Exhibit 10.01
EXECUTION COPY
ASSET PURCHASE
AGREEMENT
among
CBS RADIO STATIONS INC.
TEXAS CBS RADIO L.P.
CBS RADIO INC. OF ILLINOIS
and
ENTERCOM COMMUNICATIONS
CORP.
TABLE OF CONTENTS
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Page
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ARTICLE I ASSETS TO BE CONVEYED
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2
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1.1
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Station Assets
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2
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1.2
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Excluded Assets
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3
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1.3
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Assumption of Obligations
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5
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1.4
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Retained Liabilities
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5
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1.5
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Purchase Price
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5
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1.6
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Closing
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5
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1.7
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General Proration
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6
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1.8
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Effect of Local Marketing Agreement
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8
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1.9
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Allocation
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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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2.1
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Existence and Power
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9
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2.2
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Corporate Authorization
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9
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2.3
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Governmental Authorization
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10
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2.4
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Noncontravention
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10
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2.5
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Absence of Litigation
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10
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2.6
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Financial Statements
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10
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2.7
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FCC Licenses
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10
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2.8
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Tangible Personal Property
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11
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2.9
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Station Contracts
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11
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2.10
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Intangible Property
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11
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2.11
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Real Property
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11
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2.12
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Environmental
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12
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2.13
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Employee Information
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12
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2.14
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Compliance with Laws
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13
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2.15
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Taxes
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13
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2.16
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Sufficiency and Title to Station
Assets
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13
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2.17
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No Finder
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13
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF
BUYER
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13
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3.1
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Existence
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13
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3.2
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Corporate Authorization and Power
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13
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3.3
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Governmental Authorization
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14
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3.4
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Noncontravention
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14
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3.5
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Absence of Litigation
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14
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3.6
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FCC Qualifications
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14
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3.7
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Financing
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14
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3.8
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No Finder
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14
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ARTICLE IV COVENANTS
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15
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4.1
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Governmental Approvals
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15
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4.2
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Conduct of Business
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16
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4.3
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Access to Information; Inspections;
Confidentiality; Publicity
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18
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4.4
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Risk of Loss
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19
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4.5
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Consents to Assignment; Estoppel
Certificates
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20
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4.6
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Notification
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20
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i
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4.7
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Employee Matters
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20
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4.8
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Title Insurance; Surveys
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22
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4.9
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Environmental
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23
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4.10
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Further Assurances
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23
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4.11
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Public Filings
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24
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4.12
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No Solicitation
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24
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4.13
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Station KJCE
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24
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ARTICLE V CONDITIONS PRECEDENT
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24
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5.1
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To Buyer’s Obligations
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24
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5.2
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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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6.1
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Documents to be Delivered by Both
Parties
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27
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6.2
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Documents to be Delivered by Seller
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27
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6.3
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Documents to be Delivered by Buyer
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27
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ARTICLE VII SURVIVAL; INDEMNIFICATION
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28
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7.1
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Survival
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28
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7.2
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Indemnification
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28
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7.3
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Procedures
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29
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7.4
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Computation of Indemnifiable Losses
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29
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7.5
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Sole Remedy
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30
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ARTICLE VIII TERMINATION RIGHTS
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30
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8.1
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Termination
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30
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8.2
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Effect of Termination
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31
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8.3
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Specific Performance
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31
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ARTICLE IX TAX MATTERS
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32
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9.1
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Bulk Sales
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32
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9.2
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Transfer Taxes
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32
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9.3
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Taxpayer Identification Numbers
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32
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ARTICLE X OTHER PROVISIONS
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32
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10.1
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Expenses
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32
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10.2
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Benefit and Assignment
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32
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10.3
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No Third Party Beneficiaries
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33
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10.4
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Entire Agreement; Waiver; Amendment
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33
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10.5
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Headings
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33
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10.6
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Computation of Time
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33
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10.7
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Governing Law; Waiver of Jury Trial
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33
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10.8
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Construction
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34
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10.9
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Notices
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34
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10.10
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Severability
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35
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10.11
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Counterparts
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35
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ARTICLE XI DEFINITIONS
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35
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11.1
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Defined Terms
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35
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11.2
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Terms Generally
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41
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ii
ASSET PURCHASE
AGREEMENT
This ASSET PURCHASE AGREEMENT, made
as of the 18 th
day of August, 2006, is among
CBS Radio Stations Inc., a Delaware corporation (“ CBS
Radio ”), Texas CBS Radio L.P., a Delaware limited
partnership (“ Texas CBS Radio ”), and CBS Radio
Inc. of Illinois, a Delaware corporation (“ Illinois CBS
Radio ”, and collectively with CBS Radio and Texas CBS
Radio, “ Seller ”), and Entercom Communications
Corp., a Pennsylvania corporation (“ Buyer
”).
RECITALS
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
”):
KAMX(FM), Luling, Texas (Facility ID
No. 48651)
KJCE(AM), Rollingwood, Texas
(Facility ID No. 1243)
KKMJ-FM, Austin, Texas (Facility ID
No. 66489)
KXBT(FM), Taylor, Texas (Facility ID
No. 63201)
WMC(AM), Memphis, Tennessee
(Facility ID No. 19185)
WMC-FM, Memphis, Tennessee (Facility
ID No. 59449)
WMFS(FM), Bartlett, Tennessee
(Facility ID No. 4653)
WAQZ(FM), Ft. Thomas, Kentucky
(Facility ID No. 40915)
WGRR(FM), Hamilton, Ohio (Facility
ID No. 72126)
WKRQ(FM), Cincinnati, Ohio (Facility
ID No. 11276)
WUBE-FM, Cincinnati, Ohio (Facility
ID No. 10140)
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 the following:
(a)
all licenses, permits and other authorizations issued to Seller by
the FCC with respect to the Stations, including those described on
Schedule 1.1(a) , and including any pending
applications for or renewals or modifications thereof between the
date hereof and the Closing (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, except any
retirements or dispositions of Tangible Personal Property 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 (except agreements with Station Employees
to the extent such agreements are subsequently excluded pursuant
to Section 4.7
) 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 $250,000 per market 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 June 30, 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, 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 ”);
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(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, credit and sales
reports, and logs but excluding any such documents relating to
Excluded Assets (as defined below); and
(f)
all interests in real property, including any leases or licenses to
occupy, used or held for use in the operation of the Stations
described on Schedule 1.1(f) (the “ Real
Property ”).
The assets to be transferred to
Buyer hereunder are collectively referred to herein as the “
Station Assets. ” The Station Assets
shall be delivered as is, where is, without any representation or
warranty by Seller except as expressly set forth in this Agreement,
and Buyer acknowledges that it has not relied on or been induced to
enter into this Agreement by any representation or warranty other
than those expressly set forth in this Agreement. 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 currently but previously used in the
operation of the Stations, where such use has been abandoned by the
Stations, and all goodwill associated
therewith;
(k)
(i) all rights to marks identified on Schedule 1.2(k) 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,
Seller or one of its Affiliates shall grant Buyer, at Buyer’s
request, the right, assignable in connection with an assignment of
the Stations, to continue to use such mark royalty-free in the
manner used by Seller at the applicable Station on a basis
exclusive in the Nielsen Television Designated Market Area in which
the Stations are located so long as Buyer uses such mark, but
non-exclusive in that no right is granted to Buyer hereunder with
respect to other markets (some of which may overlap), and such
right is limited to the extent of Seller’s
rights;
(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)
(i) Group Contracts, except to the extent that Schedule
1.1(c) specifically provides for the partial assignment and
assumption of any such Group Contract and (ii) agreements relating
to the employment of Station Employees that do not become
Transferred Employees as provided in Section 4.7 ;
(n)
any asset or property which is used or held for use by Seller or an
Affiliate of Seller not located at the Stations’ offices in
Austin, Texas, Memphis, Tennessee or Cincinnati, Ohio or the
Stations’ transmitter sites and not used primarily in the
operation of the Stations;
(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;
(r)
all rights of Seller under this Agreement or the transactions
contemplated hereby; and
(s)
the contracts identified on Schedule 1.2(s) .
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)
all liabilities, obligations and commitments of Seller under the
Station Contracts to the extent they accrue 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 ;
(c)
any current liability of Seller to the extent Buyer has received a
credit under Section
1.7 ; and
(d)
all liabilities and obligations relating to the Station Assets
arising out of Environmental Laws at or after the Effective Time,
except to the extent that Seller has undertaken to remediate an
Environmental Condition under Section 4.9 (Environmental) or is
obligated under Section
7.2(a) (Indemnification) to
indemnify Buyer for Losses arising out of or resulting from
Seller’s breach of any representation or warranty in
Section 2.12 (Environmental).
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
”).
1.5
Purchase Price. 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 $220,000,000 (the “ Purchase
Price ”) by wire transfer of immediately available
federal funds pursuant to wire instructions that Seller shall
provide to Buyer.
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).
Alternatively, the Closing may take place at such other place, time
or date as the parties may mutually agree in writing. 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 ”).
5
1.7
General Proration.
(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,
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. Notwithstanding anything in this
Section 1.7 to the contrary, there shall
be no proration under this Section 1.7 for Tradeout
Agreements.
(c)
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.
(d)
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) and Section 1.7(b) , 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.
(e)
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
6
Seller reasonably believes is
necessary or desirable in connection with its review of the
Settlement Statement.
(f)
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.
(g)
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 exceeds the Prorated Station
Assets. All payments made pursuant to this
Section 1.7(g) 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.
(h)
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.
(i)
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
7
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.
(j)
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 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 (b) the
failure of Buyer to perform any of its obligations under the Local
Marketing Agreement. 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
8
exercises control, management or
supervision of the operation of the Stations or the conduct of the
business.
1.9
Allocation. Seller and
Buyer will each allocate the Purchase Price in accordance with the
respective fair market values of the Station Assets being purchased
and sold, as determined by an appraisal (the “
Appraisal ”) to be performed by Bond & Pecaro, and
in accordance with the requirements of Section 1060 of the Code,
and shall each file its federal income tax returns and its other
Tax Returns reflecting such allocation; provided, however that
nothing contained herein shall prevent Buyer or Seller from
settling any proposed deficiency or adjustment by any Tax authority
based on or arising out of such allocation, and neither Buyer nor
Seller shall be required to litigate before any court any proposed
deficiency or adjustment by any Tax authority challenging such
allocation. Bond & Pecaro shall be jointly retained by
Buyer and Seller to perform the Appraisal, and the cost of the
Appraisal shall be borne equally by each.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to
Buyer as follows:
2.1
Existence and Power. Each of CBS Radio and Illinois CBS Radio is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. Texas
CBS Radio is a limited partnership 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 or limited
partnership power and authority, as the case may be, to own and
operate the Stations as currently operated.
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 or limited partnership powers, as the case
may be, and have been duly authorized by all requisite corporate or
limited partnership action, as the case may be, 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).
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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 material action by or in respect of, or material
filing with or notification to, any Governmental Authority other
than (a) compliance with any applicable requirements of the HSRA
and (b) the FCC.
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. There is no Action pending or, to Seller’s
knowledge, threatened against Seller (a) that in any manner
challenges or seeks to prevent, enjoin, alter or delay materially
the transactions contemplated by this Agreement or (b) that, if
adversely determined, would reasonably be expected to have a Seller
Material Adverse Effect, unless all liability that may result from
such adverse determination is a Retained Liability.
2.6
Financial Statements. The unaudited results of operations of
the Stations for calendar years 2003, 2004 and 2005 and the first
six 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 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 June 30, 2006 to the
date hereof, inclusive, there has been no change in the financial
condition or the results of operations of the Stations and no event
has occurred which has had or would reasonably be expected to have
a Seller Material Adverse Effect.
2.7
FCC Licenses.
(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
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as currently conducted by Seller,
except for immaterial licenses ancillary to the operation of the
Stations.
(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 has operated the
Stations in compliance with the Communications Act of 1934, as
amended (the “ Communications Act ”) and the FCC
Licenses, has filed or made all applications, reports and other
disclosures required by the FCC to be made in respect of the
Stations and 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.
(d)
Except as set forth on Schedule 2.7(d) , to the knowledge of Seller
after due inquiry by its FCC counsel and consultation by Seller
with such 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 an adverse effect on the operation
of the Stations, 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
normal operating condition, ordinary wear and tear
excepted.
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) contains a description of the call letters of
the Stations and all owned and registered Intangible
Property. Except as set forth on Schedule 2.10, Seller
has received no notice of any claim that its use of any material
Intangible Property infringes upon or conflicts with any third
party rights. Seller owns or has the right to use the
Intangible Property free and clear of Liens other than Permitted
Liens.
2.11
Real Property. The
Seller entity set forth on Schedule 1.1(f) has 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
11
Property Leases
”). Seller has
good and valid leasehold interest in the Real Property conveyed by
the Real Property Leases (the “ Leased Real Property
”) or has a valid license to occupy the Leased Real
Property. The Owned Real Property includes, and the Real
Property Leases provide, sufficient 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, or
the property leased for the WMC AM/FM transmitter site (the “
WMC Transmitter Site ”) or the property leased for the
KJCE-AM transmitter site (the “ KJCE Transmitter Site
”), either onto such 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 , to Seller’s
knowledge, no hazardous or toxic substance or waste regulated under
any applicable Environmental Law has been generated, stored,
transported or released on, in, from or to the Real Property 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 operations of the Stations, (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 or the WMC Transmitter Site, and (d) to
Seller’s knowledge, there is no friable asbestos or PCBs
contained in any of the Station Assets. To Seller’s
knowledge, Seller has delivered to Buyer true and complete copies
of all environmental assessments or reports in its possession
relating to the Real Property, which are listed on Schedule
2.12 . “ 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(a) 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(a) is employed by
Seller or an Affiliate of Seller as of the date set forth in
Schedule 2.13(a) .
(b)
Except as otherwise set forth on Schedule 2.13(b) , none of
the Stations is subject to or bound by any labor agreement or
collective bargaining agreement. To the knowledge of Seller, there
is no activity involving any Station Employee seeking to certify a
collective bargaining unit or engaging in any other organization
activity.
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2.14
Compliance with Laws. Except as set forth 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 and ownership of the
Station Assets.
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. Seller will cause any Station Assets currently owned
or held for use by any Affiliate of Seller to be transferred to
Seller prior to the Closing. Since January 1, 2006, no
material properties or assets that were or are used in the
operation of the Stations have been transferred or assigned by
Seller to any Affiliate of Seller, except as set forth on
Schedule 2.16 .
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 corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania.
As of the Closing, Buyer will be duly qualified to do business and
in good standing in each jurisdiction where such qualification is
necessary.
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
13
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) except as set
forth on Schedule 3.4 , 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. Except for the matters set forth on Schedule
3.6 , (a) Buyer is legally, financially and otherwise qualified
to be the licensee of, acquire, own and operate the Stations under
the Communications Act , and the rules, regulations and
policies of the FCC, (b) there are no facts 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,
and (c) 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,
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
14
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.
ARTICLE IV
COVENANTS
4.1
Governmental Approvals.
(a)
Further Assurances.
Subject to
the terms and conditions of this Agreement, Buyer and Seller shall
take, or cause to be taken, all actions and to do, or cause to be
done, all things reasonably necessary or desirable under applicable
Law to consummate the transactions contemplated by this Agreement,
including, in the case of Buyer, to sell or otherwise dispose of,
hold separate (through the establishment of a trust or otherwise),
divest itself of, or limit the ownership or operations of all or
any portion of its businesses, assets or operations. Buyer
and Seller will cooperate with each other in making such filings
with the FCC as may be necessary or appropriate in connection with
any divestiture by Buyer of its interests in radio stations,
including the Stations, pursuant to the terms of this
Section 4.1(a) .
(b)
FCC Application.
(i)
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.
(ii)
The parties acknowledge that license renewal applications are
currently pending for certain of the FCC Licenses. The
parties further acknowledge that the FCC generally will not allow
the consummation of an acquisition a radio broadcast station if a
license renewal application for the station is pending. The
parties, however, desire to consummate the transactions
contemplated by this Agreement as soon as possible, subject to the
terms of this Agreement. In order to ensure that the FCC acts
on the FCC Application in the normal course and to allow the
parties to consummate the transactions contemplated by this
Agreement as soon as possible, Buyer agrees to advise the FCC in
writing, either in a letter submitted to the FCC or in the FCC
Application itself, of Buyer’s express willingness to abide
by the procedures set forth in paragraph 35 of Stockholders of
CBS , 11 FCC Rcd 3733, 3750 (1995), and to assume the
consequences associated with Buyer succeeding to the place of
Seller in such renewal applications. Seller agrees to
indemnify Buyer for all Losses relating to FCC matters that may
arise out of or result from such agreement without regard to the
limitations set forth in the last sentence of Section 7.2(a) .
(c)
Compliance with Antitrust
Laws. Each of Buyer and Seller
agrees to make appropriate filings pursuant to applicable Antitrust
Laws, including a Notification and Report Form pursuant to
the HSRA
(including making a request for early termination of
the
15
waiting period thereunder), with
respect to the transactions contemplated hereby within five
Business Days after the date of this Agreement, to furnish to the
other party all information that the other reasonably requests in
connection with such filings, and to supply, as promptly as
practicable, any additional information and documentary material
that may be requested pursuant to the HSRA. The co
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