
any cause of action or claim relating to any event or occurrence
prior to the Effective Time, except as otherwise contemplated by
Section 4.4 ;
(r)
all rights of Seller under this Agreement or the transactions
contemplated hereby; and
(s)
the contracts identified on Schedule 1.2(s) and all
Station Contracts that shall have terminated or expired prior to
the Closing Date in the ordinary course of business consistent with
the past practices of Seller.
4
1.3 Assumption of Obligations. At the Closing, Buyer shall
assume and agrees to pay, discharge and perform the following
(collectively, the “ Assumed Obligations
”):
(a)
subject to Section 1.7 , all liabilities, obligations
and commitments of Seller under the Station Contracts to the extent
they arise or relate to any period at or after the Effective
Time;
(b)
all liabilities, obligations and commitments relating to
Transferred Employees as provided for in Section 4.7 ;
and
(c)
any current liability of Seller for which Buyer has received a
credit under Section 1.7 .
1.4 Retained Liabilities. Unless otherwise required pursuant
to the Local Marketing Agreement, Buyer does not assume or agree to
discharge or perform and will not be deemed by reason of the
execution and delivery of this Agreement or any agreement,
instrument or documents delivered pursuant to or in connection with
this Agreement or otherwise by reason of the consummation of the
transactions contemplated hereby, to have assumed or to have agreed
to discharge or perform, any liabilities, obligations or
commitments of Seller of any nature whatsoever whether accrued,
absolute, contingent or otherwise, other than the Assumed
Obligations (the “ Retained Liabilities ”);
provided, however, the Retained Liabilities do not include any
liability under Environmental Laws, except to the extent Seller has
undertaken to remediate an Environmental Condition under Section
4.9 (Environmental) or Seller is obligated under
Section 7.2(a)(i) to indemnify Buyer for breach of any
representation or warranty in Section 2.12
(Environmental). For avoidance of any doubt, all liabilities for
Taxes arising from Seller’s ownership and operation of the
Stations shall be Retained Liabilities, except to the extent the
Local Marketing Agreement expressly provides otherwise.
(a) In
consideration for the sale of the Station Assets, Buyer shall, at
the Closing, in addition to assuming the Assumed Obligations, pay
to Seller the sum of $125,000,000 (the “ Purchase
Price ”) by wire transfer of immediately available
federal funds pursuant to wire instructions that Seller shall
provide to Buyer.
(b) Buyer
shall deliver to Wells Fargo Bank, National Association (the
“ Escrow Agent ”) the sum of $9,375,000 no later
than three Business Days from the date hereof to be held as an
earnest money deposit (“ Escrow Deposit ”)
pursuant to an Escrow Agreement among Seller, Buyer and Escrow
Agent of even date herewith. In addition to any other right of
Seller under this Agreement, Seller shall have the right to
terminate this Agreement if the Escrow Deposit is not delivered to
the Escrow Agent within three Business Days of the date of this
Agreement. The Escrow Deposit (i) shall be paid to Seller as
partial payment of the cash Purchase Price due at Closing to Seller
(and credited against the amount to be wire transferred to Seller
pursuant to Section 1.5(a) ) and the interest accrued
thereon shall be paid to Buyer, or (ii) shall otherwise be
made available to Seller or released in accordance with
Section 8.1(f) or Section 8.1(g)
hereof.
5
1.6 Closing. Subject to Section 8.1 hereof and
except as otherwise mutually agreed upon by Seller and Buyer, the
consummation of the sale and purchase of the Station Assets and the
assumption of the Assumed Obligations hereunder (the “
Closing ”) shall take place (by electronic exchange of
the documents to be delivered at the Closing) on the later of
(a) five Business Days after the day that the FCC Consent
becomes effective and (b) the date on which each of the other
conditions to Closing set forth in Article V has been
satisfied or waived (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions at such time); provided,
however, that the Closing shall not take place before
November 22, 2006. Alternatively, the Closing may take place
at such other place, time or date as the parties may mutually agree
in writing but shall not occur before the FCC Consent is effective.
The date on which the Closing is to occur is referred to herein as
the “ Closing Date .” The effective time of the
Closing shall be 12:01 a.m., local Station time, on the
Closing Date (the “ Effective Time
”).
(a) Except
as provided in the Local Marketing Agreement, all Station Assets
that would be classified as assets in accordance with GAAP, and all
Assumed Obligations that would be classified as liabilities in
accordance with GAAP (including accrued but unpaid commissions, but
excluding equity non-cash compensation), shall be prorated between
Buyer and Seller as of the Effective Time, including by taking into
account the elapsed time or consumption of an asset during the
month in which the Effective Time occurs (respectively, the “
Prorated Station Assets ” and the “ Prorated
Assumed Obligations ”). Except as provided in the Local
Marketing Agreement, such Prorated Station Assets and Prorated
Assumed Obligations relating to the period prior to the Effective
Time shall be for the account of Seller and those relating to the
period on or after the Effective Time for the account of Buyer and
shall be prorated accordingly.
(b) Except
as provided in the Local Marketing Agreement, such prorations shall
include all ad valorem and other property taxes, assessments,
utility expenses, liabilities and obligations under Station
Contracts, rents and similar prepaid and deferred items and all
other expenses and obligations, such as accrued but unpaid
commissions, deferred revenue and prepayments, attributable to the
ownership and operation of the Stations that straddle the period
before and after the Effective Time. If such amounts were prepaid
by Seller prior to the Effective Time and Buyer will receive a
benefit after the Effective Time, then Seller shall receive a
credit for such amounts. If Seller was entitled to receive a
benefit prior to the Effective Time and such amounts will be paid
by Buyer after the Effective Time, Buyer will receive a credit for
such amounts. To the extent not known, real estate and personal
property taxes shall be apportioned on the basis of Taxes assessed
for the preceding year, with a reapportionment as soon as the new
tax rate and valuation can be ascertained even if such is
ascertained after the Settlement Statement is so determined. In
addition, upon the Closing Date, or as promptly thereafter as is
practicable, all employee and programming bonuses and incentive
compensation or fees (and the taxes related thereto) earned or
accrued at or prior to the Closing Date or otherwise attributable
to the fiscal or calendar year or other period during which the
Closing Date falls shall be equitably prorated between Buyer and
Seller, even if such amounts would not be accrued or classified as
liabilities under GAAP.
6
(c) Notwithstanding
anything in this Section 1.7 to the contrary, there
shall be no proration under this Section 1.7 for
Tradeout Agreements except as follows. In the event that the value
of the aggregate liability of the Stations under the Tradeout
Agreements as of the Effective Time exceeds the sum of (i) $20,000
plus (ii) the aggregate fair value of the goods yet to
be received and services yet to be used by the Stations under the
Tradeout Agreements, such excess shall be treated as a Prorated
Assumed Obligation. For the purposes of this subsection, the
liability of the Stations for unperformed time on or after the
Effective Time shall be valued according to the fair market value
of the goods or services received or to be received by the Stations
for such time under such Tradeout Agreements.
(d) Accrued
vacation liabilities for Transferred Employees shall be included in
the prorations, but there shall be no proration under this
Section 1.7 for sick leave for Transferred
Employees.
(e) Within
45 days after the Closing Date, Buyer shall prepare and
deliver to Seller a proposed pro rata adjustment of assets and
liabilities in the manner described in Section 1.7(a) ,
Section 1.7(b) and Section 1.7(c) , for the
Stations, as of the Effective Time (the “ Settlement
Statement ”) setting forth the Prorated Assumed
Obligations and the Prorated Station Assets together with a
schedule setting forth, in reasonable detail, the components
thereof.
(f) During
the 30-day period following the receipt of the Settlement Statement
(i) Seller and its independent auditors, if any, shall be
permitted to review and make copies reasonably required of
(A) the financial statements of Buyer relating to the
Settlement Statement; (B) the working papers of Buyer and its
independent auditors, if any, relating to the Settlement Statement;
(C) the books and records of Buyer relating to the Settlement
Statement; and (D) any supporting schedules, analyses and
other documentation relating to the Settlement Statement and
(ii) Buyer shall provide reasonable access, upon reasonable
advance notice and during normal business hours, to such employees
of Seller and its independent auditors, if any, as Seller
reasonably believes is necessary or desirable in connection with
its review of the Settlement Statement.
(g) The
Settlement Statement shall become final and binding upon the
parties on the 30th day following delivery thereof, unless Seller
gives written notice of its disagreement with the Settlement
Statement (the “ Notice of Disagreement ”) to
Buyer prior to such date. The Notice of Disagreement shall specify
in reasonable detail the nature of any disagreement so asserted. If
a Notice of Disagreement is given to Buyer in the period specified,
then the Settlement Statement (as revised in accordance with clause
(i) or (ii) below) shall become final and binding upon
the parties on the earlier of (i) the date Buyer and Seller
resolve in writing any differences they have with respect to the
matters specified in the Notice of Disagreement or (ii) the
date any disputed matters are finally resolved in writing by the
Accounting Firm.
(h) Within
10 Business Days after the Settlement Statement becomes final and
binding upon the parties, (i) Buyer shall be required to pay
to Seller the amount, if any, by which the Prorated Station Assets
exceeds the Prorated Assumed Obligations or (ii) Seller shall
be required to pay to Buyer the amount, if any, by which the
Prorated Assumed Obligations
7
exceeds the
Prorated Station Assets. All payments made pursuant to this
Section 1.7(h) must be made via wire transfer in
immediately available funds to an account designated by the
recipient party, together with interest thereon at the prime rate
(as reported by The Wall Street Journal or, if not reported
thereby, by another authoritative source) as in effect from time to
time from the Effective Time to the date of actual
payment.
(i) Notwithstanding
the foregoing, in the event that Seller delivers a Notice of
Disagreement, Seller or Buyer shall be required to make a payment
of any undisputed amount to the other regardless of the resolution
of the items contained in the Notice of Disagreement, and Seller or
Buyer, as applicable, shall within 10 Business Days of the receipt
of the Notice of Disagreement make payment to the other by wire
transfer in immediately available funds of such undisputed amount
owed by Seller or Buyer to the other, as the case may be, pending
resolution of the Notice of Disagreement together with interest
thereon, calculated as described above.
(j) During
the 30-day period following the delivery of a Notice of
Disagreement to Buyer that complies with the preceding paragraphs,
Buyer and Seller shall seek in good faith to resolve in writing any
differences they may have with respect to the matters specified in
the Notice of Disagreement. During such period: (i) Buyer and
its independent auditors, if any, at Buyer’s sole cost and
expense, shall be, and Seller and its independent auditors, if any,
at Seller’s sole cost and expense, shall be, in each case
permitted to review and make copies reasonably required of: (A) the
financial statements of the Seller, in the case of Buyer, and
Buyer, in the case of Seller, relating to the Notice of
Disagreement; (B) the working papers of Seller, in the case of
Buyer, and Buyer, in the case of Seller, and such other
party’s auditors, if any, relating to the Notice of
Disagreement; (C) the books and records of Seller, in the case
of Buyer, and Buyer, in the case of Seller, relating to the Notice
of Disagreement; and (D) any supporting schedules, analyses
and documentation relating to the Notice of Disagreement; and
(ii) Seller, in the case of Buyer, and Buyer, in the case of
Seller, shall provide reasonable access, upon reasonable advance
notice and during normal business hours, to such employees of such
other party and such other party’s independent auditors, if
any, as such first party reasonably believes is necessary or
desirable in connection with its review of the Notice of
Disagreement.
(k) If,
at the end of such 30-day period, Buyer and Seller have not
resolved such differences, Buyer and Seller shall submit to the
Accounting Firm for review and resolution any and all matters that
remain in dispute and that were properly included in the Notice of
Disagreement. Within 60 days after selection of the Accounting
Firm, Buyer and Seller shall submit their respective positions to
the Accounting Firm, in writing, together with any other materials
relied upon in support of their respective positions. Buyer and
Seller shall use commercially reasonable efforts to cause the
Accounting Firm to render a decision resolving the matters in
dispute within 30 days following the submission of such
materials to the Accounting Firm. Buyer and Seller agree that
judgment may be entered upon the determination of the Accounting
Firm in any court having jurisdiction over the party against which
such determination is to be enforced. Except as specified in the
following sentence, the cost of any arbitration (including the fees
and expenses of the Accounting Firm) pursuant to this
Section 1.7 shall be borne by Buyer and Seller in
inverse proportion as they may prevail on matters resolved by the
Accounting Firm, which proportional allocations shall also be
determined by the
8
Accounting Firm
at the time the determination of the Accounting Firm is rendered on
the matters submitted. The fees and expenses (if any) of
Buyer’s independent auditors and attorneys incurred in
connection with the review of the Notice of Disagreement shall be
borne by Buyer, and the fees and expenses (if any) of
Seller’s independent auditors and attorneys incurred in
connection with their review of the Settlement Statement shall be
borne by Seller.
1.8 Effect of Local Marketing Agreement. Simultaneously with
the execution of this Agreement, Seller and Buyer are executing and
delivering the Local Marketing Agreement. To the extent that any
Station Assets are assigned, any Assumed Obligations are assumed or
assets and liabilities are prorated under the Local Marketing
Agreement, any obligation of the Seller under this Agreement to
assign such Station Assets, of the Buyer to assume such Assumed
Obligations or of the parties to prorate such Station Assets and
Assumed Obligations, shall be deemed satisfied. Notwithstanding
anything contained herein to the contrary, Seller shall not be
deemed to have breached any of its representations, warranties,
covenants or agreements contained herein or to have failed to
satisfy any condition precedent to Buyer’s obligation to
perform under this Agreement (nor shall Seller have any liability
or responsibility to Buyer in respect of any such representations,
warranties, covenants, agreements or conditions precedent), in each
case, to the extent that the inaccuracy of any such
representations, the breach of any such warranty, covenant or
agreement or the inability to satisfy any such condition precedent
arises out of or otherwise relates to (a) any actions taken by
or under the authorization of Buyer or its Affiliates (or any of
their respective officers, directors, employees, agents or
representatives) in connection with Buyer’s performance of
its obligations under the Local Marketing Agreement or otherwise,
or (b) the failure of Buyer to perform any of its obligations
under the Local Marketing Agreement. Buyer’s actions or
failures as provided for in (a) and (b) of this
Section 1.8 shall hereinafter be referred to as “
Buyer LMA Actions .” Buyer acknowledges and agrees
that Seller shall not be deemed responsible for or have authorized
or consented to any action or failure to act on the part of Buyer
or its Affiliates (or any of their respective officers, directors,
employees, agents or representatives) in connection with the Local
Marketing Agreement solely by reason of the fact that prior to
Closing, Seller shall have the legal right to control, manage, and
supervise the operation of the Stations and the conduct of the
business, except to the extent Seller actually exercises control,
management or supervision of the operation of the Stations or the
conduct of the business.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller
represents and warrants to Buyer as follows:
2.1 Existence and Power. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization. Seller is qualified to do
business and is in good standing in each jurisdiction where such
qualification is necessary. Seller has the requisite corporate
power and authority to own and operate the Stations as currently
operated.
9
2.2 Corporate Authorization.
(a) The
execution and delivery by Seller of this Agreement and all of the
other agreements, certificates and instruments to be executed and
delivered by Seller pursuant hereto or in connection with the
transactions contemplated hereby (the “ Seller Ancillary
Agreements ”) , the performance by Seller of its
obligations hereunder and thereunder and the consummation by Seller
of the transactions contemplated hereby and thereby are within
Seller’s corporate powers and have been duly authorized by
all requisite corporate action on the part of Seller.
(b) This
Agreement has been, and each Seller Ancillary Agreement will be,
duly executed and delivered by Seller. This Agreement (assuming due
authorization, execution and delivery by Buyer) constitutes, and
each Seller Ancillary Agreement will constitute when executed and
delivered by Seller, the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar Laws affecting or relating to
enforcement of creditors’ rights generally and general
principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity).
2.3 Governmental Authorization. The execution, delivery and
performance by Seller of this Agreement and each Seller Ancillary
Agreement and the consummation of the transactions contemplated
hereby and thereby require no action by or in respect of, or filing
with or notification to, any Governmental Authority other than
(a) compliance with any applicable requirements of the HSRA,
(b) the FCC and (c) any such action by or in respect of or
filing with any other Governmental Authority as to which the
failure to take, make or obtain would not have a Seller Material
Adverse Effect.
2.4 Noncontravention. Except as disclosed on
Schedule 2.4 , the execution, delivery and performance
of this Agreement and each Seller Ancillary Agreement by Seller and
the consummation of the transactions contemplated hereby and
thereby do not and will not (a) violate or conflict with the
organizational documents of Seller; (b) assuming compliance
with the matters referred to in Section 2.3 , conflict
with or violate any Law or Governmental Order applicable to Seller;
(c) require any consent or other action by or notification to
any Person under, constitute a default under, give to any Person
any rights of termination, amendment, acceleration or cancellation
of any right or obligation of Seller under, any provision of
(i) any Station Contract other than Real Property Leases or
(ii) any Real Property Lease; or (d) result in the
creation or imposition of any Lien on any of the Station Assets,
except for Permitted Liens, except, in the case of clauses (b),
(c)(i) and (d), for any such violations, consents, actions,
defaults, rights or losses as would not have a Seller Material
Adverse Effect.
2.5 Absence of Litigation. Except as disclosed on
Schedule 2.5 , (a) there is no Action pending or,
to Seller’s knowledge, threatened against Seller that in any
manner challenges or seeks to prevent, enjoin, alter or delay
materially the transactions contemplated by this Agreement;
(b) Seller is not in material default under any Governmental
Order relating to the conduct of the business or the operation of
any of the Stations or any of the Station Assets; (c) Seller is not
subject to any Governmental Order relating to the conduct of the
business or the
10
operation of
any of the Stations or any of the Station Assets that would
materially affect Buyer’s continued ownership and operation
of the Stations consistent with Seller’s past practices; and
(d) to Seller’s knowledge, there is no Action pending or
threatened against Seller or any of the Stations before any
Governmental Authority, arbitrator or other tribunal duly
authorized to resolve disputes (i) that affects the Stations
or the Station Assets and (ii) that, if adversely determined,
would not be a Retained Liability.
2.6 Financial Statements.
(a) The
unaudited results of operations of the Stations for calendar years
2003, 2004 and 2005 and the first seven months of calendar year
2006 included at Schedule 2.6 (the “ Reference
Financial Statements ”) are derived from the books and
records of the Stations and were prepared in accordance with the
internal accounting policies of CBS Radio Inc. and CBS Corporation,
as applicable to financial reporting at the radio station level.
The Reference Financial Statements present fairly, in all material
respects, the financial condition and results of operations of the
Stations for the periods then ended consistent with the internal
accounting policies of CBS Radio Inc. and CBS Corporation, as
applicable to financial reporting at the radio station level.
During the period from July 31, 2006 to the date hereof,
inclusive, (i) there has been no change in the financial
condition or the results of operations of the Stations and
(ii) no event has occurred that, in the case of either clause
(i) or clause (ii), has had or would reasonably be expected to
have a Seller Material Adverse Effect.
(b) To
the extent required by applicable Law and taking into account the
threshold for materiality applicable to CBS Corporation, Seller and
its Affiliates (i) have devised and maintain a system of
internal accounting controls sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the
preparation of financial statements with respect to the Stations,
(ii) have designed disclosure controls and procedures to
ensure that material information relating to the Stations is made
known to the management of Seller on no less than a quarterly
basis, and (iii) have disclosed, based on its most recent
evaluation prior to the date hereof, to the auditors of CBS
Corporation (x) any significant deficiencies in the design or
operation of internal controls which could adversely affect in any
material respect Seller’s ability to record, process,
summarize and report financial data relating to the Stations and
have identified for the auditors of CBS Corporation any material
weakness in internal controls relating to the Stations and
(y) any fraud relating to the Stations, whether or not
material, that involves management or other employees who have a
significant role in Seller’s internal controls.
(a) Seller
has made available to Buyer true, correct and complete copies of
the FCC Licenses, including any and all amendments and
modifications thereto. The FCC Licenses were validly issued by the
FCC, are validly held by Seller and are in full force and effect.
The FCC Licenses are not subject to any condition except for those
conditions that appear on the face of the FCC Licenses, those
conditions applicable to radio broadcast licenses generally or
those conditions disclosed in Schedule 2.7(a) . The FCC
Licenses listed on Schedule 1.1(a) constitute all
authorizations issued by the FCC necessary for the operation of the
Stations
11
as currently
conducted by Seller, except for those licenses the absence of which
would not reasonably be expected to have a Seller Material Adverse
Effect.
(b) Except
as otherwise set forth on Schedule 2.7(b) , the FCC
Licenses for each Station have been issued or renewed for the full
terms customarily issued to radio broadcast stations licensed to
the state in which the Station’s community of license is
located. Except as set forth on Schedule 2.7(b) ,
Seller has no applications pending before the FCC relating to the
operation of the Stations.
(c) Except
as set forth on Schedule 2.7(c) , Seller (i) has
operated the Stations in compliance with the Communications Act of
1934, as amended (the “ Communications Act ”)
and the FCC Licenses, (ii) has filed or made all applications,
reports and other disclosures required by the FCC to be made in
respect of the Stations and (iii) has timely paid all FCC
regulatory fees in respect thereof, except where the failure to do
so could not, individually or in the aggregate, reasonably be
expected to have a Seller Material Adverse Effect. All such reports
and filings are accurate and complete and, from the date hereof to
the Closing Date, will be filed on a timely basis, except where
such failure would not, individually or in the aggregate,
reasonably be expected to have a Seller Material Adverse
Effect.
(d) Except
as set forth on Schedule 2.7(d) , to the knowledge of
Seller after due inquiry of its FCC counsel, there are no
petitions, complaints, orders to show cause, notices of violation,
notices of apparent liability, notices of forfeiture, proceedings
or other actions pending or threatened before the FCC relating to
the Stations that would reasonably be expected to have a Seller
Material Adverse Effect, other than proceedings affecting the radio
broadcast industry generally.
2.8 Tangible Personal Property. Except as disclosed on
Schedule 2.8(a) , Seller has title to the Tangible
Personal Property free and clear of Liens other than Permitted
Liens. Except as disclosed on Schedule 2.8(b) , the
Tangible Personal Property is in good operating condition, ordinary
wear and tear excepted, and has been maintained in a manner
consistent with Seller’s past practices.
2.9 Station Contracts. Each of the Station Contracts
(including each of the Real Property Leases) is in effect and is
binding upon Seller and, to Seller’s knowledge, the other
parties thereto (subject to bankruptcy, insolvency, reorganization
or other similar laws relating to or affecting the enforcement of
creditors’ rights generally). Seller is not in material
default under any Station Contract, and, to Seller’s
knowledge, no other party to any of the Station Contracts is in
default thereunder in any material respect. Except as otherwise set
forth on Schedule 1.1(c) , Seller has provided to Buyer
prior to the date of this Agreement true and complete copies of all
material Station Contracts (including each Real Property
Lease).
2.10
Intangible Property. Schedule 1.1(d) lists the call
letters of the Stations and all owned, registered Intangible
Property and significant unregistered Intangible Property. Except
as set forth on Schedule 2.10 , (a) to
Seller’s knowledge, Seller’s use of the registered and
owned Intangible Property does not infringe upon or conflict with
any third party rights and, to the extent Seller uses the
unregistered Intangible Property in the Stations’ broadcast
area, such use does not infringe upon or conflict with any third
party rights, (b) Seller has received no
12
notice of any
claim that its use of any material Intangible Property infringes
upon or conflicts with any third party rights, and (c) to
Seller’s knowledge, no third party is infringing upon
Seller’s intellectual property rights in the Intangible
Property. Except as set forth on Schedule 2.10 , Seller
is not in default of any license or other agreement relating to
Seller’s use of the Intangible Property. Seller owns or has
the right to use the Intangible Property free and clear of Liens
other than Permitted Liens as of the date of this
Agreement.
2.11 Real Property. Seller has good, marketable and
insurable fee simple title to the owned Real Property identified on
Schedule 1.1(f) (the “ Owned Real Property
”) free and clear of Liens other than Permitted Liens.
Schedule 1.1(f) includes a list of each lease,
sublease, license or similar agreement pertaining to the Real
Property (the “ Real Property Leases ”). Seller
has good and valid leasehold interest in the Real Property conveyed
by the Real Property Leases or has a valid license to occupy the
Real Property conveyed by the Real Property Leases as of the date
of this Agreement. The Owned Real Property includes, and the Real
Property Leases provide, practical and legal vehicular and
pedestrian access to the Stations’ facilities. To
Seller’s knowledge, the Real Property is not subject to any
suit for condemnation or other taking by any public authority.
Seller has received no notice of default under or termination of
any Real Property Leases, and Seller has no knowledge of any
default under any Real Property Lease. Seller has delivered to
Buyer true and correct copies of the Real Property Leases together
with all amendments thereto. Except as set forth on
Schedule 1.1(c) or Schedule 1.1(f) , Seller
has not granted any oral or written right to any Person (other than
Seller) to lease, sublease, license or otherwise occupy any of the
Real Property. Except as set forth on Schedule 2.11 ,
Seller has no knowledge of any violations of zoning laws or any
encroachments with respect to the Owned Real Property, either onto
such Owned Real Property by third parties, or by the Station Assets
onto the property of others, for which there is not a valid
easement or license.
2.12 Environmental. Except as set forth on
Schedule 2.12 , no pollutant, contaminant, hazardous or
toxic substance or waste regulated under any applicable
Environmental Law has been generated, stored, transported, disposed
of or released on, in, from or to the Real Property by Seller or,
to Seller’s knowledge, by any other Person, in each case, in
violation of any applicable Environmental Law. Except as set forth
on Schedule 2.12 , (a) Seller has complied in all
material respects with all Environmental Laws applicable to the
Stations or any of the Real Property, (b) there are no
underground storage tanks used by Seller in the operation of the
Stations and (c) to Seller’s knowledge, there are no
underground storage tanks (including underground storage tanks no
longer in use) located on the Owned Real Property. “
Environmental Laws ” are those environmental, health
or safety laws and regulations applicable to Seller’s
activities at the Real Property in effect.
2.13 Employee Information.
(a)
Schedule 2.13 contains a true and complete list as of
the date set forth thereon of all Station Employees ,
including the names, date of hire, current rate of compensation,
employment status (i.e., active, disabled, on authorized leave and
reason therefor), title, whether such Station Employee is a union
or non-union employee, whether such Station Employee is full-time,
part-time or per-diem and a general description of benefits,
including severance and vacation benefits, if any. Each Station
Employee listed on Schedule 2.13 is employed by Seller
or an Affiliate of Seller as of the date set forth in
Schedule 2.13 .
13
(b) None
of the Stations is subject to or bound by any labor agreement or
collective bargaining agreement. None of the Station Employees are
represented by a union or other labor organization for purposes of
collective bargaining. To the knowledge of Seller, there is no
activity now, and there has been no activity in the past two years,
involving any Station Employee, or being conducted by a labor
organization or union, seeking to certify a collective bargaining
unit or engaging in any other organization activity, nor has a
labor union been certified.
(c) Neither
the Seller nor any ERISA Affiliate has incurred or reasonably
expects to incur any liability under Title IV of ERISA (other than
liability for premiums due to the Pension Benefit Guaranty
Corporation and contributions made in the ordinary course). “
ERISA Affiliate ” shall mean any entity which is (or
at the relevant time was) a member of a “controlled group of
corporations” with, under “common control” with,
or a member or an “affiliated service group” with,
Seller as defined in Code Section 414(b), (c), (m) or
(o).
2.14 Compliance with Laws. Except as disclosed on
Schedule 2.14 , Seller has complied in all material
respects with all laws, regulations, rules, writs, injunctions,
ordinances, franchises, decrees or orders of any Governmental
Authority that are applicable to Seller’s operation of the
Stations, ownership of the Station Assets and employment of the
Station Employees.
2.15 Taxes. Seller has, in respect of the Stations’
business, filed all material Tax Returns required to have been
filed by it under applicable Law and has paid all Taxes which have
become due pursuant to such Tax Returns or pursuant to any
assessments which have become payable.
2.16 Sufficiency and Title to Station Assets. Except for the
Excluded Assets, the Station Assets constitute all the assets used
or held for use by Seller in the business or operation of the
Stations. Seller, or an Affiliate of Seller, owns, leases or is
licensed to use all of the Station Assets free and clear of Liens,
except for Permitted Liens.
2.17 No Finder. No broker, finder or other person is
entitled to a commission, brokerage fee or other similar payment in
connection with this Agreement, the Seller Ancillary Agreements or
the transactions contemplated hereby or thereby as a result of any
agreements or action of Seller or any party acting on
Seller’s behalf.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer
represents and warrants to Seller as follows:
3.1 Existence. Buyer is a Delaware corporation duly
organized, validly existing and in good standing under the laws of
the state of its organization. Buyer is, or will be at Closing,
duly qualified to do business and is in good standing in the State
of New York and in each other jurisdiction where such qualification
is necessary.
14
3.2 Corporate Authorization and Power.
(a) The
execution and delivery by Buyer of this Agreement and all of the
other agreements, certificates and instruments to be executed and
delivered by Buyer pursuant hereto or in connection with the
transactions contemplated hereby (the “ Buyer Ancillary
Agreements ”) , the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer
of the transactions contemplated hereby and thereby are within
Buyer’s corporate powers and have been duly authorized by all
requisite corporate action on the part of Buyer.
(b) This
Agreement has been, and each Buyer Ancillary Agreement will be,
duly executed and delivered by Buyer. This Agreement (assuming due
authorization, execution and delivery by Seller) constitutes, and
each Buyer Ancillary Agreement will constitute when executed and
delivered by Buyer, the legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar Laws affecting or relating to
enforcement of creditors’ rights generally and general
principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity).
3.3 Governmental Authorization. The execution, delivery and
performance by Buyer of this Agreement and each applicable Buyer
Ancillary Agreement and the consummation of the transactions
contemplated hereby and thereby require no action by or in respect
of, or filing with or notification to, any Governmental Authority
other than (a) compliance with any applicable requirements of
the HSRA, (b) the FCC and (c) any such action by or in
respect of or filing with any Governmental Authority as to which
the failure to take, make or obtain would not have a Buyer Material
Adverse Effect.
3.4 Noncontravention. The execution, delivery and
performance of this Agreement and each Buyer Ancillary Agreement by
Buyer and the consummation of the transactions contemplated hereby
and thereby do not and will not (a) violate or conflict with
the organizational documents of Buyer; (b) assuming compliance with
the matters referred to in Section 3.3 , conflict with
or violate any Law or Governmental Order applicable to Buyer; or
(c) require any consent or other action by or notification to
any Person under, constitute a default under, give to any Person
any rights of termination, amendment, acceleration or cancellation
of any right or obligation of Buyer under, any provision of any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other agreement or instrument to
which Buyer is a party or by which any of Buyer’s assets is
or may be bound, except, in the case of clauses (b) and (c),
for any such violations, consents, actions, defaults, rights or
losses as could not have, individually or in the aggregate, a Buyer
Material Adverse Effect.
3.5 Absence of Litigation. There is no Action pending or, to
Buyer’s knowledge, threatened against Buyer that in any
manner challenges or seeks to prevent, enjoin, alter or delay
materially the transactions contemplated by this
Agreement.
3.6 FCC Qualifications. Buyer is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate
the Stations under the Communications Act , and
15
the rules,
regulations and policies of the FCC. There are no facts known to
Buyer that would, under existing Law and the existing rules,
regulations, policies and procedures of the FCC, disqualify Buyer
as an assignee of the FCC Licenses or as the owner and operator of
the other Station Assets. No waiver of any FCC rule or policy
relating to the qualifications of Buyer is necessary for the FCC
Consent to be obtained.
3.7 Financing. Buyer has, and as of the Closing Date will
have, sufficient cash, available lines of credit or other sources
of immediately available funds to enable it to make payment of the
Purchase Price and any other amounts to be paid by it in accordance
with the terms of this Agreement and the Buyer Ancillary
Agreements.
3.8 No Finder. No broker, finder or other person is entitled
to a commission, brokerage fee or other similar payment in
connection with this Agreement, the Buyer Ancillary Agreements or
the transactions contemplated hereby or thereby as a result of any
agreements or action of Buyer or any party acting on Buyer’s
behalf.
4.1 Governmental Approvals.
(a)
FCC Application. The assignment of the FCC Licenses as
contemplated by this Agreement is subject to the prior consent and
approval of the FCC. Within five Business Days after execution of
this Agreement, Buyer and Seller shall file the FCC Application.
Seller and Buyer shall thereafter prosecute the FCC Application
with all commercially reasonable diligence and otherwise use
commercially reasonable efforts to obtain the FCC Consent as
expeditiously as practicable. Each party shall promptly provide the
other with a copy of any pleading, order or other document served
on it relating to the FCC Application, and shall furnish all
information required by the FCC. If the Closing occurs prior to the
FCC Consent becoming a Final Order, then Buyer’s and
Seller’s obligations under this Section 4.1(a)
shall survive the Closing until the FCC Consent becomes a Final
Order.
(b)
Compliance with HSRA. Each party shall make, within five
Business Days after the date of this Agreement, all filings which
are required in connection with the transactions contemplated
hereby under the HSRA (including making a request for early
termination of the waiting period thereunder), a
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