-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SOW1ub9RvChSJ/Zj7LGJZtVcB+SUOoK1ksVFlczb7zmueZAWBgGil7W3XHV8CB3W qyeYi4mlFGSSxAyexRZVcw== 0000950117-96-000252.txt : 19960329 0000950117-96-000252.hdr.sgml : 19960329 ACCESSION NUMBER: 0000950117-96-000252 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960327 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSBORN COMMUNICATIONS CORP /DE/ CENTRAL INDEX KEY: 0000811714 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 061142367 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-16841 FILM NUMBER: 96539417 BUSINESS ADDRESS: STREET 1: 130 MASON STREET CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036290905 MAIL ADDRESS: STREET 2: 130 MASON STREET CITY: GREENWICH STATE: CT ZIP: 06830 10-K405 1 OSBORN COMMUNICATIONS CORPORATION 10-K ________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM 10-K (MARK ONE) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM ____________________ TO ____________________ COMMISSION FILE NUMBER 0-16841 ------------------------ OSBORN COMMUNICATIONS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------------------ DELAWARE 06-1142367 (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 130 MASON STREET, GREENWICH, CT 06830 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (203) 629-0905 ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION L2(b) OF THE ACT: None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $.01 par value (TITLE OF CLASS) ------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (SS229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x] The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $32,491,494 as of March 13, 1996. The number of shares outstanding of the registrant's classes of common stock as of March 13, 1996 was as follows: Common Stock -- 5,276,847 shares; Non-Voting Common Stock -- none. DOCUMENTS INCORPORATED BY REFERENCE Portions of Part III are incorporated herein by reference to the definitive Proxy Statement for the annual meeting of shareholders on May 22, 1996. ________________________________________________________________________________ OSBORN COMMUNICATIONS CORPORATION DECEMBER 31, 1995 INDEX
PAGE PART I Item 1. Business....................................................................................... 2 Item 2. Properties..................................................................................... 11 Item 3. Legal Proceedings.............................................................................. 12 Item 4. Submission of Matters to a Vote of Security Holders............................................ 12 Executive Officers of the Registrant...................................................................... 12 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters...................... 13 Item 6. Selected Financial Data........................................................................ 13 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 14 Item 8. Financial Statements and Supplementary Data.................................................... 21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........... 38 PART III Item 10. Directors and Executive Officers of the Registrant............................................. 38 Item 11. Executive Compensation......................................................................... 38 Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 38 Item 13. Certain Relationships and Related Transactions................................................. 38 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................ 38
PART I ITEM 1. BUSINESS Osborn Communications Corporation (the 'Company') was organized in 1984 and is a broadcasting company primarily engaged in the operation of radio stations in medium and small markets throughout the United States. In conjunction with several of its radio stations, the Company promotes country music festivals and concerts through Company-owned entertainment properties. The Company also distributes programmed music, primarily Muzak, through exclusive franchises in Florida and Georgia, and provides cable television entertainment and/or interactive educational services to hospitals throughout the United States. At December 31, 1995, the Company owned sixteen radio stations (eleven FM and five AM) in medium-sized and small markets, primarily in the eastern United States. These stations feature a variety of music formats of which country music is the most prevalent. The Company also owns four programmed music and sound equipment distributorships, a concert hall and certain country music shows and festivals, and a hospital cable television company. In addition, the Company has a 50% non-voting ownership interest (without control) of an FM radio station in San Carlos Park/Ft. Myers, Florida, a 25% ownership interest in Fairmont Communications Corporation ('Fairmont'), and an economic interest in Northstar Television Group, Inc. ('Northstar') (see Fairmont and Northstar Management Agreements). The Company derives revenue from broadcasting and related businesses, programmed music and sound equipment distribution, and hospital cable television. The gross revenue contributed by each is as follows:
GROSS REVENUE ----------------------- 1995 1994 1993 ----- ----- ----- (IN MILLIONS) Broadcasting and related businesses.................................. $30.3 $25.1 $19.3 Programmed music and sound equipment distribution.................... $ 9.4 $ 8.3 $ 7.2 Hospital cable television............................................ $ 1.7 $ 1.8 $ 1.8
Since its inception, the Company has used a variety of sources, including bank and institutional borrowings, sales of common stock to private investors and to the public, the sale of publicly-traded notes, and seller financing to finance its acquisitions. The Company has used leverage to maximize the potential returns on its investments. In August 1995, the Company entered into a credit facility of $56.0 million with Society National Bank (the 'Credit Facility'). The Credit Facility consists of a $46.0 million revolving credit facility and a $10.0 million facility which may be used for acquisitions. The initial drawdown of $44.5 million, along with the Company's internally generated funds, was used to repay loans totalling $50.0 million, at 101% of par value under the Company's outstanding debt facilities and to pay transaction costs. In July 1994, the Company effected a 1-for-2 reverse stock split. All share data contained in Part I of this Annual Report on Form 10-K reflect the reverse stock split. Acquisitions and Dispositions. The Company has made numerous acquisitions and dispositions, primarily of radio stations. The acquisitions and dispositions for 1995 and 1994 are more fully described in Part II, Item 7 -- Management's Discussion and Analysis of Financial Condition and Results of Operations. BROADCASTING Radio Operating Strategy. The Company's operating strategy is designed to capitalize on competitive dynamics unique to medium and small radio markets. Typically, these markets are characterized by lower revenues and fewer competitors than large markets. In addition, because of the greater revenue potential in larger markets, the Company believes medium and small markets tend to attract small, local operators, rather than experienced, large market broadcasting companies with sizable station portfolios and significant capital. As a result, medium and small markets tend to be 2 dominated by a few stations targeting the most profitable demographic segments. In markets where the Company operates the leading stations, its operating strategy is designed to maintain ratings dominance and enhance profitability through a combination of an aggressive sales effort, strict cost control and, in more competitive markets, audience research to ensure that programming appeals to the preferences of its target demographic groups. By contrast, in markets in which the Company has acquired a station that is not the market leader, its operating strategy relies primarily on management's extensive operating experience to achieve increased market share and profitability. This strategy is implemented by focusing on profitable demographic niches within the market through appealing formats and aggressive promotional campaigns. The Company has successfully utilized these strategies in medium and small markets throughout the United States over the past decade. Programming is central to the Company's operating strategy because format determines the demographics of the station's listeners and, in part, the station's market share. These factors, in turn, largely determine the perceived value of commercial air time to advertisers. The Company operates in each of its radio markets with a format that has the potential either to capture a dominant position in the most commercially desirable segment of listener demographics (adults age 25-54) or to obtain a dominant position with regard to a profitable market niche. The Company's stations are programmed in a variety of formats, the most prevalent of which is country music, that both attracts audiences in those demographics desirable to advertisers and accommodates relatively large amounts of advertising. The Company emphasizes programming instead of high profile, highly compensated personalities to attract audience share as a lower cost, lower risk strategy. The costs of on-air programming are relatively inexpensive because a large portion of the Company's programming is music produced by record companies, and the royalties payable to copyright holders are fixed at a relatively low percentage of revenues. In addition, several stations broadcast network originated programs and receive compensation in return for providing airtime for which the network can solicit advertising. The Company believes that the listening public's awareness of a station is crucial and that focused promotional spending is directly related to a station's success in adding and retaining new listeners. Management's goal is for the Company to be the most marketing oriented competitor in each of its markets, and its promotions are designed to attract and secure the largest share of listeners in its targeted demographic group. A key factor in the Company's marketing strategy is multimedia promotions. For example, the Company's stations sponsor contests through direct mail to listeners with key demographics, thereby promoting both the station and the advertisers included in the mailer. The Company's mobile units occasionally broadcast live at high traffic retail centers frequented by its targeted listeners, such as shopping malls. Promotions of this type are cost effective for the Company because advertisers generally provide prizes and contract for additional advertising time on the Company's stations. The Company also capitalizes on cross-promotional opportunities with its other businesses, such as its country music entertainment properties in Wheeling, West Virginia. Pricing strategy and inventory management are critical aspects of the Company's radio station management. The Company seeks to maximize revenues by continually monitoring inventory (i.e., available advertising time) and demand. As available advertising time is sold, station general managers are able to increase rates for remaining time. General managers also are able to react quickly to a shift in demand between national and local advertising by directing sales efforts to the appropriate markets. Integral to the Company's pricing strategy is strong decentralized local management. Local management is responsible for day-to-day operations of the station while corporate management is responsible for long range strategic planning and resource allocation. Local management is also responsible for building a sales team capable of turning the station's audience rankings into revenues. Members of the Company's sales force are encouraged to forge strong relationships with local advertisers. Advertising Sales. The Company's primary source of revenue is the sale of broadcasting time for local, regional and national advertising. The Company believes that radio is one of the most efficient, cost-effective means for advertisers to reach specific demographic groups. The station's format, and in some cases the content of specific programs, enable the potential advertiser to determine which demographic groups its advertising will reach. Advertising rates are based upon a program's popularity among the listeners an advertiser wishes to attract (as measured principally by periodic Arbitron rating 3 surveys that quantify the number of listeners tuned to the station at various times), the number of advertisers competing for the available time, the size and demographic makeup of the market served by the station and the availability of alternative advertising media in the market area. Rates are the highest during morning and evening drive-time hours. Advertising time on the Company's radio stations is sold locally by each station's sales staff, and nationally by sales representatives employed by firms specializing in radio advertising sales on a national level. These national sales representatives obtain advertising principally from advertising agencies located outside the Company's markets and receive commissions based on the revenues from the advertising obtained. Each station's sales staff directly solicits advertising from local advertising agencies and businesses. The local sales staff is also compensated on a commission basis. Most advertising contracts are short-term, generally running for only a few weeks. The Company determines the number of advertisements broadcast per hour that can maximize revenue without jeopardizing listening levels. Although the number of advertisements broadcast during a given time period may vary, the total number of advertisements broadcast on a particular station generally does not vary significantly from year to year. Marketing and Promotion. For each station, the Company develops and pursues a marketing strategy designed to attract and secure the largest share of listeners within its targeted demographic group. A radio station's listenership and competitive position in a market is measured principally through periodic ratings surveys conducted by Arbitron. Ratings provide a quantitative measure of a station's audience size and are used by most advertisers in considering advertising with a station and by the Company to track audience growth, establish advertising rates and adjust programming. Each of the Company's stations makes its own marketing and promotional determinations regarding the best method to reach its targeted audience. From time to time, stations in more competitive markets conduct qualitative research regarding the specific preferences of such station's target audience. The station relies on the research to create and conduct marketing and promotional campaigns, utilizing such media as direct mail, telemarketing and outdoor advertising. Acquisition Strategy. The Company seeks to acquire radio stations located in medium and small markets with positive operating cash flow and competitive technical facilities. The Company looks for properties selling at reasonable multiples of operating cash flow that have not been managed aggressively. To maximize management and operational efficiency, higher priority is given to potential acquisitions of properties in proximity to existing areas of operation. The Company has primarily focused on the southeastern United States as an area of primary interest, given the region's economic and demographic growth potential, although it considers potential acquisitions in all regions of the United States. As a result of revisions to its rules mandated by the Telecommunications Act of 1996, the Federal Communications Commission ('FCC') now permits a company to own, depending on the number of stations in a particular market, a maximum of between five and eight stations in the same geographic market (see Federal Regulation of Broadcasting). The Company intends to seek the acquisition of additional radio stations in markets in which it has an existing station or multiple stations in other markets. The Company believes that ownership of multiple stations in a market achieves significant savings through consolidation of administrative, engineering and management expenses and has the potential for increasing revenues. By acquiring an additional station in a given market, the Company can improve its market share and capture a larger share of the prime advertising time available for sale in that market while minimizing the possibility of direct format competition. In addition, ownership of multiple stations in a market would allow the Company to capitalize on its market expertise and existing relationships with advertisers, consequently lowering the Company's acquisition risk. In addition, the Company would be at a competitive disadvantage if its competitors acquire multiple stations in markets in which the Company operates. The Company has focused on medium and small markets because generally there has been less competition to acquire broadcasting properties in those markets, which has meant that relative acquisition costs have been lower than in large markets. The Company believes that medium and small 4 markets offer a reasonable rate of return on well-managed properties and that generally there is less competition for advertising revenues within such markets. Although the Company intends to continue to focus on medium and small markets, it has considered, and expects to consider, acquisition opportunities for radio stations in large markets. Local Marketing Agreements. The Company has entered into certain local marketing agreements ('LMAs') whereby it provides programming to a station owned by a third party and pays a monthly fee for the right to air such programming. The Company receives the right to solicit advertising and to receive payments from the advertisers. In addition, the Company has entered into certain other LMAs whereby a third party provides programming to a station owned by the Company and pays a monthly fee for the right to air such programming. The third party receives the right to solicit advertising and to receive payments from the advertisers. The LMAs that the Company is a party to are more fully described in Note 4 to the consolidated financial statements contained in Part II, Item 8 -- Financial Statements and Supplementary Data. Television. In December 1995, the Company entered into an option agreement with Allbritton Communications Company for the sale of television station WJSU-TV, Anniston, Alabama, and an associated 10-year LMA. This transaction is more fully described in Part II, Item 7 -- Management's Discussion and Analysis of Financial Condition and Results of Operations. The Company has no other television stations and has no current intention to own and operate broadcast television properties in the future. 5 Broadcasting Properties. The following table sets forth markets, frequencies, transmitter power and other station details of the Company's radio broadcasting properties:
METRO STATION POWER MARKET FCC LICENSE MARKET STATION FREQUENCY DAY/NIGHT(1) RANK(2) EXPIRATION DATE - -------------------------------------- ------------ --------- ------------- ------- ------------------ (IN KILOWATTS) Jackson, TN........................... WTNV(FM) 104.1MHz 100.0 255 August 1, 1996 WTJS(AM) 1390kHz 5.0/1.0 August 1, 1996 Wheeling, WV.......................... WOVK(FM) 98.7MHz 50.0 212 October 1, 2002 WWVA(AM) 1170kHz 50.0 October 1, 2002 Dayton/Springfield, OH................ WING(FM) 102.9MHz 50.0 52 October 1, 1996 Asheville, NC......................... WKSF(FM) 99.9MHz 48.0 179 December 1, 2002 WWNC(AM) 570kHz 5.0 December 1, 2002 Fort Myers, FL........................ WOLZ(FM) 95.3MHz 100.0 77 February 1, 2003 Gadsden, AL........................... WQEN(FM) 103.7MHz 100.0 * April 1, 1996(3) WAAX(AM) 570kHz 5.0/.5 April 1, 1996(3) Fort Myers/San Carlos Park, FL(4)..... WDRR(FM) 98.5MHz 2.2 77 February 1, 2003 Pending Dispositions Syracuse, NY(5)....................... WNTQ(FM) 93.1MHz 97.0 68 June 1, 1998 WNDR(AM) 1260kHz 5.0 June 1, 1998 Jacksonville, FL/Brunswick, GA(5)..... WWRD(FM) 100.7MHz 36.0 53 April 1, 1996 Raleigh/Tarboro, NC................... WFXK(FM) 104.3MHz 100.0 50 December 1, 2002 Atlantic City, NJ..................... WAYV(FM) 95.1MHz 50.0 136 June 1, 1998 Daytona Beach/Palatka, FL............. WFKS(FM) 99.9MHz 100.0 93 February 1, 2003 Pending Acquisitions Port Charlotte, FL.................... WEEJ(FM) 100.1MHz 100.0 * February 1, 2003 WKII(AM)(6) 1070kHz 3.1/0.26 May 11, 1996 Fresno, CA............................ KNAX(FM) 97.9MHz 2.1 65 December 1, 1997 KRBT(FM) 101.1MHz 10.0 December 1, 1997 Wheeling/Bethlehem, WV................ WHLX(FM) 105.5MHz 13.5 212 October 1, 2002 Wheeling, WV.......................... WKWK(FM) 97.3MHz 50.0 212 October 1, 2002 WKWK(AM) 1400kHz 1.0 October 1, 2002
- ------------ (1) Many AM radio stations are licensed to operate at a reduced power during nighttime broadcasting hours; where applicable, both power ratings are shown. (2) Metro Market Rank is based on determination by Arbitron of the market's number of persons aged 12 years and over. (3) Renewal application pending. (4) The Company has a 50% non-voting ownership interest in WDRR-FM. (5) The sales of the Jacksonville, Florida and Syracuse, New York radio stations were closed in January and February of 1996, respectively. (6) WKII-AM has been operating pursuant to Special Temporary Authority issued to it by the FCC. * These markets are not assigned a Metro Market Rank by Arbitron. BROADCAST-RELATED BUSINESSES The Company's broadcast-related businesses provide extensive marketing and promotional opportunities for its nearby radio stations. In Wheeling, West Virginia, the Company enhances and capitalizes on its ratings dominance in country music by the integration of its stations with its country music-related entertainment businesses. The Company-owned Capitol Music Hall is a 2,500 seat theater that hosts approximately 100 music, comedy and dramatic performances each year, including Jamboree USA, a live country music concert and radio program heard weekly throughout the northeastern United States featuring such country music stars as John Michael Montgomery, Trisha Yearwood, Alan Jackson and Lorrie Morgan. Each July, the Company stages Jamboree in the Hills, an outdoor festival featuring 6 20 or more country music stars held on a 200 acre site owned by the Company outside of Wheeling. This four day event attracts tens of thousands of country music fans each year from throughout the United States and Canada. Past performers at Jamboree in the Hills include Vince Gill, Loretta Lynn, Brooks & Dunn, Tim McGraw, and Travis Tritt. Jamboree in the Hills won the Country Music Association's 1991 award for Festival of the Year and was featured in a one-hour special on The Nashville Network in 1992. Besides Jamboree USA, the Capitol Music Hall also hosts, among other events, musical acts other than country, comedians, dramatic presentations and symphonies. Attendance varies based upon the popularity of each particular event. The Company also promotes shows in the 7,500 seat Wheeling Civic Center and has begun promoting shows in markets outside of Wheeling. PROGRAMMED MUSIC The Company distributes programmed music, primarily Muzak, in the Atlanta, Macon and Albany, Georgia and Ft. Myers, Florida markets. As the exclusive Muzak franchisee in these markets, the Company provides subscribers with commercial-free Muzak programming ranging from traditional background music to newer formats including country and soft rock, and sells, leases and installs the equipment required to receive the programming via satellite and other media. The franchisor, Muzak L.P., provides the programming, and the Company remits to Muzak a fee based upon the gross revenues from Muzak service. The Company, and not the franchisor, is the owner of the contracts with the individual users of the Muzak programming. These contracts generally have five-year terms with an automatic renewal provision. In most cases, the Company owns the equipment at the customers' sites and charges a lease fee for its use. As part of its programmed music business, the Company also designs, sells and installs sound, closed-circuit video and security systems and equipment in locations such as offices, schools, hospitals, shopping malls and stadiums. Examples of such systems include shopping mall paging, public address, closed-circuit video, and fire/security systems. In addition, the Company is an authorized distributor of the Rauland-Borg line of communications equipment for schools and hospitals in various markets. The Company believes the sale and installation of such sound equipment will continue to be an area of increasing growth in revenues for the Company. OSBORN HEALTHCARE Osborn Healthcare was started by the Company in 1988 and offers a range of education and entertainment services to hospitals. Osborn Healthcare operates The Patient Network in 9 hospitals in the southeastern United States. The Patient Network is a proprietary closed-circuit television system offering patients premium cable television services such as movies, news and sports. Separately, the Company distributes fully automated On-Demand Video systems, which provide educational videos to physicians, patients and hospital staff. The Company also offers The Automated Testing System, which is linked to On-Demand Video and is proprietary software that allows viewer interaction with the educational videos. These systems permit physicians to inform patients about medical procedures via video with follow-up interactive question and answer sessions. The Company is exploring expanded applications for these systems. In addition, Osborn Healthcare distributes cable television programming via satellite to 45 hospitals. The sources of the movies shown by Osborn Healthcare are film distributors licensed by major movie studios and the sources of The Patient Network's programming are major cable networks and film distributors. Osborn Healthcare generally pays a subscription fee based upon the number of beds in each of the hospitals serviced. EMPLOYEES At December 31, 1995, the Company had approximately 288 full-time employees, of whom 7 employees were on the corporate staff, and the balance were employed at the operating subsidiary level in connection with the operation and management of the Company's properties. One employee of the 7 programmed music franchise in Atlanta is a union member. The Company believes its relations with its employees are good. COMPETITION Radio. Radio is a highly competitive business. The Company's radio stations compete with radio stations in their respective market areas, as well as with other advertising media such as newspapers, television, cable television, magazines, outdoor advertising, transit advertising and direct mail marketing. Competition within the radio broadcasting industry occurs primarily in individual market areas, so that a station in one market generally does not compete with stations in other markets for local advertising, although it does compete indirectly for national advertising. In addition to management experience, factors material to competitive position include a station's audience rank in its market, authorized power, quality of equipment, location of transmitter, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other stations in the market area. Technological advances may have an impact on the competitive radio broadcasting environment. Several companies have begun offering radio programming by cable to subscribers of cable television. In addition, the FCC has allocated spectrum for, and various companies have sought authorization to provide, the direct transmission of radio programming to listeners via satellite. The FCC is also considering permitting the broadcast of terrestrial digital radio programming. The effect that these technological advances will have on the Company's operations is uncertain. In 1996, the FCC, in response to the Telecommunications Act of 1996, relaxed its rules regarding ownership by one entity of multiple radio stations in the same market. The effect that these changes will have on the Company's business is unclear. However, to the extent that the Company can purchase additional stations or enter into LMAs in markets where it has existing stations, the Company's stations may have a competitive advantage in their markets; conversely, the Company's stations may be at a competitive disadvantage to the extent other broadcasters in their markets purchase additional stations or enter into LMAs. Broadcast-Related Businesses. The Company's broadcast-related businesses generally compete regionally for audiences with other live concerts and sports and entertainment events as well as other media such as films, broadcast and cable television, videocassettes and radio. Competition for talent may come from national or regional sources and is primarily from other concert venues. Programmed Music. The Company's competition in the programmed music markets is the ready availability of low-cost, nonprogrammed music, such as regular radio broadcasts, audio cassettes and compact discs as well as competing programmed music services. The Company competes in the sale and installation of sound systems with numerous other sources of such equipment, including both local and national distributors. Hospital Cable Television. Competition for viewers for the Company's hospital cable television service comes from broadcast television. The cable television operations compete nationally for hospitals with a small number of companies involved in supplying cable programming to hospitals, local cable distributors and with companies which sell or lease television equipment to hospitals. In addition, many hospitals choose to provide their own television entertainment and education services. FEDERAL REGULATION OF BROADCASTING Introduction. Radio broadcasting is subject to regulation by the FCC under the Communications Act of 1934, as amended (the 'Communications Act'). Under the Communications Act, the FCC, among other things, assigns frequency bands for broadcasting, determines the frequencies, location and power of stations, issues, renews, revokes and modifies station licenses, regulates equipment used by stations, and adopts and implements regulations and policies which directly or indirectly affect the ownership, operations and employment practices of broadcasting stations. In particular, the Communications Act prohibits the assignment of a broadcasting license or the transfer of control of a corporation holding a broadcasting license without prior approval of the FCC. In addition, modification of the facilities of television and radio stations is subject to FCC approval. The Telecommunications Act of 8 1996 (the '1996 Act'), which was signed into law in February 1996, amended the Communications Act in several key respects. License Renewal. As a result of amendments to the Communications Act brought about through the 1996 Act, the FCC must grant the renewal application filed on behalf of a station if it finds that, during the preceding term of that station's license, the station has served the public interest, convenience, and necessity; there have been no serious violations by the licensee of the Communications Act or the rules and regulations of the FCC; and there have been no other violations by the licensee of the Communications Act or the rules and regulations of the FCC which, taken together, would constitute a pattern of abuse. If the FCC is unable to make such findings with respect to the station, it can grant the station's renewal application, but on terms and conditions that the FCC considers to be appropriate, or, the FCC can, after providing the licensee with notice and an opportunity for hearing, and if the FCC determines that no mitigating factors justify the imposition of a lesser sanction, deny the renewal application. The terms and conditions that could be imposed by the FCC in granting the renewal include requiring the payment of a forfeiture, requiring the licensee to make periodic reports to the FCC or granting the renewal for a period of time less than a normal license term. Only upon the issuance of an order denying the renewal application may the FCC accept and consider applications specifying the channel or broadcasting facilities of the former licensee, whereas, prior to the amendments brought about by the 1996 Act, a license was subject to competing applications being filed whenever the license was due for renewal. In making its determination as to whether the licensee's renewal application can be granted, the FCC may consider facts brought to its attention by parties filing petitions seeking denial of the renewal application. Also as a result of the 1996 Act, the FCC now has the authority to renew a broadcast station license for a maximum term of eight years. Previously, the Communications Act permitted the FCC to grant broadcast station license renewals for a maximum term of seven years. The FCC has announced that it intends to initiate a rulemaking in March 1996 looking toward the adoption of rules consistent with the renewal term prescribed by the 1996 Act, and that it intends to adopt such rules in the third quarter of 1996. Ownership Matters. As a result of the 1996 Act, the FCC revised its ownership rule effective March 15, 1996, to remove the national limit on the number of stations that any one entity may own or in which that entity may have an attributable interest. The FCC also revised its ownership rule so as to provide that (a) in a radio market with 45 or more commercial radio stations, a party may own, operate, or control up to 8 commercial radio stations, not more than 5 of which may be in the same service (i.e., AM or FM); (b) in a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate, or control up to 7 commercial radio stations, not more than 4 of which may be in the same service; (c) in a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate, or control up to 6 commercial radio stations, not more than 4 of which may be in the same service; and (d) in a radio market with 14 or fewer commercial radio stations, a party may own, operate, or control up to 5 commercial radio stations, not more than 3 of which are in the same service, except that the party may not own, operate, or control more than 50 percent of the stations in such market. Parties subject to the multiple ownership rules include officers, directors, and holders of 5% or more of the voting stock of broadcasting companies. Holders of debt and non-voting stock, however, are not subject to the multiple ownership rules. Passive investments of less than 10% of the voting stock of a broadcasting company held by certain categories of financial institutions are also not recognized for purposes of these rules. The multiple ownership rules could preclude the Company from acquiring radio or TV stations in areas where its officers, directors, or stockholders have such an interest. Under the Communications Act, as amended by the 1996 Act, no FCC license may be granted to any alien, to a corporation organized under the laws of a foreign government, or to any corporation of which more than 20% of its capital stock is owned of record or voted (i) by aliens or their representatives, (ii) by a foreign government or representative thereof, or (iii) by any corporation organized under the laws of a foreign country (collectively, 'Aliens'). In addition, no one corporation may hold the capital stock of another corporation owning broadcast licenses if more than 25% of the 9 capital stock of such parent corporation is owned of record or voted by Aliens or is subject to control by Aliens, unless specific FCC authorization is obtained. The Company's Restated Certificate of Incorporation and By-Laws authorize the Board of Directors to prohibit ownership, voting, or transfer of its capital stock which would cause the Company to violate the Communications Act or FCC regulations. Local Marketing Agreements. A number of broadcasting stations, including several of the Company's stations, have entered into what have commonly been referred to as 'Time Brokerage Agreements', 'Local Marketing Agreements', or 'LMAs'. While these agreements may take varying forms, under a typical LMA, separately-owned and licensed radio stations agree to enter into cooperative arrangements, subject to compliance with the requirements of antitrust laws and with the FCC's rules and policies. Under these types of arrangements, separately-owned stations could agree to function cooperatively in terms of programming, advertising sales, etc., subject to the licensee of each station maintaining independent control over the programming and station operations of its own station. One typical type of LMA is a programming agreement among two separately-owned radio stations serving a common service area, whereby the licensee of one station programs substantial portions of the broadcast day on the other licensee's station, subject to ultimate editorial and other controls being exercised by the latter licensee, and sells advertising time during such program segments. The FCC has held that such agreements are not contrary to the Communications Act, or the FCC's policies, provided that the licensee of the station which is being substantially programmed by another entity maintains complete responsibility for and control over operations of its broadcast station and assures compliance with applicable FCC rules and policies. The FCC's rules provide that a station brokering time on another station serving the same market may be considered to have an attributable ownership interest in the brokered station for purposes of the multiple ownership rules. As a result, under the rules, a broadcast station will not be permitted to program more than 15% of the broadcast time, on a weekly basis, of another local station which it could not own under the multiple ownership rules. The FCC's rules also prohibit a broadcast licensee from simulcasting more than 25% of its programming on another station in the same broadcast service (i.e., AM/AM or FM/FM) whether it owns the stations or through a time brokerage or LMA arrangement, where the brokered and brokering stations serve substantially the same geographic area. Proposed Changes. The Congress and the FCC have under consideration, and may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation and ownership of the Company and its radio and television broadcast properties. Such matters include, for example, the license renewal process; proposals to impose spectrum use or other governmentally imposed fees upon licensees; proposals to place limitations on the amount of commercial matter that television stations can carry; proposals to change rules relating to political broadcasting; proposals to increase the benchmarks or thresholds for attributing ownership interest in broadcast media; proposals to require certain types of programming; proposals to restrict the use of LMAs and certain types of marketing arrangements; technical and frequency allocation matters, including those relative to the implementation of digital audio broadcasting on both a satellite and terrestrial basis; proposals to initiate a new high definition television service; proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages or to limit the tax deductibility of such advertisements; and changes to broadcast technical requirements. The Company cannot predict what other changes might be considered in the future, nor can it judge in advance what impact, if any, such changes might have on its business. The foregoing is only a brief summary of certain provisions of the Communications Act and FCC regulations. The Communications Act and FCC regulations may be amended from time to time. The Company cannot predict whether any such legislation will be enacted or whether new or amended FCC regulations will be adopted, or the effect of any changes on the Company. For further information, reference should be made to the Communications Act, FCC regulations, and Public Notices issued by the FCC. Other Matters. Construction projects such as broadcasting towers are subject to state and local construction and environmental laws and regulations and may require governmental permits. 10 Broadcasting towers also must comply with regulations issued by the Federal Aviation Administration ('FAA') and must receive FAA approval before construction. OTHER TRANSACTIONS Fairmont and Northstar Management Agreements. The Company currently owns 25% of the stock of Fairmont Communications Corporation. Fairmont is managed by the Company pursuant to a management agreement. In August 1992, Fairmont filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. In September 1993, Fairmont emerged from Chapter 11 upon approval by the bankruptcy court of a plan of reorganization (the 'Plan'). The Plan provides for the sale of Fairmont's assets, distribution of proceeds in accordance with the Plan, and subsequent liquidation of Fairmont. All of Fairmont's stations were sold by the second quarter of 1994. The Company will continue to manage Fairmont pursuant to the management agreement which expires upon the liquidation of Fairmont, which is expected in 1996. For managing Fairmont, the Company receives an annual fee of $125,000, plus reimbursement of out-of-pocket expenses and allocated overhead costs. In 1994, the Company received additional management fees of $728,000 related to the sale of Fairmont's stations. The Company also earned distributions of $0.4 million and $2.3 million in 1995 and 1994, respectively, classified as other income in the consolidated financial statements, determined by the amounts realized by Fairmont from sales of its assets. The Company held a 32% interest in Northstar Television Group, Inc. and managed Northstar's four television stations pursuant to a management agreement in return for reimbursement of out-of-pocket expenses and allocated overhead costs. In 1994, Northstar's creditors and equity investors reached an agreement with respect to restructuring Northstar's highly leveraged capital structure pursuant to which, among other things, the Company received a portion of accrued and unpaid management fees and retains an economic interest. The Company's management agreement with Northstar terminated following the restructuring. In January 1995, three of Northstar's four television stations were sold and the Company received a distribution of $1.6 million, classified as other income in the consolidated financial statements. ITEM 2. PROPERTIES The Company's corporate headquarters are located in Greenwich, Connecticut. The Company leases offices in Greenwich pursuant to a lease terminating in May 1999. The types of properties required to support each of the Company's radio stations include offices, studios, and transmitter and antenna sites. The Company and certain subsidiaries lease the following properties: Ft. Myers, Florida, radio station and Muzak offices leased pursuant to leases terminating September 2005 and June 1999, respectively; Tampa sound equipment distribution offices leased pursuant to lease terminating March 2000; Atlanta Muzak offices leased pursuant to lease terminating October 2001; Asheville, North Carolina, FM broadcasting tower site leased pursuant to lease terminating October 1996; Dayton, Ohio, offices leased pursuant to lease expiring March 1999; Greenwich, Connecticut, offices leased pursuant to lease terminating May 1999; Daytona Beach/Palatka, Florida, offices and tower site leased pursuant to leases terminating May 1999 and December 2014, respectively; Nashville, Tennessee, offices leased pursuant to lease terminating October 1999; Raleigh, North Carolina, offices leased pursuant to lease expiring December 1999; Atlantic City, New Jersey, broadcasting tower site and offices leased pursuant to leases expiring December 1999 and December 2001, respectively; and Wheeling, West Virginia, FM broadcasting tower site leased pursuant to lease terminating February 2002. The Company owns the remaining broadcasting equipment and offices, studios and broadcasting towers. The Company believes that its facilities are adequate and suitable for their present uses. All of the Company's properties are subject to encumbrances as security for certain of the Company's borrowings. All of the stock in the subsidiaries holding such properties has also been pledged as security for certain of the Company's borrowings. See Notes 6 and 7 to the consolidated financial statements contained in Part II, Item 8 -- Financial Statements and Supplementary Data. 11 ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any lawsuit or any legal proceeding that, in the opinion of management, is likely to have a material adverse impact on the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of stockholders of the Company in the fourth quarter of 1995. EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below are the name, age, present position with the Company and a brief past five-year employment history of each executive officer of the Company.
NAME AGE POSITION - ------------------------------------------------ --- --------------------------------------------------------- Frank D. Osborn................................. 48 President, Chief Executive Officer, and Director Thomas S. Douglas............................... 47 Senior Vice President -- Finance and Treasurer W. Charles Hillebrand........................... 49 Senior Vice President -- Muzak Michael F. Mangan............................... 34 Vice President -- Controller and Secretary
Frank D. Osborn has been President and Chief Executive Officer of the Company since the Company's formation in September 1984 and was its Treasurer until August 1989. From 1983-1985, Mr. Osborn was Senior Vice President/Radio for Price Communications Corporation, a diversified communications corporation. From 1981-1983, Mr. Osborn served as Vice President and General Manager of WYNY, NBC's New York FM radio station, and was Vice President of Finance and Administration of NBC Radio from 1977-1981. Mr. Osborn serves as Chairman of the Board and Chief Executive Officer of Fairmont Communications Corporation, and is a Director of Northstar Television Group, Inc. Mr. Osborn is married to the niece of Edward G. Nelson, a Director of the Company. Fairmont filed a voluntary bankruptcy petition under Chapter 11 of the United States Bankruptcy Code on August 28, 1992 and emerged from Chapter 11 in September 1993. Thomas S. Douglas joined the Company in January 1994, and became Senior Vice President -- Finance and Treasurer in March 1994. For the previous two years, he was an investment banking advisor to the Czech Ministry of Privatization in Prague, the Czech Republic in association with Deloitte & Touche and the Bank Przemyslowo-Handlowy, Crakow, Poland in association with KPMG Peat Marwick. From 1983 to 1991, he was a Director, Investment Banking, at Prudential Securities Incorporated, New York, New York. W. Charles Hillebrand has served as Senior Vice President -- Muzak since joining the Company in 1986. In February 1993, Mr. Hillebrand was appointed President of the Company's wholly-owned subsidiaries which own and operate its programmed music businesses. Michael F. Mangan, a certified public accountant, has served as Vice President -- Controller since rejoining the Company in April 1994 and as Secretary since June 1994. From July 1992 through April 1994, he was Assistant Controller of PolyGram Holding, Inc. He previously served as the Company's Controller from 1989 through June 1992, and as Assistant Controller from 1987 through 1989. 12 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded on the NASDAQ National Market System under the symbol OSBN. Common stockholders of record at December 31, 1995 numbered approximately 135, but the Company believes that the number of beneficial owners is approximately 1,000, including those whose shares are held in nominee or 'street' names.
FIRST SECOND THIRD FOURTH ------------- ------------- --------------- ------------- 1995 1994 1995 1994 1995 1994 1995 1994 ----- ----- ---- ----- ----- ----- ----- ----- Quarterly market price range: High....................................... 7 1/2 7 1/2 7 7 1/2 11 1/8 7 3/4 9 5/8 7 1/2 Low........................................ 6 3/4 6 1/2 6 6 1/4 6 1/4 6 1/2 7 1/4 6
Market prices have been adjusted to reflect (to the nearest eighth) the 1-for-2 reverse stock split on July 11, 1994. To date, the Company has not paid cash dividends on its common stock. Under the terms of certain of the Company's debt agreements, the Company may not declare or pay any dividend on, or make any distribution to the holders of, any shares of capital stock of the Company. ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31, --------------------------------------------------- 1995 1994 1993 1992 1991 ------- ------- ------- ------- ------- (IN THOUSANDS EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA(1): Net revenues............................................... $39,100 $34,582 $27,399 $26,863 $24,860 Operating income (loss).................................... 2,215 1,315 398 (877) (4,035) Income (loss) before extraordinary items................... 6,624 (1,114) (2,173) (4,507) (9,028) Net income (loss).......................................... 2,703 (1,550) (2,173) (4,507) (9,028) INCOME (LOSS) PER COMMON SHARE(2): Primary earnings per common share: Income (loss) before extraordinary items.............. 1.23 (0.21) (0.50) (1.29) (2.59) Net income (loss)..................................... 0.50 (0.29) (0.50) (1.29) (2.59) Fully diluted earnings per common share: Income (loss) before extraordinary items.............. 1.22 (0.21) (0.50) (1.29) (2.59) Net income (loss)..................................... 0.50 (0.29) (0.50) (1.29) (2.59) Dividends.................................................. -- -- -- -- -- BALANCE SHEET AND OTHER DATA: Total assets............................................... 77,634 79,166 47,498 50,376 55,335 Long-term debt and other long-term obligations............. 44,915 48,577 22,655 27,844 30,727 Total stockholders' equity................................. 21,497 19,282 19,158 13,735 18,242 Operating cash flow(3)..................................... 9,703 9,076 6,152 5,192 3,477 EBITDA(4).................................................. 7,997 6,600 4,654 3,701 827
- ------------ (1) Reflects the acquisitions and dispositions described in Note 3 to the consolidated financial statements, as well as acquisitions and dispositions occurring in previous years. (2) Per share data adjusted to reflect the 1-for-2 reverse stock split on July 11, 1994. (3) Operating cash flow is defined as operating income before depreciation, amortization and corporate expenses. (4) EBITDA is defined as operating income before depreciation and amortization. 13 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The primary source of the Company's broadcasting revenues is the sale of air time on its radio stations for advertising. The Company's most significant operating expenses are employee salaries and commissions, programming expenses and advertising and promotional expenses. The Company strives to control these expenses by working closely with station management. The Company's revenues are affected primarily by the advertising rates its radio stations charge. These rates are in large part based on a station's ability to attract audiences in the demographic groups targeted by its advertisers, as measured periodically by Arbitron. Because audience ratings in local markets are crucial to a station's financial success, the Company endeavors to develop strong listener loyalty. The number of advertisements that can be broadcast without jeopardizing listening levels (and the resulting ratings) is limited in part by the format of a particular station. The Company's stations strive to maximize revenue by constantly managing the number of commercials available for sale and adjusting prices based upon local market conditions. The Company's advertising contracts are generally short-term. The Company generates most of its revenue from local advertising, which is sold primarily by a station's sales staff. To generate national advertising sales, the Company engages independent advertising sales representatives that specialize in national sales for each of its stations. The Company's operating results in any period may be affected by the incurrence of advertising and promotion expenses that do not necessarily produce commensurate revenues until the impact of the advertising and promotion is realized in future periods. The performance of a broadcasting company is customarily measured by its ability to generate operating cash flow. Operating cash flow is defined as operating income before depreciation, amortization and corporate expenses. Although operating cash flow is not a measure of performance calculated in accordance with Generally Accepted Accounting Principles ('GAAP'), the Company believes that operating cash flow is useful to investors because it is accepted by the radio broadcasting industry as a generally recognized measure of performance and is used by securities analysts who report publicly on the performance of broadcasting companies. Operating cash flow should not be considered in isolation or as a substitute for net income, cash flows from operating activities and consolidated income or cash flow statement data prepared in accordance with GAAP, or as a measure of the Company's profitability or liquidity. FINANCIAL ADVISOR In November 1994, the Company engaged an investment banking firm as its financial advisor to assist the Company in evaluating its options to increase shareholder value. As a result of this process, the Company has decided to dispose of broadcasting properties in Syracuse, New York and Anniston, Alabama. The engagement of the financial advisor ended in January 1996. TELECOMMUNICATIONS ACT OF 1996 The Telecommunications Act of 1996 (the '1996 Act'), which was signed into law in February 1996, impacts the Company's operations in several respects. The 1996 Act, among other things, directs the Federal Communications Commission ('FCC') to modify its ownership rules to eliminate the limits on the number of radio stations one entity may own nationally and to make the limits on the number of radio stations one entity may own in a single market less restrictive. Under the 1996 Act, depending on the number of radio stations in a particular market, one entity may own a maximum of between five and eight radio stations in a market, except that an entity may not own more than 50% of the stations in such market. The 1996 Act directed the FCC to conduct a rulemaking to reevaluate existing limitations on the number of television stations that a person or entity may own, operate or control, or have a cognizable interest in within the same television market. In addition, the FCC has the authority to grant 14 broadcast license terms for a maximum term of eight years (previously seven years). Additionally, the provisions of the 1996 Act strengthen the license renewal expectancy for a license holder. ACQUISITIONS AND DISPOSITIONS Given the less restrictive regulatory environment, the Company intends to own multiple radio stations in certain of its markets in order to attain a more dominant position in the respective market. If the Company determines that opportunities to acquire additional stations in a particular market are not satisfactory, it may dispose of its stations in such market. The Company also intends to pursue the acquisition of multiple stations in other markets. Consistent with its strategy of owning multiple stations in a market or leaving markets where opportunities to acquire additional stations are not satisfactory, the Company has entered into several transactions for the acquisition or disposition of broadcast properties in 1995 and early 1996. Each of these transactions is more fully described in Notes 3 and 13 to the consolidated financial statements. In August 1995, the Company agreed to acquire substantially all the assets of radio stations WKII-AM/WEEJ-FM, Port Charlotte, Florida for $2.85 million, subject to FCC approval and license renewal. In the event that the Company is able to relocate WEEJ-FM's broadcast antenna to the Company's Pine Island, Florida tower in order to better serve the Port Charlotte/Ft. Myers market, additional consideration of $750,000 will be paid. The Company intends to combine these stations with its existing operations in the Ft. Myers market. The transaction is expected to close in April 1996. In January 1996, the Company agreed to acquire substantially all the assets of radio station duopoly KNAX-FM/KRBT-FM, Fresno, California for consideration consisting of $6.0 million plus 120,000 shares of the Company's common stock. The FCC has consented to this transaction which is expected to close in 1996. In January 1996, the Company agreed to acquire substantially all the assets of radio station WHLX-FM, Wheeling, West Virginia for $0.8 million and in February 1996, agreed to acquire substantially all assets of radio stations WKWK-AM/FM, also in Wheeling, for $2.7 million. Both acquisitions are subject to FCC approval. The Company believes that these acquisitions will further strengthen its dominant position in the Wheeling market. Pending the closing of these acquisitions, the Port Charlotte and Fresno stations are managed by the Company pursuant to local marketing agreements. The Company also intends to enter into a local marketing agreement to manage radio stations WKWK-AM/FM in Wheeling. The Company has determined that attractive acquisition opportunities did not exist in certain of its markets and in 1995 and early 1996 agreed to sell certain broadcast properties. In September 1995, the Company agreed to sell substantially all the assets of radio stations WNDR-AM/WNTQ-FM, Syracuse, New York for $12.5 million. The transaction closed in February 1996. Since September 1995 and pending the closing of the transaction, the stations were managed by the purchaser pursuant to a local marketing agreement. In September 1995, the Company agreed to sell substantially all the assets of radio stations WWRD-FM, Jacksonville, Florida/Brunswick, Georgia and WFKS-FM, Daytona Beach/Palatka, Florida, as well as the Company's 50% interest in the broadcast tower serving WWRD-FM for total consideration of $6.5 million. The sale of WWRD-FM closed in January 1996. The closing of the WFKS-FM transaction is expected in 1996. Pending the closing of the transactions, the stations have been managed by the purchaser pursuant to local marketing agreements. In February 1996, the Company agreed to sell substantially all the assets of radio station WAYV-FM, Atlantic City, New Jersey for $3.1 million, subject to FCC approval. Pending the closing of the transaction, which is expected in 1996, the purchaser is managing the station pursuant to a local marketing agreement. The station was acquired by the Company in March 1994 for consideration of $2.5 million. In February 1996, the Company entered into an agreement to sell substantially all the assets of radio station WFXK-FM, Raleigh/Tarboro, North Carolina for $5.9 million, subject to FCC approval. 15 Pending the closing of the transaction, which is expected in 1996, the station will continue to be operated by the purchaser pursuant to a local marketing agreement. In December 1995, the Company entered into an option agreement with Allbritton Communications Company for the sale of television station WJSU-TV, Anniston, Alabama, and an associated 10-year local marketing agreement. In consideration for the option, the Company received a nonrefundable cash payment of $10.0 million. Because the cash proceeds from the option are nonrefundable, the Company accounted for the economic substance of the transaction as if a sale of substantially all the assets of the station had occurred. Accordingly, a gain of approximately $8.1 million was recorded. In addition, upon the exercise of the option and the necessary FCC consent, the Company will receive an additional cash payment of $2.0 million. If the necessary approvals to relocate the station's broadcast transmitter to a new location to maximize broadcast coverage are received, the Company will receive additional cash payments of up to $7.0 million. WJSU-TV was the Company's only television station and it does not intend to acquire additional broadcast television stations in the foreseeable future. 1994 ACQUISITIONS In June 1994, the Company acquired substantially all the assets of three FM and one AM radio stations for $20.0 million plus transaction costs. The acquisition included radio stations WWNC-AM/WKSF-FM, Asheville, North Carolina; WOLZ-FM, Ft. Myers, Florida; and WFKS-FM, Daytona Beach/Palatka, Florida. In August 1994, the Company, through a wholly-owned subsidiary, acquired substantially all the assets of radio stations WAAX-AM/WQEN-FM, Gadsden, Alabama for $1.75 million plus transaction costs. The seller of the six stations has agreed not to own or operate radio stations in these markets for a period of three years. The Gadsden market is adjacent to the Anniston market, in which the Company owned its television station. In August 1995, the Company was granted a waiver of the FCC's regulations prohibiting ownership of radio and television stations in the same market. Pending the FCC's ruling on the waiver application, the Gadsden stations were placed in a trust which operated the stations on the Company's behalf. The Asheville, Ft. Myers, Daytona Beach/Palatka, Gadsden and Atlantic City acquisitions have been accounted for using the purchase method of accounting. Accordingly, the purchase price of each acquisition has been allocated to the assets based upon their fair values at the date of acquisition. The results of operations of the properties are included in the Company's consolidated results of operations from the respective dates of acquisition for properties acquired and until the date of disposition for properties disposed. Prior to the grant of the waiver of the FCC's cross-ownership regulations, the Gadsden acquisition was accounted for using the equity method of accounting. Accordingly, prior year financial statements have been reclassified to reflect the consolidation of the Gadsden radio stations. Due to the acquisitions, dispositions, and local marketing agreements, the results of operations from period to period are not comparable and are not necessarily indicative of future results. The effects of these acquisitions and dispositions on 1996 revenue, operating cash flow and net income are dependent on the timing of the closing of each transaction. In general, it is expected that the net result will be a reduction of net revenue and operating cash flow in 1996 as compared to 1995 because acquired properties will be included for a partial year whereas divested properties will not be included for a majority of the year. The reduction in operating cash flow is expected to be more than offset by the reduction in interest expense due to the expected reduced borrowings. RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 VS. 1994 Net revenues of $39.1 million in 1995 represent a 13% increase from 1994 net revenues of $34.6 million. The increase is primarily attributable to the radio stations acquired in 1994, as well as improved operations at the Company's Asheville and Gadsden radio stations and its Georgia and Florida programmed music franchises. For businesses owned and operated for a comparable period in 1995 and 1994, net revenues increased 3%. For broadcasting and related businesses operated for a comparable period, net revenues of $23.4 million in 1995 were basically flat compared to 1994. This is attributable to reductions in net revenues for the Syracuse and Daytona Beach/Palatka radio stations which have been 16 subject to local marketing agreements since September 1995 pending disposition in 1996, and the Anniston television station which benefited in 1994 from significant political advertising, offset by increased revenues by the Company's other broadcasting properties. Net revenues for the programmed music division increased 13%, from $8.3 million in 1994 to $9.4 million in 1995. The increase reflects the growth of sound equipment sales in Georgia and Florida. Total operating expenses increased 11%, from $33.3 million in 1994 to $36.9 million in 1995. The increase is primarily attributable to the radio stations acquired in 1994, offset by expense reductions at the Syracuse and Daytona Beach/Palatka radio stations, which have been subject to local marketing agreements since September 1995. For businesses owned and operated for a comparable period in 1995 and 1994, operating expenses increased 2%. The increase in operating expenses for comparable properties reflects the increased level of business at the Company's broadcasting and programmed music operations, partially offset by the expense reductions at the Syracuse and Daytona Beach/Palatka radio stations. The decrease in corporate expenses is primarily due to nonrecurring costs incurred in 1994, totalling approximately $0.5 million, primarily relating to the relocation of the Company's corporate headquarters from New York City to Greenwich, Connecticut, severance costs, the installation of new management for the hospital cable television business, and certain costs relating to the 1994 refinancing. Operating cash flow increased 7%, to $9.7 million in 1995 from $9.1 million in 1994. The increase is attributable to a full year of operations for the radio stations acquired in 1994, as well as stronger results for the Asheville and Gadsden radio stations and the programmed music franchises. For businesses owned and operated for a comparable period in 1995 and 1994, operating cash flow increased 4%. The increase in operating cash flow for comparable properties primarily reflects the strong performance by the Asheville and Gadsden radio stations and the growth of the sound equipment business in Georgia and Florida, partially offset by the Syracuse radio stations. Operating income increased 68% to $2.2 million in 1995, from $1.3 million in 1994. Results in 1995 include distributions totalling $1.9 million, classified as other income, from Northstar Television Group ('Northstar') and Fairmont Communications Corporation ('Fairmont') relating to the sale of Northstar's television stations and Fairmont's radio stations, while results in 1994 include a distribution of $2.3 million relating to the sale of Fairmont's radio stations (see Management Agreements). Interest expense increased 19%, to $5.2 million in 1995 from $4.4 million in 1994 due to the increased level of debt outstanding following the 1994 acquisitions. Interest expense in 1995 and 1994 includes $0.3 million and $0.2 million, respectively, of non-cash interest attributable to warrant and deferred financing cost amortization. Included in results in 1995 is the gain on the sale of the Anniston station of $8.1 million. Included in 1995 and 1994 results are extraordinary losses on the early extinguishment of debt of $3.9 million and $0.4 million, respectively. Net income of $2.7 million, or $0.50 per share in 1995 compares to a net loss of $1.6 million, or $0.29 per share in 1994. YEAR ENDED DECEMBER 31, 1994 VS. 1993 Net revenues of $34.6 million in 1994 represent a 26% increase from 1993 net revenues of $27.4 million. The increase is primarily attributable to the radio stations acquired in 1994, as well as improved operations at the Company's other businesses. For businesses owned and operated for a comparable period in 1994 and 1993, net revenues increased 10%. For broadcasting and related businesses operated for a comparable period, net revenues increased 8%, to $19.9 million in 1994 from $18.4 million in 1993. The increase primarily reflects strong performance by the Company's Anniston television station, as well as certain other broadcasting properties. Net revenues for the programmed music division increased from $7.2 million in 1993 to $8.3 million in 1994, which represents a 15% increase. The increase reflects the growth of sound equipment sales in Georgia and Florida. Net revenues in 1994 include management fee revenue of $0.7 million relating to the sale of Fairmont Communications Corporation's radio stations (see Management Agreements). Total operating expenses increased 23%, from $27.0 million in 1993 to $33.3 million in 1994. The increase is primarily attributable to the radio stations acquired in 1994. For businesses owned and operated for a comparable period in 1994 and 1993, operating expenses increased 6%. The increase in operating expenses for comparable properties reflects the increased level of business at the Company's broadcasting and programmed music operations, partially offset by the local marketing agreement 17 entered into by radio station WING-FM, Dayton in 1993 and reductions in expenses at certain of the Company's broadcasting properties. The increase in corporate expenses is primarily due to nonrecurring costs totalling approximately $0.5 million primarily relating to the relocation of the Company's corporate headquarters from New York City to Greenwich, Connecticut, severance costs, the installation of new management for the hospital cable television business, and certain costs relating to the 1994 refinancing. Operating cash flow increased 48%, to $9.1 million in 1994 from $6.2 million in 1993. The increase is attributable to improved results at the businesses owned for a comparable period and the radio stations acquired in 1994. For businesses owned and operated for a comparable period in 1994 and 1993, operating cash flow increased 33%. The increase in operating cash flow for comparable properties primarily reflects the strong performance by the Anniston television station, the Wheeling radio and entertainment businesses and the growth of the sound equipment business in Georgia. These increases also reflect increased operating cash flow attributable to the local marketing agreement at the Company's Dayton radio station. Operating income of $1.3 million in 1994 compares to $0.4 million in 1993. Other income (expense) in 1994 includes a $2.3 million distribution from Fairmont relating to the sale of all of Fairmont's radio stations, partially offset by a charge of $0.4 million relating to the registration statement filed by the Company in March 1994 and withdrawn in July 1994. Interest expense increased 62%, to $4.4 million in 1994 from $2.7 million in 1993. The increase in interest expense is due to the increased level of debt outstanding following the 1994 acquisitions. Interest expense in 1994 includes $0.2 million of non-cash interest attributable to warrant and deferred financing cost amortization. The net loss in 1994 of $1.6 million includes a tax provision of $0.3 million, while the net loss of $2.2 million in 1993 includes a tax provision of $0.2 million. Included in 1994's results is an extraordinary loss on the early extinguishment of debt of $0.4 million. LIQUIDITY AND CAPITAL RESOURCES CASH FLOWS FROM OPERATING ACTIVITIES In 1995 and 1994, net cash provided by operating activities totalled $1.9 million and $2.8 million, respectively (see Results of Operations.) CASH FLOWS FROM INVESTING ACTIVITIES During 1995, the Company received cash distributions relating to the sale of Northstar's and Fairmont's broadcasting properties totalling $4.2 million, of which $2.3 million related to income accrued in 1994. In June and August 1994, the Company acquired six radio stations for an aggregate of $21.8 million plus transaction costs and in 1995 the Company entered into an option agreement for $10.0 million to sell its television station (see Acquisitions and Dispositions). During 1995 and 1994, the Company received $1.6 million and $0.3 million, respectively, representing the remaining principal from a note issued in 1988 by the purchaser of the Company's Toledo, Ohio radio station and programmed music franchise. In December 1995, the Company paid $260,000 in exchange for the interest held by outside investors in Osborn Healthcare Communications, Inc. ('Osborn Healthcare'), thereby increasing its ownership to 100%. Osborn Healthcare provides cable television services to hospitals. In addition to debt service requirements, the Company's remaining liquidity demands will primarily be for capital expenditures and to meet working capital needs. The Company made capital expenditures of $1.3 million and $0.9 million in 1995 and 1994, respectively. These expenditures are primarily attributable to the addition of new customers by its programmed music franchises and upgrades to technical facilities at several of the broadcasting properties, including those acquired in 1994. For 1996, the Company expects to make capital expenditures for its existing properties totalling $0.9 million and will make capital expenditures for the properties acquired in 1996 as needed. 18 CASH FLOWS FROM FINANCING ACTIVITIES In August 1995, the Company entered into a credit facility of $56.0 million with Society National Bank. The facility consists of a $46.0 million revolving credit facility and a $10.0 million facility which may be used for acquisitions. The initial drawdown of $44.5 million, along with the Company's internally generated funds, was used to repay all outstanding indebtedness, totalling $50.0 million, at 101% of par value under the Company's existing debt facilities and to pay transaction costs. In June 1994, the Company entered into loan agreements totalling $50.0 million with World Subordinated Debt Partners, L.P., an affiliate of Citicorp Mezzanine Investment Fund ('CMIF'). The proceeds were used to fund the 1994 acquisitions, except the Atlantic City acquisition (see Acquisitions and Dispositions); to repay certain of the Company's existing debt; to redeem the Company's 13.875% senior subordinated notes of $10.7 million at 101% of par value; to pay transaction costs; and to provide funds for general corporate purposes. As partial consideration for making the loans, CMIF received a warrant to purchase 1,014,193 shares of the Company's common stock at $7.00 per share. The warrant is exercisable for a 10-year period. The CMIF loans were repaid in August 1995, primarily with the proceeds from the Society National Bank credit facility. Along with the repayment of debt, the Company was able to cancel purchase rights with respect to 676,162 warrant shares of the 1,014,193 warrant shares issued with the CMIF loans. LONG-TERM DEBT Long-term debt to total capitalization decreased between December 31, 1994 and December 31, 1995 from 73% to 69% (see Cash Flows from Financing Activities). Based on transactions announced to date, the Company anticipates a net reduction in the ratio of long-term debt to total capitalization following the closing of the acquisitions and dispositions described above (see Acquisitions and Dispositions). WORKING CAPITAL At December 31, 1995 and 1994, cash and cash equivalents totalled $13.0 million and $6.4 million, respectively. Working capital increased $3.9 million, from $8.3 million to $12.2 million during 1995. The change in working capital is primarily attributable to the results of operations (see Cash Flows from Operating Activities) and the proceeds from the Anniston transaction. Assuming no deterioration in the economic climate, the Company believes the funds generated from its existing operations are adequate to service its debt and to meet all other existing obligations in the normal course of business, and will continue to be adequate for the foreseeable future. The Company believes that the funds available under its existing credit facility, combined with the expected proceeds from the Syracuse, Jacksonville, Daytona Beach/Palatka, and Raleigh dispositions, will be sufficient to fund the Port Charlotte, Fresno, and Wheeling acquisitions. In 1996, 1997, 1998, and 1999 through 2001, $2.7 million, $4.1 million, $5.4 million, and $35.0 million respectively, of the Company's long-term debt principal is scheduled to be repaid. The Company anticipates that the 1996 amount will be repaid from the proceeds of the sale of the Atlantic City radio station. Such indebtedness is secured by the stock and assets of Atlantic City and is otherwise nonrecourse to the Company and its other assets. There can be no assurance that funds generated from operations will be sufficient to meet these obligations in full at maturity and refinancing and/or asset sales may be necessary. There can be no assurance as to the Company's ability to refinance this debt or sell assets on acceptable terms. It is not possible to ascertain the effect on the Company's liquidity that would result from potential future acquisitions, dispositions or debt repurchases. The Company expects to evaluate all viable forms of financing when examining potential future acquisitions or its capital structure. This could take the form of, among other things, additional sales of stock or notes, bank and/or institutional borrowings, or seller financing, as well as internally generated funds. MANAGEMENT AGREEMENTS The Company currently owns 25% of the stock of Fairmont Communications Corporation. Fairmont is managed by the Company pursuant to a management agreement, for which the Company 19 receives a management fee of $125,000 plus reimbursement of out-of-pocket expenses and allocated overhead costs. In August 1992, Fairmont filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. In September 1993, Fairmont emerged from Chapter 11 upon approval by the bankruptcy court of a plan of reorganization (the 'Plan'). The Plan provides for the sale of Fairmont's assets, distribution of proceeds in accordance with the Plan, and subsequent liquidation of Fairmont. All of Fairmont's stations were sold by 1994. The Company will continue to manage Fairmont pursuant to the management agreement which expires upon the liquidation of Fairmont, which is expected in 1996. In addition to its management fees, the Company received distributions of $0.4 million and $2.3 million in 1995 and 1994, respectively, relating to the sale of Fairmont's radio stations. The Company held a 32% interest in Northstar Television Group, Inc. and managed Northstar's four television stations pursuant to a management agreement in return for a management fee plus reimbursement of out-of-pocket expenses and allocated overhead costs. In 1994, Northstar's creditors and equity investors reached an agreement with respect to restructuring Northstar's highly leveraged capital structure pursuant to which, among other things, the Company received a portion of accrued and unpaid management fees and retains an economic interest. The Company's management agreement with Northstar terminated following the restructuring. In January 1995, three of Northstar's four television stations were sold and the Company received a distribution of $1.6 million. OSBORN HEALTHCARE The Company's credit facility limits the amount of additional investment the Company may make in Osborn Healthcare to $2.0 million, of which $0.4 million was made in 1995. The Company believes that this limitation will not significantly impact the operation of the business in 1996. SEASONALITY For broadcasting properties, the first quarter is expected to reflect the lowest revenues and net income of the year, while the fourth quarter historically has had the highest revenues and net income. This is due in part to increases in retail advertising in the fall in preparation for the holiday season, with a subsequent reduction of retail advertising after the holidays. The Company's entertainment properties are expected to reflect the lowest revenues and net operating results of the year in the first quarter due to the planned scheduling of the most popular performers during the peak spring, summer and fall seasons. Also, the Company's country music festival, Jamboree in the Hills, takes place in the third quarter of each year. EFFECTS OF INFLATION The Company believes the relatively moderate rates of inflation over the past three years have not had a significant impact on the profitability of the Company. In general, the Company believes the effects of inflation are offset through increases in advertising rates. 20 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAGE --------- Consolidated Financial Statements: Consolidated Balance Sheets at December 31, l995 and l994........................................ 22 Consolidated Statements of Operations for the years ended December 31, 1995, 1994 and 1993....... 23 Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993....... 24 Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 1995, 1994 and 1993................................................................................... 25 Notes to Consolidated Financial Statements............................................................ 26 Report of Independent Auditors........................................................................ 37
21 OSBORN COMMUNICATIONS CORPORATION CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1994
1995 1994 ----------- ----------- ASSETS Current assets: Cash and cash equivalents..................................................... $12,994,779 $ 6,368,473 Accounts receivable, less allowance for doubtful accounts of $518,157 in 1995 and $370,102 in 1994......................................................... 5,759,562 5,435,792 Distribution receivable....................................................... -- 2,264,552 Note receivable............................................................... -- 1,620,455 Inventory..................................................................... 889,942 1,080,647 Prepaid expenses and other current assets..................................... 1,525,308 782,544 ----------- ----------- Total current assets..................................................... 21,169,591 17,552,463 Investment in affiliated companies................................................. 524,084 535,913 Property, plant and equipment, at cost, less accumulated depreciation of $18,624,021 in 1995 and $15,945,361 in 1994...................................... 15,358,070 16,442,810 Intangible assets, net of accumulated amortization of $15,238,193 in 1995 and $13,308,848 in 1994.............................................................. 40,463,595 44,418,927 Other noncurrent assets............................................................ 118,753 216,373 ----------- ----------- Total assets............................................................. $77,634,093 $79,166,486 ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses......................................... $ 4,509,292 $ 3,787,528 Accrued wages and sales commissions........................................... 434,309 304,781 Accrued interest payable...................................................... 459,114 1,944,787 Accrued income taxes.......................................................... 825,712 535,489 Current portion of long-term debt............................................. 2,718,000 2,700,000 ----------- ----------- Total current liabilities................................................ 8,946,427 9,272,585 Long-term debt..................................................................... 44,482,000 48,313,905 Deferred income taxes.............................................................. 2,275,711 2,035,047 Other noncurrent liabilities....................................................... 432,916 263,107 Commitments and contingencies...................................................... -- -- Stockholders' equity: Preferred stock, par value $.01 per share; authorized 5,000,000 shares, none issued and outstanding....................................................... -- -- Common stock, par value $.01 per share; authorized 7,425,000 shares, issued and outstanding shares: 5,286,347 and 5,276,347, respectively, in 1995; 5,369,747 and 5,359,747, respectively, in 1994...................................................................... 52,764 53,598 Non-voting common stock, par value $.01 per share; authorized 75,000 shares, none issued and outstanding.................................................. -- -- Additional paid-in capital.................................................... 39,694,601 40,181,258 Accumulated deficit........................................................... (18,250,326) (20,953,014) ----------- ----------- Total stockholders' equity............................................... 21,497,039 19,281,842 ----------- ----------- Total liabilities and stockholders' equity............................... $77,634,093 $79,166,486 ----------- ----------- ----------- -----------
See accompanying notes. 22 OSBORN COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993 ----------- ----------- ----------- Net revenues........................................................ $39,100,496 $34,581,651 $27,398,647 ----------- ----------- ----------- Operating expenses: Selling, technical and program................................. 11,380,774 9,087,356 6,591,832 Direct programmed music and entertainment...................... 10,489,513 9,807,495 9,199,885 General and administrative..................................... 7,526,897 6,611,035 5,454,912 Depreciation and amortization.................................. 5,782,404 5,285,280 4,256,648 Corporate expenses............................................. 1,705,850 2,475,675 1,497,617 ----------- ----------- ----------- Total operating expenses.................................. 36,885,438 33,266,841 27,000,894 ----------- ----------- ----------- Operating income.................................................... 2,215,058 1,314,810 397,753 Other income........................................................ 2,314,508 2,246,450 297,592 Interest expense.................................................... 5,212,999 4,385,827 2,714,071 Equity in results of affiliated company............................. (11,829) -- -- Gain on sale of station............................................. 8,094,993 -- -- ----------- ----------- ----------- Income (loss) before income taxes and extraordinary item............ 7,399,731 (824,567) (2,018,726) Provision for income taxes.......................................... 775,982 289,220 154,366 ----------- ----------- ----------- Income (loss) before extraordinary item............................. 6,623,749 (1,113,787) (2,173,092) Extraordinary item: Loss on debt extinguishment.................................... (3,921,061) (436,329) -- ----------- ----------- ----------- Net income (loss)................................................... $ 2,702,688 ($1,550,116) ($2,173,092) ----------- ----------- ----------- ----------- ----------- ----------- Primary earnings per common share: Income (loss) before extraordinary item........................ $1.23 ($0.21) ($0.50) Loss on extinguishment of debt................................. (0.73) (0.08) -- ----------- ----------- ----------- Net income (loss) per common share.................................. $0.50 ($0.29) ($0.50) ----------- ----------- ----------- ----------- ----------- ----------- Fully diluted earnings per common share: Income (loss) before extraordinary item........................ $1.22 ($0.21) ($0.50) Loss on extinguishment of debt................................. (0.72) (0.08) -- ----------- ----------- ----------- Net income (loss) per common share.................................. $0.50 ($0.29) ($0.50) ----------- ----------- ----------- ----------- ----------- ----------- Weighted average common shares outstanding: Primary shares................................................. 5,388,001 5,376,715 4,372,922 ----------- ----------- ----------- ----------- ----------- ----------- Fully diluted shares........................................... 5,459,353 5,376,715 4,372,922 ----------- ----------- ----------- ----------- ----------- -----------
See accompanying notes. 23 OSBORN COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)............................................................... $ 2,702,688 ($1,550,116) ($2,173,092) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization.............................................. 5,782,404 5,285,280 4,256,648 Gain on sale of station.................................................... (8,094,993) -- -- Deferred income taxes...................................................... 240,664 175,000 -- Loss on extinguishment of debt............................................. 3,921,061 436,329 -- Write-off of registration statement costs.................................. -- 397,583 -- Non-cash interest expense.................................................. 332,284 210,421 -- Equity in results of affiliated company.................................... 11,829 -- -- Distributions from affiliated companies.................................... (1,942,731) -- -- Changes in current assets and current liabilities: Increase in accounts receivable....................................... (323,770) (2,165,123) (464,823) Decrease (increase) in inventory...................................... 190,705 (214,241) (42,029) (Increase) decrease in prepaid expenses and other current assets...... (742,764) (177,499) 55,702 Acquisition deposit held in escrow.................................... 180,000 -- -- Increase in distribution receivable................................... -- (2,264,552) -- Increase (decrease) in accounts payable and accrued expenses.......... 721,764 1,069,534 (511,018) Increase (decrease) in accrued wages and sales commissions............ 129,528 (96,287) 18,251 (Decrease) increase in accrued interest payable....................... (1,485,673) 1,632,742 33,646 Increase in accrued income taxes...................................... 290,223 15,009 84,250 ----------- ----------- ----------- Total adjustments................................................ (789,469) 4,304,196 3,430,627 ----------- ----------- ----------- Net cash provided by operating activities............................. 1,913,219 2,754,080 1,257,535 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Distributions from affiliated companies.................................... 4,207,283 -- -- Payments for business acquisitions......................................... -- (21,825,094) -- Proceeds from sale of station.............................................. 10,000,000 -- -- Accrued transaction costs.................................................. (1,411,981) -- -- Proceeds from note receivable.............................................. 1,620,455 329,545 1,450,000 Capital expenditures....................................................... (1,326,492) (942,771) (340,464) Acquisition deposit held in escrow......................................... (180,000) -- (500,000) Expenditures for intangible assets......................................... (524,863) -- -- ----------- ----------- ----------- Net cash provided by (used in) investing activities................... 12,384,402 (22,438,320) 609,536 ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt................................... 44,500,000 48,460,982 -- Proceeds from issuance of stock warrant.................................... -- 1,774,837 -- Debt issuance costs........................................................ (1,183,824) (1,887,965) -- Registration statement costs............................................... -- (228,587) -- Proceeds from exercise of stock options.................................... 154,863 6,000 -- Purchase and retirement of treasury stock.................................. (642,354) (107,058) -- Proceeds from rights offering.............................................. -- -- 6,597,253 Prepayment penalty on debt retirement...................................... (500,000) -- -- Principal payments on long-term debt and notes payable..................... (50,000,000) (23,286,671) (8,086,529) ----------- ----------- ----------- Net cash (used in) provided by financing activities................... (7,671,315) 24,731,538 (1,489,276) ----------- ----------- ----------- Net increase in cash and cash equivalents....................................... 6,626,306 5,047,298 377,795 Cash and cash equivalents at beginning of period................................ 6,368,473 1,321,175 943,380 ----------- ----------- ----------- Cash and cash equivalents at end of period...................................... $12,994,779 $ 6,368,473 $ 1,321,175 ----------- ----------- ----------- ----------- ----------- ----------- Supplemental cash flow information: Cash paid for interest..................................................... $ 6,366,388 $ 2,542,664 $ 2,680,425 ----------- ----------- ----------- ----------- ----------- ----------- Cash paid for income taxes................................................. $ 245,095 $ 99,211 $ 70,116 ----------- ----------- ----------- ----------- ----------- -----------
See accompanying notes. 24 OSBORN COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
VOTING NON-VOTING --------------------- ------------------ ADDITIONAL PAR PAR PAID-IN ACCUMULATED SHARES VALUE SHARES VALUE CAPITAL DEFICIT ---------- ------- ------- ------- ----------- ----------- Balance at December 31, 1992.................... 6,976,688 $69,768 -- -- $30,894,831 ($17,229,806) Net loss........................................ -- -- -- -- -- (2,173,092) Sale of common stock............................ 3,490,000 34,900 -- -- 6,562,353 -- Issuance of common stock in exchange for minority interest............................. 285,493 2,855 -- -- 996,371 -- ---------- ------- ------- ------- ----------- ----------- Balance at December 31, 1993.................... 10,752,181 107,523 -- -- 38,453,555 (19,402,898) Exercise of stock options....................... 1,500 15 -- -- 5,984 -- Issuance of stock warrant....................... -- -- -- -- 1,774,837 -- Effect of 1-for-2 reverse stock split........... (5,376,091) (53,762) -- -- 53,762 -- Purchase and retirement of treasury stock....... (17,843) (178) -- -- (106,880) -- Net loss........................................ -- -- -- -- -- (1,550,116) ---------- ------- ------- ------- ----------- ----------- Balance at December 31, 1994.................... 5,359,747 53,598 -- -- 40,181,258 (20,953,014) Purchase and retirement of treasury stock....... (107,059) (1,071) -- -- (641,283) -- Exercise of stock options....................... 23,659 237 -- -- 154,626 -- Net income...................................... -- -- -- -- -- 2,702,688 ---------- ------- ------- ------- ----------- ----------- Balance at December 31, 1995.................... 5,276,347 $52,764 -- -- $39,694,601 ($18,250,326) ---------- ------- ------- ------- ----------- ----------- ---------- ------- ------- ------- ----------- -----------
See accompanying notes. 25 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 1 -- NATURE OF BUSINESS AND ORGANIZATION Osborn Communications Corporation (the 'Company') is engaged in the operation of radio, television, programmed music, cable television and other communications properties throughout the United States. NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES A. Basis of presentation -- The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany items and transactions have been eliminated. Investments in affiliated companies are accounted for using the equity method. Prior years' amounts have been reclassified to conform with the current year's presentation. B. Depreciation -- Property, plant and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, as follows: Buildings..................................................................... 10-30 years Furniture and fixtures........................................................ 5 years Broadcasting equipment........................................................ 3-19 years Transportation equipment...................................................... 3-5 years
Expenditures for maintenance and repairs are charged to operations as incurred. C. Intangible assets -- Intangible assets include $2.5 million for 1995 and $3.0 million for 1994 for agreements not to compete relating to certain transactions described in Note 3, and $3.4 million for 1995 and 1994 assigned to Muzak customer contracts acquired in 1990 and 1986, which are being amortized over their estimated useful lives. Deferred financing costs of $1.2 million for 1995 and $1.9 million for 1994 are being amortized over the term of the related debt on a straight-line basis, which approximates the interest method. The remainder, in the amount of $48.6 million for 1995 and $49.3 million for 1994, represents the excess of acquisition cost over the amounts assigned to other assets acquired in the Company's acquisitions, and is being amortized on a straight-line basis principally over a 40-year period. It is the Company's policy to account for goodwill and all other intangible assets at the lower of amortized cost or estimated realizable value. As part of an ongoing review of the valuation and amortization of intangible assets of the Company and its subsidiaries, management assesses the carrying value of the intangible assets if facts and circumstances suggest that there may be impairment. If this review indicates that the intangibles will not be recoverable as determined by a non-discounted cash flow analysis of the operating assets over the remaining amortization period, the carrying value of the intangible assets would be reduced to estimated realizable value. The Financial Accounting Standards Board issued SFAS No.121, 'Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of' in March 1995, which establishes standards for the recognition and measurement of impairment losses on long-lived assets, certain identifiable intangible assets, and goodwill. The requirements of SFAS No.121 will be effective for the Company's financial statements beginning in 1996. The Company does not believe that the implementation of SFAS No. 121 will have a material effect on its financial statements. D. Barter transactions -- Revenue from barter transactions (advertising provided in exchange for goods and services) is recognized as income when advertisements are broadcast, and merchandise or services received are charged to expense (or capitalized as appropriate) when received or used. E. Minority interest -- In December 1995, the Company paid $260,000 in exchange for the interest held by outside investors in Osborn Healthcare Communications, Inc. ('Osborn Healthcare'), thereby increasing its ownership to 100%. Osborn Healthcare provides cable television services to hospitals. 26 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 F. Revenue -- Broadcast revenue is presented net of advertising commissions and representative fees of $2,326,000, $2,089,000 and $1,417,000 in 1995, 1994 and 1993, respectively. G. Per share data -- Primary earnings per common share for 1995 is based on the net income for the year divided by the weighted average number of common and common equivalent shares. Common stock equivalents consist of stock options and warrants (see Notes 11 and 12). Shares issuable upon the exercise of all common stock equivalents and other potentially dilutive securities are not included in the computations for 1994 and 1993 since their effect is not dilutive. H. Cash equivalents -- Cash equivalents consist of short-term, highly liquid investments which are readily convertible into cash and have an original maturity of three months or less when purchased. I. Inventory -- Inventories, consisting of merchandise for the Company's entertainment properties, sound equipment held for resale by the Company's Muzak franchises and equipment held for resale by the Company's healthcare cable business, are valued at the lower of cost or market using the first-in, first-out method. J. Risks and Uncertainties -- The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results may differ from those estimates. NOTE 3 -- ACQUISITIONS AND DISPOSITIONS At December 31, 1995 the Company owned and operated eleven FM and five AM radio stations, four programmed music and sound equipment distributorships, a hospital cable television company and certain entertainment properties. 1995: In December 1995, the Company entered into an option agreement with Allbritton Communications Company for the sale of television station WJSU-TV, Anniston, Alabama, and an associated 10-year local marketing agreement. In consideration for the option, the Company received a nonrefundable cash payment of $10.0 million. Because the cash proceeds from the option are nonrefundable, the Company accounted for the economic substance of the transaction as if a sale of substantially all the assets of the station had occurred. Accordingly, a gain of approximately $8.1 million was recorded. In addition, upon the exercise of the option and the necessary FCC consent, the Company will receive an additional cash payment of $2.0 million. If the necessary approvals to relocate the station's broadcast transmitter to maximize broadcast coverage of the facility are received, the Company will receive additional cash payments of up to $7.0 million. In August 1995, the Company agreed to acquire substantially all the assets of radio stations WKII-AM/WEEJ-FM, Port Charlotte, Florida from Kneller Broadcasting of Charlotte County, Inc. ('Kneller') for $2.85 million, subject to Federal Communications Commission ('FCC') approval and license renewal. In the event that the Company is able to relocate WEEJ-FM's broadcast antenna to the Company's Pine Island, Florida tower in order to better serve the Port Charlotte/Ft. Myers market, additional consideration of $750,000 will be paid. Pending the closing of the transaction, which is expected in April 1996, the stations are managed by the Company pursuant to a local marketing agreement. In September 1995, the Company agreed to sell substantially all the assets of radio stations WNDR-AM/WNTQ-FM, Syracuse, New York to Pilot Communications L.L.C. ('Pilot') for $12.5 million, subject to FCC approval. Pending the closing of the transaction, which occurred in February 27 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 1996, the stations were managed by the purchaser pursuant to a local marketing agreement (see Note 13). In September 1995, the Company agreed to sell substantially all the assets of radio stations WWRD-FM, Jacksonville, Florida/Brunswick, Georgia and WFKS-FM, Daytona Beach/Palatka, Florida, as well as the Company's 50% interest in the broadcast tower serving WWRD-FM to Renda Broadcasting Corporation ('Renda') for total consideration of $6.5 million. The closing of the transactions is subject to FCC approval. The sale of WWRD-FM closed in January 1996 (see Note 13) and the sale of WFKS-FM is expected to close in 1996. Pending the closing of the transactions, the stations have been managed by the purchaser pursuant to local marketing agreements. 1994: In June 1994, the Company acquired substantially all the assets of three FM and one AM radio stations for $20.0 million plus transaction costs. The acquisition included radio stations WWNC-AM/WKSF-FM, Asheville, North Carolina; WOLZ-FM, Ft. Myers, Florida; and WFKS-FM, Daytona Beach/Palatka, Florida. In August 1994, the Company acquired substantially all the assets of radio stations WAAX-AM/WQEN-FM, Gadsden, Alabama for $1.75 million plus transaction costs. The seller of the six stations has agreed not to own or operate radio stations in these markets for a period of three years. The Gadsden market is adjacent to the Anniston market, in which the Company owned its television station. In August 1995, the Company was granted a waiver of the FCC's regulations prohibiting ownership of radio and television stations in the same market. Pending the FCC's ruling on the waiver application, the Gadsden stations were placed in a trust which operated the stations on the Company's behalf. In March 1994, the Company, through a wholly-owned subsidiary, acquired radio station WAYV-FM, Atlantic City, New Jersey, for consideration of approximately $2.5 million (see Note 6.) In February 1996, the Company entered into an agreement to sell substantially all the assets of radio station WAYV-FM, Atlantic City, New Jersey to Equity Communications, L.P. for $3.1 million, subject to FCC approval. Pending the closing of the transaction, which is expected in 1996, the purchaser is managing the stations pursuant to a local marketing agreement. All of the acquisitions have been accounted for using the purchase method of accounting. Accordingly, the purchase price of each acquisition has been allocated to the assets based upon their fair values at the date of acquisition. The results of operations of the properties acquired are included in the Company's consolidated results of operations from the respective dates of acquisition and until the date of disposition for properties disposed. Prior to the grant of the waiver of the FCC's cross-ownership regulations, the Gadsden acquisition was accounted for using the equity method of accounting. Accordingly, prior year financial statements have been reclassified to reflect the consolidation of the Gadsden radio stations. OTHER INVESTMENTS: In 1989, the Company acquired, for $620,000, a 50% non-voting ownership interest (without control) in a corporation that owns and operates radio station WDRR-FM, San Carlos Park, Florida. The station became operational in September 1995. The Company's net investment is included in investment in affiliated companies on the consolidated balance sheet. In 1989, the Company acquired a 32% ownership interest in Northstar Television Group, Inc. ('Northstar') for $329,000. From Northstar's inception through May 1994, the Company managed Northstar's four television stations for an annual fee of up to $250,000, plus reimbursement of out-of-pocket expenses and allocated overhead costs. In 1994, as a result of a proposed restructuring of Northstar, the Company agreed, as payment for prior services rendered, to receive an immediate 28 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 payment of $250,000, another payment of $250,000 within two years, and the retention of an economic interest. The Company's management agreement terminated following the restructuring. In 1995, three of Northstar's four television stations were sold and the Company received a distribution of $1.6 million, classified as other income in the consolidated statement of operations, plus accrued management fees of $250,000. In 1987, the Company acquired 25% of the stock of Fairmont Communications Corporation ('Fairmont') for $500,000. Fairmont owned seven radio stations in four large and medium sized markets. In August 1992, Fairmont filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. In September 1993, Fairmont emerged from Chapter 11 upon approval by the bankruptcy court of a plan of reorganization (the 'Plan'). The Plan provided for the sale of Fairmont's assets, distribution of the proceeds in accordance with the Plan, and subsequent liquidation of Fairmont. All of Fairmont's stations were sold by the second quarter of 1994. The Company will continue to manage Fairmont pursuant to a management agreement which expires upon the liquidation of Fairmont, which is expected in 1996. For managing Fairmont, the Company receives an annual fee of $125,000, plus reimbursement of out-of-pocket expenses and allocated overhead costs. In 1994, the Company received additional management fees of $728,000 related to the sale of Fairmont's stations. The Company also earned distributions of $0.4 million and $2.3 million in 1995 and 1994, respectively, classified as other income and distribution receivable in the consolidated financial statements, determined by the amounts realized by Fairmont from sales of its assets. NOTE 4 -- LOCAL MARKETING AGREEMENTS The Company has entered into certain local marketing agreements ('LMAs') whereby it provides programming to a station owned by a third party and pays a monthly fee for the right to air such programming. The Company receives the right to solicit advertising and to receive payments from the advertisers. In September 1995, the Company entered into an LMA with Kneller to manage Kneller's radio stations WKII-AM/WEEJ-FM, Port Charlotte, Florida pending the acquisition of the stations (see Note 3). In January 1996, the Company entered into an LMA with EBE Communications Limited Partnership and EBE Broadcasting, L.P. ('EBE') to manage EBE's radio stations KNAX-FM/KRBT-FM, Fresno, California pending the acquisition of the stations (see Note 13). In addition, the Company has entered into certain other LMAs whereby a third party provides programming to a station owned by the Company and pays a monthly fee for the right to air such programming. The third party receives the right to solicit advertising and to receive payments from the advertisers. In September 1995, the Company entered into LMAs with Renda to manage radio stations WWRD-FM, Jacksonville, Florida/Brunswick, Georgia and WFKS-FM, Daytona Beach/Palatka, Florida pending the disposition of the stations (see Note 3). In September 1995, the Company entered into an LMA with Pilot to manage radio stations WNDR-AM/WNTQ-FM, Syracuse, New York pending the disposition of the stations (see Note 3). In 1993, the Company entered into a five-year LMA with Great Trails Broadcasting Corporation ('Great Trails') to manage the Company's radio station WING-FM, Dayton/Springfield, Ohio. Great Trails has the option to purchase the station at escalating prices throughout the term of the LMA. In 1992, the Company entered into a five-year LMA with Pinnacle Broadcasting Company, Inc. ('Pinnacle') to manage the Company's radio station WFXK-FM, Raleigh/Tarboro, North Carolina. In 29 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 February 1996, the Company agreed to sell substantially all the assets of the station to Pinnacle (see Note 13). NOTE 5 -- PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
YEAR ENDED DECEMBER 31, -------------------------- 1995 1994 ----------- ----------- Net revenues............................................................. $32,349,000 $30,485,000 Loss before extraordinary item........................................... (533,000) (1,377,000) Net loss................................................................. (4,454,000) (1,813,000) Net loss per share....................................................... ($0.82) ($0.34)
The unaudited pro forma information for the year ended December 31, 1995 assumes that the Anniston, Syracuse and Jacksonville/Brunswick dispositions, as described in Note 3, had occurred on January 1, 1995. The unaudited pro forma information for the year ended December 31, 1994 assumes that the Anniston, Syracuse and Jacksonville/Brunswick dispositions and Atlantic City, Asheville, Ft. Myers, Daytona Beach/Palatka, and Gadsden acquisitions, as described in Note 3, the CMIF credit agreement, as described in Note 6, and reverse stock split, as described in Note 12, had occurred on January 1, 1994. The pro forma information is not necessarily indicative either of the results of operations that would have occurred had these transactions been made at the beginning of the period, or of future results of operations. Net assets of properties to be disposed in Syracuse, Anniston, Jacksonville/Brunsick, Daytona Beach, Raleigh/Tarboro and Atlantic City aggregated $17.6 million at December 31, 1995, consisting of current assets of $0.8 million, net property, plant and equipment of $4.1 million, and net intangible assets of $12.7 million. 30 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 NOTE 6 -- LONG-TERM DEBT A summary of long-term debt as of December 31, 1995 and 1994 is as follows:
1995 1994 ----------- ----------- Note payable to Society National Bank, at the prime rate plus 1.5%; interest payable quarterly; principal due in quarterly installments from December 31, 1996 through December 31, 2001(A)...................................................... $14,500,000 -- Note payable to Society National Bank, at LIBOR plus 2.75%; principal due in quarterly installments from December 31, 1996 through December 31, 2001(A)............................ 30,000,000 -- Notes payable to World Subordinated Debt Partners, L.P.: Senior Note at 9.25%; interest payable quarterly; principal due in quarterly installments in varying amounts June 1996 through June 2002(B).................. -- $25,000,000 Senior Subordinated Note at 11.00%; interest payable quarterly; principal due in quarterly installments in varying amounts June 1996 through June 2002(B).......... -- 10,000,000 Subordinated Note at 12.00%; interest payable semiannually; principal due in equal installments June 2003 and June 2004(B)................................... -- 15,000,000 Unamortized warrant value(B)................................... -- (1,686,095) Term loan payable to National Westminster Bank, net of unamortized debt discount of $700,000; interest payable quarterly at LIBOR plus 2.5%; principal due in quarterly installments in varying amounts June 1996 through March 2000(C)...................................................... 2,700,000 2,300,000 Revolving loan payable to National Westminster Bank, interest payable quarterly at LIBOR plus 2.5%; principal due in quarterly installments in varying amounts June 1996 through March 2000(C)................................................ -- 400,000 ----------- ----------- 47,200,000 51,013,905 Less current portion........................................... 2,718,000 2,700,000 ----------- ----------- $44,482,000 $48,313,905 ----------- ----------- ----------- -----------
- ------------ (A) In August 1995, the Company entered into a credit facility of $56.0 million with Society National Bank (the 'Credit Facility'). The Credit Facility consists of a $46.0 million revolving credit facility and a $10.0 million facility which may be used for acquisitions. The initial drawdown of $44.5 million, along with the Company's internally generated funds, was used to repay existing loans totalling $50.0 million and pay transaction costs. The Credit Facility contains covenants which require, among other things, that the Company and its subsidiaries (excluding Atlantic City Broadcasting Corp.) maintain certain financial levels, principally with respect to EBITDA and 31 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 leverage ratios, and limit the amount of capital expenditures. The Credit Facility also restricts the payment of cash dividends. The Credit Facility is collateralized by pledges of the tangible and intangible assets of the Company and its subsidiaries (excluding Atlantic City Broadcasting Corp.), as well as the stock of those subsidiaries. At December 31, 1995, the Company has additional availability under the revolving credit facility and the acquisition facility of $1.5 million and $10.0 million, respectively. The Company pays an annual commitment fee of 0.5% of the unused commitment. (B) In June 1994, the Company entered into two loan agreements totalling $50.0 million with World Subordinated Debt Partners, L.P., an affiliate of Citicorp Mezzanine Investment Fund ('CMIF'). As part of the consideration for making the loans, the lender was given a warrant to purchase 1,014,193 shares of the Company's common stock at $7.00 per share (see Note 12.) The net proceeds from the loans were used to fund the acquisitions of radio stations and to repay certain of the Company's other debt, resulting in an extraordinary loss on the early extinguishment of debt of $436,000 in 1994. The loans were repaid in August 1995, primarily using the proceeds from the Credit Facility. Along with the repayment of debt, the Company was able to cancel purchase rights with respect to 676,162 warrant shares of the 1,014,193 warrant shares issued with the previous loans. As a result of the repayment of the CMIF loans, the Company recorded an extraordinary loss on the early extinguishment of debt of approximately $3.9 million in 1995. The extraordinary loss is primarily due to non-cash charges from the write-off of deferred financing costs and debt discount. (C) The term loan and revolving loan contain covenants with respect to the Company's wholly-owned subsidiary, Atlantic City Broadcasting Corp. which, among other things, restrict cash distributions to the Company and limit the amount of annual capital expenditures. The revolving loan converted to a term loan in March 1995. These loans are collateralized by pledges of the tangible and intangible assets and stock of Atlantic City Broadcasting Corp., and is otherwise nonrecourse to the Company and its other assets. The Company and the lender have agreed to sell substantially all the assets of Atlantic City Broadcasting Corp., and accordingly, the debt is classified as short term. All proceeds of the proposed sale are expected to be used to fund transaction costs and repay the debt (see Note 13). The assets of Atlantic City Broadcasting Corporation were acquired in March 1994 for consideration of approximately $2.5 million, consisting of the assumption of debt. ------------------------ At December 31, 1995, the aggregate amounts of long-term debt due during the next five years are as follows:
YEAR ENDING DECEMBER 31, AMOUNT - ------------------------------------------------------------ ---------- 1996........................................................ $2,718,000 1997........................................................ 4,094,000 1998........................................................ 5,428,000 1999........................................................ 6,900,000 2000........................................................ 9,108,000
The fair value of the debt approximates net book value. 32 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 NOTE 7 -- PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at December 31, consists of the following:
1995 1994 ------------ ------------ Land.......................................................... $ 4,256,414 $ 4,212,237 Buildings..................................................... 4,168,839 4,122,771 Equipment..................................................... 25,556,838 24,053,163 ------------ ------------ 33,982,091 32,388,171 Less accumulated depreciation................................. (18,624,021) (15,945,361) ------------ ------------ $ 15,358,070 $ 16,442,810 ------------ ------------ ------------ ------------
At December 31, 1995, all property, plant and equipment is pledged as collateral for the debt disclosed in Note 6. NOTE 8 -- INCOME TAXES At December 31, 1995, the Company has consolidated net operating loss carryforwards for income tax purposes of $33.9 million that expire in years 2002 through 2010. Of the total net operating loss carryforwards, $11.0 million may be used only to offset future income of the Company's subsidiary, Osborn Entertainment Enterprises Corporation. For financial reporting purposes, a valuation allowance of $9.1 million has been recognized to offset the deferred tax asset related to carryforwards. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of December 31, 1995 and 1994 are as follows:
1995 1994 ----------- ------------ Deferred tax assets: Net operating loss carryforwards.......................... $13,577,873 $ 12,389,451 Other..................................................... 713,951 643,740 ----------- ------------ 14,291,824 13,033,191 Valuation allowance....................................... (9,088,722) (10,909,106) ----------- ------------ 5,203,102 2,124,085 Deferred tax liabilities: Depreciation and amortization............................. 4,014,313 3,984,132 Sale of station........................................... 3,289,500 -- Other..................................................... 175,000 175,000 ----------- ------------ 7,478,813 4,159,132 ----------- ------------ Net deferred tax liability................................ $ 2,275,711 $ 2,035,047 ----------- ------------ ----------- ------------
The 1995 provision for income taxes consists entirely of state and local taxes, of which $535,000 is current and $241,000 is deferred. The 1994 provision consists entirely of state and local taxes, of which $114,000 is current and $175,000 is deferred. The 1993 provision consists entirely of current state and local taxes. 33 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 The reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense is as follows:
1995 1994 1993 ----------- -------- -------- Amount computed using statutory rate................... $ 1,217,532 ($428,705) ($686,367) State and local taxes, net of federal benefit.......... 504,388 190,885 101,882 Losses (with) without tax benefit...................... (1,228,507) 234,539 611,691 Nondeductible expenses................................. 282,569 292,501 127,160 ----------- -------- -------- $ 775,982 $289,220 $154,366 ----------- -------- -------- ----------- -------- --------
NOTE 9 -- COMMITMENTS The Company leases office space, vehicles and office equipment. Rental expense amounted to $994,000, $768,000 and $710,000 in 1995, 1994 and 1993, respectively. The minimum aggregate annual rentals under noncancellable operating leases are payable as follows:
YEAR ENDING DECEMBER 31, AMOUNT - -------------------------------------------------------------------------------- ---------- 1996............................................................................ $1,492,000 1997............................................................................ 1,137,000 1998............................................................................ 917,000 1999............................................................................ 653,000 2000............................................................................ 279,000 and thereafter.................................................................. 752,000 ---------- $5,230,000 ---------- ----------
NOTE 10 -- EMPLOYEE BENEFIT PLANS The Company sponsors a profit sharing plan which qualifies under Section 401(k) of the Internal Revenue Code. The plan is available to all full-time employees with at least one year of employment with the Company. All eligible employees may elect to contribute a portion of their compensation to the profit sharing plan, subject to Internal Revenue Code limitations. In December 1994, the Company adopted a non-qualified deferred compensation plan available to certain management employees. NOTE 11 -- STOCK OPTION PLAN The Company's Incentive Stock Option Plan provides for the granting to officers and key employees of incentive and non-qualified stock options to purchase the Company's voting common stock as defined under current tax laws. Incentive stock options are exercisable at a price equal to the fair market value, as defined, on the date of grant, for a maximum 10-year period from the date of grant. Non-qualified stock options may be granted at an exercise price equal to at least 85% of the fair market value on the date of grant, for a maximum 11-year period from the date of grant. The exercise prices of all options granted in 1995, 1994 and 1993 were the fair market values at the date of grant. 34 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 The following table summarizes the plan's transactions for the years ended December 31, 1995, 1994 and 1993:
1995 1994 1993 ------- ------- ------- Outstanding options, beginning of year....................... 417,000 382,750 339,250 Granted...................................................... 66,500 108,250 47,500 Cancelled or expired......................................... (12,500) (72,500) (4,000) Exercised.................................................... (23,659) (1,500) -- ------- ------- ------- Outstanding options, end of year............................. 447,341 417,000 382,750 ------- ------- ------- ------- ------- ------- Average price of options exercised........................... $6.55 $4.00 -- Weighted average exercise price, end of year................. $6.66 $6.64 $5.52 Options exercisable, end of year............................. 283,921 280,083 300,884 Options available for future grant........................... 79,000 133,000 17,250
The Financial Accounting Standards Board issued SFAS No. 123, 'Accounting for Stock Based Compensation' in October 1995, which establishes financial accounting and reporting standards for stock based employee compensation plans including stock purchase plans, stock options, restricted stock, and stock appreciation rights. The Company has elected to continue accounting for stock based compensation under Accounting Principles Board Opinion No. 25. The disclosure requirements of SFAS No. 123 will be effective for the Company's financial statements beginning in 1996. The Company does not believe that the implementation of SFAS No. 123 will have a material effect on its financial statements. NOTE 12 -- STOCKHOLDERS' EQUITY In January 1995, the Company repurchased and subsequently retired 107,059 unregistered shares of its common stock which were held by an institution, totalling approximately $642,000. In December 1994, the Company repurchased and subsequently retired 17,843 shares of its common stock at $6.00 per share, totalling approximately $107,000. In June 1994, the Company entered into two credit agreements totalling $50.0 million with CMIF (see Note 6.) As partial consideration for making the loans, CMIF received a warrant to purchase 1,014,193 shares (after giving effect to the reverse stock split described below) of the Company's common stock at $7.00 per share. The warrant is exercisable for a 10-year period. Under the terms of the warrant agreement, in the event that the CMIF loans were repaid by December 31, 1995, purchase rights with respect to 676,162 warrant shares will be cancelled. The loans were repaid in August 1995 and, accordingly, the purchase rights with respect to 676,162 warrant shares were cancelled. On July 11, 1994, the Company effected a 1-for-2 reverse stock split for shareholders of record on that date. Cash was paid in lieu of fractional shares. All per share amounts in the consolidated statement of operations reflect the reverse stock split. NOTE 13 -- SUBSEQUENT EVENTS (UNAUDITED) In January 1996, the Company entered into an agreement to acquire substantially all assets of radio stations KNAX-FM/KRBT-FM, Fresno, California from EBE Broadcasting, L.P., subject to FCC approval. Consideration for the acquisition consists of $6.0 million plus 120,000 shares of the Company's common stock. Pending the closing of the transaction, which is expected in 1996, the Company is managing the stations pursuant to a local marketing agreement. In January 1996, the Company entered into an agreement to acquire substantially all the assets of radio station WHLX-FM, Wheeling, West Virginia from Bethlehem Radio, Inc. for $0.8 million, subject to FCC approval. The transaction is expected to close in 1996. 35 OSBORN COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DECEMBER 31, 1995 In February 1996, the Company entered into an agreement to acquire substantially all the assets of radio stations WKWK-AM/FM, Wheeling, West Virginia from WKWK Radio, Inc. for $2.7 million, subject to FCC approval. Pending the closing of the transaction, which is expected in 1996, the Company intends to enter into a local marketing agreement to manage the stations as soon as FCC regulations permit. In January 1996, the Company sold substantially all the assets of radio station WWRD-FM, Jacksonville, Florida/Brunswick, Georgia to Renda Broadcasting Corp. for $2.5 million. This transaction resulted in a pre-tax gain of approximately $0.8 million (see Note 3). In February 1996, the Company sold substantially all the assets of radio stations WNDR-AM/WNTQ-FM, Syracuse, New York to Pilot Communications, L.L.C. for $12.5 million. This transaction resulted in a pre-tax gain of approximately $6.0 million (see Note 3). In February 1996, the Company entered into an agreement to sell substantially all the assets of radio station WFXK-FM, Raleigh/Tarboro, North Carolina to Pinnacle Broadcasting Corporation for $5.9 million, subject to FCC approval. Pending the closing of the transaction, which is expected in 1996, the purchaser is continuing to manage the station pursuant to a local marketing agreement (see Note 4). In February 1996, the Company entered into an agreement to sell substantially all the assets of radio station WAYV-FM, Atlantic City, New Jersey to Equity Communications, L.P. for $3.1 million, subject to FCC approval. Pending the closing of the transaction, which is expected in 1996, the purchaser is managing the stations pursuant to a local marketing agreement. 36 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders OSBORN COMMUNICATIONS CORPORATION We have audited the accompanying consolidated balance sheets of Osborn Communications Corporation as of December 31, 1995 and 1994, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Osborn Communications Corporation at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. ERNST & YOUNG LLP New York, New York February 16, 1996 37 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The information required by this item is not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item relating to Directors of the Company is included in the Company's definitive proxy statement for the annual meeting of shareholders to be held on May 22, l996 and is incorporated herein by reference. The information required by this item relating to the executive officers of the Company is included in Part I of this report on page 12. All directors hold office until the next annual meeting of the shareholders of the Company and until their successors are elected and qualified. Officers are elected by the Board of Directors and serve at the pleasure of the Board, except that Mr. Osborn serves as President pursuant to a contract expiring December 1996, as discussed in Part III, Item 11 of this report. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is included in the Company's definitive proxy statement for the annual meeting of shareholders to be held on May 22, l996 and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is included in the Company's definitive proxy statement for the annual meeting of shareholders to be held on May 22, l996 and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is included in the Company's definitive proxy statement for the annual meeting of shareholders to be held on May 22, l996 and is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a)(1) The following consolidated financial statements of Osborn Communications Corporation and subsidiaries are filed as a part of this report: Consolidated Financial Statements Consolidated Balance Sheets as of December 31, l995 and l994 Consolidated Statements of Operations for the years ended December 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993 Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements Report of Independent Auditors (a)(2) The following Financial Statement Schedule for the years ended December 31, 1995, 1994 and 1993 is filed as Exhibit 99(a) as part of this annual report on Form 10-K. Schedule II -- Valuation and qualifying accounts All other schedules have been omitted because the information is not applicable or is not material or because the information required is included in the consolidated financial statements or the notes thereto. (a)(3) Exhibits The exhibits listed in the accompanying index to exhibits on page 41 are filed as part of this annual report on Form 10-K. (b) Reports on Form 8-K for the quarter ended December 31, l995: None 38 SIGNATURES Pursuant to the requirements of Section l3 or l5(d) of the Securities Exchange Act of l934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. OSBORN COMMUNICATIONS CORPORATION (Registrant) By: /s/ FRANK D. OSBORN ................................... FRANK D. OSBORN PRESIDENT AND CHIEF EXECUTIVE OFFICER March 25, 1996 Pursuant to the requirements of the Securities Exchange Act of l934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- /s/ FRANK D. OSBORN Principal Executive Officer and March 25, 1996 ......................................... Director; President and Chief (FRANK D. OSBORN) Executive Officer /s/ THOMAS S. DOUGLAS Principal Financial Officer; Senior March 25, 1996 ......................................... Vice President -- Finance and (THOMAS S. DOUGLAS) Treasurer /s/ MICHAEL F. MANGAN Principal Accounting Officer; Vice March 25, 1996 ......................................... President -- Controller and Secretary (MICHAEL F. MANGAN) /s/ BROWNLEE O. CURREY, JR. Director March 25, 1996 ......................................... (BROWNLEE O. CURREY, JR.) /s/ H. ANTHONY ITTLESON Director March 25, 1996 ......................................... (H. ANTHONY ITTLESON) /s/ EDWARD G. NELSON Director March 25, 1996 ......................................... (EDWARD G. NELSON) /s/ WILLIAM G. SPEARS Director March 25, 1996 ......................................... (WILLIAM G. SPEARS) /s/ ROBERT K. ZELLE Director March 25, 1996 ......................................... (ROBERT K. ZELLE)
39 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-30820) pertaining to the Osborn Communications Corporation 1987 Incentive Stock Plan, as Amended, and in the related Prospectus, of our report dated February 16, 1996 with respect to the consolidated financal statements and the financial statement schedule included in this Annual Report (Form 10K) of Osborn Communications Corporation. ERNST & YOUNG LLP New York, New York March 25, 1996 40 INDEX TO EXHIBITS ITEM 14(A)3. 3(a) -- Osborn Communications Corporation Restated Certificate of Incorporation, previously filed as Exhibit 10.4 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference...................................................................................... (b)(i) -- By-laws of the Company, as amended, previously filed as Exhibit 3(b) to Form 10-K for the year ended December 31, 1989 and incorporated herein by reference................................... (b)(ii) -- By-laws of the Company, as amended, previously filed as Exhibit 3(b)(ii) to Form 10-K for the year ended December 31, 1992 and incorporated herein by reference.............................. 4(a) -- Form of Specimen Stock Certificate, previously filed as Exhibit 4.1 to Registration Statement No. 33-12804 and incorporated herein by reference.............................................. 9(a) -- Irrevocable Voting Trust Agreement among Southeast Radio Holding Corp., Gadsden Broadcasting Corp., Osborn Communications Corporation and James M. Ward dated August 1, 1994, previously filed as Exhibit 9.1 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference...................................................................................... 10(a) -- Stock Purchase Agreement, dated August 6, 1985, between the Company and purchasers of the Company's Common Stock, previously filed as Exhibit 10.1 to Registration Statement No. 33-12804 and incorporated herein by reference........................................................... (b)* -- Employment Agreement between Osborn Communications Corporation and Frank D. Osborn dated July 1, 1994, previously filed as Exhibit 10.5 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference............................................................... (c)* -- Consulting Agreement, dated August 6, 1985 between the Company and Nelson Capital Corp., previously filed as Exhibit 10.3 to Registration Statement No. 33-12804 and incorporated herein by reference................................................................................... (d) -- Stock Purchase Agreement by and among Price Communications Corporation, Republic Broadcasting Corporation, and Fairfield Broadcasting, Inc., dated as of April 27, 1987, previously filed as Item 7(c)(2) to Form 8-K dated August 31, 1987 and incorporated herein by reference............ (e) -- Senior Credit Agreement between Osborn Communications Corporation and World Subordinated Debt Partners, L.P. dated as of June 30, 1994, previously filed as Exhibit 10.1 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference................................ (f) -- Subordinated Credit Agreement among Osborn Communications Corporation, its Subsidiaries and World Subordinated Debt Partners, L.P. dated as of June 30, 1994, previously filed as Exhibit 10.2 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference...... (g) -- Warrant Agreement dated as of June 30, 1994 by and among World Subordinated Debt Partners, L.P. and Osborn Communications Corporation, previously filed as Exhibit 10.3 to Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference............................ (h) -- Registration Rights Agreement, dated April 12, 1988 between Frank D. Osborn and the Company, previously filed as Item 6(a)(1) to Form 10-Q for the quarter ended March 31, 1988 and incorporated herein by reference............................................................... (i)* -- Osborn Communications Corporation 1987 Incentive Stock Plan, as amended, previously filed as Item 20.4d to Registration Statement S-8 No. 33-30820 and incorporated herein by reference..... (j)* -- Osborn Communications Corporation Profit Sharing Plan, as amended, previously filed as Item (10)(j) to Form 10-K for the period ended December 31, 1994 and incorporated herein by reference...................................................................................... (k)* -- Osborn Communications Corporation Deferred Compensation Plan, previously filed as Item (10)(k) to Form 10-K for the period ending December 31, 1994 and incorporated herein by reference...... (l) -- Asset Purchase Agreement, dated April 28, 1988 among Waite Broadcasting Corp., Osborn Communications Corporation, Noble Broadcast of Toledo, Inc. and Noble Broadcast Group Inc., previously filed as Item 7(c)(1) to Form 8-K dated September 1, 1988 and incorporated herein by reference...................................................................................... (m)(i) -- Promissory Note, dated September 1, 1988, by Noble Broadcast Group, Inc. to Waite Broadcasting Corp., previously filed as Exhibit (10)(hh) to Form 10-K for the year ended December 31, 1988 and incorporated herein by reference...........................................................
(table continued on next page) 41 (table continued from previous page) (m)(ii) -- Agreement for Modification of Promissory Note, dated August 29, 1993 by Noble Broadcast Group, Inc. to Waite Broadcasting Corp., previously filed as Exhibit 10.33 to Registration Statement No. 33-76260 and incorporated herein by reference.............................................. (n) -- Asset Purchase Agreement, dated September 22, 1988 among Champion City Broadcasting Company, Osborn of Ohio, Inc., and Osborn Communications Corporation, previously filed as Exhibit (10)(ii) to Form 10-K for the year ended December 31, 1988 and incorporated herein by reference...................................................................................... (o) -- Asset Purchase Agreement, dated October 21, 1988 among Yellow Brick Radio Corporation, Osborn Communications Corporation, KKRD Inc., and Sherman Broadcasting Corporation, previously filed as Exhibit (10)(jj) to Form 10-K for the year ended December 31, 1988 and incorporated herein by reference................................................................................... (p) -- Asset Purchase Agreement, dated November 15, 1988 among Beatrice Broadcasting Corp. and Keymarket of NEPA, Inc., previously filed as Exhibit (10)(kk) to Form 10-K for the year ended December 31, 1988 and incorporated herein by reference......................................... (q) -- Stock Exchange Agreement, dated September 28, 1988 among Osborn Communications Corporation, Donald W. Curtis and J.D. Longfellow, previously filed as Exhibit (10)(ll) to Form 10-K for the year ended December 31, 1988 and incorporated herein by reference.............................. (r) -- Amended and Restated Asset Purchase Agreement by and among NTG, Inc., Price Communications Corporation, and Western Michigan Broadcasting Corporation, Rhode Island Broadcasting Corporation, Magnolia Broadcasting Corporation, and Keystone Broadcasting Corporation, previously filed as Item 7(c)(1) to Form 8-K filed November 15, 1989 an incorporated herein by reference...................................................................................... (s) -- Asset Purchase Agreement between Brunswick Broadcasting Corporation and Nelson Broadcasting Corporation, dated June 1, 1989, previously filed as Exhibit (10)(t) to Form 10-K for the year ended December 31, 1989 and incorporated herein by reference................................... (t) -- Purchase and Sale Agreement between Florida Sound Engineering Company and Osborn Sound & Communications of Florida, Inc., dated October 10, 1989, previously filed as Exhibit (10)(u) to Form 10-K for the year ended December 31, 1989 and incorporated herein by reference............ (u) -- Asset Purchase Agreement, dated December 1, 1993, among Pine Trails Broadcasting Co., Inc., Beachside East Broadcasting, Inc., and Beachside West Broadcasting, Inc., as Sellers; Heritage Broadcast Group, Inc. as Sellers' Guarantor; Asheville Broadcasting Corp., Daytona Beach Broadcasting Corp. and Fort Myers Broadcasting Corp., as Buyers, and Southeast Radio Holding Corp., as Issuer, previously filed as Exhibit 10.1 to Registration Statement No. 33-76260 and incorporated herein by reference............................................................... (v) -- Asset Purchase Agreement, dated December 1, 1993, among Big Thicket Broadcasting Company of Alabama, Inc., as Seller; Heritage Broadcast Group, Inc., as Seller's Guarantor; Gadsden Broadcasting Corp., as Buyer, and Southeast Radio Holding Corp., as Issuer, previously filed as Exhibit 10.2 to Registration Statement No. 33-76260 and incorporated herein by reference....... (w) -- Amendatory Agreement, dated as of March 23, 1994, among Pine Trails Broadcasting Co., Inc., Beachside East Broadcasting , Inc., Beachside West Broadcasting, Inc., Big Thicket Broadcasting Company of Alabama, Inc., Heritage Broadcast Group Inc., Asheville Broadcasting Corp., Gadsden Broadcasting Corp., Southeast Radio Holding Corp., and United States Trust Company of New York, previously filed as Exhibit 10 (hh) to Form 10-K for the year ended December 31, 1993 and incorporated herein by reference............................................................... (x) -- Management Agreement, dated as of March 18, 1994, by and between Pine Trails Broadcasting Co., Inc., Beachside East Broadcasting, Inc., Beachside West Broadcasting, Inc., Heritage Broadcasting Group, Inc. and Southeast Radio Holding Corp., previously filed as Exhibit 10 (ii) to Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.........
(table continued on next page) 42 (table continued from previous page)
(y) -- Amendatory Agreement No. 2, dated as of June 29, 1994, among Pine Trails Broadcasting Co., Inc., Beachside East Broadcasting, Inc., Beachside West Broadcasting, Inc., Big Thicket Broadcasting Company of Alabama, Inc., Heritage Broadcast Group Inc., Asheville Broadcasting Corp., Daytona Beach Broadcasting Corp., Fort Myers Broadcasting Corp., Gadsden Broadcasting Corp., Southeast Radio Holding Corp., and United States Trust Company of New York, previously filed as an exhibit to Form 8-K dated June 30, 1994 and incorporated herein by reference....... (z) -- Asset Purchase Agreement, dated November 30, 1993, between Acquisition Holding Company and Radio WAYV, Inc., previously filed as Exhibit 10.3 to Registration Statement No. 33-76260 and incorporated herein by reference............................................................... (aa) -- Letter Agreement, dated as of November 22, 1993, between the Company and James Cullen, Jr., previously filed as Exhibit 10.5 to Registration Statement No. 33-76260 and incorporated herein by reference................................................................................... (bb) -- Agreement, dated as of June 2, 1993 among Spears, Benzak, Salomon & Farrell, William G. Spears and the Company, previously filed as Exhibit 10 to Registration Statement No. 33-62660 and incorporated herein by reference............................................................... (cc) -- Stock Exchange Agreement, dated as of December 17, 1993, by and among Barker, Lee & Co., Upland Associates L.P. and the Company, previously filed as Exhibit 10.8 to Registration Statement No. 33-76260 and incorporated herein by reference.................................... (dd) -- Stock Exchange Agreement, dated as of December 17, 1993, by and among Evergreen IV, L.P., Brentwood Associates IV, L.P. and the Company, previously filed as Exhibit 10.9 to Registration Statement No. 33-76260 and incorporated herein by reference.................................... (ee) -- Agreements between the Company and certain stockholders to restrict transfer of Common Stock, previously filed as Exhibit 10.17 to Registration Statement No. 33-29629 and incorporated herein by reference............................................................................ (ff) -- Management Agreement, dated September 30, 1987, between Fairfield Broadcasting, Inc. (now known as Fairmont Communications Corporation) and the Company, previously filed as Exhibit 10(d) to the Company's Registration Statement No. 33-29629 and incorporated herein by reference...................................................................................... (gg) -- Amendment to Management Agreement, dated September 21, 1993, between Fairmont Communications Corporation and the Company, previously filed as Exhibit 10.31 to Registration Statement No. 33-76260 and incorporated herein by reference.................................................. (hh) -- Credit Agreement between Atlantic City Broadcasting Corp. and National Westminster Bank USA, dated as of March 30, 1994, previously filed as Exhibit 10 (gg) to Form 10-K for the year ended December 31, 1993 and incorporated herein by reference......................................... (ii) -- Loan Agreement by and among Osborn Communications Corporation, Society National Bank, and the Financial Institutions Listed Herein as of August 18, 1995, previously filed as Item 6(a)(1) to Form 10-Q for the period ended September 30, 1995 and incorporated herein by reference......... (jj) -- Asset Purchase Agreement, dated August 31, 1995, between Kneller Broadcasting of Charlotte County, Inc. and Osborn Communications Corporation, previously filed as Item 6(a)(2) to Form 10-Q for the period ended September 30, 1995 and incorporated herein by reference.............. (kk) -- Asset Purchase Agreement, dated August 31, 1995 by and between Nelson Broadcasting Corporation and Renda Broadcasting Corporation, previously filed as Item 6(a)(3) to Form 10-Q for the period ending September 30, 1995 and incorporated herein by reference.......................... (ll) -- Asset Purchase Agreement, dated August 31, 1995 by and between Daytona Beach Broadcasting Corporation and Renda Broadcasting Corporation, previously filed as Item 6(a)(4) to Form 10-Q for the period ending September 30, 1995 and incorporated herein by reference.................. (mm) -- Stock Purchase Agreement, dated August 31, 1995 between Renda Broadcasting Corporation and SNG Holdings, Inc., the sole stockholder of Nelson Tower Corporation, previously filed as Item 6(a)(5) to Form 10-Q for the period ending September 30, 1995 and incorporated herein by reference......................................................................................
(table continued on next page) 43 (table continued from previous page) (oo) -- Asset Purchase Agreement, dated September 18, 1995, between Pilot Communications of Syracuse, Inc. and Orange Communications, Inc., previously filed as Item 6(a)(6) to Form 10-Q for the period ending September 30, 1995 and incorporated herein by reference.......................... (pp)(i) -- Asset Purchase Agreement, dated December 31, 1995, between EBE Broadcasting, L.P. and Breadbasket Broadcasting Corporation........................................................... (pp)(ii) -- Asset Purchase Agreement, dated December 31, 1995, between EBE Communications Limited Partnership and Breadbasket Broadcasting Corporation........................................... (qq) -- Option Agreement, dated December 21, 1995, between RKZ Television, Inc. and Allbritton Communications Corporation..................................................................... (rr) -- Asset Purchase Agreement, dated January 29, 1996, between Bethlehem Radio, Inc. and Mountain Radio Corporation.............................................................................. (ss) -- Asset Purchase Agreement and Amendment to Program Service Agreement, dated February 12, 1996, between Great American East, Inc., Osborn Communications Corporation, WFXK and WDUR, Inc. and Pinnacle Myrtle Corp........................................................................... (tt) -- Asset Purchase Agreement, dated February 20, 1996, between WKWK Radio, Inc. and Mountain Radio Corporation.................................................................................... (uu) -- Asset Purchase Agreement, dated February 29, 1996, between Atlantic City Broadcasting Corporation and Equity Communications, L.P..................................................... 21 -- Subsidiaries of the Company................................................................... 23 -- Consent of Ernst & Young LLP appears on page 40 of this report................................ 27 -- Financial Data Schedules...................................................................... 99(a) -- Schedule II -- Valuation and Qualifying Accounts..............................................
- ------------ * Indicates a management contract or compensatory plan or arrangement. 44 OSBORN COMMUNICATIONS CORPORATION 130 Mason Street Greenwich, Connecticut 06830 Telephone (203) 629-0905 Fax (203) 629-1749 DIRECTORS Brownlee O. Currey, Jr. H. Anthony Ittleson Edward G. Nelson Frank D. Osborn William G. Spears Robert K. Zelle OFFICERS Frank D. Osborn President and Chief Executive Officer Thomas S. Douglas Senior Vice President/Finance and Treasurer Michael F. Mangan Vice President/Controller and Secretary RADIO Larry A. Anderson Vice President/General Manager Radio and Entertainment Wheeling, West Virginia Robert E. Vandine Station Manager Radio Stations WWVA-AM/WOVK-FM Wheeling, West Virginia Mark Bass Vice President/General Manager Radio Stations WAAX-AM/WQEN-FM Gadsden, Alabama Donald Boyles Senior Vice President -- Southwest Florida/General Manager Radio Stations WKII-AM*/WOLZ-FM/ WEEJ-FM* Lynn Golub General Manager Radio Station WFKS-FM Daytona Beach, Florida Donald P. Hodges Vice President/General Manager Radio Stations WTJS-AM/WTNV-FM Jackson, Tennessee William R. McMartin Vice President/General Manager Radio Stations WWNC-AM/WKSF-FM Asheville, North Carolina Chris Pacheco Vice President/General Manager Radio Stations KNAX/KRBT-FM* Fresno, California John Rae General Manager Radio Station WFXK-FM Raleigh/Tarboro, North Carolina Ruth Ray President/General Manager Radio Station WDRR-FM** Fort Myers/San Carlos Park, Florida John Soller Group Director of Engineering General Manager Radio Station WING-FM Dayton/Springfield, Ohio Joan Taylor General Manager Radio Station WAYV-FM Atlantic City, New Jersey MUZAK'r'/OSBORN SOUND & COMMUNICATIONS W. Charles Hillebrand President Peter P. Longley Vice President Kenneth R. Maas General Manager Tampa, Florida Mark A. Rupert General Manager Fort Myers, Florida Dominique Martin General Manager Albany, Georgia HEALTHCARE COMMUNICATIONS John F. McLane President Nashville, Tennessee CORPORATE COUNSEL Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019 FCC COUNSEL Haley, Bader & Potts 4350 Fairfax Drive Arlington, Virginia 22203 AUDITORS Ernst & Young, LLP 787 Seventh Avenue New York, New York 10019 STOCK TRANSFER AGENT American Stock Transfer & Trust Co. 40 Wall Street New York, New York 10005 COMMON STOCK The Company's common stock is listed on the NASDAQ National Market System and trades under the symbol OSBN. - ------------ * Operating under an LMA pending acquisition ** The Company has a 50% non-voting ownership interest in WDRR-FM 45 EX-10 2 ASSET PURCHASE AGREEMENT ___________________________________________________________ ASSET PURCHASE AGREEMENT dated as of December 31, 1995 by and between EBE BROADCASTING, L.P. (Seller) and BREADBASKET BROADCASTING CORPORATION (Buyer) ___________________________________________________________ TABLE OF CONTENTS PAGE ARTICLE I PURCHASE AND SALE OF ASSETS 1.1 Transfer of Assets.............................1 1.2 Excluded Assets................................4 1.3 Liabilities to be Assumed......................4 1.4 Consideration..................................5 1.5 Proration of Income and Expenses...............5 1.6 Allocation of Purchase Price...................6 1.7 Guaranty.......................................6 ARTICLE II CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION 2.1 Closing........................................6 2.2 Transactions at the Closing....................7 2.3 Termination....................................9 2.4 Operation of Station pursuant to the LMA......11 2.5 Risk of Loss..................................11 2.6 Interruption of Broadcast Transmissions.......12 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 3.1 Due Organization..............................12 3.2 Authority; No Conflict........................12 3.3 Government Authorizations.....................13 3.4 Compliance with Regulations...................14 3.5 Taxes.........................................14 3.6 Personal Property.............................14 3.7 Real Property.................................15 3.8 Consents......................................17 3.9 Contracts.....................................17 3.10 Environmental.................................17 3.11 Intellectual Property.........................18 3.12 Financial Statements..........................18 3.13 Personnel Information; Labor Contracts........19 3.14 Employee Benefit Plans........................19 3.15 Litigation....................................19 3.16 Compliance with Laws..........................20 3.17 Insurance.....................................20 3.18 Undisclosed Liabilities.......................20 3.19 Instruments of Conveyance; Good Title.........21 3.20 Absence of Certain Changes....................21 3.21 Insolvency Proceedings........................22 3.22 Material Adverse Change.......................22 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Due Incorporation.............................23 4.2 Authority; No Conflict........................23 4.3 Consents......................................23 4.4 Litigation....................................24 4.5 Compliance with Laws..........................24 4.6 Qualification.................................24 ARTICLE V COVENANTS OF SELLER 5.1 Continued Operation of Station................24 5.2 Financial Obligations.........................25 5.3 Reasonable Access.............................25 5.4 Maintenance of Assets.........................25 5.5 Notification of Developments..................25 5.6 Payment of Taxes..............................25 5.7 Third Party Consents..........................25 5.8 Encumbrances..................................26 5.9 Assignment of Assets..........................26 5.10 Commission Licenses and Authorizations........26 5.11 Technical Equipment...........................26 5.12 Compensation Increases........................26 5.13 Sale of Broadcast Time........................26 5.14 Insurance.....................................26 5.15 Negotiations with Third Parties...............27 ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER 6.1 Assignment Application........................27 6.2 Performance...................................27 6.3 Conditions....................................27 6.4 Confidentiality...............................27 6.5 Cooperation...................................28 6.6 Environmental Reports.........................28 6.7 Consents to Assignment........................28 6.8 Bulk Sales Laws...............................29 6.9 Employee Matters..............................29 ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER 7.1 Commission Approvals..........................30 7.2 Performance...................................31 7.3 Failure of Transfer...........................31 7.4 Representations and Warranties................31 7.5 Consents......................................31 7.6 No Litigation.................................32 7.7 Documents.....................................32 7.8 Opinions of Counsel...........................32 7.9 Disclosure Schedule...........................32 7.10 Ancillary Agreements..........................32 7.11 Simultaneous Closing..........................32 ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER 8.1 Performance...................................33 8.2 Representations and Warranties................33 8.3 Government Approvals..........................33 8.4 Documents.....................................33 8.5 Opinion of Counsel............................33 ARTICLE IX INDEMNIFICATION 9.1 Indemnification by Seller.....................33 9.2 Indemnification by Buyer......................34 9.3 Notification of Claims........................35 ARTICLE X MISCELLANEOUS 10.1 Assignment....................................36 10.2 Survival of Indemnification...................37 10.3 No Right of Reversion.........................37 10.4 Brokerage.....................................37 10.5 Expenses of the Parties.......................37 10.6 Entire Agreement..............................37 10.7 Headings......................................38 10.8 Governing Law.................................38 10.9 Counterparts..................................38 10.10 Notices.......................................38 10.11 Specific Performance..........................39 10.12 Consent to Jurisdiction.......................39 10.13 Further Assurances............................39 10.14 Public Announcements..........................40 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT is entered into as of this 31st day of December, 1995 by and between EBE BROADCASTING L.P., a Delaware limited partnership ("Seller"), and BREADBASKET BROADCASTING CORPORATION, a corporation formed under the laws of the State of Delaware ("Buyer"). R E C I T A L S WHEREAS, Seller owns and operates and has been duly licensed by the Federal Communications Commission (the "FCC" or the "Commission") to operate radio station KRBT(FM), Fresno, California (the "Station"); WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase, the assets utilized in connection with the operation of the Station, and Seller and Buyer further desire that Seller assign to Buyer the licenses and other authorizations issued to Seller by the Commission for the purpose of operating the Station; and WHEREAS, simultaneously with the execution of this Agreement, Seller and Buyer have entered into a Local Marketing Agreement ("LMA") effective as of the 1st day of January 1996; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I PURCHASE AND SALE OF ASSETS 1.1 TRANSFER OF ASSETS. Seller agrees to assign, transfer, convey and deliver to Buyer and Buyer agrees to acquire, accept and receive from Seller, on the Closing Date (as defined herein), all of Seller's right, title and interest in and to the following assets relating to the Station (the "Station Assets") free and clear of all liens and encumbrances. (a) LICENSES AND AUTHORIZATIONS. All licenses, permits and other authorizations issued by the FCC or any other state or federal regulatory agency pertaining to the Station, including, without limitation, those licenses, permits or authorizations listed in Section 1.1(a) of the disclosure schedule delivered by Seller to Buyer and dated of even date herewith (the "Disclosure Schedule"), together with any renewals, extensions or modifications thereof and additions thereto made between the date of this Agreement and the Closing Date (the "Licenses"). The Page 2 Licenses include the right to use the call letters of the Station, including but not limited to the call letters KRBT(FM). (b) TANGIBLE PERSONAL PROPERTY. All of the tangible personal property owned by Seller and used or useable in the operation of the Station, including but not limited to the items of personal property listed in Section 1.1(b) of the Disclosure Schedule, together with all additions, modifications or replacements thereto made in the ordinary course of business between the date of this Agreement and the Closing Date, as hereafter defined (the "Personal Property"). (c) REAL ESTATE CONTRACTS. All of the leasehold interests and easement interests in real property leased by Seller and used by the Station, including all agreements, leases, grants of easements and contracts of Seller relating to the tower, transmitter, studio site, and offices of the Station (the "Real Estate Contracts"), including all security or other deposits made with respect to such Real Estate Contracts, all as described in Section 1.1(d) of the Disclosure Schedule (the land, buildings and other improvements covered by the Real Property Contracts being herein called the "Leased Real Property." The Buyer shall assume, pay and perform all obligations under such Real Estate Contracts accruing after the Closing Date to the extent such obligations relate to the period after the Closing Date. (d) REAL ESTATE ASSETS. All of Seller's interest in the real property owned by Seller and listed in Section 1.1(d) of the Disclosure Schedule and all of the buildings, structures and other improvements located thereon (collectively, the "Owned Real Property"). The Owned Real Property and the Leased Real Property are collectively referred to herein as the Real Property. (e) INTELLECTUAL PROPERTY. All of Seller's trade names, copyrights, trademarks, service marks, patents, patent applications or other similar rights relating to the operation of the Station including, but not limited to, those listed in Section 1.1(e) of the Disclosure Schedule, together with any necessary additions or modifications thereto between the date hereof and the Closing Date (the "Intellectual Property"). (f) LEASES AND CONTRACTS. All leases, contracts, agreements and franchises relating to the operation of the Station (other than contracts for the sale of broadcast time and leases for real property) listed and identified in Section 1.1(f) of the Disclosure Schedule and those leases, contracts, agreements and franchises described in Section 1.1(i) of this Agreement (the "Contracts"). Buyer Page 3 shall assume, pay and perform all obligations under such Contracts accruing after the Closing Date. (g) CONTRACTS FOR SALE OF BROADCAST TIME. All contracts for sale of broadcast time on the Station that provide for payment by the customer solely on a cash basis and that are to be in effect on the Closing Date listed and identified in Section 1.1(g) of the Disclosure Schedule (the "Broadcast Agreements"). Buyer shall assume, pay and perform all obligations under the Broadcast Agreements arising after the Closing Date, PROVIDED, HOWEVER, Buyer will not assume any contract for the sale of time entered into prior to the date of this Agreement pursuant to which payment is to be received in whole or in part in services, merchandise or other non-cash considerations ("Trade Agreements"), except as agreed to by Buyer and set forth in Section 1.1(g) of the Disclosure Schedule. (h) OPERATING AND BUSINESS RECORDS. All files, records, logs and program materials pertaining to the operation of the Station required to be maintained and kept under the rules of the Commission and such other files and records as Buyer shall reasonably require for the continuing business and operation of the Station. Seller shall have the right to reasonable access to such business records that Seller delivers to Buyer under this Section 1.1(h) upon Seller's request for five years after the Closing Date. (i) FUTURE CONTRACTS. All leases, contracts, agreements and franchises entered into between the date hereof and the Closing Date in the usual and ordinary course of business, except that those exceeding two months in duration or $5,000.00 in amount will not be assumed by Buyer unless consented to by Buyer in advance in writing and set forth in Section 1.1(i) of the Disclosure Schedule. (j) INVENTORY AND COMPUTER SOFTWARE. All of Seller's items of inventory related to the business of the Station, including, without limitation, broadcast programs, as well as all computer software used or useable by the Station. (k) ACCOUNTS RECEIVABLE. All accounts receivable of the Seller through the date hereof with regard to the operation of the Station prior to the Commencement Date of the LMA (as that term is defined herein). Seller shall list its accounts receivable as of November 30, 1995 in Section 1.1(k) of the Disclosure Schedule. Buyer agrees to use commercially reasonable efforts to collect Seller's accounts receivable with respect to radio station KFRE(AM) in the ordinary and normal course of business for a period of one hundred twenty (120) days after the date hereof (the "Collection Period"), but shall Page 4 not be required to employ counsel or any collection agency or to initiate any litigation or use any extraordinary means of collection. During the Collection Period, amounts collected by Buyer for the account of Seller shall be remitted to Seller within fifteen (15) days following the end of each calendar month. (l) OTHER RIGHTS AND PRIVILEGES. Any and all other franchises, materials, supplies, easements, rights-of-way, licenses, and other rights and privileges of Seller relating to and used, useable or necessary in the operation of the Station. 1.2 EXCLUDED ASSETS. There shall be excluded from the sale transaction described herein the following assets relating to the Station: (a) CASH AND DEPOSITS. Cash-on-hand or in banks (or their equivalents) and other investments belonging to Seller and relating to the operation of the Station as of the Closing Date. (b) PROPERTY CONSUMED. All property of the Station disposed of or consumed (including ordinary wear and tear) in the ordinary course of business between the date hereof and the Closing Date. (c) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All contracts described in Sections 1.1(f), (g) and (i) of the Disclosure Schedule that are terminated or will have expired prior to the Closing Date in the ordinary course of business. (d) PENSION AND PROFIT-SHARING PLANS. All pension and profit-sharing plans, trusts established thereunder and assets thereof, if any, of Seller. (e) OTHER EMPLOYEE BENEFIT PLANS. All other employee benefit plans (including health insurance) of Seller and the assets thereof. (f) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS. All employment agreements and collective bargaining agreements of Seller. (g) OTHER ASSETS. Those assets, if any, listed in Section 1.2(g) of the Disclosure Schedule. 1.3 LIABILITIES TO BE ASSUMED. Except as otherwise provided in this Section 1.3, Buyer assumes no liabilities or obligations of Seller of any nature whatsoever, contingent or otherwise, except for (i) amounts in respect of Seller's accounts payable with regard to the Station as of the date hereof,(ii) Seller's trade Page 5 liabilities as of the date hereof, (iii) Seller's negative trade commitments as of the date hereof and (iv) post-closing obligations related to Real Estate Contracts, Contracts, Broadcasting Agreements and Trade Agreements (the "Assumed Contracts") assigned to and specifically assumed by Buyer. Seller shall provide (w) a calculation of the amount of its working capital on Section 1.3 of the Disclosure Schedule, (x) a list of its accounts payable through December 22, 1995 in Section 1.3(a) of the Disclosure Schedule, (y) a list of its trade liabilities through December 22, 1995 in Section 1.3(b) of the Disclosure Schedule and (z) a list of its negative trade commitments through December 22, 1995 in Section 1.3(c) of the Disclosure Schedule. On or prior to the Closing Date Seller shall pay or else retain all debts, liabilities and other obligations of Seller arising prior to the Closing Date and not assigned to and specifically assumed by Buyer. 1.4 CONSIDERATION. In consideration of Seller's performance of this Agreement and the sale, assignment, transfer, conveyance and delivery of the Station Assets to Buyer free and clear of all liens and encumbrances, Buyer shall pay to Seller on the Closing Date, by wire transfer, the sum of Two Million Dollars ($2,000,000.00) (the "Purchase Price"). 1.5 PRORATION OF INCOME AND EXPENSES. Except as otherwise provided herein or in the LMA, all income and expenses arising from the conduct of the business and operations of the Station shall be prorated between Buyer and Seller in accordance with generally accepted accounting principles as of 11:59 p.m., Eastern time, on the date immediately preceding the Closing Date. Such prorations shall include, without limitation, all AD VALOREM and other property taxes (but excluding taxes arising by reason of the transfer of Station Assets as contemplated hereby, which shall be paid as set forth in Section 10.5 of this Agreement), business and license fees, music and other license fees (including any retroactive adjustments thereof, which retroactive adjustments shall not be subject to the ninety day limitation set forth in Section 1.5(a)), wages and salaries of employees hired by Buyer, including accruals up to the Closing Date for bonuses, commissions, vacation and sick pay, and related payroll taxes, utility expenses, time sales agreements, rents and similar prepaid deferred items attributable to the ownership and operation of the Station. (a) TIME FOR PAYMENT. The prorations and adjustments contemplated by this Section 1.5, to the extent practicable, shall be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within 90 days of the Closing Date. Page 6 (b) DISPUTE RESOLUTION. In the event of any disputes between the parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 1.5(a) and such disputes shall be determined by an independent certified public accountant mutually acceptable to the parties whose determination shall be final, and the fees and expenses of such accountant shall be paid one- half by Seller and one-half by Buyer. 1.6 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that the Purchase Price shall be allocated among the Station Assets in a manner to be determined by an independent appraiser selected by Buyer. Buyer and Seller agree to use such allocation in completing and filing Internal Revenue Service Form 8594 for federal income tax purposes. Buyer and Seller further agree that they shall not take any position inconsistent with such allocation upon examination of any return, in any refund claim, in any litigation, or otherwise. Buyer and Seller shall agree that the Purchase Price shall not be attributed to the transfer of the Real Estate Contracts. 1.7 GUARANTY. In order to secure the obligations and agreements of Buyer hereunder, Osborn Communications Corporation ("Osborn"), parent of Buyer, hereby unconditionally, irrevocably and absolutely guarantees to the Seller and its successors and assigns for a period of two (2) years the full and punctual payment when due of all amounts payable to the Seller by the Buyer in connection with the indemnification, the Default Payment (as defined in Section 2.4) and other obligations arising under this Agreement (the "Guaranteed Obligations"), whether by default or otherwise. Upon failure by the Buyer to pay when due any amount of the Guaranteed Obligations in accordance with the terms of this Agreement, Osborn shall pay or cause to be paid, on demand by the Seller, the amount not so paid at the place and in the manner specified in this Agreement. Osborn agrees that this Guaranty is a guaranty of payment and performance, and not of collection only, and that Osborn's obligations under this Guaranty shall be primary, absolute and unconditional. ARTICLE II CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION 2.1 CLOSING. The purchase and sale of the Station Assets contemplated by this Agreement (the "Closing") shall take place at the offices of Paul, Weiss, Rifkind Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019 at 10:00 a.m. on a mutually agreed upon day five (5) days after the latter of (a) the Commission's approval of the Assignment Application, as defined in Page 7 Section 6.1 below, becomes a Final Order, or (b) the grant of Seller's renewal application in respect of the Licenses or such other time and place as shall be mutually agreed upon by the parties (the "Closing Date"). For purposes of this Agreement, a "Final Order" shall mean any action of the Commission which has not been reversed, stayed, enjoined, set aside, annulled or suspended and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal or stay, and the time for filing any such requests and the time for the Commission to set aside the action on its own motion shall have expired. Buyer may, at its sole election, waive the requirement that the Commission's approval of the Assignment Application shall have become a Final Order. 2.2 TRANSACTIONS AT THE CLOSING. (a) At the Closing, Seller shall deliver to Buyer the following: (i) assignments of the Licenses and other pertinent authorizations transferring the same to the Buyer in customary form and substance; (ii) the certificates contemplated by Sections 7.2 and 7.4; (iii) a copy of the resolutions of the board of directors of Seller's General Partner authorizing the execution, delivery and performance of this Agreement and the agreements and documents listed in Section 2.2 of the Disclosure Schedule, if any (the "Ancillary Agreements"), and the consummation of the transactions contemplated hereby and thereby, together with a certificate of the Secretary of Seller's General Partner, dated as of the Closing Date, that such resolutions were duly adopted and are in full force and effect; (iv) all real property transfer tax returns and other similar filings required by law in connection with the transactions contemplated hereby, all duly executed and acknowledged by Seller. Seller shall also have executed such affidavits in connection with such filings as shall have been required by law or reasonably requested by Buyer. (v) affidavit of an officer of Seller, sworn to under penalty of perjury, setting forth Seller's name, address and Federal tax identification number and stating that Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986 (the "Code"). If, on or before the Closing Date, Buyer shall not have received Page 8 such affidavit, Buyer may withhold from the Purchase Price payable at Closing to Seller pursuant hereto such sums as are required to be withheld therefrom under Section 1445 of the Code. (vi) a bill of sale and all other appropriate documents and instruments assigning to Buyer good and marketable title to the Station Assets free and clear of any security interests, mortgages, liens, pledges, attachments, conditional sales contracts, claims, charges or encumbrances of any kind whatsoever; (vii) the Ancillary Agreements, duly executed by Seller as appropriate; (viii) the originals of all written consents of the respective lessors, landowners, grantors and any other persons or entities whose consents may be required to permit Buyer to assume the liabilities, contracts, leases, licenses, understandings and agreements constituting the Real Estate Contracts and the Contracts including the following: (i) a grant of easement granting to Buyer all of Seller's rights pursuant to that certain Grant of Easement dated November 7, 1994 between Headliner Broadcasting, Inc., as grantor, and Seller, as grantee (the "HEADLINER EASEMENT"); (ii) a Cancellation of Headliner Easement canceling all of Seller's rights to the Headliner Easement; (iii) prior written consent of the Headliner Easement to Buyer as required pursuant to that certain Easement Agreement entered into as of August 18, 1989, by and between Azalea Biglione and others, as grantors, and KLOK Radio, a limited partnership, doing business as Radio KFIG, as grantee, recorded as Instrument No. 91075013 in the official records of the County Recorder of Fresno County, California and subsequently assigned by Headliner Broadcasting, Inc. on November 1, 1989 to Seller; (ix) evidence satisfactory to Buyer's counsel that no financing statements are outstanding on the Station Assets; (x) all files, records, logs, and program materials relating to the Station; (xi) the opinion of counsel for Seller, dated the Closing Date, as described in Section 7.8; (xii) assignments to Buyer of all the Contracts and Real Estate Contracts in form satisfactory to Buyer; Page 9 (xiii) a current estoppel certificate from the Landlord under each Real Property Contract in form satisfactory to counsel to Buyer; and (xiv) such other documents and instruments as Buyer may reasonably request to consummate the transactions contemplated hereby. (b) At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: (i) the Purchase Price; (ii) a copy of the resolutions of the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement and the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby, together with a certificate of the Secretary of Buyer dated as of Closing Date, that such resolutions were duly adopted and are in full force and effect; (iii) the certificates contemplated by Sections 8.1 and 8.2; (iv) the Ancillary Agreements, duly executed by Buyer as appropriate; (v) the opinion of counsel for Buyer, dated the Closing Date, as described in Section 8.5; and (vi) an Agreement of Assumption of Liabilities and such other documents and instruments as Seller may reasonably request to consummate the transactions contemplated hereby. 2.3 TERMINATION. (a) Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated at any time by: (i) the mutual written consent of the parties hereto; (ii) either Buyer or Seller if the Closing does not occur before June 30, 1996, provided, however, that the party seeking termination under this Section 2.3(a)(ii) shall not have prevented the Closing from occurring; (iii) either Buyer or Seller if the Assignment Application is not granted within six (6) Page 10 months from the date the notice of filing of the Form 314 is placed on Commission's public notice (through no fault of the terminating party) or is denied by the Commission by a Final Order or is at any time set by the Commission for a formal hearing; PROVIDED, HOWEVER, that in the event of termination due solely to the Commission's designation of the Assignment Application for a formal hearing, the provisions of Section 2.3(c) shall apply; (iv) Buyer, if any of the conditions set forth in Article VII shall have become incapable of fulfillment, and shall not have been waived by Buyer, or if Seller shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing; or (v) Seller, if any of the conditions set forth in Article VIII shall have become incapable of fulfillment, and shall not have been waived by Seller, or if Buyer shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing. (b) In the event of the termination of this Agreement by Buyer or Seller pursuant to this Section 2.3, written notice thereof shall promptly be given to the other party and, except as otherwise provided herein, the transactions contemplated by this Agreement shall be terminated, without further action by any party. Nothing in this Section 2.3 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of Buyer to compel specific performance of Seller of its obligations under this Agreement. (c) The time for Commission approval provided in Section 2.3(a)(iii) notwithstanding, either party may terminate this Agreement upon written notice to the other, if, for any reason, the Assignment Application is designated for hearing by the Commission; PROVIDED, HOWEVER, that written notice of termination must be given within twenty (20) days after release of the Hearing Designation Order and that the party giving such notice is not in default and has otherwise complied with its obligations under this Agreement. Upon termination pursuant to this Section, the parties shall be released and discharged from any further obligation hereunder. (d) It is further PROVIDED, HOWEVER, that no party may terminate this Agreement if such party is in Page 11 default hereunder, or if a delay in any decision or determination by the Commission respecting the Assignment Application has been caused or materially contributed to (i) by any failure of such party to furnish, file or make available to the Commission information within its control; (ii) by the willful furnishing by such party of incorrect, inaccurate or incomplete information to the Commission; and (iii) by any other action taken by such party for the purpose of delaying the Commission's decision or determination respecting the Assignment Application. Upon such termination for failure of the Commission to act, the parties shall be released and discharged from any further obligation hereunder. (e) A party shall be deemed to be in default under this Agreement only if such party has materially breached or failed to perform its obligations hereunder, and non-material breaches or failures shall not be grounds for declaring a party to be in default, postponing the Closing, or terminating this Agreement. 2.4 OPERATION OF STATION PURSUANT TO THE LMA. Notwithstanding any provision to the contrary in this Agreement: (a) As of January 1, 1996 (the "Commencement Date"), and until the consummation of the transactions contemplated by, or the termination of, this Agreement (the "LMA Term") the business and operation of the Station shall be conducted pursuant to the terms of the LMA; (b) All LMA Liabilities shall be assumed by Buyer as of the Commencement Date. 2.5 RISK OF LOSS. The risk of any loss, damage or destruction to any of the Station Assets from fire or other casualty or cause shall be borne by Seller at all times prior to the Closing Date hereunder. Upon the occurrence of any loss or damage to any of the Station Assets as a result of fire, casualty, accident or other causes prior to the Closing Date, Seller shall notify Buyer of same in writing immediately stating with particularity the extent of loss or damage incurred, the cause thereof if known and the extent to which restoration, replacement and repair of the Station Assets lost or destroyed will be reimbursed under any insurance policy with respect thereto. In the event the loss exceeds $50,000 and the Station Assets cannot be substantially repaired or restored within forty-five (45) days after such loss, Buyer shall have the option, exercisable within ten (10) days after receipt of written notice from Seller, to: (i) terminate this Agreement; (ii) postpone the Closing until such time as the property has been completely repaired, replaced or restored to the satisfaction of Buyer, unless the same cannot be Page 12 reasonably effected within thirty (30) days of notification; or (iii) elect to consummate the Closing and accept the property in its damaged condition, in which event Seller shall assign to Buyer all rights under any insurance claim covering the loss and pay over to Buyer any proceeds under any such insurance policy thereto received by Seller with respect thereto. 2.6 INTERRUPTION OF BROADCAST TRANSMISSIONS. Notwithstanding any other provision hereof, if prior to the Closing any event occurs which prevents the broadcast transmission by the Station with substantially full licensed power and antenna height as described in the applicable FCC Licenses and in the manner it has heretofore been operating for periods of time in excess of six (6) hours, the Seller will give prompt written notice thereof to Buyer. If such facilities are not restored so that operation is resumed with substantially full licensed power within three (3) days of such event, or, in the case of more than one event, the aggregate number of days preceding such restorations from all such events is more than six (6) days, or if the Station is off the air more than three (3) times for a period in each case exceeding six (6) hours, Buyer shall have the right, by giving written notice to Seller of its election to do so, to terminate this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 DUE ORGANIZATION. Seller is a limited partnership duly organized and in good standing under the laws of the State of Delaware, and is duly qualified to do business in the State of California. The Seller's general partner is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business in the State of California. Seller has the power and authority to own and operate the Station and the Station Assets. 3.2 AUTHORITY; NO CONFLICT. The execution and delivery of this Agreement and the Ancillary Agreements have been duly and validly authorized and approved by all necessary partnership action by Seller. Neither such execution, delivery or performance nor compliance by Seller with the terms and provisions hereof, or with respect to the Ancillary Agreements, will (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or Page 13 provisions of (a) the Partnership Agreement or Certificate of limited partnership of Seller,(b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Seller is subject, or (c) any material agreement, lease or contract, written or oral, to which Seller is subject. This Agreement shall constitute the valid and binding obligation of Seller with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 3.3 GOVERNMENT AUTHORIZATIONS. Section 1.1(a) of the Disclosure Schedule contains a true and complete list of all the Licenses, which Licenses are sufficient for the lawful conduct of the business and operation of the Station in the manner and to the full extent they are currently conducted. Seller is the authorized legal holder of the Licenses, none of which is subject to any restriction or condition which would limit in any material respect the full operation of the Station as now operated. There are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened as of the date hereof before the Commission or any other governmental authority relating to the business or operations of the Station, other than applications, complaints or proceedings which generally affect the broadcasting industry as a whole, and other than reports and forms filed in the ordinary course of the Station's business. Seller has delivered to Buyer true and complete copies of the Licenses, including any and all additions, amendments and other modifications thereto. The Licenses are in good standing, are in full force and effect and are unimpaired by any act or omission of Seller or its officers, directors or employees; and the operation of the Station is in accordance with the Licenses and the underlying construction permits. No proceedings are pending or, to the knowledge of Seller, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the Licenses, the denial of any pending applications, the issuance of any cease and desist order, the imposition of any administrative actions by the Commission with respect to the Licenses or which may affect Buyer's ability to continue to operate the Station as it is currently operated. Seller has taken no action which, to its knowledge, could lead to revocation or non- renewal of the Licenses, nor omitted to take any action which, by reason of its omission, could lead to revocation of the Licenses. All material reports, forms and statements required to be filed with the Commission with respect to the Station since the grant of the last renewal of the Licenses have been filed and are complete and accurate. To the knowledge of Seller, there are no facts which, under the Communications Act of 1934, as amended, or the existing rules, regulations, requirements, policies and orders of the Commission, would disqualify Page 14 Seller as assignor, and Buyer as assignee, in connection with the Assignment Application. 3.4 COMPLIANCE WITH REGULATIONS. The operation of the Station is in compliance in all material respects with (i) all applicable engineering standards required to be met under Commission rules, and (ii) all other applicable rules, regulations, requirements, policies and orders of the Commission and all other applicable governmental authorities, including, but not limited to, ANSI Radiation Standards, to the extent required to be met under applicable Commission rules and regulations; and there are no existing claims known to Seller to the contrary. 3.5 TAXES. Seller has timely filed all federal, state, local and foreign income, franchise, sales, use, property, excise, payroll and other tax returns required by law and has paid in full all taxes, estimated taxes, interest, assessments, and penalties due and payable as shown thereon. All returns and forms which have been filed have been true and correct in all material respects and no tax or other payment in a material amount other than as shown on such returns and forms are required to be paid or have been paid by Seller. There are no present disputes as to taxes of any nature payable by Seller which in any event could materially adversely affect the Station Assets or operation of the Station. Each of the parcels included in the Owned Real Property is assessed for real estate purposes as a wholly independent tax lot, separate from any adjoining load or improvements not constituting a part of such parcel. 3.6 PERSONAL PROPERTY. Section 1.1(b) of the Disclosure Schedule contains a true and complete list of all the Personal Property. Except for those assets designated on Section 1.1(b) of the Disclosure Schedule as being subject to lease agreements, Seller owns and has, and will have on the Closing Date, good and marketable title to such Personal Property, and none of such Personal Property on the Closing Date will be subject to any security interest, mortgage, pledge, conditional sales agreement or other lien or encumbrance. All items of Personal Property are in all material respects in good operating condition, ordinary wear and tear excepted, and are available for immediate use in the conduct of the business and operation of the Station. The technical equipment, including, without limitation, all transmitters and studio equipment, constituting part of the Personal Property, has been maintained in accordance with industry practice and is in good operating condition, ordinary wear and tear excepted, (except as noted in Section 1.1(b) of the Disclosure Schedule) and complies in all material respects with all applicable rules and regulations of the Commission and the terms of the Licenses. The Personal Property includes all Page 15 such items and equipment necessary to conduct in all material respects the business and operations of the Station as now conducted. 3.7 REAL PROPERTY. (a) Seller does not own any fee title to real property as described on Section 1.1(d) of the Disclosure Schedule (hereinafter, the "Owned Real Property"). As used in this Agreement, "Title Defects" shall mean and include any mortgage, deed of trust, lien, pledge, security interest, claim, lease, charge, option, right of first refusal, easement, restrictive covenant, encroachment or other survey defect, encumbrance or other restriction or limitation whatsoever. (b) Section 1.1(d) of the Disclosure Schedule contains a true and complete list and summary of all the Real Estate Contracts. Seller holds the leasehold interest and or the grantee interest, as applicable, under each Real Property Contract free and clear of all Title Defects. The Real Estate Contracts constitute valid and binding obligations of Seller and, to the best of Seller's knowledge, of all other persons purported to be parties thereto, and are in full force and effect as of the date hereof, and will on the Closing Date constitute valid and binding obligations of Buyer and, to the best of Seller's knowledge, of all other persons purported to be parties thereto. As of the date hereof, Seller is not in default under any of the Real Estate Contracts and has not received or given written notice of any default thereunder from or to any of the other parties thereto and will not have received any such notice at or prior to the Closing Date and Seller has no knowledge of any present disputes or claims with respect to offsets or defenses by either landlord or tenant against the other under any such Real Estate Contract. Seller shall use best efforts to obtain valid and binding third-party consents, from all required third parties to the Real Estate Contracts to be conveyed and assigned to Buyer as part of the Station Assets. Subject to any required third-party consents, Seller will have full legal power and authority to assign its rights under the Real Estate Contracts of Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment shall not affect the validity, enforceability and continuity of any of the Real Estate Contracts. To the best of Seller's knowledge, Seller is in compliance with all its obligations under the Real Estate Contracts. (c) Entire Premises. All of the land, buildings, structures and other improvements used by Seller in the conduct of the Business are included in the Real Estate Contracts. Page 16 (d) No Options. Seller does not own or hold, and is not obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell or dispose of the Real Property or any portion thereof or interest therein. (e) Condition and Operation of Improvements.All components of all buildings, structures and other improvements included within the Real Property (the "Improvements") are free of structural defects and are in good working order and repair. All water, gas, electrical, steam, compressed air, telecommunication, sanitary and storm sewage lines and systems and other similar systems serving the Real Property are installed and operating and are sufficient to enable the Real Property to continue to be used and operated in the manner currently being used and operated, and any so-called hook-up fees or other associated charges have been fully paid, ordinary wear and tear excepted. (f) Real Property Permits and Insurance. All certificates of occupancy, permits, licenses, franchises, approvals and authorizations (collectively, "Real Property Permits") of all governmental authorities having jurisdiction over the Real Property, required or appropriate to have been issued to Seller to enable the Real Property to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are, as of the date hereof, in full force and effect. (g) Condemnation. Seller has not received notice and has no knowledge of any pending, threatened or contemplated condemnation proceeding affecting the Real Property or any part thereof or of any sale or other disposition of the Owned Real Property or any part thereof in lieu of condemnation. (h) Casualty. No portion of the Real Property has suffered any material damage by fire or other casualty which has not heretofore been completely repaired and restored to its original condition. No portion of the Real Property is located in a special flood hazard area as designated by Federal governmental authorities. (i) Encroachments. There are no encroachments or other facts or conditions affecting any parcel of Real Property which would, individually or in the aggregate, (i) interfere in any material respect with, or materially increase the cost of, the use, occupancy or operation thereof as currently used, occupied and operated or as intended to be used, occupied and operated, (ii) materially reduce the fair market value thereof below the fair market value such parcel would have had but for such Page 17 encroachment or other fact or condition. To the best of Seller's knowledge, no portion of any Improvement encroaches upon any property not included within the Real Property or upon the area of any easement affecting the Real Property. 3.8 CONSENTS. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Seller of this Agreement or the Ancillary Agreements to which it is a party, other than approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 3.8 of the Disclosure Schedule, no consent of any other party (including, without limitation, any party to any Real Estate Contract or Contract) is required for the execution, delivery and performance by Seller of this Agreement or the Ancillary Agreements to which it is a party. 3.9 CONTRACTS. Section 1.1(f) of the Disclosure Schedule contains a true and complete list of all Contracts, and Section 1.1(g) of the Disclosure Schedule contains a true and complete list of all Broadcast Agreements and Trade Agreements. Seller has delivered to Buyer true and complete copies of all written Contracts, Broadcast Agreements and Trade agreements in the possession of Seller, including any and all amendments and other modifications to same. All such Contracts, Broadcast Agreements and Trade Agreements are valid, binding and enforceable by Seller in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. Seller has complied in all material respects with all such Contracts, Broadcast Agreements and Trade Agreements, and Seller is not in default beyond any applicable grace periods under any of same, and no other contracting party is in material default under any of same. Subject to obtaining any required consents, Seller has full legal power and authority to assign its respective rights under such Contracts, Broadcast Agreements and Trade Agreements to Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment will not materially affect the validity, enforceability and continuity of any such Contracts, Broadcast Agreements and Trade Agreements. 3.10 ENVIRONMENTAL. Seller has not unlawfully disposed of any Hazardous Waste in a manner which has caused, or could cause, Buyer to incur a material liability under applicable law in connection therewith; and Seller warrants that the technical equipment included in the Personal Property does not contain any Hazardous Waste, including any Polychlorinated Biphenyls ("PCBs") that are Page 18 required by law to be removed, or if any equipment does contain Hazardous Waste, including any PCBs, that such equipment is stored and maintained in compliance with applicable law. Seller has complied in all material respects with all federal, state and local environmental laws, rules and regulations applicable to the Station and its operations, including but not limited to the Commission's guidelines regarding RF radiation. No Hazardous Waste has been disposed of by Seller, and to the best of Seller's knowledge, no Hazardous Waste has been disposed of by any other person on the property subject to Real Estate Contracts. As used herein, the term "Hazardous Waste" shall mean all materials regulated by any federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata). If Seller learns between the date of this Agreement and the Closing Date that Seller is in breach of the representation and warranty set forth in this Section 3.10, Seller shall begin remedial action promptly and shall use reasonable best efforts to complete such remedial action to the satisfaction of Buyer before the Closing Date. 3.11 INTELLECTUAL PROPERTY. Section 1.1(e) of the Disclosure Schedule is a true and complete list of all the Intellectual Property. The Intellectual Property has been duly registered in, filed with, or issued by the appropriate offices within all jurisdictions where such registration, filing or issuance is necessary to protect such Intellectual Property from infringement, including, without limitation, the United States Copyright Office and the United States Patent and Trademark Office. Seller has not granted any license or other rights with respect to the Intellectual Property. Seller has not received any written notice of any infringement or unlawful use of the Intellectual Property and Seller has not violated or infringed any patent, trademark, trade secret or copyright held by others or any license, authorization or permit held by it. 3.12 FINANCIAL STATEMENTS. Section 3.12 of the Disclosure Schedule contains complete unaudited copies of the statements of income, and the related balance sheets for Seller applicable to the Station for the period after Seller acquired the Station (the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles and in accordance with the policies and procedures of the Seller applicable thereto, consistently applied. The Financial Statements present fairly the financial condition and results of operations of the Station for the periods indicated. Page 19 3.13 PERSONNEL INFORMATION; LABOR CONTRACTS. (a) Section 3.13 of the Disclosure Schedule contains a true and complete list of all persons employed at the Station, including the date of hire, a description of material compensation arrangements (other than employee benefit plans set forth in Section 3.14 of the Disclosure Schedule) and a list of other terms of any and all material agreements affecting such persons. (b) Seller is not a party to any contract with any labor organization, nor has Seller agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any of Seller's employees. Seller has no knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees of the Station. During the past two years, Seller has not experienced any strikes, work stoppages, grievance proceedings, claims of unfair labor practices filed, or other significant labor difficulties of any nature. (c) Seller has complied in all material respects with all laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, equal employment opportunity and the payment and withholding of taxes. 3.14 EMPLOYEE BENEFIT PLANS. Section 3.14 of the Disclosure Schedule contains a true and complete list and summary, as of the date of this Agreement, of all employee benefit plans (as that term is defined in Section 3(3) of ERISA) applicable to the employees of Seller. Seller maintains no other employee benefit plan. Each of Seller's employee benefit plans has been operated and administered in all material respects in accordance with its terms and applicable law, including, without limitation, ERISA and the Internal Revenue Code. 3.15 LITIGATION. Except as set forth in Section 3.15 of the Disclosure Schedule, Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree, and there is no litigation, proceeding or investigation pending or, to the best of Seller's knowledge, threatened against Seller or the Station in any federal, state or local court, or before any administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Licenses), or before any other tribunal duly authorized to resolve disputes, Page 20 which would reasonably be expected to have any material adverse effect upon the business, property, assets or condition (financial or otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. In particular, but without limiting the generality of the foregoing, except as set forth in Section 3.15 of the Disclosure Schedule, there are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened before the Commission or any other governmental organization with respect to the business or operation of the Station, other than applications, complaints or proceedings which affect the broadcast industry generally. 3.16 COMPLIANCE WITH LAWS. Seller has not received any notice asserting any non-compliance with any applicable statute, rule, regulation, requirement, policy or order (federal, state or local) whether or not related to the business or operation of the Station or the Real Property. Seller is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or to any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Seller is in compliance in all material respects with all laws, regulations and governmental orders whether or not applicable to the conduct of the business and operation of the Station and any other business or operations conducted by Seller. The Real Property is in full compliance with all applicable building, zoning, subdivision, environmental and other land use and similar laws, codes, ordinances, rules, regulations and orders of governmental authorities (collectively, "Real Property Laws"), and Seller has not received any notice of violation or claimed violation of any Real Property Law. Seller has no knowledge of any pending change in any Real Property Law which would have a material adverse effect upon the ownership or use of the Real Property. 3.17 INSURANCE. Seller has in full force and effect insurance on all of the Real Property, Personal Property, and all other Station Assets pursuant to insurance policies, a true and complete copy of which is contained in Section 3.17 of the Disclosure Schedule. Seller shall continue to maintain such insurance in full force and effect up to the Closing Date or shall have obtained prior to the Closing Date other insurance policies with limits and coverage comparable to the current policies after prior notice to, and upon written consent of the Buyer, which consent shall not be unreasonably withheld. 3.18 UNDISCLOSED LIABILITIES. Except as to, and to the extent of, the amounts specifically reflected or Page 21 reserved against in Seller's balance sheets for the period ending December 31, 1994 (the "Balance Sheet Date"), and except for liabilities and obligations incurred since the Balance Sheet Date in the ordinary and usual course of business, Seller has no material liabilities or obligations of any nature whether accrued, absolute, contingent or otherwise and whether due or to become due, and, to the best of Seller's knowledge, there is no basis for the assertion against Seller of any such liability or obligations. No representation or warranty made by Seller in this Agreement, and no statement made in any exhibit or schedule hereto or any certificate or document delivered by Seller pursuant to the terms of this Agreement, contain or will contain any untrue statement of a material fact or omit or will omit to state any material fact necessary to make such representation or warranty or any such statement not misleading. 3.19 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The instruments to be executed by Seller and delivered to Buyer at Closing, conveying the Station Assets, to Buyer, will be in a form sufficient to transfer good and marketable title to the Station Assets, free and clear of all liabilities, obligations and encumbrances, except as provided herein. 3.20 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Section 3.20 of the Disclosure Schedule, between the Balance Sheet Date and the date of this Agreement there has not been: (a) Any material adverse change in the working capital, financial condition, business, results of operations, assets or liabilities of Seller; (b) Any change in the manner in which Seller conducts its business and operations other than changes in the ordinary and usual course of business consistent with past practice; (c) Any amendment to the Certificate of Incorporation or Bylaws of Seller; (d) Any contract or commitment, to which Seller is a party, entered into, modified or terminated, except in the ordinary and usual course of business; (e) Any creation or assumption of any mortgage, pledge or other lien or encumbrance upon any of the Station Assets except in the ordinary and usual course of business; (f) Any sale, assignment, lease, transfer, or other disposition of any of the Station Assets, except in the ordinary and usual course of business; Page 22 (g) The incurring of any liabilities or obligations, except items incurred in the ordinary and usual course of business; (h) The write-off or determination to write off as uncollectible any accounts receivable or portion thereof, except for write-offs in the ordinary course of business consistent with past practice at a rate no greater than during the twelve months prior to the Balance Sheet Date; (i) The cancellation of any debts or claims, or waiver of any rights, having an aggregate value in excess of $5,000; (j) The disposition, lapse or termination of any Intellectual Property; (k) The increase or promise to increase the rate of commissions, fixed salary or wages, draw, bonus or other compensation payable to any employee of Seller, except in the ordinary and usual course of business consistent with past practice; (l) The issuance of, or authorization to issue, any additional shares of capital stock of Seller, or rights, warrants or options to acquire, any such shares, or convertible securities; (m) Any default under any contract or lease to which Seller is a party; or (n) Any change in any method of accounting or accounting practice used by Seller. 3.21 INSOLVENCY PROCEEDINGS. No insolvency proceedings of any character including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting Seller or the Station Assets are pending or, to Seller's knowledge, threatened, and Seller has made no assignment for the benefit of creditors, nor taken any action with a view to, or which would constitute the basis for, the institution of any such insolvency proceedings. 3.22 MATERIAL ADVERSE CHANGE. (a) Between November 30, 1995 and the date hereof there has been no change in the manner in which Seller conducts its business with respect to working capital and there has not been a material adverse change in the assets of Seller other than changes in the ordinary and usual course of business consistent with past practice. Page 23 (b) Between December 22, 1995 and the date hereof there has not been a material adverse change in the liabilities of Seller other than changes in the ordinary and usual course of business consistent with past practice. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 DUE INCORPORATION. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and as of the Closing Date shall be duly qualified to do business in and be in good standing in the State of California. 4.2 AUTHORITY; NO CONFLICT. The execution and delivery of this Agreement and the Ancillary Agreements have been duly and validly authorized and approved by the board of directors of Buyer, and Buyer has the corporate power and authority to execute, deliver and perform this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery, performance hereof, and compliance by Buyer with the terms and provisions hereof, or with respect to the Ancillary Agreements, thereof, will not (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Buyer, (b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Buyer is subject, or (c) any material agreement, lease or contract, written or oral, to which Buyer is subject. This Agreement will constitute the valid and binding obligation of Buyer with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 4.3 CONSENTS. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Buyer of this Agreement or the Ancillary Agreements to which it is a party, other than the approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 4.3 of the Disclosure Schedule, no consent of any other party is required for the execution, delivery and performance by Buyer of this Agreement, the Ancillary Agreements to which it is a party or any of the agreements or actions contemplated thereby. Page 24 4.4 LITIGATION. There is no litigation, proceeding or investigation pending or, to the best of Buyer's knowledge, threatened against Buyer in any federal, state or local court, or before any administrative agency or arbitrator, or before any other tribunal duly authorized to resolve disputes, that would reasonably be expected to have any material adverse effect upon the ability of Buyer to perform its obligations hereunder, or that seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. 4.5 COMPLIANCE WITH LAWS. Buyer is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or of any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Buyer is not in violation of any law, regulation or governmental order, the violation of which would have a material adverse effect on Buyer or its ability to perform its obligations pursuant to this Agreement. 4.6 QUALIFICATION. To the best of Buyer's knowledge, Buyer is legally, technically and financially qualified to be the assignee of the Licenses and the other Station Assets, and, prior to the Closing Date, Buyer will exercise its best efforts to refrain from doing any act which would disqualify Buyer from being the assignee of the Licenses and the other Station Assets. ARTICLE V COVENANTS OF SELLER Between the date of this Agreement and the Closing Date, Seller shall have complete control of the Station and its operations, and Seller covenants as follows with respect to such period: 5.1 CONTINUED OPERATION OF STATION. Subject to the LMA, Seller shall continue to operate the Station under the terms of the Licenses in the manner in which the Station has been operated heretofore, in the usual and ordinary course of business, in conformity with all material applicable laws, ordinances, regulations, rules and orders, and in a manner so as to preserve and foster the goodwill and business relationships of the Station and Seller, including, without limitation, relationships with advertisers, suppliers, customers, and employees. Seller shall file with the Commission and any other applicable governmental authority all applications and other documents Page 25 required to be filed in connection with the continued operation of the Station. 5.2 FINANCIAL OBLIGATIONS. Subject to the LMA, Seller shall continue to conduct the financial operations of the Station, including its credit and collection policies, in the ordinary course of business with the same effort, to the same extent, and in the same manner, as in the prior conduct of the business of the Station; and shall continue to pay and satisfy all expenses, liabilities and obligations arising in the ordinary course of business in accordance with past accounting practices. Seller shall not enter into or amend any contracts or commitments involving expenditures by Seller in an aggregate amount in excess of $5,000 without the prior written consent of Buyer. 5.3 REASONABLE ACCESS. Seller shall provide Buyer, and representatives of Buyer, with reasonable access during normal business hours to the Station and shall furnish such additional information concerning the Station as Buyer from time to time may reasonably request. 5.4 MAINTENANCE OF ASSETS. Seller shall maintain the Real Property, the Personal Property and all other tangible assets in their present good operating condition, repair and order, reasonable wear and tear in ordinary usage excepted. Seller shall not waive or cancel any claims or rights of substantial value, transfer or otherwise dispose of the Real Property, any Personal Property, or permit to lapse or dispose of any right to the use of any Intellectual Property. 5.5 NOTIFICATION OF DEVELOPMENTS. Seller shall notify Buyer of any problems or developments with respect to the Station Assets or operation of the Station; and provide Buyer with prompt written notice of any change in any of the information contained in the representations and warranties made herein or in the Disclosure Schedule or any other documents delivered in connection with this Agreement. 5.6 PAYMENT OF TAXES. Seller shall pay or cause to be paid all property and all other taxes relating to the Station, the Real Property and the assets and employees of the Station required to be paid to city, county, state, federal and other governmental units through the Closing Date. 5.7 THIRD PARTY CONSENTS. Seller shall use commercially reasonable efforts to obtain from any third party waivers, permits, licenses, approvals, authorizations, qualifications, orders and consents necessary for the consummation of the transactions Page 26 contemplated by this Agreement and the Ancillary Agreements, including, without limitation, approval from the Commission of the Assignment Application contemplated hereby. 5.8 ENCUMBRANCES. Seller shall not suffer or permit the creation of any mortgage, conditional sales agreement, security interest, lease, lien, hypothecation, deed of trust or pledge, encumbrance, restriction, liability, charge, or imperfection of title with respect to the Station Assets, including the Real Property. 5.9 ASSIGNMENT OF ASSETS. Seller shall not sell, assign, lease or otherwise transfer or dispose of any Station Assets, whether now owned or hereafter acquired, except for retirements in the normal and usual course of business or in connection with the acquisition of similar property or assets, as provided for herein. 5.10 COMMISSION LICENSES AND AUTHORIZATIONS. Seller shall not by any act or omission surrender, modify adversely, forfeit or fail to renew under regular terms the Licenses, cause the Commission or any other governmental authority to institute any proceeding for the revocation, suspension or modification of any such License, or fail to prosecute with due diligence any pending applications with respect to the Licenses at the Commission or any other applicable governmental authority. 5.11 TECHNICAL EQUIPMENT. Seller shall not fail to repair, maintain or replace the technical equipment transferred hereunder in accordance with the normal standards of maintenance applicable in the broadcast industry. 5.12 COMPENSATION INCREASES. Seller shall not permit any increase in the rate of commissions, fixed salary or wages, draw or other compensation payable to any employees of Seller. 5.13 SALE OF BROADCAST TIME. Seller shall not enter into, extend or renew any Broadcast Agreement not consistent with the usual and ordinary course of business, provided, however, that Seller shall not enter into, extend or renew any Broadcast Agreement exceeding $10,000 in amount unless such Broadcast Agreement is terminable on 30 days' notice. Seller shall not enter into any Trade Agreement without the prior written consent of Buyer. 5.14 INSURANCE. Seller shall maintain at all times between the date hereof and the Closing Date, those insurance policies listed in Section 3.17 of the Disclosure Schedule. Page 27 5.15 NEGOTIATIONS WITH THIRD PARTIES. Seller shall not, before Closing or the termination of this Agreement, enter into discussions with respect to any sale or offer of the Station, any Station Assets or any stock of Seller to any third party, nor shall Seller offer the Station, any Station Assets or any stock of Seller to any third party. ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER Buyer and Seller covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 6.1 ASSIGNMENT APPLICATION. As promptly as practicable after the date of this Agreement, and in no event later than ten (10) days after execution of this Agreement, Seller and Buyer shall join in and file an application on FCC Form 314 with the Commission requesting its consent to the assignment of the Licenses from Seller to Buyer (the "Assignment Application"). Seller and Buyer agree to prosecute the Assignment Application with all reasonable diligence and to use their best efforts to obtain prompt Commission grant of the Assignment Application filed at the Commission. 6.2 PERFORMANCE. Buyer and Seller shall perform all acts required of them under this Agreement and refrain from taking or omitting to take any action that would violate their representations and warranties hereunder or render same inaccurate as of the Closing Date. 6.3 CONDITIONS. If any event should occur, either within or without the control of any party hereto, which would prevent fulfillment of the conditions placed upon the obligations of any party hereto to consummate the transactions contemplated by this Agreement, the parties hereto shall use their best efforts to cure the event as expeditiously as possible. 6.4 CONFIDENTIALITY. Buyer and Seller shall each keep confidential all information they obtain with respect to any other party hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions contemplated by this Agreement. If the transactions contemplated hereby are not consummated for any reason, each party hereto shall return to the party so providing, without retaining a copy thereof, any schedules, documents or other written information obtained from the party so providing such information in connection with this Page 28 Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to keep confidential or return any information which (i) is known or available through other lawful sources, (ii) is or becomes publicly known through no fault of the receiving party or its agents, (iii) is required to be disclosed pursuant to an order or request of a judicial or governmental authority (provided the disclosing party is given reasonable prior notice), or (iv) is developed by the receiving party independently of the disclosure by the disclosing party. 6.5 COOPERATION. Buyer and Seller shall cooperate fully and with each other in taking any actions to obtain the required consent of any governmental instrumentality or any third party necessary or helpful to accomplish the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that no party shall be required to take any action which would have a material adverse effect upon it or any entity affiliated with it. 6.6 ENVIRONMENTAL REPORTS. If desired by Buyer, Seller and Buyer agree to arrange for the preparation of, at the expense of Buyer, appropriate environmental reports for the real property subject to Real Estate Contracts. Such environmental reports shall conclude that: (i) the real property subject to Real Estate Contracts is not in any way contaminated with any Hazardous Waste requiring remediation, clean-up or removal under applicable laws relating to Hazardous Waste; (ii) the real property subject to Real Estate Contracts is not subject to any federal, state or local "superfund" or "Act 307" lien, proceeding, claim, liability or action, or the threat or likelihood thereof, for the clean-up, removal or remediation of any Hazardous Waste from same; (iii) there is no asbestos located in the buildings situated on the real property subject to Real Estate Contracts requiring remediation, encapsulation or removal under applicable laws relating to asbestos clean-up; and (iv) there are no underground storage tanks located at the real property subject to Real Estate Contracts requiring remediation, clean-up or removal under applicable laws relating to Hazardous Waste, and if any have previously been removed, such removal was done in accordance with all applicable laws, rules and regulations. The environmental review to be conducted shall initially be a Phase I review. Any further investigations recommended in the environmental reports obtained pursuant to this Section 6.6 shall be conducted with the cost to be shared equally by Seller and Buyer. 6.7 CONSENTS TO ASSIGNMENT. Except for the Real Estate Contracts, to the extent that any Contract, Broadcast Agreement, Trade Agreement or other contract identified in the Disclosure Schedule that is to be Page 29 assigned under this Agreement is not capable of being sold, assigned, transferred, delivered or subleased without the waiver or consent of any third person withholding same (including a government or governmental unit), or if such sale, assignment, transfer, delivery or sublease or attempted sale, transfer, delivery or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant hereto shall not constitute a sale, assignment, transfer, delivery or sublease or an attempted sale, assignment, transfer, delivery or sublease thereof. Except for any consents required pursuant to a Real Estate Contract, in those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Closing Date to the transfer and assignment to Buyer of such contracts, Buyer may in its sole discretion elect to have this Agreement and any assignments executed pursuant hereto, to the extent permitted by law, constitute an equitable assignment by Seller to Buyer of all of Seller's rights, benefits, title and interest in and to such contracts, and where necessary or appropriate, Buyer shall be deemed to be Seller's agent for the purpose of completing, fulfilling and discharging all of Seller's rights and liabilities arising after the Closing Date under such contracts. Seller shall use its reasonable best efforts to provide Buyer with the benefits of such contracts (including, without limitation, permitting Buyer to enforce any rights of Seller arising under such contracts), and Buyer shall, to the extent Buyer is provided with the benefits of such contracts, assume, perform and in due course pay and discharge all debts, obligations and liabilities of Seller under such contracts. 6.8 BULK SALES LAWS. Buyer hereby waives compliance by Seller with the provisions of the "bulk sales" or similar laws of any state. Seller agrees to indemnify Buyer and hold it harmless against any and all claims, losses, damages, liabilities, costs and expenses incurred by Buyer or any affiliate as a result of any failure to comply with any "bulk sales" or similar laws. 6.9 EMPLOYEE MATTERS. (a) While under no obligation to hire any employees of the Station, Buyer shall make reasonable efforts to offer employment at will to certain employees of the Station. Upon review of a full list of employees and salaries, Buyer shall notify Seller of (i) those employees to whom it will so offer employment as soon as practicable and (ii) those employees that Buyer intends to discharge not less than thirty (30) days prior to the Closing Date. Seller shall be responsible for all salary and benefits of the employees of the Station who do not accept, or are not offered, employment with Buyer. Seller shall be Page 30 responsible for all salary and other compensation due to be paid for work for Seller for employees of the Station who become employees of Buyer and Buyer shall be responsible for the salary and other compensation due to be paid for work for Buyer on or after the date of hire by Buyer for such employees. Seller shall be responsible for severance payments which may be applicable under its employee benefit plans to any employees not so offered employment and hired by Buyer. Except as expressly provided in paragraph (b) below, Buyer shall assume no liability under an employment agreement or severance agreement entered into or maintained by Seller with respect to current or former employees of the Station. Except as otherwise required by applicable law, employees of the Station who become employees of Buyer shall cease to participate in the employees benefit plans of Seller as of the date of hire by Buyer and Buyer shall have no liability with respect thereto. (b) Notwithstanding the foregoing, in the event Buyer terminates the employment of Rita Walls or Laura Eaton during the LMA Term, Buyer shall be responsible for the severance payments due to each such person under the terms of the employment agreements, dated August 14, 1995, between EBE Communications Limited Partnership and Rita Walls and EBE Communications Limited Partnership and Laura Eaton, respectively; PROVIDED, HOWEVER, that the Cash Payment shall be reduced by the amount of any such payments made by Buyer. In the event Buyer terminates the employment of the persons listed in Section 3.13 of the Disclosure Schedule during the LMA Term, other than Ms. Walls and Ms. Eaton, Buyer shall be responsible for the severance payments due to each such person under the terms of the employment agreements entered into between EBE Communications Limited Partnership and each such employee, attached to Section 3.13 of the Disclosure Schedule, and no adjustment to the Cash Payment shall be made. ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER The performance of the obligations of the Buyer hereunder is subject, at the election of the Buyer, to the following conditions precedent: 7.1 COMMISSION APPROVALS. Notwithstanding anything herein to the contrary, the consummation of this Agreement is conditioned upon (a) a grant by the Commission of the Assignment Application, and (b) compliance by the parties with the conditions, if any, imposed by the Commission in connection with the grant of the Assignment Application (provided that neither party shall be required Page 31 to accept or comply with any condition which would be unreasonably burdensome or which would have a materially adverse effect upon it). All required governmental filings shall have been made, and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted and become Final Orders. The Licenses shall be in unconditional full force and effect, shall be valid for the balance of the current License term applicable generally to radio stations licensed to communities located in the State of California, and shall be unimpaired by any acts or omissions of Seller or Seller's employees or agents. 7.2 PERFORMANCE. The Station Assets shall have been transferred to Buyer by Seller, and all of the terms, conditions and covenants to be complied with or performed by Seller on or before the Closing Date shall have been duly complied with and performed in all material respects, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.3 FAILURE OF TRANSFER. Notwithstanding any other provision in this Agreement to the contrary, in the event that any law, regulation or official policy prevents the transfer or assignment of the Station Assets from Seller to Buyer or any Buyer affiliate, the parties shall have amended this Agreement and/or executed such supplemental agreements, as necessary, to achieve for both Buyer and Seller, to the maximum extent possible, the benefits of the transactions contemplated by this Agreement and the Ancillary Agreements in a manner consistent with applicable law. 7.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties of Seller to Buyer shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.5 CONSENTS. Seller shall have received all consents (including landlord and grantor consents for the studio and tower sites) specified in Section 3.8 of the Disclosure Schedule and as follows: (i) a grant of easement granting to Buyer all of Seller's rights pursuant to that certain Grant of Easement dated November 7, 1994 between Headliner Broadcasting, Inc., as grantor, and Seller, as grantee (the "HEADLINER EASEMENT"); (ii) a Cancellation of Headliner Easement canceling all of Seller's rights to the Headliner Easement; (iii) prior written consent of the Headliner Easement to Buyer as required pursuant to that certain Easement Agreement Page 32 entered into as of August 18, 1989, by and between Azalea Biglione and others, as grantors, and KLOK Radio, a limited partnership, doing business as Radio KFIG, as grantee, recorded as Instrument No. 91075013 in the official records of the County Recorder of Fresno County, California and subsequently assigned by Headliner Broadcasting, Inc. on November 1, 1989 to Seller. 7.6 NO LITIGATION. No litigation, proceeding, or investigation of any kind shall have been instituted or, to Seller's knowledge, threatened which would materially adversely affect the ability of Seller to comply with the provisions of this Agreement or would materially adversely affect the operation of the Station. 7.7 DOCUMENTS. Seller shall have obtained, executed, where necessary, and delivered, to Buyer where applicable, all of the documents, reports, orders and statements required of it herein, as well as any other documents (including collateral assignments) required by any entity providing financing for the transactions contemplated by this Agreement and the Ancillary Agreements. 7.8 OPINIONS OF COUNSEL. Seller shall have delivered to Buyer an opinion of Moses & Singer, counsel to Seller, addressed to Buyer and substantially in the form attached hereto as Exhibit A. In addition, Seller shall have delivered to Buyer a written opinion of Seller's FCC counsel, dated as of the Closing Date, addressed to Buyer and substantially in the form attached hereto as Exhibit B. 7.9 DISCLOSURE SCHEDULE. Seller shall have delivered to Buyer each Section of the Disclosure Schedule required of it herein and the information contained therein shall be in form and content reasonably satisfactory to Buyer. 7.10 ANCILLARY AGREEMENTS. Buyer and Seller shall have entered into the Ancillary Agreements, if any, on terms and conditions satisfactory to Buyer. 7.11 SIMULTANEOUS CLOSING. The Closing shall occur simultaneously with the closing of the transactions contemplated by that certain Asset Purchase Agreement by and between EBE Communications, Limited Partnership and Buyer dated of even date herewith. Page 33 ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER The performance of the obligations of Seller hereunder is subject, at the election of Seller, to the following conditions precedent: 8.1 PERFORMANCE. All of the terms, conditions and covenants to be complied with or performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties of Buyer to Seller shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.3 GOVERNMENT APPROVALS. All required governmental filings shall have been made and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted. 8.4 DOCUMENTS. Buyer shall have obtained, executed, where necessary, and delivered to Seller where applicable, all of the documents, reports, orders and statements required of it herein. 8.5 OPINION OF COUNSEL. Buyer shall have delivered to Seller an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to Buyer, addressed to Seller and substantially in the form attached hereto as Exhibit C. ARTICLE IX INDEMNIFICATION 9.1 INDEMNIFICATION BY SELLER. From and after the Closing Date, Seller agrees to and shall indemnify, defend and hold Buyer harmless, and shall reimburse Buyer for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto) resulting from or arising out of: (a) Any breach by Seller of any representation, or warranty contained in this Agreement, Page 34 any Ancillary Agreement or in any certificate, exhibit, schedule, or other document furnished to or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment or breach by Seller of any covenant, agreement, term or condition contained in this Agreement, any Ancillary Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (c) Any material inaccuracy in any covenant, representation, agreement or warranty by Seller including all material statements or figures contained in the Financial Statements heretofore furnished to Buyer; and (d) Any liabilities of any kind or nature, absolute or contingent not assumed by Buyer including, without limitation, any liabilities relating to or arising from the business and operation of the Station by Seller prior to the Closing Date. Notwithstanding any other provision contained herein, Seller shall be solely responsible for any fine or forfeiture imposed by the Commission relating to the operation of the Station prior to the Closing Date. Anything in this Section 9.1 to the contrary notwithstanding, Buyer shall be entitled to indemnity only to the extent that all damages exceed an aggregate of $25,000. 9.2 INDEMNIFICATION BY BUYER. From and after the Closing Date, Buyer agrees to and shall indemnify, defend and hold Seller harmless, and shall reimburse Seller for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto), resulting from or arising out of: (a) Any breach by Buyer of any covenant, agreement, term, condition, representation, or warranty contained in this Agreement, any Ancillary Agreement or in any certificate, exhibit, schedule, or any other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment by Buyer of any covenant contained in this Agreement, any Ancillary Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; and Page 35 (c) Any liabilities of any kind or nature, absolute or contingent, relating to or arising from the business and operation of the Station subsequent to the Closing Date. Anything in this Section 9.2 to the contrary notwithstanding, Seller shall be entitled to indemnity only to the extent that all damages exceed an aggregate of $25,000. 9.3 NOTIFICATION OF CLAIMS. (a) A party entitled to be indemnified pursuant to Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the party liable for such indemnification (the "Indemnifying Party") in writing of any claim or demand which the Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement. Subject to the Indemnifying Party's right to defend in good faith third party claims as hereinafter provided, the Indemnifying Party shall satisfy its obligations under this Article IX within thirty (30) days after the receipt of a written notice thereof from the Indemnified Party. (b) If the Indemnified Party shall notify the Indemnifying Party of any claim or demand pursuant to Section 9.3(a), and if such claim or demand relates to a claim or demand asserted by a third party against the Indemnified Party which the Indemnifying Party acknowledges is a claim or demand for which it must indemnify or hold harmless the Indemnified Party under Sections 9.1 or 9.2, the Indemnifying Party shall have the right to assume the defense of such third party claim or demand and to employ counsel reasonably acceptable to the Indemnified Party to defend any such claim or demand asserted against the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any such claim or demand at its own expense. Notwithstanding the foregoing, the Indemnified Party shall have the right to employ separate counsel at the Indemnifying Party's expense and to control its own defense if in the reasonable opinion of counsel to such Indemnified Party a conflict or potential conflict exists between the Indemnifying Party and such Indemnified Party that would make such separate representation advisable. The Indemnifying Party shall notify the Indemnified Party in writing, as promptly as possible (but in any case before the due date for the answer or response to a claim) after the date of the notice of claim given by the Indemnified Party to the Indemnifying Party under Section 9.3(a) of its election to defend in good faith any such third party claim or demand. So long as the Indemnifying Party is defending in good faith any such claim or demand asserted by a third party against the Page 36 Indemnified Party, the Indemnified Party shall not settle or compromise such claim or demand. The Indemnifying Party shall not settle or compromise such claim or demand with respect to the Indemnified Party without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld). The Indemnified Party shall make available to the Indemnifying Party or its agents all records and other materials in the Indemnified Party's possession reasonably required by it for its use in contesting any third party claim or demand. Whether or not the Indemnifying Party elects to defend any such claim or demand, the Indemnified Party shall have no obligations to do so. Upon payment of any claim or demand pursuant to this Article IX, the Indemnifying Party shall, to the extent of payment, be subrogated to all rights of the Indemnified Party. ARTICLE X MISCELLANEOUS 10.1 ASSIGNMENT. (a) This Agreement shall not be assigned or conveyed by either party hereto to any other person or entity without the prior written consent of the other parties hereto; PROVIDED, HOWEVER, that Buyer may assign this Agreement without Seller's prior consent to one or more corporations or other entities controlled by Buyer and Seller shall have recourse to Buyer in the event Buyer's assignee defaults hereunder. Subject to the foregoing, this Agreement shall be binding and shall inure to the benefit of the parties hereto, their successors and assigns. (b) Notwithstanding anything to the contrary set forth herein, Buyer may assign and transfer to any entity providing financing for the transactions contemplated by this Agreement (or any refinancing of such financing) as security for such financing all of the interest, rights and remedies of Buyer with respect to this Agreement and the Ancillary Agreements, and Seller shall expressly consent to such assignment. Any such assignment will be made for collateral security purposes only and will not release or discharge Buyer from any obligations it may have pursuant to this Agreement. Notwithstanding anything to the contrary set forth herein, Buyer may (i) authorize and empower such financing sources to assert, either directly or on behalf of Buyer, any claims Buyer may have against Seller under this Agreement and (ii) make, constitute and appoint one agent bank in respect of such financing (and all officers, employees and agents designated by such agent) as the true and lawful attorney Page 37 and agent-in-fact of Buyer for the purpose of enabling the financing sources to assert and collect any such claims. 10.2 SURVIVAL OF INDEMNIFICATION. The indemnification obligations of Seller contained in this Agreement (other than any indemnification required as a result of Seller's breach of Sections 3.1, 3.2 or 3.3 hereof, which indemnification shall survive indefinitely) shall be binding for a period of three (3) years following the date hereof. 10.3 NO RIGHT OF REVERSION. Buyer and Seller represent and warrant to each other that upon the consummation of the transactions contemplated herein and the assignment to Buyer of the Licenses and authorizations, Seller shall retain no right of reversion of the Licenses and authorizations, no right to a reassignment of the Licenses and authorizations in the future, and reserve no right to use the facilities of the Station for any period whatsoever. 10.4 BROKERAGE. Seller and Buyer warrant and represent to one another that, with the exception of Exline Media Broker Consultants (William Exline), broker for the Seller, there has been no broker in any way involved in the transactions contemplated hereby and that no one other than Exline Media Broker Consultants (William Exline), is or will be entitled to any fee or other compensation in the nature of a brokerage fee or finder's fee as a result of the Closing hereunder. Seller shall be wholly responsible for any brokerage or other fee due to Exline Media Broker Consultants (William Exline). 10.5 EXPENSES OF THE PARTIES. It is expressly understood and agreed that all expenses of preparing this Agreement and of preparing and prosecuting the Assignment Application with the Commission, and all other expenses, whether or not the transactions contemplated hereby are consummated, shall be borne solely by the party who shall have incurred the same and the other party shall have no liability in respect thereto, except as otherwise provided herein. All costs of transferring the Station Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be borne equally by Seller and Buyer. Any filing or grant fees imposed by any governmental authority the consent of which is required for the transactions contemplated hereby shall be borne equally by Seller and Buyer. 10.6 ENTIRE AGREEMENT. This Agreement, together with any related Schedules or Exhibits, contains all the terms agreed upon by the parties with respect to the subject matter herein, and supersedes all prior agreements Page 38 and understandings among the parties and may not be changed or terminated orally. No attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced. 10.7 HEADINGS. The headings set forth in this Agreement have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any manner, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement. Unless otherwise specified herein, the section references contained herein refer to sections of this Agreement. 10.8 GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the internal laws of the State of New York. 10.9 COUNTERPARTS. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of such shall constitute one and the same instrument. 10.10 NOTICES. Any notices or other communications shall be in writing and shall be considered to have been duly given when deposited into first class, certified mail, postage prepaid, return receipt requested, delivered personally (which shall include delivery by Federal Express or other recognized overnight courier service that issues a receipt or other confirmation of delivery) or delivered via facsimile machine; IF TO SELLER: William J. McEntee Jr. Vice President EBE Communications Limited Partnership 400 Executive Drive, Suite 210 West Palm Beach, FL 33401 Fax: 407-640-7699 Phone: 407-640-3585 With a copy to: Jerome S. Traum Moses & Singer LLP 1301 Avenue of the Americas New York, NY 10019-6076 Fax: 212-554-7700 Phone: 212-554-7813 Page 39 IF TO BUYER: Mr. Frank D. Osborn Osborn Communications Corporation 130 Mason Street Greenwich, CT 06830 Fax: (203) 629-1749 Phone: (203) 629-0905 With a copy to: Robert M. Hirsh Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Fax: (212) 757-3990 Phone: (212) 373-3108 Any party may at any time change the place of receiving notice by giving notice of such change to the other as provided herein. 10.11 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a special, unique and extraordinary character and that damages are inadequate to compensate Buyer for Seller's breach of this Agreement. Accordingly, in the event of a material breach by Seller of its representations, warranties, covenants and agreements under this Agreement, Buyer may sue at law for damages or, at Buyer's sole election in addition to any other remedy available to it, Buyer may also seek a decree of specific performance requiring Seller to fulfill its obligations under this Agreement, and Seller agrees to waive its defense that an adequate remedy at law exists. 10.12 CONSENT TO JURISDICTION. Seller and Buyer hereby submit to the nonexclusive jurisdiction of the courts of the State of New York and the federal courts of the United States of America located in such state solely in respect of the interpretation and enforcement of the provisions hereof and of the documents referred to herein, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that they are not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that this Agreement or any of such documents may not be enforced in or by said courts or that the Station property is exempt or immune from execution, that the suit, action or proceeding is brought in an inconvenient forum, or that the venue of the suit, action or proceeding is improper. 10.13 FURTHER ASSURANCES. Seller and Buyer agree to execute all such documents and take all such actions Page 40 after the Closing Date as any other party shall reasonably request in connection with carrying out and effectuating the intent and purpose hereof and all transactions and things contemplated by this Agreement, including, without limitation, the execution and delivery of any and all confirmatory and other documents in addition to those to be delivered on the Closing Date and all actions which may reasonably be necessary or desirable to complete the transactions contemplated hereby. 10.14 PUBLIC ANNOUNCEMENTS. No public announcement (including an announcement to employees) or press release concerning the transactions provided for herein and in the LMA shall be made by either party without the prior approval of the other party, except as required by law. Page 41 IN WITNESS WHEREOF, the parties hereto have executed or have caused this Agreement to be executed by a duly authorized officer on the day and year first above written. SELLER EBE BROADCASTING, L.P. By: Guild Radio Corporation, Inc., General Partner By: Name: Title: BUYER BREADBASKET BROADCASTING CORPORATION By: Name: Title: IN WITNESS WHEREOF, Osborn Communications Corporation has caused this Agreement to be executed by a duly authorized officer on the day and year first above written for the sole purpose of being bound by the provisions of Section 1.7 hereof. OSBORN COMMUNICATIONS CORPORATION By: Name: Title: EX-10 3 ASSET PURCHASE AGREEMENT ___________________________________________________________ ASSET PURCHASE AGREEMENT dated as of December 31, 1995 by and between EBE COMMUNICATIONS LIMITED PARTNERSHIP (Seller) and BREADBASKET BROADCASTING CORPORATION (Buyer) ___________________________________________________________ TABLE OF CONTENTS PAGE ARTICLE I PURCHASE AND SALE OF ASSETS 1.1 Transfer of Assets.............................1 1.2 Excluded Assets................................4 1.3 Liabilities to be Assumed......................5 1.4 Consideration..................................5 1.5 Proration of Income and Expenses...............6 1.6 Allocation of Purchase Price...................6 1.7 Guaranty.......................................7 ARTICLE II CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION 2.1 Closing........................................7 2.2 Transactions at the Closing....................7 2.3 Termination...................................11 2.4 Default Payment...............................12 2.5 Operation of Station pursuant to the LMA......13 2.6 Risk of Loss..................................13 2.7 Interruption of Broadcast Transmissions.......13 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 3.1 Due Organization..............................14 3.2 Authority; No Conflict........................14 3.3 Government Authorizations.....................14 3.4 Compliance with Regulations...................15 3.5 Taxes.........................................15 3.6 Personal Property.............................16 3.7 Real Property.................................16 3.8 Consents......................................18 3.9 Contracts.....................................19 3.10 Environmental.................................19 3.11 Intellectual Property.........................20 3.12 Financial Statements..........................20 3.13 Personnel Information; Labor Contracts........20 3.14 Employee Benefit Plans........................21 3.15 Litigation....................................21 3.16 Compliance with Laws..........................21 3.17 Insurance.....................................22 3.18 Undisclosed Liabilities.......................22 3.19 Instruments of Conveyance; Good Title.........23 3.20 Absence of Certain Changes....................23 3.21 Insolvency Proceedings........................24 3.22 Material Adverse Change.......................24 3.23 Investment Intent of Seller...................24 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Due Incorporation.............................25 4.2 Authority; No Conflict........................25 4.3 Consents......................................26 4.4 Litigation....................................26 4.5 Compliance with Laws..........................26 4.6 Qualification.................................26 4.7 Stock.........................................26 ARTICLE V COVENANTS OF SELLER 5.1 Continued Operation of Station................27 5.2 Financial Obligations.........................27 5.3 Reasonable Access.............................27 5.4 Maintenance of Assets.........................27 5.5 Notification of Developments..................28 5.6 Payment of Taxes..............................28 5.7 Third Party Consents..........................28 5.8 Encumbrances..................................28 5.9 Assignment of Assets..........................28 5.10 Commission Licenses and Authorizations........28 5.11 Technical Equipment...........................29 5.12 Compensation Increases........................29 5.13 Sale of Broadcast Time........................29 5.14 Insurance.....................................29 5.15 Negotiations with Third Parties...............29 ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER 6.1 Assignment Application........................29 6.2 Performance...................................30 6.3 Conditions....................................30 6.4 Confidentiality...............................30 6.5 Cooperation...................................30 6.6 Environmental Reports.........................30 6.7 Consents to Assignment........................31 6.8 Bulk Sales Laws...............................32 6.9 Employee Matters..............................32 ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER 7.1 Commission Approvals..........................33 7.2 Assets of Station.............................33 7.3 Performance...................................35 7.4 Failure of Transfer...........................35 7.5 Representations and Warranties................35 7.6 Consents......................................35 7.7 No Litigation.................................35 7.8 Documents.....................................35 7.9 Disclosure Schedule...........................35 7.10 Opinions of Counsel...........................36 7.11 Ancillary Agreements..........................36 7.12 Simultaneous Closing..........................36 ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER 8.1 Performance...................................36 8.2 Representations and Warranties................36 8.3 Government Approvals..........................36 8.4 Documents.....................................36 8.5 Opinion of Counsel............................37 ARTICLE IX INDEMNIFICATION 9.1 Indemnification by Seller.....................37 9.2 Indemnification by Buyer......................38 9.3 Notification of Claims........................38 ARTICLE X MISCELLANEOUS 10.1 Assignment....................................39 10.2 Survival of Indemnification...................40 10.3 No Right of Reversion.........................40 10.4 Brokerage.....................................40 10.5 Expenses of the Parties.......................41 10.6 Entire Agreement..............................41 10.7 Headings......................................41 10.8 Governing Law.................................41 10.9 Counterparts..................................41 10.10 Notices.......................................41 10.11 Specific Performance..........................42 10.12 Consent to Jurisdiction.......................43 10.13 Further Assurances............................43 10.14 Public Announcements..........................43 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT is entered into as of this 31st day of December, 1995 by and between EBE COMMUNICATIONS LIMITED PARTNERSHIP, a Delaware limited partnership ("Seller"), and BREADBASKET BROADCASTING CORPORATION, a corporation formed under the laws of the State of Delaware ("Buyer"). R E C I T A L S WHEREAS, Seller owns and operates and has been duly licensed by the Federal Communications Commission (the "FCC" or the "Commission") to operate radio station KNAX(FM), Fresno, California (the "Station"); WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase, the assets utilized in connection with the operation of the Station, and Seller and Buyer further desire that Seller assign to Buyer the licenses and other authorizations issued to Seller by the Commission for the purpose of operating the Station; and WHEREAS, simultaneously with the execution of this Agreement, Seller and Buyer have entered into a Local Marketing Agreement ("LMA") effective as of the 1st day of January 1996; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I PURCHASE AND SALE OF ASSETS 1.1 TRANSFER OF ASSETS. Seller agrees to assign, transfer, convey and deliver to Buyer and Buyer agrees to acquire, accept and receive from Seller, on the Closing Date (as defined herein), all of Seller's right, title and interest in and to the following assets relating to the Station (the "Station Assets") free and clear of all liens and encumbrances. (a) LICENSES AND AUTHORIZATIONS. All licenses, permits and other authorizations issued by the FCC or any other state or federal regulatory agency pertaining to the Station, including, without limitation, those licenses, permits or authorizations listed in Section 1.1(a) of the disclosure schedule delivered by Seller to Buyer and Page 2 dated of even date herewith (the "Disclosure Schedule"), together with any renewals, extensions or modifications thereof and additions thereto made between the date of this Agreement and the Closing Date (the "Licenses"). The Licenses include the right to use the call letters of the Station, including but not limited to the call letters KNAX(FM). (b) TANGIBLE PERSONAL PROPERTY. All of the tangible personal property owned by Seller and used or useable in the operation of the Station, including but not limited to the items of personal property listed in Section 1.1(b) of the Disclosure Schedule, together with all additions, modifications or replacements thereto made in the ordinary course of business between the date of this Agreement and the Closing Date, as hereafter defined (the "Personal Property"). (c) REAL ESTATE CONTRACTS. All of the leasehold interests and easement interests in real property leased by Seller and used by the Station, including all agreements, leases, grants of easements and contracts of Seller relating to the tower, transmitter, studio site, and offices of the Station (the "Real Estate Contracts"), including all security or other deposits made with respect to such Real Estate Contracts, all as described in Section 1.1(d) of the Disclosure Schedule (the land, buildings and other improvements covered by the Real Property Contracts being herein called the "Leased Real Property.") The Buyer shall assume, pay and perform all obligations under such Real Estate Contracts accruing after the Closing Date to the extent such obligations relate to the period after the Closing Date. (d) REAL ESTATE ASSETS. All of Seller's interest in the real property owned by Seller and listed in Section 1.1(d) of the Disclosure Schedule and the Meadow Lakes Property as more particularly described in Section 7.2 hereof and all of the buildings, structures and other improvements located thereon (collectively, the "Owned Real Property"). The Owned Real Property and the Leased Real Property are collectively referred to herein as the Real Property. (e) INTELLECTUAL PROPERTY. All of Seller's trade names, copyrights, trademarks, service marks, patents, patent applications or other similar rights relating to the operation of the Station including, but not limited to, those listed in Section 1.1(e) of the Disclosure Schedule, together with any necessary additions or modifications thereto between the date hereof and the Closing Date (the "Intellectual Property"). Page 3 (f) LEASES AND CONTRACTS. All leases, contracts, agreements and franchises relating to the operation of the Station (other than contracts for the sale of broadcast time and leases for real property) listed and identified in Section 1.1(f) of the Disclosure Schedule and those leases, contracts, agreements and franchises described in Section 1.1(i) of this Agreement (the "Contracts"). Buyer shall assume, pay and perform all obligations under such Contracts accruing after the Closing Date. (g) CONTRACTS FOR SALE OF BROADCAST TIME. All contracts for sale of broadcast time on the Station that provide for payment by the customer solely on a cash basis and that are to be in effect on the Closing Date listed and identified in Section 1.1(g) of the Disclosure Schedule (the "Broadcast Agreements"). Buyer shall assume, pay and perform all obligations under the Broadcast Agreements arising after the Closing Date, PROVIDED, HOWEVER, Buyer will not assume any contract for the sale of time entered into prior to the date of this Agreement pursuant to which payment is to be received in whole or in part in services, merchandise or other non-cash considerations ("Trade Agreements"), except as agreed to by Buyer and set forth in Section 1.1(g) of the Disclosure Schedule. (h) OPERATING AND BUSINESS RECORDS. All files, records, logs and program materials pertaining to the operation of the Station required to be maintained and kept under the rules of the Commission and such other files and records as Buyer shall reasonably require for the continuing business and operation of the Station. Seller shall have the right to reasonable access to such business records that Seller delivers to Buyer under this Section 1.1(h) upon Seller's request for five years after the Closing Date. (i) FUTURE CONTRACTS. All leases, contracts, agreements and franchises entered into between the date hereof and the Closing Date in the usual and ordinary course of business, except that those exceeding two months in duration or $5,000.00 in amount will not be assumed by Buyer unless consented to by Buyer in advance in writing and set forth in Section 1.1(i) of the Disclosure Schedule. (j) INVENTORY AND COMPUTER SOFTWARE. All of Seller's items of inventory related to the business of the Station, including, without limitation, broadcast programs, as well as all computer software used or useable by the Station. (k) ACCOUNTS RECEIVABLE. All accounts receivable of the Seller through the date hereof with regard to the operation of the Station prior to the Commencement Date of the LMA (as that term is defined herein). Seller Page 4 shall list its accounts receivable as of November 30, 1995 in Section 1.1(k) of the Disclosure Schedule. Buyer agrees to use commercially reasonable efforts to collect Seller's accounts receivable with respect to radio station KFRE(AM) in the ordinary and normal course of business for a period of one hundred twenty (120) days after the date hereof (the "Collection Period") as listed on Section 1.1(k) of the Disclosure Schedule, but shall not be required to employ counsel or any collection agency or to initiate any litigation or use any extraordinary means of collection. During the Collection Period, amounts collected by Buyer for the account of Seller shall be remitted to Seller within fifteen (15) days following the end of each calendar month. (l) OTHER RIGHTS AND PRIVILEGES. Any and all other franchises, materials, supplies, easements, rights-of-way, licenses, and other rights and privileges of Seller relating to and used, useable or necessary in the operation of the Station. 1.2 EXCLUDED ASSETS. There shall be excluded from the sale transaction described herein the following assets relating to the Station: (a) CASH AND DEPOSITS. Cash-on-hand or in banks (or their equivalents) and other investments belonging to Seller and relating to the operation of the Station as of the Closing Date. (b) PROPERTY CONSUMED. All property of the Station disposed of or consumed (including ordinary wear and tear) in the ordinary course of business between the date hereof and the Closing Date. (c) EXPIRED LEASES, CONTRACTS AND AGREEMENTS. All contracts described in Sections 1.1(f), (g) and (i) of the Disclosure Schedule that are terminated or will have expired prior to the Closing Date in the ordinary course of business. (d) PENSION AND PROFIT-SHARING PLANS. All pension and profit-sharing plans, trusts established thereunder and assets thereof, if any, of Seller. (e) OTHER EMPLOYEE BENEFIT PLANS. All other employee benefit plans (including health insurance) of Seller and the assets thereof. (f) EMPLOYMENT AND COLLECTIVE BARGAINING AGREEMENTS. All employment agreements and collective bargaining agreements of Seller. Page 5 (g) OTHER ASSETS. Those assets, if any, listed in Section 1.2(g) of the Disclosure Schedule. 1.3 LIABILITIES TO BE ASSUMED. Except as otherwise provided in this Section 1.3, Buyer assumes no liabilities or obligations of Seller of any nature whatsoever, contingent or otherwise, except for (i) amounts in respect of Seller's accounts payable with regard to the Station as of the date hereof, (ii) Seller's trade liabilities as of the date hereof, (iii) Seller's negative trade commitments as of the date hereof and (iv) post-closing obligations related to Real Estate Contracts, Contracts, Broadcasting Agreements and Trade Agreements (the "Assumed Contracts") assigned to and specifically assumed by Buyer. Seller shall provide (w) a calculation of the amount of its working capital in Section 1.3 of the Disclosure Schedule, (x) a list of its accounts payable through December 22, 1995 in Section 1.3(a) of the Disclosure Schedule, (y) a list of its trade liabilities through December 22, 1995 in Section 1.3(b) of the Disclosure Schedule and (z) a list of its negative trade commitments through December 22, 1995 in Schedule 1.3(c) of the Disclosure Schedule. On or prior to the Closing Date Seller shall pay or else retain all debts, liabilities and other obligations of Seller arising prior to the Closing Date and not assigned to and specifically assumed by Buyer. 1.4 CONSIDERATION. In consideration of Seller's performance of this Agreement and the sale, assignment, transfer, conveyance and delivery of the Station Assets to Buyer free and clear of all liens and encumbrances, Buyer shall: (i) pay to Seller on the Closing Date, by wire transfer, the sum of Four Million Dollars ($4,000,000.00) (the "Cash Payment"); (ii) deliver certificates representing One Hundred Twenty Thousand (120,000) Shares of Common Stock of Osborn Communications Corporation ("Osborn"), the parent of Buyer (the "Osborn Shares") (the Osborn Shares and the Cash Payment are collectively referred to herein as the "Purchase Price"); (iii) grant an option to Seller to purchase Common Stock of the Buyer at an exercise price of Eight Dollars ($8) per share (the "Option"), exercisable on the third anniversary of the Closing Date (or earlier in the event of the sale of the Station by Buyer) (the Exercise Date"). The number of shares that Seller is entitled to purchase may be calculated by multiplying cash flow on the Exercise Date by ten and subtracting Page 6 eight million from the product and then multiplying five percent by the difference and dividing by eight, as follows: cash flow x 10 - 8 million x .05 [divided by] 8 = number of shares underlying the Option. 1.5 PRORATION OF INCOME AND EXPENSES. Except as otherwise provided herein or in the LMA, all income and expenses arising from the conduct of the business and operations of the Station shall be prorated between Buyer and Seller in accordance with generally accepted accounting principles as of 11:59 p.m., Eastern time, on the date immediately preceding the Closing Date. Such prorations shall include, without limitation, all AD VALOREM and other property taxes (but excluding taxes arising by reason of the transfer of Station Assets as contemplated hereby, which shall be paid as set forth in Section 10.5 of this Agreement), business and license fees, music and other license fees (including any retroactive adjustments thereof, which retroactive adjustments shall not be subject to the ninety day limitation set forth in Section 1.5(a)), wages and salaries of employees hired by Buyer, including accruals up to the Closing Date for bonuses, commissions, vacation and sick pay, and related payroll taxes, utility expenses, time sales agreements, rents and similar prepaid deferred items attributable to the ownership and operation of the Station. (a) TIME FOR PAYMENT. The prorations and adjustments contemplated by this Section 1.5, to the extent practicable, shall be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within 90 days of the Closing Date. (b) DISPUTE RESOLUTION. In the event of any disputes between the parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 1.5(a) and such disputes shall be determined by an independent certified public accountant mutually acceptable to the parties whose determination shall be final, and the fees and expenses of such accountant shall be paid one- half by Seller and one-half by Buyer. 1.6 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that the Purchase Price shall be allocated among the Station Assets in a manner to be determined by an independent appraiser selected by Buyer. Buyer and Seller agree to use such allocation in completing and filing Internal Revenue Service Form 8594 for federal income tax purposes. Buyer and Seller further agree that they shall not take any position inconsistent with such allocation upon examination of any return, in any refund claim, in any litigation, or otherwise. Buyer and Seller shall agree that Page 7 the Purchase Price shall not be attributed to the transfer of the Real Estate Contracts. 1.7 GUARANTY. In order to secure the obligations and agreements of Buyer hereunder, Osborn hereby unconditionally, irrevocably and absolutely guarantees to the Seller and its successors and assigns for a period of two (2) years the full and punctual payment when due of all amounts payable to the Seller by the Buyer in connection with the indemnification, the Default Payment (as defined in Section 2.4) and other obligations arising under this Agreement (the "Guaranteed Obligations"), whether by default or otherwise. Upon failure by the Buyer to pay when due any amount of the Guaranteed Obligations in accordance with the terms of this Agreement, Osborn shall pay or cause to be paid, on demand by the Seller, the amount not so paid at the place and in the manner specified in this Agreement. Osborn agrees that this Guaranty is a guaranty of payment and performance, and not of collection only, and that Osborn's obligations under this Guaranty shall be primary, absolute and unconditional. ARTICLE II CLOSING, TERMINATION, RISK OF LOSS AND LMA OPERATION 2.1 CLOSING. The purchase and sale of the Station Assets contemplated by this Agreement (the "Closing") shall take place at the offices of Paul, Weiss, Rifkind Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019 at 10:00 a.m. on a mutually agreed upon day five (5) days after the latter of (a) the Commission's approval of the Assignment Application, as defined in Section 6.1 below, becomes a Final Order, or (b) the grant of Seller's renewal application in respect of the Licenses or such other time and place as shall be mutually agreed upon by the parties (the "Closing Date"). For purposes of this Agreement, a "Final Order" shall mean any action of the Commission which has not been reversed, stayed, enjoined, set aside, annulled or suspended and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal or stay, and the time for filing any such requests and the time for the Commission to set aside the action on its own motion shall have expired. Buyer may, at its sole election, waive the requirement that the Commission's approval of the Assignment Application shall have become a Final Order. 2.2 TRANSACTIONS AT THE CLOSING. (a) At the Closing, Seller shall deliver to Buyer the following: Page 8 (i) assignments of the Licenses and other pertinent authorizations transferring the same to the Buyer in customary form and substance; (ii) the certificates contemplated by Sections 7.2, 7.3 and 7.5; (iii) a copy of the resolutions of the board of directors of Seller's General Partner authorizing the execution, delivery and performance of this Agreement and the agreements and documents listed in Section 2.2 of the Disclosure Schedule, if any (the "Ancillary Agreements"), and the consummation of the transactions contemplated hereby and thereby, together with a certificate of the Secretary of Seller's General Partner, dated as of the Closing Date, that such resolutions were duly adopted and are in full force and effect; (iv) A special warranty deed (or its equivalent in the State of California), in proper statutory form for recording, conveying each parcel of Owned Real Property; (v) Buyer and Seller shall obtain, at Buyer's expense, an owner's extended coverage policy of title insurance with respect to each parcel of Real Property, in each case issued on the date of Closing by a title insurance company acceptable to counsel for Buyer (the "Title Company"). Each such title insurance policy shall be in an amount designated by Buyer and shall insure Buyer's ownership of fee title with respect to the Owned Real Property without any of the Scheduled B standard pre-printed exceptions (other than taxes not yet due and payable) and free and clear of title defects and other exceptions to or exclusions from coverage other than those Title Defects (as hereinafter defined in Section 3.7(a)) which, in the reasonable opinion of Buyer's counsel, individually or in the aggregate (i) interfere in any material respect with the use, occupancy or operation of the Owned Real Property or (ii) materially reduce the fair market value of the Owned Real Property below the fair market value the Owned Real Property would have had but for such encumbrances (collectively, the "Permitted Owned Real Property Exceptions"). (vi) At Buyer's expense, a survey of each parcel of Owned Real Property certified to Buyer or its permitted assigns and the Title Company. The certification shall be by a Registered Land Surveyor and shall be made in accordance with the minimum technical standards of land surveying in California. The survey shall be prepared in accordance with the Page 9 Minimum Detail Standards for Land Title Survey of 1992 of the American Title Association and American Congress on Surveying and Mapping. Each such survey shall show (i) the courses and distances of all boundary lines of such parcel (including, appurtenant easements), (ii) the location of all Improvements situated on or above such parcel and on or above any easements or rights of way affecting said parcel, (iii) all encroachments of adjoining properties or improvements onto such parcel, (iv) all encroachments of Improvements onto any adjoining property, (v) the location of all easements and other rights burdening such parcel and all encroachments of Improvements onto the areas of such easements, (vi) the location of all roadways, alleys, rights of way and the like affecting such parcel, (vii) all access ways from such parcel to public streets and (viii) such other facts and conditions affecting such parcel as are appropriate, or as may have been reasonably requested by Buyer, to be shown on such survey. Each such survey shall otherwise be in form satisfactory to counsel for Buyer. (vii) all real property transfer tax returns and other similar filings and all associated transfer tax costs required by law in connection with the transactions contemplated hereby, all duly executed and acknowledged by Seller. Seller shall also have executed such affidavits in connection with such filings as shall have been required by law or reasonably requested by Buyer. (viii) affidavit of an officer of Seller, sworn to under penalty of perjury, setting forth Seller's name, address and Federal tax identification number and stating that Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986 (the "Code"). If, on or before the Closing Date, Buyer shall not have received such affidavit, Buyer may withhold from the Purchase Price payable at Closing to Seller pursuant hereto such sums as are required to be withheld therefrom under Section 1445 of the Code. (ix) a bill of sale and all other appropriate documents and instruments assigning to Buyer good and marketable title to the Station Assets free and clear of any security interests, mortgages, liens, pledges, attachments, conditional sales contracts, claims, charges or encumbrances of any kind whatsoever; (x) the Ancillary Agreements, duly executed by Seller as appropriate; Page 10 (xi) the originals of all written consents of the respective lessors, landowners, grantors and any other persons or entities whose consents may be required to permit Buyer to assume the liabilities, contracts, leases, licenses, understandings and agreements constituting the Real Estate Contracts and the Contracts; (xii) evidence satisfactory to Buyer's counsel that no financing statements are outstanding on the Station Assets; (xiii) all files, records, logs, and program materials relating to the Station; (xiv) the opinion of counsel for Seller, dated the Closing Date, as described in Section 7.10; (xv) assignments to Buyer of all the Contracts and Real Estate Contracts in form satisfactory to Buyer; (xvi) a current estoppel certificate from the Landlord under each Real Property Contract in form satisfactory to counsel to Buyer; and (xvii) such other documents and instruments as Buyer may reasonably request to consummate the transactions contemplated hereby. (b) At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: (i) the Purchase Price; (ii) a copy of the resolutions of the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement and the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby, together with a certificate of the Secretary of Buyer dated as of Closing Date, that such resolutions were duly adopted and are in full force and effect; (iii) the certificates contemplated by Sections 8.1 and 8.2; (iv) the Ancillary Agreements, duly executed by Buyer as appropriate; (v) the opinion of counsel for Buyer, dated the Closing Date, as described in Section 8.5; and Page 11 (vi) an Agreement of Assumption of Liabilities and such other documents and instruments as Seller may reasonably request to consummate the transactions contemplated hereby. 2.3 TERMINATION. (a) Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated at any time by: (i) the mutual written consent of the parties hereto; (ii) either Buyer or Seller if the Closing does not occur before June 30, 1996, provided, however, that the party seeking termination under this Section 2.3(a)(ii) shall not have prevented the Closing from occurring; (iii) either Buyer or Seller if the Assignment Application is not granted within six (6) months from the date the notice of filing of the Form 314 is placed on Commission's public notice (through no fault of the terminating party) or is denied by the Commission by a Final Order or is at any time set by the Commission for a formal hearing; PROVIDED, HOWEVER, that in the event of termination due solely to the Commission's designation of the Assignment Application for a formal hearing, the provisions of Section 2.3(c) shall apply; (iv) Buyer, if any of the conditions set forth in Article VII shall have become incapable of fulfillment, and shall not have been waived by Buyer, or if Seller shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing; or (v) Seller, if any of the conditions set forth in Article VIII shall have become incapable of fulfillment, and shall not have been waived by Seller, or if Buyer shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing. (b) In the event of the termination of this Agreement by Buyer or Seller pursuant to this Section 2.3, written notice thereof shall promptly be given to the other party and, except as otherwise provided herein, the transactions contemplated by this Agreement shall be Page 12 terminated, without further action by any party. Nothing in this Section 2.3 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of Buyer to compel specific performance of Seller of its obligations under this Agreement. (c) The time for Commission approval provided in Section 2.3(a)(iii) notwithstanding, either party may terminate this Agreement upon written notice to the other, if, for any reason, the Assignment Application is designated for hearing by the Commission; PROVIDED, HOWEVER, that written notice of termination must be given within twenty (20) days after release of the Hearing Designation Order and that the party giving such notice is not in default and has otherwise complied with its obligations under this Agreement. Upon termination pursuant to this Section, the parties shall be released and discharged from any further obligation hereunder. (d) It is further PROVIDED, HOWEVER, that no party may terminate this Agreement if such party is in default hereunder, or if a delay in any decision or determination by the Commission respecting the Assignment Application has been caused or materially contributed to (i) by any failure of such party to furnish, file or make available to the Commission information within its control; (ii) by the willful furnishing by such party of incorrect, inaccurate or incomplete information to the Commission; and (iii) by any other action taken by such party for the purpose of delaying the Commission's decision or determination respecting the Assignment Application. Upon such termination for failure of the Commission to act, the parties shall be released and discharged from any further obligation hereunder. (e) A party shall be deemed to be in default under this Agreement only if such party has materially breached or failed to perform its obligations hereunder, and non-material breaches or failures shall not be grounds for declaring a party to be in default, postponing the Closing, or terminating this Agreement. 2.4 DEFAULT PAYMENT. In the event this Agreement is terminated due to Buyer's default or failure to close, Buyer shall pay Seller an amount (the "Default Payment") equal to all accrued interest payable in respect of that certain Amended and Restated Loan Agreement between Seller and State Street Bank and Trust Company dated as of November 3, 1989, as amended by a First Amendment dated as of August 4, 1992, a Forbearance Agreement dated as of March 13, 1995 and an Amended and Restated Forbearance Agreement dated as of October 24, 1995 (collectively, the "Loan Agreement"), for the LMA Term (as defined in Section Page 13 2.5(a) herein); PROVIDED, HOWEVER, that such amount shall not exceed the value of six months of accrued interest payable under the Loan Agreement. 2.5 OPERATION OF STATION PURSUANT TO THE LMA. Notwithstanding any provision to the contrary in this Agreement: (a) As of January 1, 1996 (the "Commencement Date"), and until the consummation of the transactions contemplated by, or the termination of, this Agreement (the "LMA Term") the business and operation of the Station shall be conducted pursuant to the terms of the LMA; (b) All LMA Liabilities shall be assumed by Buyer as of the Commencement Date. 2.6 RISK OF LOSS. The risk of any loss, damage or destruction to any of the Station Assets from fire or other casualty or cause shall be borne by Seller at all times prior to the Closing Date hereunder. Upon the occurrence of any loss or damage to any of the Station Assets as a result of fire, casualty, accident or other causes prior to the Closing Date, Seller shall notify Buyer of same in writing immediately stating with particularity the extent of loss or damage incurred, the cause thereof if known and the extent to which restoration, replacement and repair of the Station Assets lost or destroyed will be reimbursed under any insurance policy with respect thereto. In the event the loss exceeds $50,000 and the Station Assets cannot be substantially repaired or restored within forty-five (45) days after such loss, Buyer shall have the option, exercisable within ten (10) days after receipt of written notice from Seller, to: (i) terminate this Agreement; (ii) postpone the Closing until such time as the property has been completely repaired, replaced or restored to the satisfaction of Buyer, unless the same cannot be reasonably effected within thirty (30) days of notification; or (iii) elect to consummate the Closing and accept the property in its damaged condition, in which event Seller shall assign to Buyer all rights under any insurance claim covering the loss and pay over to Buyer any proceeds under any such insurance policy thereto received by Seller with respect thereto. 2.7 INTERRUPTION OF BROADCAST TRANSMISSIONS. Notwithstanding any other provision hereof, if prior to the Closing any event occurs which prevents the broadcast transmission by the Station with substantially full licensed power and antenna height as described in the applicable FCC Licenses and in the manner it has heretofore been operating for periods of time in excess of six (6) hours, the Seller will give prompt written notice thereof to Buyer. If such facilities are not restored so that Page 14 operation is resumed with substantially full licensed power within three (3) days of such event, or, in the case of more than one event, the aggregate number of days preceding such restorations from all such events is more than six (6) days, or if the Station is off the air more than three (3) times for a period in each case exceeding six (6) hours, Buyer shall have the right, by giving written notice to Seller of its election to do so, to terminate this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 DUE ORGANIZATION. Seller is a limited partnership duly organized and in good standing under the laws of the State of Delaware, and is duly qualified to do business in the State of California. The Seller's general partner is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business in the State of California. Seller has the power and authority to own and operate the Station and the Station Assets. 3.2 AUTHORITY; NO CONFLICT. The execution and delivery of this Agreement and the Ancillary Agreements have been duly and validly authorized and approved by all necessary partnership action by Seller. Neither such execution, delivery or performance nor compliance by Seller with the terms and provisions hereof, or with respect to the Ancillary Agreements, will (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Partnership Agreement or Certificate of Limited Partnership of Seller,(b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Seller is subject, or (c) any material agreement, lease or contract, written or oral, to which Seller is subject. This Agreement shall constitute the valid and binding obligation of Seller with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 3.3 GOVERNMENT AUTHORIZATIONS. Section 1.1(a) of the Disclosure Schedule contains a true and complete list of all the Licenses, which Licenses are sufficient for the lawful conduct of the business and operation of the Station in the manner and to the full extent they are currently conducted. Seller is the authorized legal holder of the Licenses, none of which is subject to any restriction Page 15 or condition which would limit in any material respect the full operation of the Station as now operated. There are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened as of the date hereof before the Commission or any other governmental authority relating to the business or operations of the Station, other than applications, complaints or proceedings which generally affect the broadcasting industry as a whole, and other than reports and forms filed in the ordinary course of the Station's business. Seller has delivered to Buyer true and complete copies of the Licenses, including any and all additions, amendments and other modifications thereto. The Licenses are in good standing, are in full force and effect and are unimpaired by any act or omission of Seller or its officers, directors or employees; and the operation of the Station is in accordance with the Licenses and the underlying construction permits. No proceedings are pending or, to the knowledge of Seller, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the Licenses, the denial of any pending applications, the issuance of any cease and desist order, the imposition of any administrative actions by the Commission with respect to the Licenses or which may affect Buyer's ability to continue to operate the Station as it is currently operated. Seller has taken no action which, to its knowledge, could lead to revocation or non- renewal of the Licenses, nor omitted to take any action which, by reason of its omission, could lead to revocation of the Licenses. All material reports, forms and statements required to be filed with the Commission with respect to the Station since the grant of the last renewal of the Licenses have been filed and are complete and accurate. To the knowledge of Seller, there are no facts which, under the Communications Act of 1934, as amended, or the existing rules, regulations, requirements, policies and orders of the Commission, would disqualify Seller as assignor, and Buyer as assignee, in connection with the Assignment Application. 3.4 COMPLIANCE WITH REGULATIONS. The operation of the Station is in compliance in all material respects with (i) all applicable engineering standards required to be met under Commission rules and (ii) all other applicable rules, regulations, requirements, policies and orders of the Commission and all other applicable governmental authorities, including, but not limited to, ANSI Radiation Standards, to the extent required to be met under applicable Commission rules and regulations; and there are no existing claims known to Seller to the contrary. 3.5 TAXES. Seller has timely filed all federal, state, local and foreign income, franchise, sales, use, property, excise, payroll and other tax returns required by law and has paid in full all taxes, estimated taxes, Page 16 interest, assessments, and penalties due and payable as shown thereon. All returns and forms which have been filed have been true and correct in all material respects and no tax or other payment in a material amount other than as shown on such returns and forms are required to be paid or have been paid by Seller. There are no present disputes as to taxes of any nature payable by Seller which in any event could materially adversely affect the Station Assets or operation of the Station. Each of the parcels included in the Owned Real Property is assessed for real estate purposes as a wholly independent tax lot, separate from any adjoining load or improvements not constituting a part of such parcel. 3.6 PERSONAL PROPERTY. Section 1.1(b) of the Disclosure Schedule contains a true and complete list of all the Personal Property. Except for those assets designated on Section 1.1(b) of the Disclosure Schedule as being subject to lease agreements, Seller owns and has, and will have on the Closing Date, good and marketable title to such Personal Property, and none of such Personal Property on the Closing Date will be subject to any security interest, mortgage, pledge, conditional sales agreement or other lien or encumbrance. All items of Personal Property are in all material respects in good operating condition, ordinary wear and tear excepted, and are available for immediate use in the conduct of the business and operation of the Station. The technical equipment, including, without limitation, all transmitters and studio equipment, constituting part of the Personal Property, has been maintained in accordance with industry practice and is in good operating condition, ordinary wear and tear excepted, (except as noted in Section 1.1(b) of the Disclosure Schedule) and complies in all material respects with all applicable rules and regulations of the Commission and the terms of the Licenses. The Personal Property includes all such items and equipment necessary to conduct in all material respects the business and operations of the Station as now conducted. 3.7 REAL PROPERTY. (a) As of the date hereof, Seller does not own any fee title to real property as described on Section 1.1(d) of the Disclosure Schedule (hereinafter the "Owned Real Property"). As used in this Agreement, "Title Defects" shall mean and include any mortgage, deed of trust, lien, pledge, security interest, claim, lease, charge, option, right of first refusal, easement, restrictive covenant, encroachment or other survey defect, encumbrance or other restriction or limitation whatsoever. (b) Section 1.1(d) of the Disclosure Schedule contains a true and complete list and summary of Page 17 all the Real Estate Contracts. Seller holds the leasehold interest and or the grantee interest, as applicable, under each Real Property Contract free and clear of all Title Defects. The Real Estate Contracts constitute valid and binding obligations of Seller and, to the best of Seller's knowledge, of all other persons purported to be parties thereto, and are in full force and effect as of the date hereof, and will on the Closing Date constitute valid and binding obligations of Buyer and, to the best of Seller's knowledge, of all other persons purported to be parties thereto. As of the date hereof, Seller is not in default under any of the Real Estate Contracts and has not received or given written notice of any default thereunder from or to any of the other parties thereto and will not have received any such notice at or prior to the Closing Date and Seller has no knowledge of any present disputes or claims with respect to offsets or defenses by either landlord or tenant against the other under any such Real Estate Contract. Seller shall use best efforts to obtain valid and binding third-party consents from all required third parties to the Real Estate Contracts to be conveyed and assigned to Buyer as part of the Station Assets. Subject to any required third-party consents, Seller will have full legal power and authority to assign its rights under the Real Estate Contracts of Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment shall not affect the validity, enforceability and continuity of any of the Real Estate Contracts. To the best of Seller's knowledge, Seller is in compliance with all its obligations under the Real Estate Contracts. (c) Entire Premises. All of the land, buildings, structures and other improvements used by Seller in the conduct of the Business are included in the Real Estate Contracts. (d) No Options. Seller does not own or hold, and is not obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell or dispose of the Real Property or any portion thereof or interest therein. (e) Condition and Operation of Improvements.All components of all buildings, structures and other improvements included within the Real Property (the "Improvements") are free of structural defects and are in good working order and repair. All water, gas, electrical, steam, compressed air, telecommunication, sanitary and storm sewage lines and systems and other similar systems serving the Real Property are installed and operating and are sufficient to enable the Real Property to continue to be used and operated in the manner currently being used and operated, and any so-called hook-up fees or Page 18 other associated charges have been fully paid, ordinary wear and tear excepted. (f) Real Property Permits and Insurance. All certificates of occupancy, permits, licenses, franchises, approvals and authorizations (collectively, "Real Property Permits") of all governmental authorities having jurisdiction over the Real Property, required or appropriate to have been issued to Seller to enable the Real Property to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are, as of the date hereof, in full force and effect. (g) Condemnation. Seller has not received notice and has no knowledge of any pending, threatened or contemplated condemnation proceeding affecting the Real Property or any part thereof or of any sale or other disposition of the Owned Real Property or any part thereof in lieu of condemnation. (h) Casualty. No portion of the Real Property has suffered any material damage by fire or other casualty which has not heretofore been completely repaired and restored to its original condition. No portion of the Real Property is located in a special flood hazard area as designated by Federal governmental authorities. (i) Encroachments. There are no encroachments or other facts or conditions affecting any parcel of Real Property which would, individually or in the aggregate, (i) interfere in any material respect with, or materially increase the cost of, the use, occupancy or operation thereof as currently used, occupied and operated or as intended to be used, occupied and operated, (ii) materially reduce the fair market value thereof below the fair market value such parcel would have had but for such encroachment or other fact or condition. To the best of Seller's knowledge, no portion of any Improvement encroaches upon any property not included within the Real Property or upon the area of any easement affecting the Real Property. 3.8 CONSENTS. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Seller of this Agreement or the Ancillary Agreements to which it is a party, other than approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 3.8 of the Disclosure Schedule, no consent of any other party (including, without limitation, any party to any Real Estate Contract or Contract) is required for the execution, Page 19 delivery and performance by Seller of this Agreement or the Ancillary Agreements to which it is a party. 3.9 CONTRACTS. Section 1.1(f) of the Disclosure Schedule contains a true and complete list of all Contracts, and Section 1.1(g) of the Disclosure Schedule contains a true and complete list of all Broadcast Agreements and Trade Agreements. Seller has delivered to Buyer true and complete copies of all written Contracts, Broadcast Agreements and Trade agreements in the possession of Seller, including any and all amendments and other modifications to same. All such Contracts, Broadcast Agreements and Trade Agreements are valid, binding and enforceable by Seller in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. Seller has complied in all material respects with all such Contracts, Broadcast Agreements and Trade Agreements, and Seller is not in default beyond any applicable grace periods under any of same, and no other contracting party is in material default under any of same. Subject to obtaining any required consents, Seller has full legal power and authority to assign its respective rights under such Contracts, Broadcast Agreements and Trade Agreements to Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment will not materially affect the validity, enforceability and continuity of any such Contracts, Broadcast Agreements and Trade Agreements. 3.10 ENVIRONMENTAL. Seller has not unlawfully disposed of any Hazardous Waste in a manner which has caused, or could cause, Buyer to incur a material liability under applicable law in connection therewith; and Seller warrants that the technical equipment included in the Personal Property does not contain any Hazardous Waste, including any Polychlorinated Biphenyls ("PCBs") that are required by law to be removed, or if any equipment does contain Hazardous Waste, including any PCBs, that such equipment is stored and maintained in compliance with applicable law. Seller has complied in all material respects with all federal, state and local environmental laws, rules and regulations applicable to the Station and its operations, including but not limited to the Commission's guidelines regarding RF radiation. No Hazardous Waste has been disposed of by Seller, and to the best of Seller's knowledge, no Hazardous Waste has been disposed of by any other person on the property subject to Real Estate Contracts. As used herein, the term "Hazardous Waste" shall mean all materials regulated by any federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata). If Seller Page 20 learns between the date of this Agreement and the Closing Date that Seller is in breach of the representation and warranty set forth in this Section 3.10, Seller shall begin remedial action promptly and shall use reasonable best efforts to complete such remedial action to the satisfaction of Buyer before the Closing Date. 3.11 INTELLECTUAL PROPERTY. Section 1.1(e) of the Disclosure Schedule is a true and complete list of all the Intellectual Property. The Intellectual Property has been duly registered in, filed with, or issued by the appropriate offices within all jurisdictions where such registration, filing or issuance is necessary to protect such Intellectual Property from infringement, including, without limitation, the United States Copyright Office and the United States Patent and Trademark Office. Seller has not granted any license or other rights with respect to the Intellectual Property. Seller has not received any written notice of any infringement or unlawful use of the Intellectual Property and Seller has not violated or infringed any patent, trademark, trade secret or copyright held by others or any license, authorization or permit held by it. 3.12 FINANCIAL STATEMENTS. Section 3.12 of the Disclosure Schedule contains complete unaudited copies of the statements of income, and the related balance sheets for Seller applicable to the Station for the period after Seller acquired the Station (the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles and in accordance with the policies and procedures of the Seller applicable thereto, consistently applied. The Financial Statements present fairly the financial condition and results of operations of the Station for the periods indicated. 3.13 PERSONNEL INFORMATION; LABOR CONTRACTS. (a) Section 3.13 of the Disclosure Schedule contains a true and complete list of all persons employed at the Station, including the date of hire, a description of material compensation arrangements (other than employee benefit plans set forth in Section 3.14 of the Disclosure Schedule) and a list of other terms of any and all material agreements affecting such persons. (b) Seller is not a party to any contract with any labor organization, nor has Seller agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any of Seller's employees. Seller has no knowledge of any organizational effort currently being made or threatened by or on behalf of any Page 21 labor union with respect to employees of the Station. During the past two years, Seller has not experienced any strikes, work stoppages, grievance proceedings, claims of unfair labor practices filed, or other significant labor difficulties of any nature. (c) Seller has complied in all material respects with all laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, equal employment opportunity and the payment and withholding of taxes. 3.14 EMPLOYEE BENEFIT PLANS. Section 3.14 of the Disclosure Schedule contains a true and complete list and summary, as of the date of this Agreement, of all employee benefit plans (as that term is defined in Section 3(3) of ERISA) applicable to the employees of Seller. Seller maintains no other employee benefit plan. Each of Seller's employee benefit plans has been operated and administered in all material respects in accordance with its terms and applicable law, including, without limitation, ERISA and the Internal Revenue Code. 3.15 LITIGATION. Except as set forth in Section 3.15 of the Disclosure Schedule, Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree, and there is no litigation, proceeding or investigation pending or, to the best of Seller's knowledge, threatened against Seller or the Station in any federal, state or local court, or before any administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Licenses), or before any other tribunal duly authorized to resolve disputes, which would reasonably be expected to have any material adverse effect upon the business, property, assets or condition (financial or otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. In particular, but without limiting the generality of the foregoing, except as set forth in Section 3.15 of the Disclosure Schedule, there are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened before the Commission or any other governmental organization with respect to the business or operation of the Station, other than applications, complaints or proceedings which affect the broadcast industry generally. 3.16 COMPLIANCE WITH LAWS. Seller has not received any notice asserting any non-compliance with any Page 22 applicable statute, rule, regulation, requirement, policy or order (federal, state or local) whether or not related to the business or operation of the Station or the Real Property. Seller is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or to any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Seller is in compliance in all material respects with all laws, regulations and governmental orders whether or not applicable to the conduct of the business and operation of the Station and any other business or operations conducted by Seller. The Real Property is in full compliance with all applicable building, zoning, subdivision, environmental and other land use and similar laws, codes, ordinances, rules, regulations and orders of governmental authorities (collectively, "Real Property Laws"), and Seller has not received any notice of violation or claimed violation of any Real Property Law. Seller has no knowledge of any pending change in any Real Property Law which would have a material adverse effect upon the ownership or use of the Real Property. 3.17 INSURANCE. Seller has in full force and effect insurance on all of the Real Property, Personal Property, and all other Station Assets pursuant to insurance policies, a true and complete copy of which is contained in Section 3.17 of the Disclosure Schedule. Seller shall continue to maintain such insurance in full force and effect up to the Closing Date or shall have obtained prior to the Closing Date other insurance policies with limits and coverage comparable to the current policies after prior notice to, and upon written consent of the Buyer, which consent shall not be unreasonably withheld. 3.18 UNDISCLOSED LIABILITIES. Except as to, and to the extent of, the amounts specifically reflected or reserved against in Seller's balance sheets for the period ending December 31, 1994 (the "Balance Sheet Date"), and except for liabilities and obligations incurred since the Balance Sheet Date in the ordinary and usual course of business, Seller has no material liabilities or obligations of any nature whether accrued, absolute, contingent or otherwise and whether due or to become due, and, to the best of Seller's knowledge, there is no basis for the assertion against Seller of any such liability or obligations. No representation or warranty made by Seller in this Agreement, and no statement made in any exhibit or schedule hereto or any certificate or document delivered by Seller pursuant to the terms of this Agreement, contain or will contain any untrue statement of a material fact or omit or will omit to state any material fact necessary to make such representation or warranty or any such statement not misleading. Page 23 3.19 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The instruments to be executed by Seller and delivered to Buyer at Closing, conveying the Station Assets, to Buyer, will be in a form sufficient to transfer good and marketable title to the Station Assets, free and clear of all liabilities, obligations and encumbrances, except as provided herein. 3.20 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Section 3.20 of the Disclosure Schedule, between the Balance Sheet Date and the date of this Agreement there has not been: (a) Any material adverse change in the working capital, financial condition, business, results of operations, assets or liabilities of Seller; (b) Any change in the manner in which Seller conducts its business and operations other than changes in the ordinary and usual course of business consistent with past practice; (c) Any amendment to the Certificate of Incorporation or Bylaws of Seller; (d) Any contract or commitment, to which Seller is a party, entered into, modified or terminated, except in the ordinary and usual course of business; (e) Any creation or assumption of any mortgage, pledge or other lien or encumbrance upon any of the Station Assets except in the ordinary and usual course of business; (f) Any sale, assignment, lease, transfer, or other disposition of any of the Station Assets, except in the ordinary and usual course of business; (g) The incurring of any liabilities or obligations, except items incurred in the ordinary and usual course of business; (h) The write-off or determination to write off as uncollectible any accounts receivable or portion thereof, except for write-offs in the ordinary course of business consistent with past practice at a rate no greater than during the twelve months prior to the Balance Sheet Date; (i) The cancellation of any debts or claims, or waiver of any rights, having an aggregate value in excess of $5,000; (j) The disposition, lapse or termination of any Intellectual Property; Page 24 (k) The increase or promise to increase the rate of commissions, fixed salary or wages, draw, bonus or other compensation payable to any employee of Seller, except in the ordinary and usual course of business consistent with past practice; (l) The issuance of, or authorization to issue, any additional shares of capital stock of Seller, or rights, warrants or options to acquire, any such shares, or convertible securities; (m) Any default under any contract or lease to which Seller is a party; or (n) Any change in any method of accounting or accounting practice used by Seller. 3.21 INSOLVENCY PROCEEDINGS. No insolvency proceedings of any character including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting Seller or the Station Assets are pending or, to Seller's knowledge, threatened, and Seller has made no assignment for the benefit of creditors, nor taken any action with a view to, or which would constitute the basis for, the institution of any such insolvency proceedings. 3.22 MATERIAL ADVERSE CHANGE. (a) Between November 30, 1995 and the date hereof there has been no change in the manner in which Seller conducts its business with respect to working capital and there has not been a material adverse change in the assets of Seller other than changes in the ordinary and usual course of business consistent with past practice. (b) Between December 22, 1995 and the date hereof there has not been a material adverse change in the liabilities of Seller other than changes in the ordinary and usual course of business consistent with past practice. 3.23 INVESTMENT INTENT OF SELLER. Seller acknowledges that it understands that the Osborn Shares to be purchased by it hereunder will not be registered under the Securities Act of 1933 (the "Securities Act") in reliance upon the exemption afforded by Section 4(2) thereof for transactions by an issuer not involving any public offering, and will not be registered or qualified under any applicable state securities laws. Seller represents that (i) it is acquiring the Osborn Shares for investment only and without any view toward distribution thereof, and it will not sell or otherwise dispose of such Osborn Shares except in compliance with the registration requirements or exemption provisions of the Securities Act and any applicable state securities laws, (ii) its economic Page 25 circumstances are such that it is able to bear all risks of the investment in the Osborn Shares for an indefinite period of time, including the risk of a complete loss of its investment in the Osborn Shares, (iii) it has knowledge and experience in financial and business matters sufficient to evaluate the merits and risks of investment in the Osborn Shares and has had access to, or has been furnished with, all such information as it has considered necessary, (iv) it has consulted with its own counsel and tax advisor, to the extent deemed necessary by it, as to all legal and taxation matters covered by this Agreement and has not relied upon Buyer for any explanation of the application of the various United States or state securities laws or tax laws with regard to its acquisition of the Osborn Shares and (v) in making any subsequent offering or sale of the securities the undersigned will be acting only for itself and not as part of a sale or planned distribution that would be in violation of the Securities Act. Seller further acknowledges and represents that it has made its own independent investigation of Osborn and the business conducted by Osborn. Seller is an "accredited investor" as that term is defined in Regulation D promulgated under the Securities Act. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 DUE INCORPORATION. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and as of the Closing Date shall be duly qualified to do business in and be in good standing in the State of California. 4.2 AUTHORITY; NO CONFLICT. The execution and delivery of this Agreement and the Ancillary Agreements have been duly and validly authorized and approved by the board of directors of Buyer, and Buyer has the corporate power and authority to execute, deliver and perform this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery, performance hereof, and compliance by Buyer with the terms and provisions hereof, or with respect to the Ancillary Agreements, thereof, will not (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Buyer, (b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Buyer is subject, or Page 26 (c) any material agreement, lease or contract, written or oral, to which Buyer is subject. This Agreement will constitute the valid and binding obligation of Buyer with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 4.3 CONSENTS. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Buyer of this Agreement or the Ancillary Agreements to which it is a party, other than the approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 4.3 of the Disclosure Schedule, no consent of any other party is required for the execution, delivery and performance by Buyer of this Agreement, the Ancillary Agreements to which it is a party or any of the agreements or actions contemplated thereby. 4.4 LITIGATION. There is no litigation, proceeding or investigation pending or, to the best of Buyer's knowledge, threatened against Buyer in any federal, state or local court, or before any administrative agency or arbitrator, or before any other tribunal duly authorized to resolve disputes, that would reasonably be expected to have any material adverse effect upon the ability of Buyer to perform its obligations hereunder, or that seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. 4.5 COMPLIANCE WITH LAWS. Buyer is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or of any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Buyer is not in violation of any law, regulation or governmental order, the violation of which would have a material adverse effect on Buyer or its ability to perform its obligations pursuant to this Agreement. 4.6 QUALIFICATION. To the best of Buyer's knowledge, Buyer is legally, technically and financially qualified to be the assignee of the Licenses and the other Station Assets, and, prior to the Closing Date, Buyer will exercise its best efforts to refrain from doing any act which would disqualify Buyer from being the assignee of the Licenses and the other Station Assets. 4.7 STOCK. The Osborn Shares to be delivered by Buyer on the Closing Date consists of shares of Common Stock which have been duly authorized and validly issued Page 27 and are fully paid and non-assessable. Said shares are not subject to preemptive rights of any shareholder and shall be issued or transferred to Seller free of adverse claim. ARTICLE V COVENANTS OF SELLER Between the date of this Agreement and the Closing Date, Seller shall have complete control of the Station and its operations, and Seller covenants as follows with respect to such period: 5.1 CONTINUED OPERATION OF STATION. Subject to the LMA, Seller shall continue to operate the Station under the terms of the Licenses in the manner in which the Station has been operated heretofore, in the usual and ordinary course of business, in conformity with all material applicable laws, ordinances, regulations, rules and orders, and in a manner so as to preserve and foster the goodwill and business relationships of the Station and Seller, including, without limitation, relationships with advertisers, suppliers, customers, and employees. Seller shall file with the Commission and any other applicable governmental authority all applications and other documents required to be filed in connection with the continued operation of the Station. 5.2 FINANCIAL OBLIGATIONS. Subject to the LMA, Seller shall continue to conduct the financial operations of the Station, including its credit and collection policies, in the ordinary course of business with the same effort, to the same extent, and in the same manner, as in the prior conduct of the business of the Station; and shall continue to pay and satisfy all expenses, liabilities and obligations arising in the ordinary course of business in accordance with past accounting practices. Seller shall not enter into or amend any contracts or commitments involving expenditures by Seller in an aggregate amount in excess of $5,000 without the prior written consent of Buyer. 5.3 REASONABLE ACCESS. Seller shall provide Buyer, and representatives of Buyer, with reasonable access during normal business hours to the Station and shall furnish such additional information concerning the Station as Buyer from time to time may reasonably request. 5.4 MAINTENANCE OF ASSETS. Seller shall maintain the Real Property, the Personal Property and all other tangible assets in their present good operating condition, repair and order, reasonable wear and tear in ordinary usage excepted. Seller shall not waive or cancel any Page 28 claims or rights of substantial value, transfer or otherwise dispose of the Real Property, any Personal Property, or permit to lapse or dispose of any right to the use of any Intellectual Property. 5.5 NOTIFICATION OF DEVELOPMENTS. Seller shall notify Buyer of any problems or developments with respect to the Station Assets or operation of the Station; and provide Buyer with prompt written notice of any change in any of the information contained in the representations and warranties made herein or in the Disclosure Schedule or any other documents delivered in connection with this Agreement. 5.6 PAYMENT OF TAXES. Seller shall pay or cause to be paid all property and all other taxes relating to the Station, the Real Property and the assets and employees of the Station required to be paid to city, county, state, federal and other governmental units through the Closing Date. 5.7 THIRD PARTY CONSENTS. Seller shall use commercially reasonable efforts to obtain from any third party waivers, permits, licenses, approvals, authorizations, qualifications, orders and consents necessary for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, including, without limitation, approval from the Commission of the Assignment Application contemplated hereby. 5.8 ENCUMBRANCES. Seller shall not suffer or permit the creation of any mortgage, conditional sales agreement, security interest, lease, lien, hypothecation, deed of trust or pledge, encumbrance, restriction, liability, charge, or imperfection of title with respect to the Station Assets, including the Real Property. 5.9 ASSIGNMENT OF ASSETS. Seller shall not sell, assign, lease or otherwise transfer or dispose of any Station Assets, whether now owned or hereafter acquired, except for retirements in the normal and usual course of business or in connection with the acquisition of similar property or assets, as provided for herein. 5.10 COMMISSION LICENSES AND AUTHORIZATIONS. Seller shall not by any act or omission surrender, modify adversely, forfeit or fail to renew under regular terms the Licenses, cause the Commission or any other governmental authority to institute any proceeding for the revocation, suspension or modification of any such License, or fail to prosecute with due diligence any pending applications with respect to the Licenses at the Commission or any other applicable governmental authority. Page 29 5.11 TECHNICAL EQUIPMENT. Seller shall not fail to repair, maintain or replace the technical equipment transferred hereunder in accordance with the normal standards of maintenance applicable in the broadcast industry. 5.12 COMPENSATION INCREASES. Seller shall not permit any increase in the rate of commissions, fixed salary or wages, draw or other compensation payable to any employees of Seller. 5.13 SALE OF BROADCAST TIME. Seller shall not enter into, extend or renew any Broadcast Agreement not consistent with the usual and ordinary course of business, provided, however, that Seller shall not enter into, extend or renew any Broadcast Agreement exceeding $10,000 in amount unless such Broadcast Agreement is terminable on 30 days' notice. Seller shall not enter into any Trade Agreement without the prior written consent of Buyer. 5.14 INSURANCE. Seller shall maintain at all times between the date hereof and the Closing Date, those insurance policies listed in Section 3.17 of the Disclosure Schedule. 5.15 NEGOTIATIONS WITH THIRD PARTIES. Seller shall not, before Closing or the termination of this Agreement, enter into discussions with respect to any sale or offer of the Station, any Station Assets or any stock of Seller to any third party, nor shall Seller offer the Station, any Station Assets or any stock of Seller to any third party. ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER Buyer and Seller covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 6.1 ASSIGNMENT APPLICATION. As promptly as practicable after the date of this Agreement, and in no event later than ten (10) days after execution of this Agreement, Seller and Buyer shall join in and file an application on FCC Form 314 with the Commission requesting its consent to the assignment of the Licenses from Seller to Buyer (the "Assignment Application"). Seller and Buyer agree to prosecute the Assignment Application with all reasonable diligence and to use their best efforts to obtain prompt Commission grant of the Assignment Application filed at the Commission. Page 30 6.2 PERFORMANCE. Buyer and Seller shall perform all acts required of them under this Agreement and refrain from taking or omitting to take any action that would violate their representations and warranties hereunder or render same inaccurate as of the Closing Date. 6.3 CONDITIONS. If any event should occur, either within or without the control of any party hereto, which would prevent fulfillment of the conditions placed upon the obligations of any party hereto to consummate the transactions contemplated by this Agreement, the parties hereto shall use their best efforts to cure the event as expeditiously as possible. 6.4 CONFIDENTIALITY. Buyer and Seller shall each keep confidential all information they obtain with respect to any other party hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions contemplated by this Agreement. If the transactions contemplated hereby are not consummated for any reason, each party hereto shall return to the party so providing, without retaining a copy thereof, any schedules, documents or other written information obtained from the party so providing such information in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to keep confidential or return any information which (i) is known or available through other lawful sources, (ii) is or becomes publicly known through no fault of the receiving party or its agents, (iii) is required to be disclosed pursuant to an order or request of a judicial or governmental authority (provided the disclosing party is given reasonable prior notice), or (iv) is developed by the receiving party independently of the disclosure by the disclosing party. 6.5 COOPERATION. Buyer and Seller shall cooperate fully and with each other in taking any actions to obtain the required consent of any governmental instrumentality or any third party necessary or helpful to accomplish the transactions contemplated by this Agreement; PROVIDED, HOWEVER, that no party shall be required to take any action which would have a material adverse effect upon it or any entity affiliated with it. 6.6 ENVIRONMENTAL REPORTS. If desired by Buyer, Seller and Buyer agree to arrange for the preparation of, at the expense of Buyer, appropriate environmental reports for the real property subject to Real Estate Contracts. Such environmental reports shall conclude that: (i) the real property subject to Real Estate Contracts is not in any way contaminated with any Hazardous Waste requiring remediation, clean-up or removal under applicable laws Page 31 relating to Hazardous Waste; (ii) the real property subject to Real Estate Contracts is not subject to any federal, state or local "superfund" or "Act 307" lien, proceeding, claim, liability or action, or the threat or likelihood thereof, for the clean-up, removal or remediation of any Hazardous Waste from same; (iii) there is no asbestos located in the buildings situated on the real property subject to Real Estate Contracts requiring remediation, encapsulation or removal under applicable laws relating to asbestos clean-up; and (iv) there are no underground storage tanks located at the real property subject to Real Estate Contracts requiring remediation, clean-up or removal under applicable laws relating to Hazardous Waste, and if any have previously been removed, such removal was done in accordance with all applicable laws, rules and regulations. The environmental review to be conducted shall initially be a Phase I review. Any further investigations recommended in the environmental reports obtained pursuant to this Section 6.6 shall be conducted with the cost to be shared equally by Seller and Buyer. 6.7 CONSENTS TO ASSIGNMENT. Except for the Real Estate Contracts, to the extent that any Contract, Broadcast Agreement, Trade Agreement or other contract identified in the Disclosure Schedule that is to be assigned under this Agreement is not capable of being sold, assigned, transferred, delivered or subleased without the waiver or consent of any third person withholding same (including a government or governmental unit), or if such sale, assignment, transfer, delivery or sublease or attempted sale, transfer, delivery or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant hereto shall not constitute a sale, assignment, transfer, delivery or sublease or an attempted sale, assignment, transfer, delivery or sublease thereof. Except for any consents required pursuant to a Real Estate Contract, in those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Closing Date to the transfer and assignment to Buyer of such contracts, Buyer may in its sole discretion elect to have this Agreement and any assignments executed pursuant hereto, to the extent permitted by law, constitute an equitable assignment by Seller to Buyer of all of Seller's rights, benefits, title and interest in and to such contracts, and where necessary or appropriate, Buyer shall be deemed to be Seller's agent for the purpose of completing, fulfilling and discharging all of Seller's rights and liabilities arising after the Closing Date under such contracts. Seller shall use its reasonable best efforts to provide Buyer with the benefits of such contracts (including, without limitation, permitting Buyer to enforce any rights of Seller arising under such contracts), and Buyer shall, to the extent Buyer is Page 32 provided with the benefits of such contracts, assume, perform and in due course pay and discharge all debts, obligations and liabilities of Seller under such contracts. 6.8 BULK SALES LAWS. Buyer hereby waives compliance by Seller with the provisions of the "bulk sales" or similar laws of any state. Seller agrees to indemnify Buyer and hold it harmless against any and all claims, losses, damages, liabilities, costs and expenses incurred by Buyer or any affiliate as a result of any failure to comply with any "bulk sales" or similar laws. 6.9 EMPLOYEE MATTERS. (a) While under no obligation to hire any employees of the Station, Buyer shall make reasonable efforts to offer employment at will to certain employees of the Station. Upon review of a full list of employees and salaries, Buyer shall notify Seller of (i) those employees to whom it will so offer employment as soon as practicable and (ii) those employees that Buyer intends to discharge not less than thirty (30) days prior to the Closing Date. Seller shall be responsible for all salary and benefits of the employees of the Station who do not accept, or are not offered, employment with Buyer. Seller shall be responsible for all salary and other compensation due to be paid for work for Seller for employees of the Station who become employees of Buyer and Buyer shall be responsible for the salary and other compensation due to be paid for work for Buyer on or after the date of hire by Buyer for such employees. Seller shall be responsible for severance payments which may be applicable under its employee benefit plans to any employees not so offered employment and hired by Buyer. Except as expressly provided in paragraph (b) below, Buyer shall assume no liability under an employment agreement or severance agreement entered into or maintained by Seller with respect to current or former employees of the Station. Except as otherwise required by applicable law, employees of the Station who become employees of Buyer shall cease to participate in the employees benefit plans of Seller as of the date of hire by Buyer and Buyer shall have no liability with respect thereto. (b) Notwithstanding the foregoing, in the event Buyer terminates the employment of Rita Walls or Laura Eaton during the LMA Term, Buyer shall be responsible for the severance payments due to each such person under the terms of the employment agreements, dated August 14, 1995, between Seller and Rita Walls and Seller and Laura Eaton, respectively; PROVIDED, HOWEVER, that the Cash Payment shall be reduced by the amount of any such payments made by Buyer. In the event Buyer terminates the employment of the persons listed in Section 3.13 of the Page 33 Disclosure Schedule during the LMA Term, other than Ms. Walls and Ms. Eaton, Buyer shall be responsible for the severance payments due to each such person under the terms of the employment agreements entered into between Seller and each such employee, attached to Section 3.13 of the Disclosure Schedule, and no adjustment to the Cash Payment shall be made. ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER The performance of the obligations of the Buyer hereunder is subject, at the election of the Buyer, to the following conditions precedent: 7.1 COMMISSION APPROVALS. Notwithstanding anything herein to the contrary, the consummation of this Agreement is conditioned upon (a) a grant by the Commission of the Assignment Application, and (b) compliance by the parties with the conditions, if any, imposed by the Commission in connection with the grant of the Assignment Application (provided that neither party shall be required to accept or comply with any condition which would be unreasonably burdensome or which would have a materially adverse effect upon it). All required governmental filings shall have been made, and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted and become Final Orders. The Licenses shall be in unconditional full force and effect, shall be valid for the balance of the current License term applicable generally to radio stations licensed to communities located in the State of California, and shall be unimpaired by any acts or omissions of Seller or Seller's employees or agents. 7.2 ASSETS OF STATION. (a) The transmitter building, FM tower, transmitter equipment and telephone equipment shall have been transferred to Seller by Michelle Leasing II and Meadow Lakes Tower Company, Inc. and including, without limitation, that property leased by Meadow Lakes Tower Company, Inc., as lessor, to Seller, as lessee, pursuant to that certain lease dated April 1, 1992 (the "Meadow Lakes Property") and Michelle Leasing II, and all terms, conditions and covenants to be complied with or performed by Seller and Meadow Lakes Tower Company, Inc. and Michelle Leasing II in respect thereof on or before the Closing Date shall have been duly complied with and performed in all material respects, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. Page 34 (b) A special warranty deed (or its equivalent in the State of California), in proper statutory form for recording, conveying each parcel of Owned Real Property to Buyer; (c) Buyer and Seller shall obtain, at Buyer's expense, an owner's extended coverage policy of title insurance with respect to each parcel of Real Property, in each case issued on the date of Closing by the Title Company. Each such title insurance policy shall be in an amount designated by Buyer and shall insure Buyer's ownership of fee title with respect to the Owned Real Property without any of the Schedule B standard pre-printed exceptions (other than taxes not yet due and payable) and free and clear of title defects and other exceptions to or exclusions from coverage other than the Permitted Owned Real Property Exceptions. (d) Buyer and Seller shall obtain, at Buyer's expense, a survey of each parcel of Owned Real Property certified to Buyer or its permitted assigns and the Title Company. The certification shall be by a Registered Land Surveyor and shall be made in accordance with the minimum technical standards of land surveying in California. The survey shall be prepared in accordance with the Minimum Detail Standards for Land Title Survey of 1992 of the American Title Association and American Congress on Surveying and Mapping. Each such survey shall show (i) the courses and distances of all boundary lines of such parcel (including, appurtenant easements), (ii) the location of all Improvements situated on or above such parcel and on or above any easements or rights of way affecting said parcel, (iii) all encroachments of adjoining properties or improvements onto such parcel, (iv) all encroachments of Improvements onto any adjoining property, (v) the location of all easements and other rights burdening such parcel and all encroachments of Improvements onto the areas of such easements, (vi) the location of all roadways, alleys, rights of way and the like affecting such parcel, (vii) all access ways from such parcel to public streets and (viii) such other facts and conditions affecting such parcel as are appropriate, or as may have been reasonably requested by Buyer, to be shown on such survey. Each such survey shall otherwise be in form satisfactory to counsel for Buyer. The survey shall be delivered to Buyer at least thirty (30) days prior to the Closing Date. Buyer shall within fourteen (14) days of receipt of the survey notify Seller in writing specifying the defects and encroachments reflected by the survey, and Seller shall have ten (10) days within which to remove such defects and encroachments. If Seller does not remove such defects, Buyer may elect to terminate this Agreement. Page 35 7.3 PERFORMANCE. The Station Assets shall have been transferred to Buyer by Seller, and all of the terms, conditions and covenants to be complied with or performed by Seller on or before the Closing Date shall have been duly complied with and performed in all material respects, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.4 FAILURE OF TRANSFER. Notwithstanding any other provision in this Agreement to the contrary, in the event that any law, regulation or official policy prevents the transfer or assignment of the Station Assets from Seller to Buyer or any Buyer affiliate, the parties shall have amended this Agreement and/or executed such supplemental agreements, as necessary, to achieve for both Buyer and Seller, to the maximum extent possible, the benefits of the transactions contemplated by this Agreement and the Ancillary Agreements in a manner consistent with applicable law. 7.5 REPRESENTATIONS AND WARRANTIES. The representations and warranties of Seller to Buyer shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.6 CONSENTS. Seller shall have received all consents (including landlord and grantor consents for the studio and tower sites) specified in Section 3.8 of the Disclosure Schedule. 7.7 NO LITIGATION. No litigation, proceeding, or investigation of any kind shall have been instituted or, to Seller's knowledge, threatened which would materially adversely affect the ability of Seller to comply with the provisions of this Agreement or would materially adversely affect the operation of the Station. 7.8 DOCUMENTS. Seller shall have obtained, executed, where necessary, and delivered, to Buyer where applicable, all of the documents, reports, orders and statements required of it herein, as well as any other documents (including collateral assignments) required by any entity providing financing for the transactions contemplated by this Agreement and the Ancillary Agreements. 7.9 DISCLOSURE SCHEDULE. Seller shall have delivered to Buyer each Section of the Disclosure Schedule required of it herein and the information contained therein Page 36 shall be in form and content reasonably satisfactory to Buyer. 7.10 OPINIONS OF COUNSEL. Seller shall have delivered to Buyer an opinion of Moses & Singer, counsel to Seller, addressed to Buyer and substantially in the form attached hereto as Exhibit A. In addition, Seller shall have delivered to Buyer a written opinion of Seller's FCC counsel, dated as of the Closing Date, addressed to Buyer and substantially in the form attached hereto as Exhibit B. 7.11 ANCILLARY AGREEMENTS. Buyer and Seller shall have entered into the Ancillary Agreements, if any, on terms and conditions satisfactory to Buyer. 7.12 SIMULTANEOUS CLOSING. The Closing shall occur simultaneously with the closing of the transactions contemplated by that certain Asset Purchase Agreement by and between EBE Broadcasting L.P. and Buyer dated of even date herewith. ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER The performance of the obligations of Seller hereunder is subject, at the election of Seller, to the following conditions precedent: 8.1 PERFORMANCE. All of the terms, conditions and covenants to be complied with or performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties of Buyer to Seller shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.3 GOVERNMENT APPROVALS. All required governmental filings shall have been made and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted. 8.4 DOCUMENTS. Buyer shall have obtained, executed, where necessary, and delivered to Seller where Page 37 applicable, all of the documents, reports, orders and statements required of it herein. 8.5 OPINION OF COUNSEL. Buyer shall have delivered to Seller an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to Buyer, addressed to Seller and substantially in the form attached hereto as Exhibit C. ARTICLE IX INDEMNIFICATION 9.1 INDEMNIFICATION BY SELLER. From and after the Closing Date, Seller agrees to and shall indemnify, defend and hold Buyer harmless, and shall reimburse Buyer for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto) resulting from or arising out of: (a) Any breach by Seller of any representation, or warranty contained in this Agreement, any Ancillary Agreement or in any certificate, exhibit, schedule, or other document furnished to or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment or breach by Seller of any covenant, agreement, term or condition contained in this Agreement, any Ancillary Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (c) Any material inaccuracy in any covenant, representation, agreement or warranty by Seller including all material statements or figures contained in the Financial Statements heretofore furnished to Buyer; and (d) Any liabilities of any kind or nature, absolute or contingent not assumed by Buyer including, without limitation, any liabilities relating to or arising from the business and operation of the Station by Seller prior to the Closing Date. Notwithstanding any other provision contained herein, Seller shall be solely responsible for any fine or forfeiture imposed by the Commission relating to the operation of the Station prior to the Closing Date. Anything in this Section 9.1 to the contrary notwithstanding, Buyer shall be entitled to indemnity only Page 38 to the extent that all damages exceed an aggregate of $25,000. 9.2 INDEMNIFICATION BY BUYER. From and after the Closing Date, Buyer agrees to and shall indemnify, defend and hold Seller harmless, and shall reimburse Seller for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto), resulting from or arising out of: (a) Any breach by Buyer of any covenant, agreement, term, condition, representation, or warranty contained in this Agreement, any Ancillary Agreement or in any certificate, exhibit, schedule, or any other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment by Buyer of any covenant contained in this Agreement, any Ancillary Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; and (c) Any liabilities of any kind or nature, absolute or contingent, relating to or arising from the business and operation of the Station subsequent to the Closing Date. Anything in this Section 9.2 to the contrary notwithstanding, Seller shall be entitled to indemnity only to the extent that all damages exceed an aggregate of $25,000. 9.3 NOTIFICATION OF CLAIMS. (a) A party entitled to be indemnified pursuant to Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the party liable for such indemnification (the "Indemnifying Party") in writing of any claim or demand which the Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement. Subject to the Indemnifying Party's right to defend in good faith third party claims as hereinafter provided, the Indemnifying Party shall satisfy its obligations under this Article IX within thirty (30) days after the receipt of a written notice thereof from the Indemnified Party. (b) If the Indemnified Party shall notify the Indemnifying Party of any claim or demand pursuant to Section 9.3(a), and if such claim or demand relates to a claim or demand asserted by a third party against the Page 39 Indemnified Party which the Indemnifying Party acknowledges is a claim or demand for which it must indemnify or hold harmless the Indemnified Party under Sections 9.1 or 9.2, the Indemnifying Party shall have the right to assume the defense of such third party claim or demand and to employ counsel reasonably acceptable to the Indemnified Party to defend any such claim or demand asserted against the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any such claim or demand at its own expense. Notwithstanding the foregoing, the Indemnified Party shall have the right to employ separate counsel at the Indemnifying Party's expense and to control its own defense if in the reasonable opinion of counsel to such Indemnified Party a conflict or potential conflict exists between the Indemnifying Party and such Indemnified Party that would make such separate representation necessary. The Indemnifying Party shall notify the Indemnified Party in writing, as promptly as possible (but in any case before the due date for the answer or response to a claim) after the date of the notice of claim given by the Indemnified Party to the Indemnifying Party under Section 9.3(a) of its election to defend in good faith any such third party claim or demand. So long as the Indemnifying Party is defending in good faith any such claim or demand asserted by a third party against the Indemnified Party, the Indemnified Party shall not settle or compromise such claim or demand. The Indemnifying Party shall not settle or compromise such claim or demand with respect to the Indemnified Party without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld). The Indemnified Party shall make available to the Indemnifying Party or its agents all records and other materials in the Indemnified Party's possession reasonably required by it for its use in contesting any third party claim or demand. Whether or not the Indemnifying Party elects to defend any such claim or demand, the Indemnified Party shall have no obligations to do so. Upon payment of any claim or demand pursuant to this Article IX, the Indemnifying Party shall, to the extent of payment, be subrogated to all rights of the Indemnified Party. ARTICLE X MISCELLANEOUS 10.1 ASSIGNMENT. (a) This Agreement shall not be assigned or conveyed by either party hereto to any other person or entity without the prior written consent of the other parties hereto; PROVIDED, HOWEVER, that Buyer may assign this Agreement without Seller's prior consent to one or Page 40 more corporations or other entities controlled by Buyer; PROVIDED, FURTHER, that Seller shall have recourse to Buyer in the event Buyer's assignee defaults hereunder PROVIDED, FURTHER, that Seller may assign its right to the Default Payment under Section 2.4 hereunder to State Street Bank and Trust Company when, as, and if such payment becomes due. Subject to the foregoing, this Agreement shall be binding and shall inure to the benefit of the parties hereto, their successors and assigns. (b) Notwithstanding anything to the contrary set forth herein, Buyer may assign and transfer to any entity providing financing for the transactions contemplated by this Agreement (or any refinancing of such financing) as security for such financing all of the interest, rights and remedies of Buyer with respect to this Agreement and the Ancillary Agreements, and Seller shall expressly consent to such assignment. Any such assignment will be made for collateral security purposes only and will not release or discharge Buyer from any obligations it may have pursuant to this Agreement. Notwithstanding anything to the contrary set forth herein, Buyer may (i) authorize and empower such financing sources to assert, either directly or on behalf of Buyer, any claims Buyer may have against Seller under this Agreement and (ii) make, constitute and appoint one agent bank in respect of such financing (and all officers, employees and agents designated by such agent) as the true and lawful attorney and agent-in-fact of Buyer for the purpose of enabling the financing sources to assert and collect any such claims. 10.2 SURVIVAL OF INDEMNIFICATION. The indemnification obligations of Seller contained in this Agreement (other than any indemnification required as a result of Seller's breach of Sections 3.1, 3.2 or 3.3 hereof, which indemnification shall survive indefinitely) shall be binding for a period of three (3) years following the date hereof. 10.3 NO RIGHT OF REVERSION. Buyer and Seller represent and warrant to each other that upon the consummation of the transactions contemplated herein and the assignment to Buyer of the Licenses and authorizations, Seller shall retain no right of reversion of the Licenses and authorizations, no right to a reassignment of the Licenses and authorizations in the future, and reserve no right to use the facilities of the Station for any period whatsoever. 10.4 BROKERAGE. Seller and Buyer warrant and represent to one another that, with the exception of Exline Media Broker Consultants (William Exline) broker for the Seller, there has been no broker in any way involved in the transactions contemplated hereby and that no one other than Page 41 Exline Media Broker Consultants (William Exline) is or will be entitled to any fee or other compensation in the nature of a brokerage fee or finder's fee as a result of the Closing hereunder. Seller shall be wholly responsible for any brokerage or other fee due to Exline Media Broker Consultants (William Exline). 10.5 EXPENSES OF THE PARTIES. It is expressly understood and agreed that all expenses of preparing this Agreement and of preparing and prosecuting the Assignment Application with the Commission, and all other expenses, whether or not the transactions contemplated hereby are consummated, shall be borne solely by the party who shall have incurred the same and the other party shall have no liability in respect thereto, except as otherwise provided herein. All costs of transferring the Station Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be borne equally by Seller and Buyer. Any filing or grant fees imposed by any governmental authority the consent of which is required for the transactions contemplated hereby shall be borne equally by Seller and Buyer. 10.6 ENTIRE AGREEMENT. This Agreement, together with any related Schedules or Exhibits, contains all the terms agreed upon by the parties with respect to the subject matter herein, and supersedes all prior agreements and understandings among the parties and may not be changed or terminated orally. No attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced. 10.7 HEADINGS. The headings set forth in this Agreement have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any manner, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement. Unless otherwise specified herein, the section references contained herein refer to sections of this Agreement. 10.8 GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the internal laws of the State of New York. 10.9 COUNTERPARTS. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of such shall constitute one and the same instrument. 10.10 NOTICES. Any notices or other communications shall be in writing and shall be considered to have been duly given when deposited into first class, Page 42 certified mail, postage prepaid, return receipt requested, delivered personally (which shall include delivery by Federal Express or other recognized overnight courier service that issues a receipt or other confirmation of delivery) or delivered via facsimile machine; IF TO SELLER: William J. McEntee Jr. Vice President EBE Communications Limited Partnership 400 Executive Drive, Suite 210 West Palm Beach, FL 33401 Fax: 407-640-7699 Phone: 407-640-3585 With a copy to: Jerome S. Traum Moses & Singer LLP 1301 Avenue of the Americas New York, NY 10019-6076 Fax: 212-554-7700 Phone: 212-554-7813 IF TO BUYER: Mr. Frank D. Osborn Osborn Communications Corporation 130 Mason Street Greenwich, CT 06830 Fax: (203) 629-1749 Phone: (203) 629-0905 With a copy to: Robert M. Hirsh Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Fax: (212) 757-3990 Phone: (212) 373-3108 Any party may at any time change the place of receiving notice by giving notice of such change to the other as provided herein. 10.11 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a special, unique and extraordinary character and that damages are inadequate to compensate Buyer for Seller's breach of this Agreement. Accordingly, in the event of a material breach by Seller of its representations, warranties, covenants and agreements under this Agreement, Buyer may sue at law for damages or, at Buyer's Page 43 sole election in addition to any other remedy available to it, Buyer may also seek a decree of specific performance requiring Seller to fulfill its obligations under this Agreement, and Seller agrees to waive its defense that an adequate remedy at law exists. 10.12 CONSENT TO JURISDICTION. Seller and Buyer hereby submit to the nonexclusive jurisdiction of the courts of the State of New York and the federal courts of the United States of America located in such state solely in respect of the interpretation and enforcement of the provisions hereof and of the documents referred to herein, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that they are not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that this Agreement or any of such documents may not be enforced in or by said courts or that the Station property is exempt or immune from execution, that the suit, action or proceeding is brought in an inconvenient forum, or that the venue of the suit, action or proceeding is improper. 10.13 FURTHER ASSURANCES. Seller and Buyer agree to execute all such documents and take all such actions after the Closing Date as any other party shall reasonably request in connection with carrying out and effectuating the intent and purpose hereof and all transactions and things contemplated by this Agreement, including, without limitation, the execution and delivery of any and all confirmatory and other documents in addition to those to be delivered on the Closing Date and all actions which may reasonably be necessary or desirable to complete the transactions contemplated hereby. 10.14 PUBLIC ANNOUNCEMENTS. No public announcement (including an announcement to employees) or press release concerning the transactions provided for herein and in the LMA shall be made by either party without the prior approval of the other party, except as required by law. Page 44 IN WITNESS WHEREOF, the parties hereto have executed or have caused this Agreement to be executed by a duly authorized officer on the day and year first above written. SELLER EBE COMMUNICATIONS LIMITED PARTNERSHIP By: Guild Radio Corporation, Inc., General Partner By: Name: Title: BUYER BREADBASKET BROADCASTING CORPORATION By: Name: Title: IN WITNESS WHEREOF, Osborn Communications Corporation has caused this Agreement to be executed by a duly authorized officer on the day and year first above written for the sole purpose of being bound by the provisions of Section 1.7 hereof. OSBORN COMMUNICATIONS CORPORATION By: Name: Title: EX-10 4 OPTION AGREEMENT OPTION AGREEMENT by and between RKZ TELEVISION, INC. and ALLBRITTON COMMUNICATIONS COMPANY dated as of December 21, 1995 TABLE OF CONTENTS Page ARTICLE 1 GRANT OF THE OPTION; EXERCISE OF THE OPTION 2 Section 1.1. Grant of Option 2 Section 1.2. Schedules and Due Diligence Review 2 Section 1.3. Payment of Option Amount 2 Section 1.4. Exercise of the Option 2 ARTICLE 2 SUPPLEMENTAL AMOUNT 4 Section 2.1. Relocation of Transmitter Site 4 Section 2.2. Construction of Tower 4 Section 2.3. Payment of Supplemental Amount 4 Section 2.4. Termination of Obligation to Pay Supplemental Amount 5 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF GRANTOR 5 Section 3.1. Incorporation; Authorization; etc. 5 Section 3.2. Consents and Approvals 6 Section 3.3. Financial Statements 6 Section 3.4. Brokers, Finders, etc. 6 Section 3.5. Representations and Warranties in the Purchase Agreement 7 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ACC 7 Section 4.1. Incorporation; Authorization; etc 7 Section 4.2. Consents and Approvals 7 Section 4.3. Brokers, Finders, etc 7 Section 4.4. Representations and Warranties in the Purchase Agreement 8 ARTICLE V ADDITIONAL AGREEMENTS 8 Section 5.1. Due Diligence Review 8 Section 5.2. Delivery of Schedules 8 Section 5.3. Operation of the Station 8 Section 5.4. Additional Deliveries of Grantor 8 Section 5.5. Additional Deliveries of ACC 9 Section 5.6. Confidentiality 9 Section 5.7. Non-solicitation of Employees 9 ARTICLE 6 CREDIT OR REFUND OF OPTION AMOUNT; TERMINATION 10 Section 6.1. Credit for Option Amount and Supplemental Amount 10 Section 6.2. Termination 10 ARTICLE 7 GENERAL PROVISIONS 10 Section 7.1. Survival of Representations 10 Section 7.2. Agreement of Grantor to Indemnify 10 Section 7.3. Agreement of ACC to Indemnify 11 Section 7.4. Specific Performance 11 Section 7.5. Remedies Cumulative 11 ARTICLE 8 GENERAL PROVISIONS 12 Section 8.1. Expenses 12 Section 8.2. Notices 12 Section 8.3. Public Announcements 13 Section 8.4. Headings 13 Section 8.5. Severability 13 Section 8.6. Entire Agreement 13 Section 8.7. Successors and Assigns 13 Section 8.8. Third-Party Beneficiaries 14 Section 8.9. Amendment; Wavier 14 Section 8.10. Governing Law 14 Section 8.11. Jurisdiction and Forum 14 Section 8.12. Counterparts 15 Section 8.13. Osborn Guaranty 15 THIS OPTION AGREEMENT (the "Option Agreement") is made this 21st day of December, 1995, by and between Allbritton Communications Company, a Delaware corporation, or its designated affiliate (collectively, "ACC") and RKZ Television, Inc., a Delaware corporation ("Grantor"). W I T N E S S E T H: WHEREAS, Grantor owns and operates television broadcast station WJSU-TV, Channel 40, Anniston, Alabama, together with certain auxiliary facilities (the "Station"); WHEREAS, ACC and Grantor are entering into a Time Brokerage Agreement as of the date hereof (the "Time Brokerage Agreement") pursuant to which ACC agrees to provide programs, and Grantor agrees to broadcast such programs on the Station, in conformance with the Time Brokerage Agreement and the rules, regulations and policies of the Federal Communications Commission ("FCC"); WHEREAS, ACC is willing to enter into the Time Brokerage Agreement only upon the condition that Grantor enters into this Option Agreement pursuant to which Grantor grants to ACC the option to acquire the assets of the Station from the Grantor for the Purchase Price as set forth in the Purchase Agreement (as defined herein) and in accordance with and subject to the terms and conditions set forth herein; WHEREAS, ACC shall pay the Option Amount (as defined herein) to Grantor on or before January 15, 1996, subject to a satisfactory due diligence review by ACC of the Station and the Assets of the Station; and WHEREAS, capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the form of Asset Purchase Agreement attached hereto as Exhibit A and incorporated herein by reference (the "Purchase Agreement"). NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE 1. GRANT OF THE OPTION; EXERCISE OF THE OPTION Section 1.1. Grant of Option. Grantor hereby grants to ACC the irrevocable right and option (the "Option"), but not the obligation, to acquire the assets of the Station from Grantor, upon the terms and subject to the conditions set forth herein and in the Purchase Agreement. Section 1.2. Schedules and Due Diligence Review. On or before December 31, 1995, the Grantor shall deliver to ACC and ACC's counsel schedules, which shall be complete and accurate in all material respects (together with copies of the documents referred to therein) identified on Exhibit B hereto regarding the Station and the assets of the Station (collectively, the "Schedules"). Grantor shall prepare the Schedules in compliance with the terms and conditions of the Purchase Agreement. Upon receipt, ACC shall promtly review the Schedules and shall conduct its due diligence review of the Station and the assets of the Station (collectively, the "Diligence Review") until the later to occur of December 31, 1995 or four (4) business days after ACC's receipt of the Schedules (the "Commitment Date"). Section 1.3. Payment of Option Amount. In the event that on or before the Commitment Date ACC is satisfied with the Diligence Review, ACC agrees to pay to Grantor on or before January 15, 1996, the sum of Ten Million Dollars ($10,000,000) (the "Option Amount") (the date of such payment is hereafter referred to as the "Commencement Date"). In the event that ACC provides written notice to Grantor on or before the Commitment Date that ACC is not in its good faith reasonable business judgment satisfied with the Diligence Review because (a) Grantor has failed to deliver material information which had been reasonably and timely requested by ACC, or (b) ACC has learned of a material adverse disclosure regarding the business, assets, liabilities, results of operations, business conditions (financial or otherwise) or properties of the Station (the "Business Condition"), ACC shall have no obligation to pay the Option Amount to Grantor, the Option and this Option Agreement shall terminate and neither party hereto shall have any further liabilities or obligations hereunder. Section 1.4. Exercise of the Option. ACC may exercise the Option at any time prior to the tenth anniversary of the date of this Option Agreement (the "Option Term") by delivering written notice of exercise thereof to Grantor. Upon receipt of such notice, the Grantor, ACC and the Guarantor (as defined herein) shall immediately enter into the Purchase Agreement and the Grantor shall provide to ACC updates of the Schedules (the "Updated Schedules") within 15 days following the execution of the Purchase Agreement. In the event that the Updated Schedules contain materially adverse disclosures regarding the Business Condition, ACC may terminate the Purchase Agreement and pursue any and all legal and equitable remedies against Grantor. ARTICLE 2. SUPPLEMENTAL AMOUNT Section 2.1. Relocation of Transmitter Site. Grantor agrees to use its reasonable best efforts to obtain authorization from the FCC and the Federal Aviation Administration ("FAA") to relocate the Station's antenna tower and related transmitter facilities (collectively, the "Station Tower") to one of the following locations (the "Transmitter Site"): (a) to the site presently specified in Grantor's pending application on FCC Form 301, filed on August 8, 1995 (FCC File No. BPCT-950808KF) (the "Modification Application"), or (b) such other site which is reasonably acceptable to ACC and which places a predicted city grade contour over at least part of the presently incorporated city limits of Birmingham, Alabama (the "Birmingham Limits"). Grantor shall (a) pay all preliminary costs necessary to acquire access and/or ownership of the Transmitter Site, (b) complete the engineering and FAA studies necessary for the Transmitter Site, (c) obtain all federal, state, and local governmental approvals necessary for the relocation, which approvals shall no longer be subject to judicial or administrative review (collectively, the "Governmental Approvals"), and (d) pay all costs incurred in connection with obtaining the Governmental Approvals. Section 2.2. Construction of Tower. Following receipt of all Governmental Approvals, ACC shall construct the Station Tower at the Transmitter Site as authorized by the FCC and the FAA and abiding by the specifications of any construction permits issued to Grantor. ACC shall own all assets acquired in connection with the construction of the Station Tower, and shall grant to the Grantor a license to use the Station Tower for the operation of the Station, for a fee of one dollar ($1.00) per year, until the earlier to occur of the following: (a) the Closing under the Purchase Agreement, (b) the termination of the Purchase Agreement, or (c) the termination of the Option Agreement. If, upon termination of such license, Grantor remains the initial Licensee of the Station, ACC and Grantor shall enter into a lease on commercially reasonable terms for Grantor's continued use of the Station Tower for operation of the Station. Section 2.3. Payment of Supplemental Amount. (a) Upon receipt of all Governmental Approvals (the "Approval Date"), the sum of Seven Million Dollars ($7,000,000) shall be payable by ACC to Grantor as a supplemental payment in accordance with the terms of this Section 2.3 (the "Supplemental Amount"). In the event that Grantor remains the owner and operator of the Station on the Approval Date, ACC agrees to pay to Grantor Five Million Dollars ($5,000,000) of the Supplemental Amount on the Approval Date and pay the balance of Two Million Dollars ($2,000,000) of the Supplemental Amount upon the Closing of the Purchase Agreement. In the event that ACC (or its assignee) has become the owner and operator of the Station on the Approval Date, ACC shall pay to Grantor the Supplemental Amount in full on the Approval Date. (b) In the event that the area within the Birmingham Limits encompassed by the predicted city grade contour of the Station, as approved and authorized by the FCC, from the Station Tower at the Transmitter Site (the "Authorized Contour Area") is less than the area within the Birmingham Limits encompassed by the predicted city grade contour presently proposed in the Modification Application (the "Proposed Contour Area"), the Supplemental Amount shall be reduced to equal the amount which is the product of (i) Seven Million Dollars ($7,000,000) multiplied by (ii) the fraction of which the numerator is the Authorized Contour Area and the denominator is the Proposed Contour Area. In the event that the Supplemental Amount is reduced in accordance with the preceding sentence, all partial payments of the Supplemental Amount shall also be reduced pro rata. 2.4. Termination of Obligation to Pay Supplemental Amount. In the event that Grantor has not obtained all Governmental Approvals within forty-eight (48) months of the Commencement Date, ACC shall have the right by written notice to Grantor to terminate all of ACC's obligations under this Article 2 and neither party hereto shall have any further liabilities or obligations under this Article 2. ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF GRANTOR Grantor represents and warrants to ACC as follows: Section 3.1. Incorporation; Authorization; etc. Grantor is a corporation validly existing and in good standing under the laws of the State of Delaware, and Grantor has full corporate power to execute and deliver this Option Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Option Agreement and the Purchase Agreement, the performance of Grantor's obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby by Grantor have been duly and validly authorized by the board of directors of Grantor and no other corporate proceedings or actions on the part of Grantor, its board of directors or stockholders are necessary therefor. The execution, delivery and performance of this Option Agreement and the Purchase Agreement by Grantor will not (a) conflict with or violate any law, order, award, judgment, injunction or decree applicable to Grantor, the Assets or the Station or by which any of the Assets or the Station is subject or affected, (b) conflict with or result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) of any Contract to which Grantor is a party or by which Grantor is bound or to which any of the Assets or the Station is subject or affected, or result in the acceleration of any indebtedness or in the creation of any Encumbrance upon the Assets, or (c) conflict with or violate the articles of incorporation, bylaws or any related organizational documents of Grantor. This Option Agreement has been duly executed and delivered by Grantor, and, assuming the due execution hereof by ACC, this Option Agreement constitutes the legal, valid and binding obligation of Grantor. Section 3.2. Consents and Approvals. Except for the consent of Society National Bank, the execution and delivery of this Option Agreement do not and will not require any consent, approval, exemption, authorization or other action by, or filing with or notification to any Government Authority or any other person, except that the Option Agreement shall be filed with the FCC within thirty (30) days from the date hereof. Section 3.3. Financial Statements. Grantor has prepared and shall furnish to ACC the unaudited balance sheets of Grantor as of the end of the fiscal year ending in each of 1992, 1993, and 1994 and unaudited statements of income. Grantor also has prepared and shall furnish to ACC the unaudited balance sheets of Grantor as of the end of each month of Grantor ending after November 30, 1995, and unaudited statements of income for the respective months then ended. All of the financial statements, including, without limitation, the notes thereto, referred to in this Section: (a) are in accordance with the books and records of the Grantor, (b) present fairly the consolidated financial position of the Grantor as of the respective dates and the results of operations and changes in financial position for the respective periods indicated, and (c) have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior accounting periods. Section 3.4. Brokers, Finders, etc.. Grantor has not employed, and is not subject to the valid claim of, any broker, finder, consultant or other intermediary in connection with the transactions contemplated hereby who would have a valid claim for a fee or commission from ACC in connection with such transactions. Grantor has employed the services of Alex Brown & Co. as broker and shall be solely responsible for its fees in connection therewith. Section 3.5. Representations and Warranties in the Purchase Agreement. Grantor hereby makes all of the representations and warranties of the "Seller" set forth in Article 3 of the Purchase Agreement for the benefit of ACC and all such representations and warranties are (a) true and correct as of the date heref, and (b) incorporated herein by reference in their entirety. ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF ACC ACC represents and warrants to Grantor as follows: Section 4.1. Incorporation; Authorization; etc. ACC is a corporation validly existing and in good standing under the laws of the State of Delaware, and ACC has full corporate power to execute and deliver this Option Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Option Agreement, the performance of ACC's obligations hereunder and the consummation of the transactions contemplated hereby by ACC have been duly and validly authorized by the board of directors of ACC and no other corporate proceedings or actions on the part of ACC, its board of directors or stockholders are necessary therefor. The execution, delivery and performance under this Option Agreement by ACC will not (a) conflict with or violate any law, order, award, judgment, injunction or decree applicable to ACC, (b) conflict with or result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) of a contract to which ACC is bound, or (c) conflict with or violate the articles of incorporation, bylaws or any related organizational documents of ACC. This Option Agreement has been duly executed and delivered by ACC, and, assuming the due execution hereof by Grantor, this Option Agreement constitutes the legal, valid and binding obligation of ACC, enforceable against ACC in accordance with its terms. Section 4.2. Consents and Approvals. The execution and delivery of this Option Agreement do not and will not require any consent, approval, exemption, authorization or other action by, or filing with or notification to any Government Authority or any other person, except that the Option Agreement shall be filed with the FCC within thirty (30) days from the date hereof. Section 4.3. Brokers, Finders, etc. ACC has not employed, and is not subject to the valid claim of, any broker, finder, consultant or other intermediary in connection with the transactions contemplated hereby who would have a valid claim for a fee or commission from ACC in connection with such transactions. Section 4.4. Representations and Warranties in the Purchase Agreement. ACC hereby makes all of the representations and warranties of the "Buyer" set forth in Article 4 of the Purchase Agreement for the benefit of Grantor and all such representations and warranties are (a) true and correct as of the date heref, and (b) incorporated herein by reference in their entirety. ARTICLE 5. ADDITIONAL AGREEMENTS Section 5.1. Due Diligence Review. Grantor covenants and agrees to provide ACC and ACC's authorized representatives (a) full and complete access upon reasonable notice during normal business hours to Grantor's properties, books, records, contracts, commitments, facilities, premises, and equipment and to Grantor's respective directors, officers and employees, agents and representatives, and (b) all such other information and copies of documents as ACC may reasonably request, concerning Grantor, the operation of the Station and the Assets of the Station, and the Station's customers and suppliers. Grantor covenants and agrees to permit Buyer's consulting engineers and other representatives, agents, employees and independent contractors, at Buyer's expense, to conduct engineering and other inspections of the Station and the assets of the Station. Section 5.2. Delivery of Schedules. Grantor covenants and agrees to deliver to ACC and ACC's counsel the Schedules on or before December 31, 1995. Grantor further covenants and agrees that the Schedules shall be true, complete and accurate as of the date hereof. Section 5.3. Operation of the Station. From and after the date of this Option Agreement, Grantor agrees to comply with and be bound by the covenants and agreements regarding operation of the Station set forth in Section 7 of the Purchase Agreement and such covenants and agreements are incorporated herein by reference in their entirety. Grantor agrees to keep ACC fully apprised of all material developments with respect to the Station and the Grantor. Section 5.4. Additional Deliveries of Grantor. In addition to the other things required to be done hereby, Grantor shall deliver, or cause to be delivered, as of the date hereof, to ACC the following: (a) a copy of the resolutions of the board of directors of Grantor, authorizing the execution, delivery and performance hereof by Grantor, and a certificate of its secretary or assistant secretary, dated as of the date hereof, that such resolutions were duly adopted and are in full force and effect, and (b) such other certificates, instruments and documents as may be reasonably requested by ACC to carry out the provisions hereof and give effect to the transactions contemplated hereby. Section 5.5. Additional Deliveries of ACC. In addition to the payment of the Option Amount and the other things required to be done hereby, ACC shall deliver, or cause to be delivered, as of the date hereof, to Grantor the following: (a) a copy of the resolutions of the board of directors of ACC, authorizing the execution, delivery and performance hereof by ACC, and a certificate of ACC's secretary or assistant secretary, dated as of the date hereof, that such resolutions were duly adopted and are in full force and effect, and (b) such other certificates, instruments and documents as may be reasonably requested by Grantor to carry out the provisions hereof and give effect to the transactions contemplated hereby. Section 5.6. Confidentiality. ACC shall maintain strict confidentiality with respect to all documents and information furnished to ACC by or on behalf of Grantor; provided, however, that ACC shall have no such obligations with respect to confidential information that (a) is a matter of public knowledge or (b) has been or is hereafter publicly disclosed other than by or through ACC. In the event the Option Agreement is terminated, ACC will return to Grantor all copies in its possession of documents, drafts, work papers, and other material prepared or furnished by Grantor relating to the transactions contemplated hereunder, whether obtained before or after the execution of the Option Agreement and the agreements and instruments called for hereunder. Section 5.7. Non-solicitation of Employees. In the event that ACC terminates the Option pursuant to Section 1.3 of this Option Agreement, ACC agrees that it will not solicit for hire or hire any employee of Grantor for a period of one (1) year from the date hereof. Section 5.8. Delivery of Bank Consent. Grantor shall obtain written consent of Society National Bank in connection with the Grantor's execution, delivery and performance of the Time Brokerage Agreement, the Purchase Agreement and this Option Agreement. Grantor covenants and agrees to deliver to ACC and ACC's counsel a copy of such consent within three (3) business days from the date hereof. ARTICLE 6. CREDIT OF OPTION AMOUNT AND SUPPLEMENTAL AMOUNT; TERMINATION Section 6.1. Credit for Option Amount and Supplemental Amount. In the event the Option is exercised pursuant to Section 1.4, the Option Amount and any portion of the Supplemental Amount paid to Grantor (collectively, the "Reimbursable Amounts") shall be credited to the payment of the Purchase Price pursuant to terms and conditions of the Purchase Agreement. Section 6.2 Termination. Without limiting any rights of ACC set forth in Article 7, ACC shall have the right to terminate this Option Agreement upon the occurrence of any of the following events: (a) any representation or warranty of Grantor contained in Article 3 hereof shall fail to be true and correct in all material respects; or (b) Grantor shall fail to comply in any material respect with any covenant or obligation applicable to it set forth in this Option Agreement, the Time Brokerage Agreement or the Purchase Agreement. ARTICLE 7. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS; REMEDIES Section 7.1. Survival of Representations. All representations and warranties made by any party in this Option Agreement or pursuant hereto shall survive the date hereof for a period of two (2) years, provided that Sections 3.13 and 3.15 of the Purchase Agreement, as incorporated by reference herein in Section 3.5, shall survive the date of this Option Agreement for a period equal to the applicable statute of limitations and Section 3.05(b) of the Purchase Agreement shall survive without limitation as to time. Section 7.2 Survival of Covenants. All other covenants, indemnities and other agreements made by any party to this Option Agreement herein or pursuant hereto shall survive the date hereof and any investigation, audit or inspection at any time made by or on behalf of any party hereto. Section 7.3. Agreement of Grantor to Indemnify. Grantor hereby agrees to indemnify, defend and hold harmless ACC and its affiliates, employees, stockholders, representatives, agents, officers and directors (the "ACC Indemnified Persons") from and against and in any respect of all Losses asserted against, resulting to, imposed upon or incurred by the ACC Indemnified Persons (whether such Losses are by, against or relate to Grantor or any other party, including a governmental entity), directly or indirectly, by reason of or resulting from any misrepresentation or breach of any representation or warranty, or noncompliance with any conditions, covenants or other agreements, given or made by Grantor in this Option Agreement or the Time Brokerage Agreement. Section 7.4. Agreement of ACC to Indemnify. ACC hereby agrees to indemnify, defend and hold harmless Grantor and its affiliates, employees, stockholders, representatives, agents, officers and directors (the "Grantor Indemnified Persons") from and against and in respect of all Losses asserted against, resulting to, imposed upon or incurred by the Grantor Indemnified Persons (whether such Losses are by, against or relate to ACC or any other party, including, without limitation, a governmental entity), directly or indirectly, by reason of or resulting from any misrepresentation or breach of any representation or warranty, or noncompliance with any conditions, covenants or other agreements, given or made by ACC in this Option Agreement or the Time Brokerage Agreement. Section 7.5. Specific Performance. In addition to any other remedies which ACC may have at law or in equity, Grantor hereby acknowledge that the Assets and the Station are unique, and that the harm to ACC resulting from a breach by Grantor of its obligations cannot be adequately compensated by damages. Accordingly, Grantor agrees that ACC shall have the right to have all obligations, undertakings, agreements, covenants and other provisions of this Option Agreement specifically performed by Grantor, and that ACC shall have the right to obtain an order or decree of such specific performance in any of the courts of the United States of America or of any state or other political subdivision thereof. Section 7.6. Remedies Cumulative. The remedies provided herein shall be cumulative and shall not preclude the assertion by Grantor or ACC of any other rights or the seeking of any other remedies against the other, or their respective successors or assigns. ARTICLE 8. GENERAL PROVISIONS Section 8.1. Expenses. Unless otherwise indicated in this Option Agreement, all costs and expenses incurred in connection with this Option Agreement and the transactions contemplated hereby, including fees and disbursements of counsel, financial advisors and accountants, shall be paid by the party incurring such costs and expenses. Section 8.2. Notices. All notices, requests, claims, demands and other communications given or made pursuant hereto shall be in writing (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by telecopy (with confirmation copy of such telecopied material delivered in person or by registered or certified mail, postage prepaid, return receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section). Notices to Grantor shall be addressed to: RZK Television, Inc. c/o Osborn Communications Corporation 130 Mason Street Greenwich, CT 06830 Attention: Frank D. Osborn Telecopy Number: (203) 629-1749 with a copy to: Haley Bader & Potts, P.L.C. 4350 N. Fairfax Drive, #900 Arlington, VA 22203 Attention: Theodore D. Kramer, Esq. Telecopy Number: (703) 841-2345 or at such other address and to the attention of such other person as Grantor may designate by written notice to ACC. Notices to ACC shall be addressed to: Allbritton Communications Company 800 17th Street, N.W., Suite 301 Washington, DC 20006 Attention: Jerald N. Fritz Telecopy Number: (202) 822-6749 with a copy to: Hogan & Hartson L.L.P. 555 Thirteenth Street, N.W. Washington, D.C. 20004 Attention: Mace J. Rosenstein, Esq. Telecopy Number: (202) 637-5910 or such other address and to the attention of such other person as ACC may designate by written notice to Grantor. Section 8.3. Public Announcements. The parties hereto shall not make, or cause to be made, any press releases or public announcements in respect of this Option Agreement or the transactions contemplated herein or otherwise communicate with any news media without prior notification of the other, and the parties shall cooperate as to the timing and content of any such announcement. Section 8.4. Headings. The descriptive headings contained in this Option Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Option Agreement. Section 8.5. Severability. If any term or other provision of this Option Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Option Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Option Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. Section 8.6. Entire Agreement. This Option Agreement, together with the other agreements contemplated hereby, constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, with respect to the subject matter hereof. Section 8.7. Successors and Assigns. This Option Agreement shall be binding upon and inure to the benefit of the parties hereto and their permitted successors and assigns. Grantor may not assign its rights and obligations hereunder without the prior written consent of ACC. ACC shall be permitted to assign any of its rights hereunder to any person, but shall remain liable on ACC's obligations. Section 8.8. Third-Party Beneficiaries. This Option Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such assigns, any legal or equitable rights thereunder. Section 8.9. Amendment; Wavier. This Option Agreement may not be amended or modified except by an instrument in writing duly executed by each party hereto. Waiver of any term or condition of this Option Agreement shall only be effective if in a writing signed by the party to be charged therewith and shall not be construed as a waiver of any subsequent breach or waiver of the same term or condition, or a waiver of any other term or condition of this Option Agreement. Section 8.10. Governing Law. This Option Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed and performed in that State. Section 8.11. Jurisdiction and Forum. (a) The parties hereto agree that an appropriate forum and venue for any disputes between the parties hereto arising out of this Option Agreement shall be any state or federal court in the State of New York. By the execution and delivery of this Option Agreement, each of ACC and Grantor irrevocably submits to the personal jurisdiction of any state or federal court in the State of New York in any suit or proceeding arising out of this Option Agreement or the transactions contemplated hereby. The foregoing shall not limit the rights of any party to obtain execution of judgment in any other jurisdiction. The parties further agree, to the extent permitted by law, that final and unappealable judgment against any of them in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and amount of such judgment. (b) To the extent that either ACC or Grantor has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, each of ACC and Grantor hereby irrevocably waives such immunity in respect of its obligations with respect hereto. Section 8.12. Counterparts. This Option Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Section 8.13. Osborn Guaranty. (a) Osborn Communications Corp. ("Guarantor") hereby irrevocably and unconditionally guarantees to ACC the prompt and complete payment and performance of each and every obligation of Grantor to ACC, direct or indirect, now existing or hereafter arising under this Option Agreement, including the due and punctual performance and observance by Grantor of all of the terms and conditions of this Option Agreement. (b) The obligations of Guarantor hereunder shall be absolute and unconditional and shall continue in full force and effect until the payment and performance of all of the obligations of Grantor under this Option Agreement, and are in no way conditioned upon any event or contingency, or upon any attempt to enforce Grantor's performance under this Option Agreement or any other right or remedy against Grantor or to collect from Grantor through the commencement of legal proceedings or otherwise. (c) The obligations of Guarantor hereunder shall not be affected, reduced, impaired, modified, changed, released, limited or discharged in any manner whatsoever by reason of any impairment, modification, change, release, or limitation of the liability of Grantor or its estate in bankruptcy, resulting from the operation of any present or future provision of the bankruptcy laws or other similar statute, or from the decision of any court. (d) Guarantor unconditionally waives diligence, presentment, protest, notice of dishonor, demand, extension of time for payment, notice of nonpayment at maturity, and indulgences and notices of every kind, and consents to any and all changes in terms, covenants, and conditions hereof. (e) Guarantor agrees that the obligations of Guarantor hereunder are irrevocable and are independent of the obligations of Grantor under this Option Agreement; that a separate action or actions may be brought and prosecuted against Guarantor regardless of whether any action is brought against Grantor or whether Grantor is joined in any such action or actions. (f) Guarantor agrees that Guarantor shall not exercise any rights that it may acquire by way of subrogation hereunder or otherwise until the performance in full of all obligations guaranteed pursuant hereto. (g) Guarantor represents and warrants to ACC that (i) it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, (ii) it has the full corporate power and corporate authority to enter into this Option Agreement, and this Option Agreement has been duly authorized, executed and delivered by Guarantor and is a legal, valid and binding agreement and obligation of Guarantor enforceable against Guarantor in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, moratorium and other similar laws of general application relating to or affecting the enforcement of creditors' rights and general equity principles, (iii) neither the execution and delivery of this Option Agreement, the consummation of any of the transactions contemplated herein, nor compliance with the terms hereof, will conflict with or result in a breach of any provision of any law or regulation applicable to Guarantor, or any indenture, contract or other agreement to which Guarantor is a party or by which Guarantor is bound, or any statute, rule, regulation, judgment, decree or order binding upon Guarantor, and (iv) Guarantor indirectly owns all of the issued and outstanding stock of Grantor. (h) The provisions of this Section shall inure to the benefit of and may be enforced by ACC and its successors and assigns, and shall be binding upon and enforceable against Guarantor and Guarantor's successors or assigns. Section 8.14. Delivery of Forms of Exhibits. Within fourteen (14) days from the date of this Option Agreement, Grantor shall deliver to ACC in form and substance reasonably satisfactory to ACC the form of Exhibits A through G of the Purchase Agreement. IN WITNESS WHEREOF, the parties have caused this Option Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. ALLBRITTON COMMUNICATIONS COMPANY By: Name: Jerald N. Fritz Title: Vice President RKZ TELEVISION, INC. By: Name: Frank D. Osborn Title: President For purposes of Section 8.13 of this Option Agreement OSBORN COMMUNICATIONS CORP. By: Frank D. Osborn President EXHIBIT A - FORM OF ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT TABLE OF CONTENTS
Page ---- ARTICLE 1. 1 DEFINITIONS AND REFERENCES 1 ARTICLE 2. 6 SALE AND PURCHASE OF ASSETS; PURCHASE PRICE; PAYMENT OF PURCHASE PRICE; ASSUMPTION OF LIABILITIES 6 2.01 Asset Sale. 6 2.02 Purchase Price. 6 2.03 Payment of Purchase Price. 6
2.04 Assumption of Liabilities. 6 ARTICLE 3 7 REPRESENTATIONS AND WARRANTIES BY SELLER 7 3.01 Organization and Standing. 7 3.02 Authorization. 7 3.03 Litigation; Compliance with Law. 7 3.04 Financial Statements and Condition; Liabilities. 8 3.05 Assets; Consents. 8 3.06 Condition of Tangible Assets. 9 3.07 Trademarks; Licenses. 10 3.08 Licenses. 10 3.09 Reports and Records. 10 3.10 Contracts. 11 3.11 Conflicts. 11 3.12 Related Parties. 11 3.13 Taxes. 12 3.14 Employee Benefit Plans. 12 3.15 Environmental Matters. 14 3.16 Labor Relations. 15 3.17 Broadcast of Programming 15 3.18 Insurance. 15 3.19 Disclosure. 16 ARTICLE 4. 16 REPRESENTATIONS AND WARRANTIES BY BUYER 16 4.01 Organization and Standing. 16 4.02 Authorization. 16 4.03 Qualification as Licensee. 17 ARTICLE 5. 17 APPLICATION FOR COMMISSION CONSENT 17 ARTICLE 6. 17 HART-SCOTT-RODINO 17 ARTICLE 7. 18 COVENANTS AND AGREEMENTS OF SELLER 18 7.01 Negative Covenants. 18 7.02 Affirmative Covenants. 19 7.03 Removal of Materials. 21 7.04 Confidentiality. 21 7.05 Employees. 21 ARTICLE 8. 22 COVENANTS AND AGREEMENTS OF BUYER 22 8.01 Confidentiality. 22 8.02 Corporate Action. 22 ARTICLE 9. 22 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE 22 9.01 Representations and Covenants. 22
9.02 Consents. 23 9.03 Delivery of Documents. 23 9.04 FCC Order. 23 9.05 Title Insurance Commitment and Survey. 23 9.06 Legal Proceedings. 23 9.07 Hart-Scott-Rodino. 23 9.08 Absence of Material Change. 23 ARTICLE 10. 24 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. 24 10.01 Representations and Covenants. 24 10.02 Delivery of Documents. 24 10.03 FCC Order. 24 10.04 Legal Proceedings. 24 10.05 Hart-Scott-Rodino. 24 ARTICLE 11. 25 THE CLOSING 25 11.01 Closing. 25 11.02 Delivery by Seller. 25 11.03 Delivery by Buyer. 26 ARTICLE 12. 27 ALLOCATION OF PURCHASE PRICE AMONG ASSETS 27 ARTICLE 13. 27 POSSESSION AND CONTROL 27 ARTICLE 14. 27 RISK OF LOSS 27 ARTICLE 15. 28 SURVIVAL; INDEMNIFICATION 28 15.01 Survival of Seller's Representations. 28 15.02 Indemnification by Seller. 28 15.03 Survival of Buyer's Representations. 28 15.04 Indemnification by Buyer. 29 15.05 Conditions of Indemnification. 29 ARTICLE 16. 30 TERMINATION 30 ARTICLE 17. 31 REMEDIES 31 17.01 Default by Buyer. 31 17.02 Default by Seller. 31 17.03 Specific Performance. 31 ARTICLE 18. 32 GUARANTEE 32 ARTICLE 19. 33 ADDITIONAL ACTIONS AND DOCUMENTS 33 ARTICLE 20. 33
BROKERS 33 ARTICLE 21. 34 EXPENSES 34 ARTICLE 22. 34 NOTICES 34 ARTICLE 23. 35 WAIVER 35 ARTICLE 24. 36 BENEFIT AND ASSIGNMENT 36 ARTICLE 25. 36 REMEDIES CUMULATIVE 36 ARTICLE 26. 36 ENTIRE AGREEMENT; AMENDMENT 36 ARTICLE 27. 37 SEVERABILITY 37 ARTICLE 28. 37 PRESS RELEASES 37 ARTICLE 29. 37 HEADINGS 37 ARTICLE 30. 37 GOVERNING LAW 37 ARTICLE 31. 38 SIGNATURE IN COUNTERPARTS 38
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of this day of , 199___ by and between RKZ TELEVISION, INC., a Delaware corporation ("Seller"), and ALLBRITTON COMMUNICATIONS COMPANY, a Delaware corporation, or its designated affiliate ("Buyer"). WHEREAS, Seller owns and operates Television Station WJSU-TV, Channel 40, Anniston, Alabama, together with certain auxiliary facilities (collectively, the "Station"); WHEREAS, Seller and Buyer are parties to that certain Option Agreement dated as of , 1995 whereby Seller granted to Buyer the option to purchase the assets of the Station from Seller (the "Option Agreement"); WHEREAS, Buyer exercised the Option pursuant to written notice dated as of ; and WHEREAS, Buyer agrees to purchase from Seller all the Assets (as hereinafter defined), and Seller desires to sell all the Assets to Buyer, all in accordance with and subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, and intending to be legally bound, the parties hereto hereby agree as follows: ARTICLE 1. DEFINITIONS AND REFERENCES As used herein, the following terms shall have the meanings set forth below, unless the context otherwise requires: "Accounts Receivable" means all accounts, notes or accounts receivable with respect to the Station. "Additional Agreements" shall have the meaning set forth in Section 7.01(e). "Applications" shall have the meaning set forth in Section 5. "Assets" means the Station and all real, personal and mixed assets, both tangible and intangible (including the business of the Station as a "going concern"), wherever located, owned or held by Seller and which are used or useful in the business and operation of the Station. Subject to the provisions of Section 7, Assets shall include all such assets existing on the date of this Agreement and all such assets acquired between that date and the Closing Date, and shall include, without limitation, all of Seller's right, title and interest in and to the following assets: (a) that certain real property set forth and described in Schedule 1(a). (b) the leasehold interests in that certain real property described in Schedule 1(b). (c) all buildings, structures, fixtures, and other improvements now or hereafter actually or constructively attached to the Property, and all modifications, additions, restorations, or replacements of the whole or any part thereof, including, without limitation, those described in Schedules 1(a) and 1(b) (the "Improvements"). (d) as landlord (whether named as such therein or by assignment or otherwise) in all leases and subleases, if any, of the Property and the Improvements now existing or at any time hereafter made, and any and all amendments, modifications, supplements, renewals and extensions thereof, together with all rents, royalties, security deposits, revenues, issues, earnings, profits, income and other benefits of the Property or the Improvements now due or hereafter to become due with respect to the Property or the Improvements or any part thereof. (e) in and to all streets, roads and public places, opened or proposed, and all easements and rights of way, public and private, rights and appurtenances, now or hereafter used in connection with, or belonging, incident or appertaining to, the Property or the Improvements. (f) all furniture, fixtures, furnishings, machinery, equipment, inventory, supplies, antenna installations, towers and other property, including, without limitation, those described in Schedule 1(f). (g) all of the Licenses (as hereinafter defined) for the Station as more fully described in Schedule 1(g). (h) all of the copyrights, trademarks and trade names (including any and all applications, registrations, extensions and renewals relating thereto), and all of the rights associated therewith, including, without limitation, those described in Schedule 1(h) and Seller's rights to the call letters for the Station. (i) all contracts, agreements, leases and other intangible assets, including, without limitation, those trade-out agreements and other contracts, agreements and leases described in Schedule 1(i). (j) all deposits and prepaid expenses, including, without limitation, those described in Schedule 1(j). (k) all automotive equipment and motor vehicles, including, without limitation, those described in Schedule 1(k). (l) all engineering, business and other books, papers, files and records, but not the articles of incorporation, by-laws, minute books, stock transfer records, or other corporate records of Seller. (m) all translators, earth stations, and other auxiliary facilities, and all applications therefor. "Assignment of Contracts" means that certain Assignment of Contracts, dated as of the Closing Date and executed by Seller, substantially in the form attached hereto as Exhibit D. "Assignment of Leases" means that certain Assignment of Leases, dated as of the Closing Date and executed by Seller, substantially in the form attached hereto as Exhibit A. "Assignment of Licenses" means that certain Assignment of Licenses, dated as of the Closing Date and executed by Seller, substantially in the form attached hereto as Exhibit C. "Assumption Agreement" means that certain Assumption Agreement dated as of the Closing Date and executed by Buyer and Seller, substantially in the form attached hereto as Exhibit G. "Bill of Sale" means that certain Bill of Sale and Assignment of Assets, dated as of the Closing Date and executed by Seller, substantially in the form attached hereto as Exhibit B. "Claims" shall have the meaning specified in Section 15.05. "Closing" means the closing of the purchase, assignment and sale of the Assets contemplated hereunder. "Closing Date" means the time and date on which the Closing takes place, as established by Section 11.01. "Commission" means the Federal Communications Commission. "Deed" means the general warranty deed of Seller, substantially in the form attached hereto as Exhibit E. "Encumbrances" mean any mortgages, pledges, liens, claims, security interests, agreements, restrictions, defects in title, easements, encumbrances, or charges. "FCC Order" means an order or orders of the Commission, or of the Chief, Mass Media Bureau, acting under delegated authority, consenting to the assignment to Buyer of the Licenses for the Station, as proposed in the Applications therefor, without conditions which are adverse to Buyer or which in any way diminish the operating rights with respect to the Assets and the Station, except any such conditions expressly accepted by Buyer in writing. "Final Order" means the FCC Order(s) as to which the time for filing a request for administrative or judicial review, or for instituting administrative review sua sponte, shall have expired without any such filing having been made or notice of such review having been issued; or, in the event of such filing or review sua sponte, as to which such filing or review shall have been disposed of favorably to the grant and the time for seeking further relief with respect thereto shall have expired without any request for such further relief having been filed. "Indemnified Party" and "Indemnifying Party" shall have the respective meanings specified in Section 15.05. "Licenses" means all of the licenses and other authorizations issued by the Commission for the operation of the Station, as set forth in Schedule 1(g). "Option" means the option to purchase the Station granted by Seller to Buyer, pursuant to the exercise of which this Agreement has been entered into. "Option Consideration" means the amount of Ten Million Dollars ($10,000,000) which Buyer has paid Seller pursuant to the terms of the Option Agreement and any portion of the Supplemental Amount, if any, previously paid by Buyer to Seller. "Property" means, collectively, that certain real property described in Schedule 1(a) and the leasehold interests in that certain real property described in Schedule 1(b). "Purchase Price" means the amount of Twelve Million Dollars ($12,000,000) and up to an additional amount of Seven Million Dollars ($7,000,000) in the event that the Supplemental Amount has been paid by Buyer to Seller as specified in Section 2.3 of the Option Agreement. "Station Contracts" shall have the meaning set forth in Section 3.10. "Supplemental Amount" shall have the meaning set forth in the Option Agreement. "Survey" means the surveys for all parcels of real property described on Schedule 1(a), each of which shall be prepared by a registered land surveyor licensed in the State of Alabama (the "Surveyor"), certified by the Surveyor to Buyer and Buyer's lender, and showing (a) the location of all lot and street lines, (b) the location of encroachments, overhangs or projections by buildings or improvements erected on adjacent lands or on such real property, (c) means of ingress and egress to public roads, (d) the location of all utility and other easements, rights of way, set-back lines and other matters of record affecting such real property; (e) a description and the location of all existing improvements (including parking areas), and (f) such other facts and information as Buyer may require. "TBA" means that certain Time Brokerage Agreement, dated as of December 21, 1995, by and between Seller and Buyer. "Title Insurance Commitment" means an irrevocable title insurance commitment issued by a title insurance company acceptable to Buyer with respect to the real property described in Schedule 1(a) for (i) a prepaid owner's policy of title insurance (on ALTA Form B 1990 or form offering similar coverage), showing fee simple title to the real property described in Schedule 1(a) in Buyer, with no exception as to survey matters, no standard pre-printed exceptions, no creditors' rights exceptions, no exceptions for mechanics and materialmen's liens, no gap exceptions, and affirmative coverage as Buyer may reasonably request, and (ii) a prepaid full-coverage mortgagee policy of title insurance (on the ALTA 1990 form or form offering similar coverage), naming Buyer's lender as the insured party, with no exception as to survey matters, no standard pre-printed exceptions, no creditors' rights exceptions, no exceptions for mechanics and materialmen's liens, no gap exceptions, and affirmative coverage as Buyer may reasonably request, insuring that the mortgage of Buyer's lender constitutes a valid and recorded first lien on a good and marketable fee simple interest in the real property described in Schedule 1(a). The dollar amount of each policy shall be equal to the amount of consideration allocated to the real property pursuant to Section 12. All references to Sections, Exhibits and Schedules are to Sections of and Exhibits and Schedules to this Agreement. ARTICLE 2. SALE AND PURCHASE OF ASSETS; PURCHASE PRICE; PAYMENT OF PURCHASE PRICE; ASSUMPTION OF LIABILITIES 2.01 Asset Sale. On the basis of the representations, warranties and agreements contained herein, and subject to the terms and conditions hereof, Seller agrees to sell, assign, transfer, convey and deliver to Buyer, and Buyer agrees to purchase from Seller, the Assets at the Closing. 2.02 Purchase Price. For and in consideration of the conveyances and assignments described herein and in addition to the assumption of liabilities as set forth in Section 2.04, Buyer agrees to pay to Seller, and Seller agrees to accept from Buyer, the Purchase Price (less the Option Consideration), subject to adjustment for payment of expenses as provided for in Section 21. The Purchase Price shall be payable as described in Section 2.03. The Purchase Price shall be allocated among the Assets in accordance with Section 12. 2.03 Payment of Purchase Price. On the Closing Date, the Buyer shall pay the adjusted Purchase Price (as calculated in accordance with Section 2.02) to Seller by wire transfer of immediately available funds. 2.04 Assumption of Liabilities. At the Closing, Buyer shall assume only the following liabilities and obligations of Seller (the "Assumed Liabilities"): (a) the liabilities and obligations of Seller to be performed after the Closing Date under the contracts, agreements and leases set forth and described in Schedules 1(b) and 1(i) and (b) the liabilities and obligations of Seller to be performed after the Closing Date under any contracts, agreements and leases which are entered into after the date hereof (in compliance with Section 7) and which are identified in the certificate referred to in Section 11.02(c). Buyer shall not assume or be deemed to assume any debts, liabilities or obligations of Seller except as specified in this Section 2.04. All such assumptions pursuant to this Section 2.04 shall be subject to Buyer's confirmation with creditors of existing unperformed obligations. ARTICLE 3 REPRESENTATIONS AND WARRANTIES BY SELLER Seller represents and warrants to Buyer as follows: 3.01 Organization and Standing. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and authorized to conduct business in the State of Alabama. Neither the nature of the business conducted by Seller, nor the character of the properties owned, leased or otherwise held by Seller makes any such qualification necessary in any other state, country, territory or jurisdiction. Seller has the full and unrestricted power and authority, corporate and otherwise, to own, lease and operate the Assets, to carry on its business as now conducted, and to enter into and perform the terms of this Agreement, the agreements, and instruments referred to herein, and the transactions contemplated hereby and thereby. 3.02 Authorization. The execution, delivery and performance of this Agreement and of the agreements and instruments called for hereunder, and the consummation of the transactions contemplated hereby and by such agreements and instruments have been duly and validly authorized by all necessary actions of Seller (none of which actions has been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes, and upon execution and delivery each other agreement and instrument will constitute, a valid and binding agreement and obligation of Seller, enforceable in accordance with its respective terms. Except as specified in Section 3.05, the execution, delivery and performance by Seller of this Agreement and the agreements and instruments called for hereunder will not require the consent, approval or authorization of any person, entity or governmental authority. 3.03 Litigation; Compliance with Law. There is no action, suit, investigation, claim, arbitration or litigation pending or, so far as Seller knows, threatened against or involving either Seller, the Assets, the Station or the Station's business and operations, at law or in equity, or before or by any court, arbitrator or governmental authority, and neither Seller nor the Station is operating under or subject to any order, judgment, decree or injunction of any court, arbitrator or governmental authority, except for those listed in Schedule 3.03. Seller has complied and is in compliance in all material respects with all laws, ordinances, regulations, awards, orders, judgments, decrees and injunctions applicable to Seller, to the Assets, to the Station and to its business and operations, including all federal, state and local laws, ordinances, regulations and orders pertaining to employment or labor, safety, health, environmental protection, zoning and other matters. Seller has obtained all material permits, licenses and approvals (none of which has been modified or rescinded and all of which are in full force and effect) from all governmental authorities necessary in order to conduct the operation of the Station as presently conducted and to own, use and maintain the Assets. 3.04 Financial Statements and Condition; Liabilities. 3.04(a) Seller has prepared and/or furnished to Buyer the balance sheets of Seller as of the dates specified on Schedule 3.04(a), and the statements of income, stockholders' equity and changes in financial position for the periods specified on Schedule 3.04(a). All of the financial statements, including, without limitation, the notes thereto, referred to in Schedule 3.04(a) or furnished to Buyer after the date hereof pursuant to this Agreement: (i) are in accordance with the books and records of the Seller, (ii) are true, correct and complete in all material respects and present fairly the financial position of Seller as of the respective dates and the results of operations and changes in cash flow for the respective periods indicated, and (iii) have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior accounting periods. All deposits and prepaid expenses, if any, included as assets of Seller represent bona fide deposits or payments theretofore made by Seller, the benefit and advantage of which will be obtained and enjoyed by Seller and, after the Closing Date, by Buyer. 3.04(b) Except as reflected in the balance sheets as of , 199 , including the notes thereto, there exist no liabilities of Seller, contingent or absolute, matured or unmatured, known or unknown. Since , 199 , (i) Seller has not made any contract, agreement or commitment or incurred any obligation or liability (contingent or otherwise), except in the ordinary course of business and consistent with past business practices, (ii) there has not been any discharge or satisfaction of any obligation or liability owed to Seller, which is not in the ordinary course of business or which is inconsistent with past business practices, or (iii) there has not occurred any loss or material injury to the Assets as the result of any fire, accident, act of God or the public enemy, or other casualty, or any adverse material change in the Assets. 3.05 Assets; Consents. 3.05(a) The Assets to be acquired at the Closing constitute all of the real, personal, and mixed assets, both tangible and intangible, that are used, held for use or necessary for the business and operations of the Station as presently conducted. 3.05(b) Seller is the sole and exclusive legal and equitable owner of all right, title and interest in and has good, marketable, and insurable title to the Assets, free and clear of any Encumbrances, except for and subject only to (i) liens for real estate taxes not yet due and payable, (ii) existing easements of record on real property which do not materially impair the use of such property for the purposes contemplated hereunder, and (iii) those encumbrances set forth in Schedule 3.05(b), which shall be removed prior to or contemporaneously with the Closing Date. 3.05(c) On the Closing Date, Buyer shall acquire good, marketable and insurable title to, and all right, title and interest in, the Assets, free and clear of all Encumbrances, except for and subject only to liens for real estate taxes not yet due and payable and existing easements of record on real property which do not materially impair the use of such property for the purposes contemplated hereunder. 3.05(d) All of the Assets to be transferred hereunder are transferable by Seller by Seller's sole act and deed, and no consent on the part of any other person is necessary to validate the transfer to Buyer, except (i) the Licenses described in Schedule 1(g) are not assignable without the consent of the Commission as provided by law and (ii) certain of the agreements described in Schedules 1(b) and 1(i), as specified in Schedule 3.05(d), may be assigned only with the consent of third parties. 3.05(e) The Property and all of the Improvements have direct and unobstructed access to all public utilities necessary for the uses to which the Property and all of the Improvements are presently devoted by Seller and to a public street. No portion of the Property or any Improvement is the subject of, or affected by, any condemnation or eminent domain proceedings currently instituted or pending, and so far as Seller knows, no such proceedings are threatened. The Property and the Improvements are not subject to any covenant or other restriction preventing or limiting Seller's right to convey Seller's right, title and interest in the Property and the Improvements or to use the Property and the Improvements for the various purposes for which the Property and the Improvements are being used. 3.06 Condition of Tangible Assets. All tangible Assets are in good operating condition and repair, and are suitable, adequate and fit for the uses for which they are intended or are being used; and the present use of such Assets do not violate in any material respect any applicable licenses, statutes, or building, fire, zoning, health and safety or any other laws or regulations. Without limiting the foregoing, such tangible assets and operations thereof do not result in exposure of workers or the general public to levels of radio frequency radiation in excess of the "Radio Frequency Protection Guides" recommended in "American National Standard Safety Levels With Respect to Human Exposure to Radio Frequency Electromagnetic Fields, 300 KHz to 100 GHz," issued by the American National Standards Institute and which the Commission has incorporated in its rules and regulations. 3.07 Trademarks; Licenses. Schedule 1(h) contains a true and complete listing of all franchises, licenses, trademarks, trade names, copyrights and applications therefor owned or licensed by or registered in the name of Seller and used or held for use in the business and operations of the Station, other than the Licenses, all of which are transferable to Buyer by the sole act and deed of Seller; and no consent on the part of any other person is necessary to validate the transfer to Buyer. Seller pays no royalty to anyone under any of the foregoing. Seller owns or possesses all rights to use all franchises, licenses, service marks, trademarks, trade names, copyrights, patents and applications therefor necessary to the conduct of the business of the Station. Seller does not have any knowledge nor has Seller received any notice to the effect that any service rendered by Seller relating to the business of the Station may infringe on any trademark, service mark, trade name, copyright, patent, trade secret or legally protectable right of another. 3.08 Licenses. The Licenses for the Station are valid through April 1, 1997, and there are no orders, complaints, proceedings or investigations, pending or, so far as Seller knows, threatened, which would affect the validity of the Licenses. 3.09 Reports and Records. During the current term of the Licenses, all returns, reports and statements relating to the Station currently required to be filed by Seller with the Commission or any other governmental instrumentality have been filed and complied with and are true, correct and complete in all material respects. All such reports, returns and statements shall continue to be filed on a current basis until the Closing Date, and will be true, correct, and complete in all material respects. During the current term of the Licenses, all documents required by the Commission's rules to be placed in the Station's public files have been placed and are being held in such files. During the current term of the Licenses, all logs and business records of every type and nature relating to the business and operations of the Station, including but not limited to political and public record files, program, operating and maintenance logs, equipment performance measurements, policies or evidence of insurance, licenses, payroll, social security and withholding tax returns, operator agreements and other records pertaining to the business and operations of the Station have been maintained in all material respects in accordance with good business practices and the rules of the Commission and are at the Station. 3.10 Contracts. The contracts, agreements and leases set forth and described in Schedules 1(b), and 1(i) are all of the contracts, agreements, leases and commitments (both written and oral) relating to the Assets, to the Station or to the business and operations thereof, other than (i) contracts for the sale of advertising for cash, which are not for a term longer than thirty (30) days, and (ii) contracts or commitments which do not require payments of more than $5,000 each or $20,000 in the aggregate. Seller has delivered to Buyer prior to the execution of this Agreement true and complete copies or descriptions of all contracts, agreements, leases and commitments (and all amendments and modifications thereto) relating to the Assets, the Station or to the business and operations thereof (collectively, the "Station Contracts"). The unperformed obligations ascertainable from the terms on the face of the Station Contracts are the existing unperformed obligations thereunder. Each Station Contract is in full force and effect, and constitutes a valid and binding obligation of, and is legally enforceable in accordance with its terms against, the parties thereto. The parties thereto have complied with all of the material provisions of the Station Contracts and are not in default thereunder, and there has not occurred any event which (whether with or without notice, lapse of time, or the happening or occurrence of any other event) would constitute such a default. There has not been (i) any failure of any party to any Station Contract to comply with all material provisions thereof, (ii) any default by any party thereunder, (iii) any threatened cancellation thereof, (iv) any outstanding dispute thereunder, or (v) any basis for any claim of breach or default thereunder. 3.11 Conflicts. Except as set forth in Schedule 3.11, the execution and delivery of this Agreement and the agreements and instruments called for hereunder, the fulfillment of and the compliance with the respective terms and provisions of each, and the consummation of the transactions described in each, do not and will not conflict with or violate any law, ordinance, regulation, order, award, judgment, injunction or decree applicable to Seller, to the Assets or to the Station, or conflict with or result in a breach of or constitute a default under any of the terms, conditions or provisions of Seller's articles of incorporation or bylaws, or any contract, agreement, lease, commitment, or understanding to which Seller is a party or by which Seller is bound or to which any of the Assets or the Station is subject, or result in the acceleration of any indebtedness or in the creation of any Encumbrance upon the Assets. 3.12 Related Parties. Neither Seller nor any shareholder, officer or director of Seller has any interest whatsoever in any corporation, firm, partnership or other business enterprise which has had any business transactions with Seller relating to the Assets or the Station, and no shareholder of Seller has entered into any transaction with Seller relating to the Assets or the Station, except for those set forth in Schedule 3.12. 3.13 Taxes. The Seller has timely filed with all appropriate governmental agencies all federal, state, commonwealth, local, and other tax or information returns and tax reports (including, but not limited to, all income tax, unemployment compensation, social security, payroll, sales and use, profit, excise, privilege, occupation, property, ad valorem, franchise, license, school and any other tax under the laws of the United States or of any state or any commonwealth or any municipal entity or of any political subdivision with valid taxing authority) due for all periods ended on or before the date hereof. Seller has paid in full all federal, state, commonwealth, foreign, local and other governmental taxes, estimated taxes, interest, penalties, assessments and deficiencies (collectively, "Taxes") which have become due pursuant to such returns or without returns or pursuant to any assessments received by Seller. Such returns and forms are true, correct and complete in all material respects, and Seller has no liability for any Taxes in excess of the Taxes shown on such returns. Seller is not a party to any pending action or proceeding, and, to Seller's knowledge, there is no action or proceeding threatened by any government or authority against Seller for assessment or collection of any Taxes, and no unresolved claim for assessment or collection of any Taxes has been asserted against Seller. 3.14 Employee Benefit Plans. 3.14(a) Except as described in Schedule 3.14(a), neither Seller nor any Affiliates (as defined below) have at any time established, sponsored, maintained, or made any contributions to, or been parties to any contract or other arrangement or been subject to any statute or rule requiring them to establish, maintain, sponsor, or make any contribution to, (1) any "employee pension benefit plan" (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended, and regulations thereunder ("ERISA")) ("Pension Plan"); (ii) any "employee welfare benefit plan" (as defined in Section 3(1) of ERISA) ("Welfare Plan"); or (iii) any deferred compensation, bonus, stock option, stock purchase, or other employee benefit plan, agreement, commitment, or arrangement ("Other Plan"). Seller and the Affiliates have no obligations or liabilities (whether accrued, absolute, contingent, or unliquidated, whether or not known, and whether due or to become due) with respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA) or Other Plan that is not listed in Schedule 3.14(a). For purposes of this Section 3.14, the term "Affiliate" shall include all persons under common control with Seller within the meaning of Sections 4001(a)(14) or (b)(1) of ERISA or any regulations promulgated thereunder, or Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended (the "Code"). 3.14(b) Each plan or arrangement listed in Schedule 3.14(a) (and any related trust or insurance contract pursuant to which benefits under such plans or arrangements are funded or paid) has been administered in all respects in full compliance with its terms and in both form and operation is in compliance with applicable provisions of ERISA, the Code, the Consolidated Omnibus Budget Reconciliation Act of 1986 and regulations thereunder, and other applicable law. Each Pension Plan listed in Schedule 3.14(a) has been determined by the Internal Revenue Service to be qualified under Section 401(a) and, if applicable, Section 401(k) of the Code, and nothing has occurred or been omitted since the date of the last such determination that resulted or could result in the revocation of such determination. Seller and the Affiliates have made all required contributions or payments to or under each plan or arrangement listed in Schedule 3.14(a) on a timely basis and have made adequate provision for reserves to meet contributions and payments under such plans or arrangements that have not been made because they are not yet due. 3.14(c) The consummation of this Agreement (and the employment by Buyer of former employees of Seller or any employees of an Affiliate) will not result in any carryover liability to Buyer for taxes, penalties, interest or any other claims resulting from any employee benefit plan (as defined in Section 3(3) of ERISA) or Other Plan. In addition, Seller and each Affiliate make the following representations (i) as to all of their Pension Plans: (A) neither Seller nor any Affiliate has become liable to the PBGC under ERISA under which a lien could attach to the assets of Seller or an Affiliate; (B) Seller and each Affiliate has not ceased operations at a facility so as to become subject to the provisions of Section 4062(e) of ERISA; and (C) Seller and each Affiliate has not made a complete or partial withdrawal from a multiemployer plan (as defined in Section 3(37) of ERISA) so as to incur withdrawal liability as defined in Section 4201 of ERISA, and (ii) all group health plans maintained by the Seller and each Affiliate have been operated in compliance with Section 4980B(f) of the Code. 3.14(d) The parties agree that Buyer does not and will not assume the sponsorship of, or the responsibility for contributions to, or any liability in connection with, any Pension Plan, any Welfare Plan, or Other Plan maintained by Seller or an Affiliate for its employees, former employees, retirees, their beneficiaries or any other person. In addition and not as a limitation of the foregoing covenant, the parties agree that Seller and such Affiliate shall be liable for any continuation coverage (including any penalties, excise taxes or interest resulting from the failure to provide continuation coverage) required by Section 4980B of the Code due to qualifying events which occur on or before Closing Date. 3.15 Environmental Matters. 3.15(a) For purposes of this section, "Hazardous Materials" means any wastes, substances, or materials, whether solids, liquids or gases, that are deemed hazardous, toxic, pollutants, or contaminants, including but not limited to substances defined as "hazardous wastes," "hazardous substances," "toxic substances," "radioactive materials," or other similar designations in, or otherwise subject to regulation under, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, ("CERCLA") as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. 9601 et seq.; the Toxic Substance Control Act ("TSCA"), 15 U.S.C. 2601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. 1802 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. 9601 et seq.; the Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et seq.; or other applicable federal, state, or local laws, including any plans, rules, regulations, orders, or ordinances adopted, or other criteria and guidelines promulgated pursuant to the preceding laws or other similar laws, regulations, rules, orders, or ordinances now or hereafter in effect relating to the protection of human health and the environment (collectively "Environmental Laws"). "Hazardous Materials" includes but is not limited to polychlorinated biphenyls (PCBs), asbestos and lead-based paints. 3.15(b) Seller's Environmental Representations and Warranties. Seller hereby represents and warrants that except as set forth on Schedule 3.15(b): (i) There are no pending or, to Seller's knowledge threatened, actions, suits, claims, legal proceedings or any other proceedings based on Hazardous Materials or the Environmental Laws at the Property, or any part thereof, or otherwise arising from Seller's activities at the Property involving Hazardous Materials; (ii) To Seller's knowledge, there are no conditions, facilities, procedures or any other facts or circumstances which could give rise to claims, expenses, losses, liabilities, or governmental action against Buyer in connection with any Hazardous Materials present at or disposed of from the Property, including without limitation the following conditions arising out of, resulting from, or attributable to, the assets, business, or operations of Seller at the Property: (A) the presence of any Hazardous Materials on the Property or the release or threatened release of any Hazardous Materials into the environment from the Property; (B) the off-site disposal of Hazardous Materials originating on or from the Property or the business or operations of Seller; (C) the release or threatened release of any Hazardous Materials into any storm drain, sewer, septic system or publicly owned treatment works; (D) any noncompliance with federal, state or local requirements governing occupational safety and health, or presence or release in the air and water supply systems of the Property of any substances that pose a hazard to human health or an impediment to working conditions; or (E) any facility operations, procedures or designs, which do not conform to the statutory or regulatory requirements of any Environmental Laws. (iii) To Seller's knowledge, neither polychlorinated biphenyls nor asbestos-containing materials are present on or in the Property. (iv) The Property contains no underground storage tanks, or underground piping associated with tanks, used currently or, to Seller's knowledge, in the past for the management of Hazardous Materials. 3.16 Labor Relations. There are no strikes, work stoppages, grievance proceedings, union organization efforts, or other controversies pending or threatened between Seller and any of its employees or agents or any union or collective bargaining unit. Seller has complied and is in compliance in all material respects with all laws and regulations relating to the employment of labor, including without limitation provisions relating to wages, hours, collective bargaining, occupational safety and health, equal employment opportunity, and the withholding of income taxes and social security contributions. Except as set forth in Schedule 3.16 hereto, there are no collective bargaining agreements or employment agreements between Seller and any of its employees. The consummation of the transactions contemplated hereby will not cause Buyer to incur or suffer any liability relating to, or obligation to pay, severance, termination, or other payments to any person or entity. Except as set forth in Schedule 3.16 hereto, no employee of Seller has any contractual right to continued employment by Seller following consummation of the transactions contemplated by this Agreement. Seller has previously delivered to Buyer an accurate and complete list, a date no more than fourteen (14) days prior to the date of this Agreement, of all employees of Seller and the rate of compensation (including salary, bonuses and commissions) of each such employee. 3.17 Broadcast of Programming The motion pictures, feature films, and syndicated programs for which Seller has obtained broadcast rights have been scheduled and broadcast in the ordinary course of business, consistent with Seller's past business practices and with customary practices in the television broadcast industry. 3.18 Insurance. Schedule 3.18 contains a list and brief description of all policies of title, property, fire, casualty, liability, life, workmen's compensation, business interruption and other forms of insurance of any kind relating to the Assets or the business and operations of the Station and owned or held by Seller. All such policies: (i) are in full force and effect; (ii) are sufficient for compliance in all material respects by Seller with all requirements of law and of all agreements to which Seller is a party; (iii) are valid, outstanding, and enforceable policies; and (iv) insure against risks of the kind customarily insured against and in amounts customarily carried by corporations similarly situated and provide adequate insurance coverage for the Assets and the Station (including the business and operations thereof). 3.19 Disclosure. All facts of material importance to the Assets, to the Station and to the business of Seller have been fully and truthfully disclosed to Buyer in this Agreement. No representation or warranty by Seller and no document, statement, certificate, schedule or exhibit to be furnished or delivered to Buyer pursuant to or in connection with this Agreement contains or will contain any material untrue or misleading statement of fact or omits or will omit any fact necessary to make the statements contained herein or therein not materially misleading. ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY BUYER Buyer represents, warrants and covenants to Seller as follows: 4.01 Organization and Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and by the Closing Date will be duly qualified to do business as a foreign corporation in Alabama. Buyer has the full and unrestricted power and authority, corporate and otherwise, to enter into and perform the terms of this Agreement, the agreements and instruments referred to herein, and the transactions contemplated hereby and thereby. 4.02 Authorization. The execution, delivery and performance of this Agreement and of the agreements and instruments called for hereunder, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary actions of Buyer (none of which actions has been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes, and upon execution and delivery each other agreement and instrument will constitute, a valid and binding agreement and obligation of Buyer, enforceable in accordance with its respective terms. Except for the consent of the Commission to the assignment to Buyer of the Licenses described in Schedule 1(g), the pre-merger notification clearance required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any consents which may be required from certain lenders of Buyer as described in Schedule 4.02, the execution, delivery and performance by Buyer of this Agreement and the agreements and instruments called for hereunder will not require the consent, approval or authorization of any person, entity or governmental authority. 4.03 Qualification as Licensee. Except for possible contour overlap with television station WCFT-TV, Tuscaloosa, Alabama, Buyer knows of no reason why it should not be found by the Commission to be qualified under the Communications Act of 1934, as amended, and the Commission's rules and regulations to become the licensee of the Station. ARTICLE 5. APPLICATION FOR COMMISSION CONSENT As promptly as practicable and no later than ten (10) business days following the execution of this Agreement, Seller and Buyer shall take all steps reasonably necessary to file and shall participate in the filing of applications with the Commission (the "Applications") requesting its written consent to the assignment of the Licenses for the Station (and any extensions and renewals thereof) from Seller to Buyer. Seller and Buyer will diligently take all necessary and proper steps, provide any additional information reasonably requested, and otherwise use their best efforts in order to obtain promptly the requested consent and approval of the Applications by the Commission; provided that neither of the parties hereto shall have any obligation to take any unreasonable steps to satisfy complainants, if any, or to participate in any evidentiary hearing (other than a hearing at which only oral argument is to be presented). ARTICLE 6. HART-SCOTT-RODINO As promptly as practicable and no later than thirty (30) days following the execution of this Agreement, Seller and Buyer shall complete any filing that may be required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or shall mutually agree that no such filing is required. Seller and Buyer shall diligently take all necessary and proper steps and provide any additional information reasonably requested in order to comply with the requirements of such Act. ARTICLE 7. COVENANTS AND AGREEMENTS OF SELLER Seller covenants and agrees with Buyer as follows: 7.01 Negative Covenants. Pending and prior to the Closing, Seller will not, without the prior written approval of Buyer, do or agree to do any of the following: 7.01(a) Dispositions; Mergers. Sell, assign, lease or otherwise transfer or dispose of any of the Assets or merge or consolidate with or into any other entity or enter into any negotiations or agreements relating thereto; provided, however, Seller may sell, assign, lease or otherwise transfer or dispose of any asset described in Schedule 1(f) if such asset is expended in the ordinary course of business, consistent with Seller's past business practices and with customary practices in the television broadcast industry, and property or equipment of like kind and equivalent value is substituted therefor. 7.01(b) Accounting Principles and Practices. Change or modify any of Seller's accounting principles or practices or any method of applying such principles or practices. 7.01(c) Trade-Outs. Enter into any trade-out agreement, or similar contract, commitment or understanding to provide broadcast time, except those which are in the ordinary course of business and consistent with Seller's past business practices and the TBA and which can be and are performed completely prior to the Closing Date. 7.01(d) Broadcast Time Agreements. Enter into any broadcast time sales agreement, contract, commitment or understanding except those that are in the ordinary course of business and consistent with customary practices in the television broadcast industry and the TBA. 7.01(e) Local Marketing Arrangements. Except for the TAB, acquire or enter into any local marketing arrangements, time brokerage agreements or other similar contracts. 7.01(f) Program Contracts. Acquire or enter into any new program contracts or renew, extend, amend, alter, modify or otherwise change any existing program contract, except that Seller may enter into new program contracts, consistent with the terms of the TBA, which have a term of less than six months. 7.01(g) Additional Agreements. Materially modify or amend any of the agreements listed in Schedule 3.05(d) which are marked by an asterisk or enter into any other agreements, contracts, leases, commitments, understandings, or licenses (collectively, "Additional Agreements") or incur any obligation or liability (contingent or absolute); provided, however, that Seller may enter into trade-out agreements, broadcast time agreements and program contracts consistent with this Section 7.01 and the terms of the TBA; and that any Additional Agreements are entered into in the ordinary course of business consistent with Seller's past business practices and customary practices in the television broadcast industry, so long as such Additional Agreements do not involve payments or obligations in excess of One Million Dollars ($1,000,000) for all such Additional Agreements in the aggregate. 7.01(h) Breaches; Employment Contracts. Do or omit to do any act (or permit such action or omission) which will cause a material breach of any Station Contract; enter into or become subject to any employment, labor or union contract, any professional service contract not terminable at will, or any bonus, pension, insurance, profit sharing, deferred compensation, severance pay, retirement, hospitalization, employee benefit, or other similar plan; increase the compensation payable or to become payable to any employee; or pay or arrange to pay any bonus payment to any employee. 7.01(i) Actions Affecting Licenses or Contracts. Take any action which under existing law may reasonably be expected to have a material adverse effect on the validity or enforceability of or rights under the Licenses or any material lease or contract. 7.01(j) Programming. Program or broadcast any motion picture, feature film or syndicated program, except in the ordinary course of business, within the terms of the TBA and consistent with Seller's past business practices. 7.01(k) Accounts. Accelerate the collection of or sell or assign any accounts receivable, or decelerate the payment of accounts payable, except in order to conform with Seller's past business practices and the terms of the TBA. 7.02 Affirmative Covenants. Pending and prior to the Closing Date, Seller will: 7.02(a) Preserve Existence. Preserve its corporate existence and business organization intact, maintain its existing franchises and licenses, use its reasonable best efforts to preserve for Buyer its relationships with suppliers, customers, employees and others having business relations with Seller, and keep all Assets in their present condition, ordinary wear and tear excepted. 7.02(b) Normal Operations. Subject to the terms and conditions of this Agreement (including, without limitation, Section 7.01) and the terms and conditions of the TBA: (i) carry on the business and activities of the Station, including without limitation, the sale of advertising time, entering into trade or barter arrangements, entering into other agreements, leases, commitments or understandings, or purchasing and scheduling of programming, in the usual and ordinary course of business consistent with Seller's past business practices and with customary practices in the television broadcast industry; (ii) pay or otherwise satisfy all obligations (cash and barter) of the Station as they come due and payable; (iii) maintain all of its properties in customary repair, order and condition; and (iv) maintain its books of account, records, and files in substantially the same manner as heretofore. 7.02(c) Maintain Licenses. Maintain the validity of the Licenses, and comply in all material respects with all rules and regulations of the Commission. 7.02(d) Payables. Pay all of its obligations, including, without limitation, obligations under the Station Contracts and under any such contracts that shall be entered into between the date hereof and the Closing pursuant to Section 7.01, as and when they become due and payable. 7.02(e) Corporate Action. Take all corporate action under the law of the State of Delaware necessary to effectuate the transactions contemplated by this Agreement and by the agreements and instruments called for hereunder. 7.02(f) Transfer Tax; Bulk Sales. Take all necessary action to provide for the payment of all applicable state sales, transfer or use taxes, and to comply with all applicable bulk transfer and similar laws, in connection with the transactions contemplated by this Agreement and the agreements and instruments called for hereunder. 7.02(g) Access. Give to Buyer and Buyer's authorized representatives full and complete access upon reasonable notice during normal business hours to Seller's properties, books, records, contracts, commitments, facilities, premises, and equipment and to Seller's officers and employees. 7.02(h) Other Information. Provide to Buyer all such other information and copies of documents concerning Seller, the operation of the Station, the Assets, and Seller's customers and suppliers as Buyer may request. 7.02(i) Insurance. Maintain in full force and effect all of its existing casualty, liability, and other insurance through the day following the Closing Date in amounts not less than those in effect on the date hereof. 7.02(j) Financial Statements. Provide Buyer with (i) unaudited monthly balance sheets, and statements of revenues and expenses reflecting the results of business and operations of the Station and of Seller for the month preceding the date of this Agreement and for each month thereafter, within twenty (20) days of the end of each such month; and (ii) with unaudited statements of assets and liabilities and statements of revenues and expenses reflecting the results of the business and operations of the Station for the preceding twelve (12) months, within thirty (30) days of the end of the fiscal year. All of the foregoing financial statements shall comply with the requirements concerning financial statements set forth in Section 3.04. 7.02(k) Interruption in Broadcast Operations. Promptly notify Buyer in writing if any Station ceases to broadcast at its authorized power for more than 48 consecutive hours. 7.02(l) Consents. Obtain third party consents to assign to Buyer those agreements on Schedule 3.05(d) which are marked with an asterisk and use its best efforts to obtain third party consents for assignment of all other agreements listed on Schedule 3.05(d). 7.03 Removal of Materials. Any building materials or other items located in or around the Property which qualify as Hazardous Wastes or Toxic Substances shall immediately be removed from the Property at Seller's cost and expense. 7.04 Confidentiality. Seller will use its best efforts to maintain strict confidentiality with respect to all documents and information furnished to Seller by or on behalf of Buyer; provided, however, that Seller shall have no such obligations with respect to confidential information that (i) is a matter of public knowledge or (ii) has been or is hereafter publicly disclosed other than by or through Seller. In the event this Agreement is terminated, Seller will return to Buyer all documents, drafts, work papers, and other material prepared or furnished by Buyer relating to the transactions contemplated hereunder, whether obtained before or after the execution of this Agreement. 7.05 Employees. For a period commencing upon the execution of this Agreement and ending twelve (12) months following the Closing Date, Seller and its affiliates will not offer employment elsewhere than at the Station to any employee of Seller currently employed at the Station without the prior written approval of Buyer. ARTICLE 8. COVENANTS AND AGREEMENTS OF BUYER Buyer covenants and agrees with Seller as follows: 8.01 Confidentiality. Buyer will maintain strict confidentiality with respect to all documents and information furnished to Buyer by or on behalf of Seller; provided, however, that Buyer shall have no such obligations with respect to confidential information that (i) is a matter of public knowledge or (ii) has been or is hereafter publicly disclosed other than by or through Buyer. In the event this Agreement is terminated, Buyer will return to Seller all copies in its possession of documents, drafts, work papers, and other material prepared or furnished by Seller relating to the transactions contemplated hereunder, whether obtained before or after the execution of this Agreement and the agreements and instruments called for hereunder. 8.02 Corporate Action. Prior to the Closing, Buyer shall take all corporate action under the law of the State of Delaware necessary to effectuate the transactions contemplated by this Agreement and by the agreements and instruments called for hereunder. ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE The obligations of Buyer to purchase the Assets and to proceed with the Closing are subject to the satisfaction (or waiver by Buyer) at or prior to the Closing of each of the following conditions: 9.01 Representations and Covenants. The representations and warranties of Seller made herein or in any agreement, instrument or document called for hereunder shall have been true and correct when made and shall be true and correct on the Closing Date as though such representations and warranties were made on and as of the Closing Date, and Seller shall have performed and complied with all covenants and agreements required by this Agreement to be performed or complied with by Seller prior to the Closing Date. 9.02 Consents. Seller shall have obtained prior to the Closing Date all consents necessary to effect valid assignments to Buyer of those contracts on Schedule 3.05(d) which are marked with an asterisk and all other consents necessary to consummate the transactions contemplated hereby (except for the FCC Order which shall be governed by Section 9.04). 9.03 Delivery of Documents. Seller shall have delivered to Buyer all agreements, instruments and documents required to be delivered by Seller to Buyer pursuant to Section 11.02. 9.04 FCC Order. The FCC Order shall have become a Final Order with respect to the Station. 9.05 Title Insurance Commitment and Survey. Buyer shall have received the Title Insurance Commitment and Survey referred to in Section 1 for the real property described in Schedule 1(a), in form and substance satisfactory to Buyer. 9.06 Legal Proceedings. No action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed, settled or otherwise terminated) which might restrain, prohibit or invalidate the transactions contemplated by this Agreement (other than an action or proceeding instituted or threatened by Buyer). 9.07 Hart-Scott-Rodino. All applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have expired. 9.08 Absence of Material Change. Neither the Station nor the Assets shall have suffered a material adverse change since the date hereof, and there shall have been no changes since the date hereof in the business, operations, prospects, condition (financial or otherwise), properties, assets or liabilities of Seller, of the Station or of the Assets (regardless of whether or not such events or changes are consistent with the representations and warranties given herein by Seller), except changes contemplated by this Agreement and changes in the ordinary course of business which are not (either individually or in the aggregate) materially adverse. ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. The obligation of Seller to sell, transfer, convey and deliver the Assets and to proceed with the Closing are subject to the satisfaction (or waiver by Seller) at or prior to the Closing of each of the following conditions: 10.01 Representations and Covenants. The representations and warranties of Buyer made in this Agreement or in any agreement, instrument or document called for hereunder shall have been true and correct when made and shall be true and correct on the Closing Date as though such representations and warranties were made on and as of the Closing Date, and Buyer shall have performed and complied with all covenants and agreements required to be performed or complied with by Buyer prior to the Closing Date. 10.02 Delivery of Documents. Buyer shall have delivered to Seller the Purchase Price and all agreements, instruments and documents required to be delivered by Buyer to Seller pursuant to Section 11.03. 10.03 FCC Order. The FCC Order shall have been issued with respect to the Station. 10.04 Legal Proceedings. No action or proceeding by or before any governmental authority shall have been instituted or threatened (and not subsequently dismissed, settled, or otherwise terminated) that might restrain, prohibit or invalidate the transactions contemplated by this Agreement, other than an action or proceeding instituted or threatened by Seller. 10.05 Hart-Scott-Rodino. All applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have expired. ARTICLE 11. THE CLOSING 11.01 Closing. Unless otherwise agreed by the parties hereto, the Closing hereunder shall be held on a date specified by Buyer within ten (10) days following the date that the FCC Order becomes a Final Order. The Closing shall be held at 10:00 A.M. local time at the offices of Hogan & Hartson in Washington, D.C. or at such other time and place as the parties may agree. 11.02 Delivery by Seller. At or before the Closing, Seller shall deliver to Buyer the following: 11.02(a) Agreements and Instruments. The following bills of sale, statements, assignments and other instruments of transfer, dated as of the Closing Date, in form sufficient to transfer and convey to Buyer title (of the quality provided for in this Agreement) to the Assets: (i) the Assignment of Leases; (ii) the Bill of Sale; (iii) the Assignment of Licenses; (iv) the Assignment of Contracts; (v) the Deed; and (vi) such other instruments or documents as Buyer or Buyer's senior lender may reasonably request. 11.02(b) Consents. Copies of all consents necessary to effect valid assignments to Buyer of all of the agreements listed on Schedule 3.05(d) which are marked with an asterisk and any other consents Seller has been able to obtain. 11.02(c) Certificate Concerning Interim Agreements. A certificate of Seller describing all broadcast time sales agreements made, all trade- out agreements entered into, and all other contracts, agreements and leases entered into by Seller between the date hereof and the Closing Date, and certifying that such agreements, contracts and leases were entered into in accordance with Section 7.01. 11.02(d) Corporate Resolutions. Copies of the resolutions of directors and shareholders of Seller, certified as being correct and complete and then in full force and effect, authorizing the execution, delivery and performance of this Agreement and the agreements and instruments called for hereunder, and the consummation of the transactions contemplated hereby and by such agreements and instruments. 11.02(e) Officers' Certificate. A certificate of Seller signed by the President and the Secretary of Seller certifying that the representations and warranties of Seller made herein were true and correct in all material respects as of the date of this Agreement and are true and correct in all material respects as of the Closing Date, and that Seller has performed and complied with all covenants and agreements required to be performed or complied with by Seller on or prior to the Closing Date. 11.02(f) Opinion of Counsel. An opinion of counsel for Seller, dated the Closing Date, addressed to Buyer and to Buyer's lender, substantially in the form attached hereto as Exhibit F. 11.02(g) Seller's IRS Form 8594. Internal Revenue Service Form 8594 completed by Seller in connection with the acquisition of the Assets by Buyer. 11.03 Delivery by Buyer. At or before the Closing, Buyer shall deliver to Seller the following: 11.03(a) Purchase Price. (i) The Purchase Price in the amount and manner set forth in Section 2. 11.03(b) Assumption Agreement. The Assumption Agreement. 11.03(c) Corporate Resolutions. Copies of the resolutions of the directors of Buyer, certified as being correct and complete and then in full force and effect, authorizing the execution, delivery and performance of this Agreement and the agreements and instruments called for hereunder, and the consummation of the transactions contemplated by this Agreement and by such agreements and instruments. 11.03(d) Officers' Certificate. A certificate of Buyer signed by the President and the Secretary of Buyer certifying that the representations and warranties of Buyer made herein were true and correct in all material respects as of the date of this Agreement and are true and correct in all material respects as of the Closing Date, and that Buyer has performed and complied with all covenants and agreements required to be performed or complied with by Buyer prior to the Closing Date. 11.03(e) Buyer's IRS Form 8594. Internal Revenue Service Form 8594 completed by Buyer in connection with the acquisition of the Assets by Buyer. ARTICLE 12. ALLOCATION OF PURCHASE PRICE AMONG ASSETS Seller and Buyer each represent, warrant, covenant, and agree with each other that the Purchase Price shall be allocated among the Assets, as set forth in an appraisal of the tangible assets to be performed prior to the Closing (at Buyer's sole expense) by Bond & Pecaro, for purposes of all federal, state and other income tax returns filed by it or other tax payments made by it. Notwithstanding any other provision of this Agreement, the provisions of this Section 12 shall survive the Closing Date without limitation. ARTICLE 13. POSSESSION AND CONTROL Between the date hereof and the Closing Date, Buyer shall not directly or indirectly control, supervise or direct, or attempt to control, supervise or direct, the business and operations of the Station, and such operation, including complete control and supervision of all programs, shall be the sole responsibility of Seller; provided, however, Buyer shall be entitled to inspect the Assets as provided in Section 7.02(h) so that an uninterrupted and efficient transfer of ownership may be effected. On and after the Closing Date, Seller shall have no control over, or right to intervene or participate in, the business and operations of the Station. ARTICLE 14. RISK OF LOSS The risk of loss or damage by fire or other casualty or cause to the Assets until the Closing Date shall be upon Seller. In the event of such loss or damage prior to the Closing Date, Seller shall promptly restore, replace or repair the damaged Assets to their previous condition at Seller's sole cost and expense. In the event such loss or damage shall not be restored, replaced, or repaired as of the Closing Date, Buyer shall, at its option, either (a) proceed with the Closing and receive all insurance proceeds to which Seller would be entitled as a result of such loss or damage (provided, however, if such proceeds do not equal the loss, Seller shall pay the deficiency to Buyer), or (b) defer the Closing Date until such restorations, replacements or repairs are made (provided that no such deferral shall affect the right of Buyer to terminate this Agreement pursuant to the provisions of Section 16). ARTICLE 15. SURVIVAL; INDEMNIFICATION 15.01 Survival of Seller's Representations. Except as otherwise specified, the representations and warranties made by Seller in this Agreement or pursuant hereto shall survive the Closing Date for a period of two (2) years, provided that Sections 3.13 and 3.15 shall survive the Closing Date for a period equal to the applicable statute of limitations and Section 3.05(b) shall survive without limitation as to time, and the representations and warranties made by Seller shall also survive and shall be unaffected by (and shall not be deemed waived by) any investigation, audit, appraisal, or inspection at any time made by or on behalf of Buyer. 15.02 Indemnification by Seller. Subject to the conditions and provisions of Section 15.05, Seller agrees to indemnify, defend and hold harmless Buyer, Buyer's employees, managers and directors ("Buyer Indemnified Parties") from and against and in respect of any and all demands, claims, complaints, actions or causes of action, suits, proceedings, investigations, arbitrations, assessments, losses, damages, liabilities, costs and expenses, including, but not limited to, interest, penalties and attorneys' fees and disbursements, asserted against, imposed upon or incurred by Buyer Indemnified Parties, directly or indirectly, by reason of or resulting from (a) any liability, obligation, or claim against Seller (whether absolute, accrued, contingent or otherwise and whether a contractual, tax or any other type of liability or obligation or claim) not expressly assumed by Buyer pursuant to Section 2.04, arising out of, relating to or resulting from the business of Seller, or relating to or resulting from the Assets or the business and operations of the Station during the period prior to the Closing Date; (b) any misrepresentation or breach of the representations and warranties of Seller contained in or made pursuant to this Agreement; or (c) any noncompliance by Seller with any covenants, agreements or undertakings of Seller contained in or made pursuant to this Agreement. 15.03 Survival of Buyer's Representations. The representations and warranties made by Buyer in this Agreement or pursuant hereto shall survive the Closing Date for a period of two (2) years, and shall also survive and shall be unaffected by (and shall not be deemed waived by) any investigation, audit, appraisal or inspection at any time made by or on behalf of Seller. 15.04 Indemnification by Buyer. Subject to the conditions and provisions of Section 15.05, Buyer hereby agrees to indemnify, defend and hold harmless Seller, Seller's employees, managers and directors ("Seller Indemnified Parties") from and against all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs and expenses, including, but not limited to, interest, penalties and attorneys' fees and disbursements, asserted against, imposed upon or incurred by Seller Indemnified Parties, directly or indirectly, by reason of or resulting from (a) any liability, obligation, or claims against Seller Indemnified Parties (whether absolute, accrued, contingent or otherwise and whether contractual, tax or any other type of liability or obligation or claim) expressly assumed by Buyer hereunder; (b) any misrepresentation or breach of the representations and warranties of Buyer contained in or made pursuant to this Agreement; or (c) any noncompliance by Buyer with any covenants, agreements or undertakings of Buyer contained in or made pursuant to this Agreement. 15.05 Conditions of Indemnification. The obligations and liabilities of Seller and of Buyer hereunder with respect to their respective indemnities pursuant to this Section 15, resulting from any claim or other assertion of liability by third parties (hereinafter called collectively, "Claims"), shall be subject to the following terms and conditions: 15.05(a) The party seeking indemnification (the "Indemnified Party") must give the other party or parties, as the case may be (the "Indemnifying Party"), notice of any such Claim promptly after the Indemnified Party receives notice thereof. 15.05(b) The Indemnifying Party shall have the right to undertake, by counsel or other representatives of its own choosing, the defense of such claim. 15.05(c) In the event that the Indemnifying Party shall elect not to undertake such defense, or within a reasonable time after notice of any such Claim from the Indemnified Party shall fail to defend, the Indemnified Party (upon further written notice to the Indemnifying Party) shall have the right to undertake the defense, compromise or settlement of such Claim, by counsel or other representatives of its own choosing, on behalf of and for the account and risk of the Indemnifying Party (subject to the right of the Indemnifying Party to assume defense of such Claim at any time prior to settlement, compromise or final determination thereof). 15.05(d) Anything in this Section 15.05 to the contrary notwithstanding, (i) if there is a reasonable probability that a Claim may materially and adversely affect the Indemnified Party other than as a result of money damages or other money payments, the Indemnified Party shall have the right, at its own cost and expense, to participate in the defense, compromise or settlement of the Claim, (ii) the Indemnifying Party shall not, without the Indemnified Party's written consent, settle or compromise any Claim or consent to entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party of a release from all liability in respect of such Claim, and (iii) in the event that the Indemnifying Party undertakes defense of any Claim, the Indemnified Party, by counsel or other representative of its own choosing and at its sole cost and expense, shall have the right to consult with the Indemnifying Party and its counsel or other representatives concerning such Claim and the Indemnifying Party and the Indemnified Party and their respective counsel or other representatives shall cooperate with respect to such Claim. ARTICLE 16. TERMINATION If (i) an FCC Order has not become a Final Order and/or the Closing has not occurred on or before the tenth anniversary of the date of the Option Agreement, (ii) the Commission designates the Application contemplated by Section 5 for an evidentiary hearing, or (iii) the Commission issues an order in connection with such application with conditions which are adverse to Buyer or which in any way diminish the operating rights with respect to the Assets and the Station (except any such conditions expressly accepted by Buyer in writing), then in any such event Buyer may, upon written notice to the Seller, terminate this Agreement without any further obligation to the Seller hereunder, provided, that such notice of termination is given prior to the date of the Closing or the date on which such FCC Order shall have become a Final Order. If the Closing has not occurred on or before the tenth anniversary of the date of the Option Agreement, then in such event Seller may, upon written to the Buyer, terminate this Agreement without any further obligation to the Buyer hereunder, provided, that, such notice of termination is given prior to the date of the Closing and the Seller is not in material default at such time. Upon termination of this Agreement pursuant to this Section 16, this Agreement shall be deemed null, void, and of no further force and effect (except for the provisions of Sections 7.04, 8.01, and 21, which shall survive such termination). ARTICLE 17. REMEDIES 17.01 Default by Buyer. If Buyer shall default in the performance of its obligations under this Agreement in any material respect or if, as a result of Buyer's action or failure to act, the conditions precedent to Seller's obligation to close specified in Section 10 are not satisfied, and for such reason or reasons this Agreement is not consummated, and provided that Seller shall not then be in default in the performance of Seller's obligations hereunder, Seller shall be entitled, by written notice to Buyer, to terminate this Agreement and to pursue any other remedies Seller has at law or in equity or otherwise. 17.02 Default by Seller. If Seller shall default in the performance of Seller's obligations under this Agreement in any material respect, or if, as a result of Seller's action or failure to act, the conditions precedent to Buyer's obligation to close specified in Section 9 are not satisfied and for such reason or reasons this Agreement is not consummated, or if Seller fails to operate the Station at its authorized power for longer than 48 consecutive hours, and provided that Buyer shall not then be in default in any material respect in the performance of Buyer's obligations hereunder, Buyer shall be entitled, at Buyer's sole option: (i) To require Seller to consummate and specifically perform the sale in accordance with the terms of this Agreement, if necessary through injunction or other court order or process; or (ii) By written notice to Seller, to terminate this Agreement and to pursue any other remedies Buyer has at law or in equity or otherwise. 17.03 Specific Performance. Seller acknowledges that the Assets to be sold and delivered to Buyer pursuant to this Agreement are unique and that Buyer has no adequate remedy at law if Seller shall fail to perform any of their obligations hereunder, and Seller therefore confirms and agrees that Buyer's right to specific performance is essential to protect the rights and interests of Buyer. Accordingly, in addition to any other remedies which Buyer may have hereunder or at law or in equity or otherwise, Seller hereby agrees that Buyer shall have the right to have all obligations, undertakings, agreements and other provisions of this Agreement specifically performed by Seller and that Buyer shall have the right to obtain an order or decree of such specific performance in any of the courts of the United States or of any state or other political subdivision thereof. ARTICLE 18. GUARANTEE 18.01 Osborn Communications Corp. ("Guarantor") hereby irrevocably and unconditionally guarantees to Buyer the prompt and complete performance and payment of each and every obligation of Seller to Buyer, direct or indirect, now existing or hereafter arising under this Agreement, including the due and punctual performance and observance by Seller of all of the terms and conditions of this Agreement. 18.02 The obligations of Guarantor hereunder shall be absolute and unconditional and shall continue in full force and effect until the performance and payment of all of the obligations of Seller under this Agreement, and are in no way conditioned upon any event or contingency, or upon any attempt to enforce Seller's performance under this Agreement or any other right or remedy against Seller or to collect from Seller through the commencement of legal proceedings or otherwise. 18.03 The obligations of Guarantor hereunder shall not be affected, reduced, impaired, modified, changed, released, limited or discharged in any manner whatsoever by reason of any impairment, modification, change, release, or limitation of the liability of Seller or its estate in bankruptcy, resulting from the operation of any present or future provision of the bankruptcy laws or other similar statute, or from the decision of any court. 18.04 Guarantor unconditionally waives diligence, presentment, protest, notice of dishonor, demand, extension of time for payment, notice of nonpayment at maturity, and indulgences and notices of every kind, and consents to any and all changes in terms, covenants, and conditions hereof. 18.05 Guarantor agrees that the obligations of Guarantor hereunder are irrevocable and are independent of the obligations of Seller under this Agreement; that a separate action or actions may be brought and prosecuted against Guarantor regardless of whether any action is brought against Seller or whether Grantor is joined in any such action or actions. 18.06 Guarantor agrees that Guarantor shall not exercise any rights that it may acquire by way of subrogation hereunder or otherwise until the performance in full of all obligations guaranteed pursuant hereto. 18.07 Guarantor represents and warrants to Buyer that (a) it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, (b) it has the full corporate power and corporate authority to enter into this Agreement, and this Agreement has been duly authorized, executed and delivered by Guarantor and is a legal, valid and binding agreement and obligation of Guarantor enforceable against Guarantor in accordance with its terms, except to the extent limited by applicable bankruptcy, insolvency, moratorium and other similar laws of general application relating to or affecting the enforcement of creditors' rights and general equity principles, (c) neither the execution and delivery of this Agreement, the consummation of any of the transactions contemplated herein, nor compliance with the terms hereof, will conflict with or result in a breach of any provision of any law or regulation applicable to Guarantor, or any indenture, contract or other agreement to which Guarantor is a party or by which Guarantor is bound, or any statute, rule, regulation, judgment, decree or order binding upon Guarantor, and (d) Guarantor indirectly owns all of the issued and outstanding stock of Seller. 18.08 The provisions of this Section shall inure to the benefit of and may be enforced by Buyer and its successors and assigns, and shall be binding upon and enforceable against Guarantor and Guarantor's successors or assigns. ARTICLE 19. ADDITIONAL ACTIONS AND DOCUMENTS Each of the parties hereto agrees that it will, at any time, prior to, at or after the Closing Date, take or cause to be taken such further actions, and execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments, and obtain such consents, as may be necessary or reasonably requested in connection with the consummation of the purchase and sale contemplated by this Agreement or in order to fully effectuate the purposes, terms and conditions of this Agreement. ARTICLE 20. BROKERS Except for Alex Brown & Co., Seller represents to Buyer that Seller has not engaged, or incurred any unpaid liability (for any brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder or agent in connection with the transactions contemplated by this Agreement; Buyer represents to Seller that Buyer has not engaged, or incurred any unpaid liability (for any brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder or agent in connection with the transactions contemplated by this Agreement; and Seller agrees to indemnify Buyer, and Buyer agrees to indemnify Seller, against any claims asserted against the other parties for any such fees or commissions by any person purporting to act or to have acted for or on behalf of the indemnifying party. Notwithstanding any other provision of this Agreement, this representation and warranty shall survive the Closing Date without limitation as to time. ARTICLE 21. EXPENSES Each party hereto shall pay its own expenses incurred in connection with this Agreement and in the preparation for and consummation of the transactions provided for herein. Notwithstanding the foregoing, (a) Seller and Buyer shall share equally in all sales, use, transfer, stamp, documentary, and recording taxes and fees, all costs of conveyances, all notary fees, all filing and application fees to any federal, state or local agency, all filing fees to the Commission in connection with the Applications, all sales, stamp, documentary, transfer, and recording taxes and fees applicable to the transactions contemplated by this Agreement and the instruments and documents called for hereunder, including, without limitation, any Alabama sales, use, stamp, documentary, transfer or similar taxes imposed with respect to the sale of any motor vehicle or with respect to the transfer of any real property, (b) Buyer shall pay all fees and expenses of the appraiser referred to in Section 12 and the Title Insurance Commitment, and all filing fees in connection with any filing under the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended, and (c) Seller shall pay all fees and expenses for the Survey. ARTICLE 22. NOTICES All notices, demands, requests, or other communications which may be or are required to be given or made by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered (including delivery by overnight courier), mailed by first-class registered or certified mail, return receipt requested, postage prepaid, delivered by overnight air courier, or transmitted by telegram, telex or facsimile transmission addressed as follows: (i) If to Buyer: Allbritton Communications Company 800 17th Street, N.W. Suite 301 Washington, D.C. 20006 Attn.: Jerald N. Fritz, Esq. with a copy (which shall not constitute notice) to: Hogan & Hartson 555 Thirteenth Street, N.W. Washington, D.C. 20004 Attn.: Mace J. Rosenstein, Esq. (ii) If to Seller: RKZ Television, Inc. c/o Osborn Communications Corp. 130 Mason Street Greenwich, CT 06830 Attn: Frank D. Osborn with a copy (which shall not constitute notice) to: Haley, Bader & Potts P.L.C. 4350 North Fairfax Drive Suite 900 Arlington, VA 22203-1633 Attn: Theodore D. Kramer or such other address as the addressee may indicate by written notice. Each notice, demand, request, or communication which shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the affidavit of messenger or (with respect to a telex or facsimile) the answer back being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation. ARTICLE 23. WAIVER No delay or failure on the part of any party hereto in exercising any right, power or privilege under this Agreement or under any other instrument or document given in connection with or pursuant to this Agreement shall impair any such right, power or privilege or be construed as a waiver of any default or any acquiescence therein. No single or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege, or the exercise of any other right, power or privilege. No waiver shall be valid against any party hereto unless made in writing and signed by the party against whom enforcement of such waiver is sought and then only to the extent expressly specified therein. ARTICLE 24. BENEFIT AND ASSIGNMENT Except as hereinafter specifically provided in this Section 24, no party hereto shall assign this Agreement, in whole or in part, whether by operation of law or otherwise without the prior written consent of Seller (if the assignor is Buyer) or Buyer (if the assignor is Seller), and any purported assignment contrary to the terms hereof shall be null, void and of no force and effect. In no event shall any assignment by Seller of its rights and obligations under this Agreement, whether before or after the Closing, release Seller from its liabilities hereunder. Notwithstanding the foregoing, Buyer or any permitted assignee of Buyer may assign this Agreement and any and all rights hereunder, in whole or in part, to any subsidiary of Buyer or to any entity in which the controlling shareholders of Buyer maintain control. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No person or entity other than the parties hereto is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns as permitted hereunder. ARTICLE 25. REMEDIES CUMULATIVE Except as specifically provided herein, the remedies provided herein shall be cumulative and shall not preclude the assertion by Seller or by Buyer of any other rights or the seeking of any other remedies against the other. ARTICLE 26. ENTIRE AGREEMENT; AMENDMENT This Agreement, together with all Exhibits and Schedules hereto, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. ARTICLE 27. SEVERABILITY If any part of any provision of this Agreement or any other agreement, document or writing given pursuant to or in connection with this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provisions or the remaining provisions hereof or of said agreement, document or writing. ARTICLE 28. PRESS RELEASES All notices to third parties and other publicity relating to the transactions contemplated by this Agreement shall be jointly planned, coordinated and agreed to by Buyer and Seller. Prior to the Closing Date neither of the parties hereto shall act unilaterally in this regard without the prior written approval of the other, except as required by law and/or the rules and regulations of the Commission. ARTICLE 29. HEADINGS The headings of the sections and subsections contained in this Agreement are inserted for convenience only and do not form a part or affect the meaning, construction or scope thereof. ARTICLE 30. GOVERNING LAW This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed under and in accordance with the laws of the State of New York, excluding the choice of law rules thereof. ARTICLE 31. SIGNATURE IN COUNTERPARTS This Agreement may be executed in separate counterparts, neither of which need contain the signatures of both parties, each of which shall be deemed to be an original, and both of which taken together constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto. IN WITNESS WHEREOF, each of the parties hereto has executed this Asset Purchase Agreement, or has caused this Asset Purchase Agreement to be duly executed and delivered in its name on its behalf, all as of the day and year first above written. SELLER RKZ TELEVISION, INC. By: Name: Title: BUYER ALLBRITTON COMMUNICATIONS COMPANY By: ________________________________ Robert L. Allbritton Executive Vice President For purposes of Article 18 of this Asset Purchase Agreement OSBORN COMMUNICATIONS CORP. By: Name: Title: DECEMBER 29, 1995 LETTER TO RKZ TELEVISION, INC. December 29, 1995 RKZ Television, Inc. Osborn Communications Corporation c/o Osborn Communications Corporation 130 Mason Street Greenwich, Connecticut 06830 Re: WJSU-TV, Anniston, Alabama (the "Station") Gentlemen: Reference is hereby made to that (a) certain Option Agreement, dated as of December 21, 1995 (the "Option Agreement"), by and among RKZ Television, Inc., a Delaware corporation ("Grantor"), Osborn Communications Corporation, a Delaware corporation ("Guarantor" and together with "Grantor," the "Sellers"), and Allbritton Communications Company, a Delaware corporation ("ACC") and (b) that certain Asset Purchase Agreement to be entered into by and among the Sellers and ACC upon the exercise of the option described in the Option Agreement (the "Purchase Agreement" and together with the Option Agreement, the "Transaction Agreements"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Transaction Agreements. Notwithstanding anything to the contrary set forth in the Transaction Agreements or otherwise, this letter agreement (the "Letter Agreement") sets forth our agreement with respect to the following matters: 1. Liens and Encumbrances. Sellers, ACC and Society National Bank (the "Bank") have entered into an agreement dated as of December 29, 1995 (the "Bank Agreement"), pursuant to which the Bank will give notice to ACC prior to the foreclosure by the Bank on its liens and security interests in the Assets, provided that the Sellers pay certain amounts to the Bank as set forth in the Bank Agreement. Sellers represent and warrant that the Option Amount and any Supplemental Amount (net of reasonable transaction expenses and applicable taxes) paid by ACC will be paid to the Bank. Except for the liens and security interests disclosed by Grantor to ACC on Schedule 3.05(b) to the Option Agreement delivered pursuant thereto, Sellers shall not, and shall not permit any of its subsidiaries to, directly or indirectly, create, incur, assume or permit to suffer to exist any lien, security interest or other encumbrance of any kind on, or with respect to, the Assets, whether now owned or hereafter acquired, or any income or profits therefrom. Notwithstanding anything to the contrary, Sellers may permit new liens, security interests or other encumbrances in connection with the refinancing of any debt presently owed to the Bank, provided that the banks or such other financial institutions which agree to provide refinancing to the Sellers agree in writing to the terms and conditions applicable to the Bank which are set forth in the Bank Agreement and in the consent agreement dated as of December 29, 1995 entered into by and between the Guarantor and the Bank. 2. Intercompany Debt. Sellers acknowledge and agree that (a) intercompany debt and interest in the amount of approximately $10.4 million is owed to O.C.C., Inc., a wholly-owned subsidiary of the Guarantor, by the Grantor and (b) the entire intercompany debts and obligations of the Grantor will be extinguished and paid in full upon payment by ACC of the Option Amount. Except as may be reasonably required by Grantor, pursuant to the exercise of its sole good faith business judgment, to carry out its obligations under the Transaction Agreements, including Grantor's obligations as the licensee of the Station, Grantor shall not, directly or indirectly, create, incur, assume, guaranty or otherwise become or remain directly or indirectly liable with respect to any intercompany indebtedness or any indebtedness with an affiliate of Grantor. 3. Bankruptcy. (a) Grantor represents that as of the date hereof and continuing through the Closing Date, Grantor has not filed a voluntary petition for relief, nor is there any involuntary petition pending against the Grantor or against or with respect to the Assets, under any provision of the federal bankruptcy laws or other local, state, federal, or other insolvency or similar laws providing for the relief of debtors (individually, an "Insolvency Proceeding"). (b) The Grantor represents, warrants and covenants to ACC that the exercise by ACC of its rights pursuant to the Option Agreement will not be thwarted, prevented, hindered or delayed by an Insolvency Proceeding. Grantor further represents, warrants and covenants to ACC that Grantor shall not voluntarily commence an Insolvency Proceeding, and that Grantor shall use its best efforts to cause to be immediately dismissed any involuntary Insolvency Proceeding. (c) In the event that an Insolvency Proceeding is commenced, Grantor knowingly, voluntarily and intentionally, after consultation with and advice of counsel, stipulates and agrees, to the fullest extent allowed by law and with the full intention that such stipulations and agreements shall survive the filing of any Insolvency Proceeding, that: (i) Without the necessity of an evidentiary hearing and without the necessity or requirement that ACC establish or prove the value of the Assets, or the lack of adequate protection of ACC's interest in the Assets, Grantor consents to and ACC shall be entitled to the immediate modification or termination of any stays of proceedings pursuant to 11 U.S.C. Section 362 or otherwise, thereby allowing ACC to exercise all of its legal rights and remedies including, without limitation, the right to acquire the Assets. Grantor shall not oppose, directly or indirectly, or otherwise defend against ACC's effort to gain such relief from the any stays. (ii) The Grantor hereby irrevocably appoints ACC as its attorney in fact to communicate to any court of competent jurisdiction the express consent of the Grantor to any request by ACC for the modification or termination of the stays of proceedings as set forth above, and to take any and all other and further actions necessary or appropriate to the modification or termination of any stays. (iii) In addition to and not in lieu of the modification or termination of any stays of proceedings contemplated above and to the extent that the Letter Agreement, the Transaction Agreements and the transactions contemplated hereby are or might be considered to be in the nature of executory contracts, the Grantor shall, at the request of ACC, immediately assume and cure any default in performance under the terms of this Letter Agreement and the Transaction Agreements and shall file with a court of competent jurisdiction such motions, adversary proceedings or other actions as may be necessary to give immediate effect to the assumption thereof. Failure or refusal of the Grantor to undertake immediately and successfully such assumption shall constitute additional cause for the modification or termination of any and all stays of proceedings. (iv) The Grantor hereby irrevocably appoints ACC as its attorney in fact to communicate to any court of competent jurisdiction the express consent of the Grantor to the assumption of this Letter Agreement and the Transaction Agreements and to take any and all other and further actions necessary or appropriate to implement such assumption. The rights and remedies set forth in this Paragraph (c) are in addition to and not in substitution for ACC's right to submit and have allowed a claim pursuant to 11 U.S.C. Section 502(g) (or any similar or successor statute or rule of court) in the event that this Letter Agreement or the Transaction Agreements are rejected as executory contracts in an Insolvency Proceeding. (d) The Grantor expressly acknowledges that the agreements of the parties with respect to the matters set forth in this Letter Agreement constitute a materially significant portion of the inducement for ACC to pay the Option Amount as of the date hereof. 4. Relocation of Transmitter Site. Section 2.1 of the Option Agreement is amended to clarify that the determination of whether a Transmitter Site is "reasonably acceptable to ACC" shall not include consideration of the extent of coverage of Birmingham from such a site as long as such site places a predicted city grade contour over at least part of the Birmingham Limits using the prediction methodology specified in paragraph 5 hereof. 5. Calculation of Predicted City Grade Contour. For purposes of Sections 2.1 and 2.3(b) of the Option Agreement, the Grantor and ACC agree that the area within the Authorized Contour Area and the area within the Proposed Contour Area shall each be determined as follows: A grid of evenly-spaced squares, each one of which is of 1,000 meters in length on each side, shall be superimposed over the area within the Birmingham Limits. Within each square, the predicted signal strength will be determined using the MSite Program of EDX Engineering. The predicted signal strength will be determined by assuming free space propagation minus diffraction losses caused by terrain based upon the rounded obstacle diffraction model described in Section 7.3 of NBS Technical Note 101, assuming 50 percent time and location variability and the receiving antenna height assumed by the FCC's F(50,50) curves. Each square receiving a predicted signal strength of 80 dBu or greater will be deemed to be encompassed by the city grade contour of the Station. The area encompassed within all such squares receiving a predicted signal strength of 80 dBu or greater shall be considered to be the area within the Birmingham Limits encompassed by the predicted city grade contour. The signal strength prediction shall be subject to review by ACC's engineer to assure that assumptions have been made consistent with similar studies submitted to the FCC using the MSite program or another EDX program employing the same diffraction loss calculation techniques and assumptions. 6. Delivery of the Option Amount. ACC acknowledges that payment by ACC of the Option Amount shall constitute a waiver by ACC of any right to terminate the Option pursuant to Section 1.3 of the Option Agreement. 7. Miscellaneous. This Letter Agreement and the covenants and agreements set forth herein shall be binding upon and inure solely to the benefit of the signatory parties hereto (and their successors and assigns as permitted under the Transaction Agreements). This Letter Agreement shall be deemed to amend the Transaction Agreements and to the extent that any of the terms or conditions herein are inconsistent or conflict with the forms or conditions of the Transaction Agreements, the terms and conditions of this Letter Agreement shall govern. Please acknowledge your understanding of and agreement with the foregoing by signing this Letter Agreement in the spaces provided below, retaining one original for your files and returning the other original to ACC in the manner provided in the Purchase Agreement. Sincerely, ALLBRITTON COMMUNICATIONS COMPANY By: Name: Jerald N. Fritz Title: Vice President ACCEPTED AND AGREED TO THIS __th DAY OF December, 1995: RKZ TELEVISION, INC. By: Name: Michael F. Mangan Title: Vice President OSBORN COMMUNICATIONS CORPORATION By: Name: Michael F. Mangan Title: Vice President RKZ Television, Inc. Osborn Communications Corporation c/o Osborn Communications Corporation December 29, 1995 Page 6 WJSU TIME BROKERAGE AGREEMENT TIME BROKERAGE AGREEMENT Time Brokerage Agreement ("Agreement") dated as of December 21, 1995, by and between RKZ Television Inc. ("Licensee") and Allbritton Communications Company ("Broker"). WHEREAS, Licensee owns and operates television station WJSU-TV, Channel 40, Anniston, Alabama (the "Station"); and WHEREAS, Licensee and Broker have entered into on this day an Option Agreement relating to the Station (the "Option Agreement") pursuant to which Broker has purchased from Licensee the option to purchase the Station; and WHEREAS, Licensee, while maintaining control over the Station's finances, personnel matters and programming, desires to accept and broadcast programming supplied by Broker on the Station and Broker desires to provide such programming; NOW, THEREFORE, for and in consideration of the mutual covenants herein contained, the parties hereto have agreed and do agree as follows: 1. Air Time and Transmission Services. Licensee hereby agrees, beginning on the Commencement Date, as defined in the Option Agreement, to broadcast, or cause to be broadcast, on the Station, during times when Licensee Programs are not broadcast, programming provided by Broker (the "Programming"), which may include, without limitation, network programming, syndicated programs, barter programs, paid-for programs, locally produced programs and advertising. 2. Payments. Broker hereby agrees, beginning on the Commencement Date, to pay Licensee, as full and complete consideration for the rights granted hereunder, the amounts, and pursuant to the terms, set forth in Attachment I. Broker shall receive a payment credit for any Programming not broadcast by the Station, such credit to be determined by multiplying the sum of the Base and Expenses Payments by the ratio of the amount of time preempted or not accepted to the total number of hours of Programming supplied each month, provided that the failure of the Station to broadcast such Programming is not due to the negligent act of Broker, equipment downtime or local needs programming in accordance with Paragraph 8; provided, further, that if Licensee without Broker's concurrence has not broadcast any programming supplied to the Station pursuant to any affiliation agreement between the Broker and the ABC Television Network (the ABC Affiliation Agreement), then Licensee shall be responsible for satisfying any obligations to the ABC Network thereunder ("Network Obligations"). 3. Term. The term of this Agreement shall be until the earlier of: (i) the acquisition of the Station pursuant to the Option Agreement; or (ii) ten (10) years beginning on the Commencement Date. 4. Programming. Broker shall furnish or cause to be furnished the Programming, which shall be programming of its selection and may include commercial matter, network programming, syndicated programming, news, entertainment, promotions, contests, public service announcements and other television programming. On a regular basis, Licensee shall air, or shall require Broker to air, on the Station programming responsive to issues of importance to the local community and educational and informational programming for children aged 16 years and younger. All Programming shall be in accordance with (i) the Communications Act of 1934, as amended; (ii) Federal Communications Commission (the "FCC") rules, requirements and policies, including, without limitation, the FCC's rules on plugola/payola, lotteries, station identification, children's programming, sponsorship identification, political programming and political advertising rates; (iii) all applicable federal, state and local regulations and policies; and (iv) generally accepted quality standards consistent with Licensee's past practices. Subject to the provisions of Paragraph 2 hereof, Broker agrees that if, in the sole, good faith judgment of the Licensee or the Station General Manager, Broker does not comply with the standards of this paragraph, Licensee may suspend or cancel any Programming not in compliance. Licensee and Broker shall cooperate in an effort to avoid conflicts regarding broadcasts on the Station. The right to use the Programming and to authorize its use in any manner and in any media whatsoever shall be, and remain, vested solely in Broker. 5. Special Events. Licensee reserves the right in its discretion to preempt, delay or delete any of the broadcasts of the Programming and to substitute programming which in Licensee's judgment is of greater local or national importance. In all such cases, Licensee shall use its best efforts to give Broker reasonable notice of its intention to preempt such Programming, and, in the event of such preemption, Broker shall receive a payment credit and Licensee shall be responsible for Network Obligations for the Programming so omitted pursuant to the terms of Paragraph 2 hereof. 6. Advertising and Programming Revenues. Broker shall retain all advertising and other revenues, and all accounts receivables, relating to the Programming it delivers to the Station for broadcast, including, without limitation, network compensation revenues, promotion-related revenues and retransmission consent revenues. Broker shall be responsible for payment of the commissions due to any sales representative engaged by it for the purpose of selling advertising which is part of the Programming it provides for the Station. Licensee shall retain the revenue from the sale of any advertising on the Station on programs not produced or delivered to it by Broker. Licensee and Broker each shall have the right, at their own expense, to seek copyright royalty payments for their own programming. Broker may sell advertising on the Station in combination with the sale of advertising on other broadcasting stations of its choosing, subject to compliance with antitrust laws. 7. Broadcast Obligations. Licensee represents and warrants that all contracts, commitments or understandings of Licensee to broadcast on the Station any programs or commercial matter on or after the date hereof are set forth in Attachment II ("Broadcast Obligations"). Those Broadcast Obligations which Broker agrees to assume on the Commencement Date are marked with an asterisk on Attachment II, and Broker agrees to assume all Broadcast Obligations which may not be terminated without penalty on 30-days written notice. As of the Commencement Date, Licensee shall have paid all amounts owed on its Broadcast Obligations as of that date. Licensee shall not incur any other Broadcast Obligations without the prior written consent of Broker. Licensee agrees to be solely responsible for, and to indemnify Broker against, satisfying and/or terminating any Broadcast Obligation not expressly assumed by Broker and shall provide to Broker evidence of such satisfaction or termination no later than 30 days following the Commencement Date. Licensee agrees, upon request of the Broker, to terminate its affiliation agreement with the CBS Television Network as of a date as soon as possible after the commencement of the ABC Affiliation Agreement. 8. Station Facilities. 8.1. Use of Facilities. Subject to the qualifications set forth in this Agreement, throughout the term of this Agreement, Licensee shall make the facilities of the Station available to Broker for operation and broadcast with the maximum authorized facilities twenty-four (24) hours a day, seven (7) days a week, except for downtime occasioned by routine maintenance not to exceed two (2) hours each Sunday morning between the hours of 12 Midnight and 4:00 a.m. To the extent practicable, any maintenance work affecting the operation of the Station at full power shall be scheduled upon at least forty-eight (48) hours prior notice with the agreement of Broker, such agreement not to be unreasonably withheld. During the term of this Agreement, Broker agrees to perform, without charge, routine monitoring of the Station's transmitter performance and tower lighting, subject to the Licensee's supervision. 9. Right of Access. Broker and Broker's employees or agents shall at all times be afforded reasonable access to the Station in order to perform their duties in connection with the production and transmission of the Programming over the facilities of the Station. Broker shall have the right to install at Licensee's and/or Broker's premises, and to maintain throughout the term of this Agreement, at Broker's expense, any microwave studio/transmitter relay equipment, telephone lines, transmitter remote control, monitoring devices or any other equipment necessary for the proper transmission of the Programming on the Station, and Licensee and Broker shall take all steps reasonably necessary to prepare and file any applications with the FCC to effectuate such proper transmission. Whenever on the Station's premises, Broker and its employees and agents shall be subject to the supervision and direction of Licensee's General Manager and/or other designated employee or agent. 10. New Technologies. The parties agree that any future FCC frequency allocations associated with the operation of the Station, or any additional uses of the Station's frequency authorized by the FCC (or any government agency or entity succeeding to the FCC's authority), including but not exclusively the transmission of advanced television, high definition, or digital broadcasts, are included under the provisions of this Agreement. Following a timely request by Broker, Licensee agrees to apply for any additional FCC authorization, or authorization from such other government agency or entity which may be necessary in order to make use of any future frequency allocations or additional uses of the Station's frequency as provided herein. 11. Force Majeure. Any failure or impairment of facilities or any delay or interruption in broadcasting the Programming, or failure at any time to furnish facilities, in whole or in part, for broadcasting, due to acts of God, strikes, or threats thereof, force majeure, or due to causes beyond the control of Licensee, shall not constitute a breach of this Agreement, and Licensee shall not be liable to Broker, except to the extent of allowing in each such case an appropriate payment credit for time not provided or broadcasts not carried based upon a pro rata adjustment to amounts due as specified in Paragraph 2 hereof calculated upon the length of time during which the failure or impairment exists and Licensee's satisfaction of any Network Obligations. 12. Licensee Control of Station. Notwithstanding anything to the contrary in this Agreement, Licensee shall have full authority, control and power over the operation of the Station during the period of this Agreement. Licensee shall retain control, said control to be reasonably exercised, over the policies, programming and operations of the Station, including, without limitation, the right to decide whether to accept or reject any Programming or advertisements, the right to preempt any Programming in order to broadcast a program deemed by Licensee to be of greater national, regional, or local interest, and the right to take any other actions necessary for compliance with the laws of the United States; the laws of the relevant states; the rules, regulations, and policies of the FCC (including without limitation the prohibition on unauthorized transfers of control); and the rules, regulations and policies of other federal governmental authorities, including without limitation the Federal Trade Commission and the Department of Justice. Licensee shall be responsible for ensuring that FCC requirements are met with respect to ascertainment of the problems, needs and interests of the community, public service programming, main studio staffing, maintenance of public inspection files and the preparation of quarterly issues/programs lists and children's programming reports. Broker shall, upon request by Licensee, provide Licensee with information with respect to such of Broker's programs which are responsive to the problems, needs and interests of the community or which contain educational and informational programming for children, so as to assist Licensee in the preparation of required quarterly issues/programs lists and children's programming reports, and shall provide upon request other information to enable Licensee to prepare other records, reports and logs required by the FCC or other local, state or federal governmental agencies. 13. Responsibility for Employees and Expenses. Broker shall employ and be responsible for the salaries, taxes, insurance and related costs for all personnel used in the production of the Programming (including, without limitation, salespeople, traffic personnel and programming staff). Licensee shall employ two full-time employees of the Station, one of whom shall be a manager, both of whom shall report to and be accountable solely to Licensee, and who shall be ultimately responsible for the day-to-day operation of the Station. Licensee shall be responsible for the salaries, taxes, insurance and related costs for such personnel. Licensee shall also be responsible for all expenses related to the Station's studio and broadcast transmission, including, but not limited to, tower and studio rent or mortgages, utilities, insurance on Licensee's facilities, automobile expenses of Licensee's employees, property taxes and income taxes relating to Licensee's earnings from this arrangement. Whenever on the Station's premises, all Broker personnel shall be subject to the supervision and the direction of Licensee's designated personnel. Broker shall pay for all telephone calls associated with program production and listener responses, for all fees to ASCAP, BMI and SESAC, for all sums owed under assumed contracts and for any other copyright fees attributable to the Broker's Programming broadcast on the Station. 14. Indemnification. Broker shall indemnify and hold Licensee and its stockholders, directors, officers, agents, employees, successors, and assigns harmless against all liability for libel, slander, illegal competition or trade practice, infringement of trade marks, trade names, or program titles, violation of rights of privacy, and infringement of copyrights and proprietary rights and other liabilities resulting from or relating to the broadcast of Programming furnished by Broker and for any breach of any representations, covenants or warranties of Broker contained in or made pursuant to this Agreement. Licensee agrees to indemnify and to hold Broker and its stockholders, directors, officers, agents, employees, successors, and assigns harmless against all liability arising out of (i) material broadcast by Licensee other than the Programming and/or (ii) liabilities of the type described in the first sentence of this Paragraph that arise as a result of Licensee's preemption or alteration of any Programming prior to broadcast by Licensee; or (iii) any breach of any representations, covenants or warranties of Licensee contained in or made pursuant to this Agreement. Broker's and Licensee's obligations to hold the other harmless against the liabilities specified above shall survive any termination of this Agreement until the expiration of all applicable statutes of limitation. Each of Broker and Licensee shall carry errors and omissions insurance covering broadcasts made under this Agreement, and shall name the other party as an additional insured on such insurance policy to cover broadcasts made under this Agreement. 15. Events of Default: Cure periods and Remedies. 15.1. Events of Default. The following shall, after the expiration of the applicable cure periods, constitute Events of Default under the Agreement: 15.1.1. Non-Payment. Broker's failure to timely pay the consideration provided for in Paragraph 2 hereof; 15.1.2. Default in Covenants or Adverse Legal Action. The default by any party hereto in the material observance or performance of any material covenant, condition or agreement contained herein, or if any party shall (a) make a general assignment for the benefit of creditors, (b) files or has filed against it a petition for bankruptcy, for reorganization or an arrangement, or for the appointment of a receiver, trustee or similar creditors' representative for the property or assets of such party under any federal or state insolvency law, which, if filed against such party, has not been dismissed or discharged within sixty (60) days thereof, or, specifically and without limitation, if Licensee's successors and assigns, including, without limitation, any assignee of the FCC license for the Station, except if such successor or assign is Broker, refuses to abide by or terminates this Agreement during the term of this Agreement, such event shall constitute a breach by Licensee. 15.1.3. Breach of Representation. If any material representation or warranty herein made by either party hereto, or in any certificate or document furnished by either party to the other pursuant to the provisions hereof, shall prove to have been false or misleading in any material respect as of the time made or furnished. 15.2. Cure Periods. An Event of Default shall not be deemed to have occurred until twenty (20) business days after the nondefaulting party has provided the defaulting party with written notice specifying the event or events that if not cured would constitute an Event of Default and specifying the actions necessary to cure within such period, except that in the Event of Default pursuant to Paragraph 15.1.1 hereof, an Event of Default shall not be deemed to have occurred until five (5) business days after Licensee has provided Broker with written notice specifying the event or events that if not cured would constitute an Event of Default and specifying the actions necessary to cure within such period. The twenty (20) business-day period may be extended for a reasonable period of time if the defaulting party is acting in good faith to cure and such delay is not materially adverse to the other party. The Event of Default shall not be deemed to have occurred if actions necessary to cure are taken during the relevant cure period. 15.3. Termination Upon Default. Upon the occurrence of an Event of Default, the non-defaulting party may terminate this Agreement provided that it is not also in material default hereunder. If Broker has defaulted in the performance of its obligations, Licensee shall be under no further obligation to make available to Broker any further broadcast time or broadcast transmission facilities and all amounts accrued or payable to Licensee up to the date of termination which have not been paid, less any payment credits, shall immediately become due and payable. If Licensee has defaulted in the performance of its obligations hereunder, Broker may seek such remedies at law and/or equity as are available, including, without limitation, specific performance. 15.4. Liabilities Upon Termination. Broker shall be responsible for all liabilities, debts and obligations of Broker accrued from the purchase of air time and transmission services including, without limitation, accounts payable, barter agreements and unaired advertisements, but not for Licensee's federal, state, and local tax liabilities associated with Broker's payments to Licensee as provided for herein. With respect to Broker's obligations to broadcast material over the Station after termination hereunder, Broker may propose compensation to Licensee for meeting these obligations, but Licensee shall be under no duty to accept such compensation or to perform such obligations. Upon termination, Broker shall return to Licensee any equipment or property of the Station used by Broker, its employees or agents, in substantially the same condition as such equipment existed on the date of this Agreement, ordinary wear and tear excepted. Notwithstanding anything in the foregoing to the contrary, termination shall not extinguish any rights of either party as may be provided by Paragraphs 14, 15 or 16 hereof. 16. Broker Termination Options. Broker may elect, but shall not be required, to terminate this Agreement at any time during the term hereof (a) in the event that Licensee preempts or substitutes other programming for that supplied by the Broker during five (5) percent or more of the total hours of operation of the Station during any calendar month. In the event Broker elects to terminate this Agreement pursuant to this provision, it shall give Licensee notice of such election at least sixty (60) days prior to the termination date. Upon termination, all sums owing to Licensee by Broker shall be paid. Notwithstanding anything in the foregoing to the contrary, termination shall not extinguish any rights of either party as may be provided by Paragraph 14 hereof. 17. Responsive Programming. Broker and Licensee mutually acknowledge their interest in ensuring that the Station serves the needs and interests of the residents of the Station's community of license and service area and agree to cooperate in doing so. Licensee shall, on a regular basis, assess the issues of concern to residents of the Station's community of license and service area and address those issues in its public service programming. Licensee shall describe those issues and responsive programming and place issues/programs lists in the Station's public inspection file as required by FCC rules. Licensee may request, and Broker shall provide, information concerning such of Broker's Programming that is responsive to community issues so as to assist Licensee in the satisfaction of its public service programming obligations. Licensee shall also evaluate the local need for children's educational and informational programming and shall inform Broker of its conclusions in that regard. Licensee, in cooperation with Broker, shall ensure that educational and informational programming for children aged 16 years and younger is broadcast over the Station in compliance with applicable FCC requirements. Broker shall also provide to Licensee upon request such other information necessary to enable Licensee to prepare records and reports required by the FCC or other local, state or federal government entities. 18. Time Brokerage Challenge. If this Agreement is challenged in whole or in part at the FCC or in another administrative or judicial forum, whether or not in connection with the Station's license renewal application, counsel for the Licensee and counsel for the Broker shall jointly defend the Agreement and parties' performance thereunder throughout all such proceedings. Each of Licensee and Broker shall bear its respective costs of such proceedings. If portions of this Agreement do not receive the approval of the FCC's staff, then the parties shall endeavor in good faith to reform the Agreement as necessary to satisfy the FCC staff's concerns or seek reversal of the staff decision and approval from the full Commission on appeal. 19. Representations and Warranties. 19.1. Mutual Representations and Warranties. Both Licensee and Broker represent that they are legally qualified, empowered, and able to enter into this Agreement, and that the execution, delivery and performance hereof shall not constitute a breach or violation of any agreement, contract or other obligation to which either party is subject or by which it is bound. 19.2. Licensee's Representations, Warranties and Covenants. Licensee makes the following further representations, warranties and covenants: 19.2.1. Authorizations. During the term of this Agreement, Licensee shall own and hold all licenses and other permits and authorizations necessary for the operation of the Station as presently conducted (including licenses, permits and authorizations issued by the FCC), and such licenses, permits and authorizations shall be in full force and effect for the entire term, unimpaired by any acts or omissions of Licensee, its principals, employees or agents. There is not now pending or, to Licensee's best knowledge, threatened, any action by the FCC or other party to revoke, cancel, suspend, refuse to renew or modify adversely any of such licenses, permits or authorizations, and, to Licensee's best knowledge, no event has occurred that allows or, after notice or lapse of time or both would allow, the revocation or termination of such licenses, permits or authorizations or the imposition of any restriction thereon of such a nature that may limit the operation of the Station as presently conducted. Licensee has no reason to believe that any such license, permit or authorization shall not be renewed during the term of this Agreement in its ordinary course. Licensee is not in violation of any statute, ordinance, rule, regulation, order or decree of any federal, state, local or foreign governmental agency, court or authority having jurisdiction over it or over any part of its operations or assets, which default or violation would have a material adverse effect on Licensee or its assets or on its ability to perform this Agreement. Licensee shall not take any action or omit to take any action which would have an adverse impact upon the Licensee, its assets, the Station or upon Licensee's ability to perform this Agreement. 19.2.2. Filings. All material reports and applications required to be filed with the FCC (including ownership reports and renewal applications) or any other governmental agency, department or body in respect of the Station have been filed during the current license term and in the future shall be filed in substantially a timely manner, and are and shall be true and complete and accurately present the information contained therein in all material respects. All such reports and documents, to the extent required to be kept in the public inspection files of the Station, are and shall be kept in such files. 19.2.3. Facilities. The Station's facilities shall be maintained at the expense of Licensee and shall comply and be operated, in all material respects, in accordance with the FCC authorizations for the Station and with good engineering standards necessary to deliver a high quality technical signal to the area served by the Station, and with all applicable laws and regulations (including the requirements of the Communications Act and the rules, regulations, policies and procedures of the FCC promulgated thereunder). Licensee, throughout the term of this Agreement, shall maintain good and marketable title to all of the assets and properties used and useful in the operation of the Station. During the term of this Agreement, Licensee shall not dispose of, transfer, assign or pledge any of such assets and properties except with the prior written consent of the Broker, if such action might adversely affect Licensee's performance hereunder or the business and operations of Licensee or the Station permitted hereby. All expenditures reasonably required to maintain the quality of the Station's signal shall be made promptly by Licensee, provided that Broker reimburses Licensee for such expenses as set forth in Attachment I. 19.2.4. Compliance with Law. Throughout the term of this Agreement, Licensee shall comply with all laws and regulations applicable in the conduct of Licensee's business and Licensee acknowledges that Broker has not urged, counseled, or advised the use of any unfair business practice. 19.2.5. Payment of Obligations. Licensee shall not incur any debt, obligation or liability without the prior written consent of Broker if such undertaking would adversely affect Licensee's performance hereunder or the business and operations of the Broker permitted hereby. Licensee shall pay in a timely fashion all of its debts, assessments and obligations, including without limitation tax liabilities and payments attributable to the operations of the Station, as they come due from and after the effective date of this Agreement. 19.2.6. Broadcast Obligations. Licensee has no agreement, contract, commitment or understanding to broadcast on the Station on or after the Commencement Date, any programs or commercial matter other than those listed in Attachment II hereto. Licensee shall not incur any other such obligation without the prior written consent of Broker. 19.2.7. Insurance. Licensee shall maintain in full force and effect throughout the term of this Agreement insurance with responsible and reputable insurance companies or associations covering such risks (including fire and other risks insured against by extended coverage, public liability insurance, insurance for claims against personal injury or death or property damage and such other insurance as may be applicable) and in such amounts and on such terms as is conventionally carried by broadcasters operating television stations with facilities comparable to those of the Station. Any insurance proceeds received by Licensee in respect of damaged property shall be used to repair or replace such property so that the operations of the Station conform with this Agreement. 19.2.8. Licensee Control. Licensee hereby verifies that for the term of this Agreement it shall maintain ultimate control over the Station's facilities, including specifically control over the Station's finances, personnel and programming, and nothing herein shall be interpreted as depriving Licensee of the power or right of such ultimate control. 19.3. Broker's Representations, Warranties and Covenants. 19.3.1. Compliance with Applicable Law. Broker's performance of its obligations under the Agreement and its furnishing of Programming shall be in compliance with, and shall not violate, any applicable laws or any applicable rules, regulations, or orders of the FCC or any other governmental agency. Throughout the term of this Agreement, Broker shall comply with all laws and regulations applicable in the conduct of Broker's business and Broker acknowledges that Licensee has not urged, counseled, or advised the use of any unfair business practice. 19.3.2. Children's Television Advertising. Broker shall not broadcast advertising in programs originally designed for children aged 12 years and under in excess of the amounts permitted under applicable FCC rules. 19.3.3. Handling of Complaints. Broker shall promptly advise Licensee of any public or FCC complaint or inquiry that Broker receives concerning the Programming on the Station. 19.3.4. Contracts. On the Commencement Date, Broker shall assume Licensee's rights and obligations under the Broadcast Obligations marked with an asterisk on Attachment II, and all Broadcast Obligations which may not be terminated without penalty on 30 days written notice. 19.3.5. Copyright and Licensing. Broker represents and warrants to Licensee that Broker has and shall have throughout the term of this Agreement the full authority to broadcast the Programming on the Station and that Broker shall not broadcast on the Station any material in violation of the Copyright Act. 19.3.6. Information For FCC Reports. Upon request by Licensee, Broker shall provide in a timely manner any such information in its possession which shall enable Licensee to prepare, file or maintain the records and reports required by the FCC. 19.3.7. Payola/Plugola. Broker shall not accept, and shall not permit any of its agents or employees to accept, any consideration, compensation, gift or gratuity of any kind whatsoever, regardless of its value or form, including, but not limited to, a commission, discount, bonus, materials, supplies or other merchandise, services or labor, whether or not pursuant to written contracts or agreements between Broker and merchants or advertisers, unless the payer is identified in the program as having paid for or furnished such consideration, in accordance with FCC requirements. Broker agrees to annually, or more frequently at the request of Licensee, execute and provide Licensee with an affidavit regarding payola/plugola compliance. 19.3.8. Insurance. Broker shall maintain in full force and effect throughout the term of this Agreement insurance with responsible and reputable insurance companies or associations covering such risks (including fire and other risks insured against by extended coverage, public liability insurance, insurance for claims against personal injury or death or property damage and such other insurance as may be applicable), in such amounts and on such terms as is conventionally carried by broadcasters operating television stations with facilities comparable to those of the Station, and shall name the Licensee as an additional insured on such insurance policy. Any insurance proceeds received by Broker in respect of damaged property shall be used to repair or replace Station facilities. Broker shall carry also errors and omissions insurance covering broadcasts made on the Station, and shall name the Licensee as an additional insured on such insurance policy. 20. Publicity. Licensee and Broker shall not issue any press release or otherwise make any public statement with respect to the transactions contemplated herein except as may be required by law or regulation or as agreed to by Licensee and Broker. 21. Modification and Waiver. No modification or waiver of any provision of this Agreement shall in any event be effected unless the same shall be in writing and signed by the party adversely affected by the waiver or modification, and then such waiver and consent shall be effective only in the specific instance and for the purpose for which given. 22. No Waiver: Remedies Cumulative. No failure or delay on the part of Licensee or Broker in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of Licensee and Broker herein provided are cumulative and are not exclusive of any right or remedies which it may otherwise have. 23. Construction. This Agreement shall be construed in accordance with the laws of the State of New York, and the obligations of the parties hereto are subject to all federal, state or municipal laws or regulations now or hereafter in force and to the regulations of the FCC and all other governmental bodies or authorities presently or hereafter to be constituted. 24. Headings. The headings contained in this Agreement are included for convenience only and no such heading shall in any way alter the meaning of any provision. 25. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including, without limitation, and Licensee shall assign this Agreement to, any assignee of the FCC license for the Station. 26. Notices. Any notice required hereunder shall be in writing and any payment, notice or other communications shall be deemed given when delivered personally, or mailed by certified mail or Federal Express; postage prepaid, with return receipt requested, and addressed in accordance with the listing set forth in Attachment III hereto. 27. Entire Agreement. This Agreement embodies the entire agreement between the parties and there are no other agreements, representations, warranties, or understandings, oral or written, between them with respect to the subject matter hereof. No alterations, modification or change of this Agreement shall be valid unless by like written instrument. 28. Severability. The event that any of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had not been contained herein, subject to Broker's right to terminate pursuant to Paragraphs 15 and 18 hereof. 29. Counterpart Signatures. This Agreement may be signed in one or more counterparts, each of which shall be deemed a duplicate original, binding on the parties hereto notwithstanding that the parties are not signatory to the original or the same counterpart. This Agreement shall be binding and effective as of the date on which the executed counterparts are exchanged by the parties. IN WITNESS WHEREOF, the parties have executed this Time Brokerage Agreement as of the date first above written. RKZ TELEVISION INC. By: _________________________________ Name: Frank D. Osborn Title: President ALLBRITTON COMMUNICATIONS COMPANY By: _________________________________ Name: Jerald N. Fritz Title: Vice President TIME BROKERAGE AGREEMENT ATTACHMENT I (1) During the term of this Agreement, Broker shall pay to Licensee on the first day of each calendar month an "Expenses Payment" plus a "TBA Payment" by wire transfer or check. The Expenses Payment shall reimburse Licensee for all of its monthly legitimate and prudent expenses in operating the Station pursuant to this Agreement, as set forth in the budget of anticipated Licensee expenses attached hereto as Attachment IV. Pursuant to such budget, the monthly Expenses Payment shall initially be $24,500.00 per month. The TBA Payment shall equal $15,000.00 per month until all Governmental Approvals for the Station Tower, as defined in the Option Agreement, have been obtained, after which the TBA Payment shall be increased to $30,000.00 per month. In addition to the above, a supplemental TBA Payment of $3,000 per month shall be paid by Broker to Licensee commencing forty-eight (48) months from the date hereof. (2) There shall be a settlement at the end of each calendar year where the actual legitimate and prudent operating expenses of Licensee relating to the Station are compared to the Expenses Payments paid that calendar year by Broker to Licensee. To the extent, if any, that the actual legitimate and prudent operating expenses are more or less than those paid by Broker, going forward, the monthly Expenses Payment shall be increased or decreased by the amount of overpayment or underpayment. (3) Licensee shall submit to Broker no later than thirty (30) days prior to the end of each calendar year a proposed budget for the upcoming calendar year. Broker and Licensee shall agree in good faith on an amount for the upcoming year's budgeted expenses no later than September 30 of each year. TIME BROKERAGE AGREEMENT ATTACHMENT II TIME BROKERAGE AGREEMENT ATTACHMENT III If the notice is to Licensee: RKZ Television, Inc. c/o Osborn Communications Corporation 130 Mason Street Greenwich, CT 06830 Attention: Frank D. Osborn Telecopy No. (203) 629-1749 With a copy to (which shall not constitute notice): Haley, Bader & Potts P.L.C. 4350 N. Fairfax Drive Suite 900 Arlington, VA 22203 Attention: Theodore D. Kramer, Esq. Telecopier No. (703) 841-2345 If the notice is to Broker: Allbritton Communications Company 800 17th Street, N.W., Suite 301 Washington, DC 20006 Attention: Jerald N. Fritz Telecopier No. (202) 822-6749 With a copy to (which shall not constitute notice): Hogan & Hartson L.L.P. 555 Thirteenth Street, N.W. Washington, D.C. 20004 Attention: Mace J. Rosenstein, Esq. Telecopier No. (202) 637-5910 TIME BROKERAGE AGREEMENT ATTACHMENT IV Station Operating Budget OSBORN COMMUNICATIONS CORPORATION Calculation of Expenses relating to LMA WJSU Technical Technical Personnel Salary 3,667 Insurance 590 Payroll Tax 281 Unemployment Ins. 128 Repairs & Maintenance 650 Utilities 4,900 General General Manager Salary 3,423 Insurance 590 Payroll Tax 262 Unemployment Ins. 245 Lease Payment 3,155 Utilities 900 Telephone-Svc. Chg./Maint. 1,000 Repairs & Maintenance 300 Property Insurance 3,820 Property Tax 500 Payroll Service 50 _______ 24,462 LETTER AMENDMENT TO WJSU TIME BROKERAGE December 29, 1995 RKZ Television, Inc. c/o Osborn Communications Corporation 130 Mason Street Greenwich, Connecticut 06830 Re: WJSU-TV, Anniston, Alabama (the "Station") Gentlemen: Reference is hereby made to that certain Time Brokerage Agreement, dated as of December 21, 1995 (the "Brokerage Agreement"), by and between RKZ Television, Inc., a Delaware corporation ("Licensee") and Allbritton Communications Company, a Delaware corporation ("Broker"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Brokerage Agreement. Notwithstanding anything to the contrary set forth in the Brokerage Agreement or otherwise, this letter agreement (the "Letter Agreement") sets forth our agreement with respect to the following matters: 1. Station Employees. Licensee and Broker acknowledge and agree that after February 1, 1996, the "expenses" of Licensee which the Broker agrees to reimburse pursuant to Attachment I of the Brokerage Agreement shall not include any compensation or other remuneration for any employee (or former employee) of the Station (other than the General Manager and Chief Engineer). Broker shall be entitled, but not obligated, to offer employment to any of the employees of Licensee other than the General Manager and Chief Engineer on or before February 1, 1996. Licensee shall be liable and responsible for any salary, commission, bonus, benefit plan contribution, or other compensation or benefit of the employees (or former employees) of the Station arising or incurred prior to the Commencement Date, and such payments shall not be deemed expenses reimbursable pursuant to Attachment I of the Brokerage Agreement. 2. Programming Revenue. Licensee and Broker acknowledge and agree that all programs broadcast or selected for broadcast by Broker pursuant to contracts, the obligations for which have been assumed by Broker pursuant to Section 7 of the Brokerage Agreement, shall be deemed Programming for purposes of the Brokerage Agreement, and Broker shall be entitled to all revenue derived in connection therewith, including without limitation any network compensation pursuant to the Affiliation Agreement by and between Licensee and CBS Affiliate Relations dated as of December 4, 1992, as amended. Exhibit A hereto, listing the existing program agreements of Licensee, shall be deemed to be Attachment II to the Brokerage Agreement. 3. Studio Lease. Licensee acknowledges that the lease for studio space in Anniston, Alabama terminated as of July 5, 1994. Licensee agrees that in the event that the new lease, presently being negotiated, should provide for a lease term of greater than six (6) months, Licensee must obtain the prior written consent of Broker, which consent will not be unreasonably withheld prior to entering into such lease. 4. Miscellaneous. This Letter Agreement and the covenants and agreements set forth herein shall be binding upon and inure solely to the benefit of the signatory parties hereto (and their successors and assigns as permitted under the Brokerage Agreement). This Letter Agreement shall be deemed to amend the Brokerage Agreement and to the extent that any of the terms or conditions herein are inconsistent or conflict with the forms or conditions of the Brokerage Agreement, the terms and conditions of this Letter Agreement shall govern. Please acknowledge your understanding of and agreement with the foregoing by signing this Letter Agreement in the spaces provided below, retaining one original for your files and returning the other original to Broker in the manner provided in the Brokerage Agreement. Sincerely, ALLBRITTON COMMUNICATIONS COMPANY By: Name: Jerald N. Fritz Title: Vice President ACCEPTED AND AGREED TO THIS __th DAY OF December, 1995: RKZ TELEVISION, INC. By: Name: Michael F. Mangan Title: Vice President EX-10 5 WHLX ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT dated as of January 29, 1996 by and between BETHLEHEM RADIO, INC. (Seller) and MOUNTAIN RADIO CORPORATION (Buyer) TABLE OF CONTENTS
Page ARTICLE I - ASSIGNMENT AND PURCHASE OF ASSETS 1.1 Assignment of Assets 1 1.2 Excluded Assets 4 1.3 Liabilities to be Assumed 5 1.4 Purchase Price 5 1.5 Proration of Income and Expenses 6 1.6 Allocation of Purchase Price 6 ARTICLE II - CLOSING, TERMINATION, AND RISK OF LOSS 2.1 Closing 7 2.2 Transactions at the Closing 7 2.3 Termination 10 2.4 Risk of Loss 11 2.5 Interruption of Broadcast Transmissions 12 ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER 3.1 Due Incorporation 12 3.2 Authority; No Conflict 13 3.3 Government Authorizations 13 3.4 Compliance with Regulations 14
3.5 Taxes and Regulatory Fees 14 3.6 Personal Property 14 3.7 Real Property 15 3.8 Consents 17 3.9 Contracts 17 3.10 Environmental 18 3.11 Intangibles 18 3.12 Financial Statements 19 3.13 Personnel Information; Labor Contracts 19 3.14 Employee Benefit Plans 19 3.15 Litigation 20 3.16 Compliance with Laws 20 3.17 Insurance 21 3.18 Undisclosed Liabilities 21 3.19 Instruments of Conveyance; Good Title 21 3.20 Absence of Certain Changes 21 3.21 Insolvency Proceedings 23 ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Due Incorporation 23 4.2 Authority; No Conflict 23 4.3 Consents 24 4.4 Litigation 24 4.5 Compliance with Laws 24 4.6 Qualification 24 ARTICLE V - COVENANTS OF SELLER 5.1 Continued Operation of Station 25 5.2 Financial Obligations 25 5.3 Reasonable Access 25 5.4 Maintenance of Assets 25 5.5 Notification of Developments 26 5.6 Payment of Taxes 26 5.7 Third Party Consents 26 5.8 Encumbrances 26 5.9 Assignment of Assets 26 5.10 Commission Licenses and Authorizations 26 5.11 Technical Equipment 27 5.12 Compensation Increases 27 5.13 Sale of Broadcast Time 27 5.14 Insurance 27 5.15 Negotiations with Third Parties 27 5.16 Covenant Not to Compete 27
ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER 6.1 Assignment Application 28 6.2 Performance 28 6.3 Conditions 28 6.4 Confidentiality 28 6.5 Cooperation 29 6.6 Environmental Reports 29 6.7 Consents to Assignment 29 6.8 Employee Matters 30 6.9 Survey 30 6.10 Escrow Agreement 31 ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER 7.1 Commission Approvals 31 7.2 Performance 32 7.3 Failure of Transfer 32 7.4 Representations and Warranties 32 7.5 Consents 2 7.6 No Litigation 32 7.7 No Adverse Change 2 7.8 Documents 3 7.9 Opinions of Counsel 33 7.10 Financing 3 7.11 Survey 33 7.12 Non-compete Agreement 33 ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER 8.1 Performance 33 8.2 Representations and Warranties 33 8.3 Government Approvals 34 8.4 Documents 34 8.5 Opinion of Counsel 34 ARTICLE IX - INDEMNIFICATION 9.1 Indemnification by Seller 34 9.2 Indemnification by Buyer 35 9.3 Notification of Claims 35
ARTICLE X - MISCELLANEOUS 10.1 Assignment 37 10.2 Survival of Indemnification 37 10.3 Brokerage 38 10.4 Expenses of the Parties 38 10.5 Entire Agreement 38 10.6 Headings 38 10.7 Governing Law 38 10.8 Counterparts 38 10.9 Notices 39 10.10 Specific Performance 40 10.11 Consent to Jurisdiction 40 10.12 Further Assurances 40 10.13 Public Announcements 40
DISCLOSURE SCHEDULE 1.1(a) Licenses and Authorizations 1.1(b) Tangible Personal Property 1.1(d) Real Estate Contracts Real Estate Assets 1.1(e) Intangibles 1.1(f) Leases and Contracts 1.1(g) Contracts for Sale of Broadcast Time 1.1(i) Future Contracts 1.2(h) Excluded Assets 3.7 Title Defects 3.8 Seller's Consents 3.12 Financial Statements 3.13 Personnel 3.14 Employee Benefit Plans 3.15 Litigation 3.17 Insurance 3.20 Certain Changes 4.3 Buyer's Consents THIS ASSET PURCHASE AGREEMENT is entered into this 29th day of January, 1996 by and between BETHLEHEM RADIO, INC., a corporation formed under the laws of the State of West Virginia ("Seller"), and MOUNTAIN RADIO CORPORATION, a corporation formed under the laws of the State of Delaware ("Buyer") (Seller and Buyer sometimes being referred to herein individually as a "Party" and jointly as "Parties"). R E C I T A L S WHEREAS, Seller owns and operates and has been duly licensed by the Federal Communications Commission (the "FCC" or the "Commission") to operate radio station WHLX-FM, Bethlehem, West Virginia (the "Station"); and WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase, the assets utilized in connection with the operation of the Station, and Seller and Buyer further desire that Seller assign to Buyer the licenses and other authorizations issued to Seller by the Commission for the purpose of operating the Station. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows: ARTICLE I ASSIGNMENT AND PURCHASE OF ASSETS 1.1 Assignment of Assets. Seller agrees to assign, transfer, convey and deliver to Buyer and Buyer agrees to acquire, accept and receive from Seller, on the Closing Date (as defined herein), all of Seller's right, title and interest in and to the following assets relating to the Station (the "Station Assets") free and clear of all liens and encumbrances; provided, however, that notwithstanding anything to the contrary in this Agreement, Buyer shall take the Station Assets subject to that certain lease agreement of July 6, 1995 between Bethlehem Radio, Inc., and Colonial Pacific Leasing Corporation: (a) Licenses and Authorizations. All licenses, permits and other authorizations issued by the FCC or any other state or federal regulatory agency pertaining to the Station, including, without limitation, those licenses, permits or authorizations listed in Section 1.1(a) of the Disclosure Schedule delivered by Seller to Buyer and dated of even date herewith (the "Disclosure Schedule"), together with any renewals, extensions or modifications thereof and additions thereto made between the date of this Agreement and the Closing Date (the "Licenses"). The Licenses include the right to use the call letters of the Station, including but not limited to the call letters WHLX (FM). (b) Tangible Personal Property. All of the tangible personal property owned by Seller and used or useable in the operation of the Station, including but not limited to the items of personal property listed in Section 1.1(b) of the Disclosure Schedule, together with all additions, modifications or replacements thereto made in the ordinary course of business between the date of this Agreement and the Closing Date, as hereafter defined (the "Personal Property"). (c) Real Estate Contracts. All of the leasehold interests in real property leased by Seller and used by the Station, including all agreements, leases, and contracts of Seller relating to the tower, transmitter, studio site, and offices of the Station (the "Real Estate Contracts"), including all security or other deposits made with respect to such Real Estate Contracts, all as described in Section 1.1(d) of the Disclosure Schedule (the land, buildings and other improvements covered by the Real Estate Contracts being herein called the "Leased Real Property"). The Buyer shall assume, pay and perform all obligations under such Real Estate Contracts accruing after the Closing Date to the extent such obligations relate to the period after the Closing Date. (d) Real Estate Assets. All of Seller's interest in the real property owned by Seller and listed in Section 1.1(d) of the Disclosure Schedule and all of the buildings, structures and other improvements located thereon (collectively, the "Owned Real Property"). The Owned Real Property and the Leased Real Property are collectively referred to herein as the Real Property. (e) Intangibles. The good will of the Station and other intangible assets used or useful in the operation of the Station, including all of Seller's rights in the trade names, copyrights, trademarks, service marks, patents, patent applications, slogans, jingles, logos or other similar rights relating to the operation of the Station including, but not limited to, those listed in Section 1.1(e) of the Disclosure Schedule, together with any necessary additions or modifications thereto between the date hereof and the Closing Date (the "Intangibles"). (f) Leases and Contracts. All leases, contracts, agreements and franchises relating to the operation of the Station (other than contracts for the sale of broadcast time and leases for real property) listed and identified in Section 1.1(f) of the Disclosure Schedule and those leases, contracts, agreements and franchises described in Section 1.1(i) of this Agreement (the "Contracts"). Buyer shall assume, pay and perform all obligations under such Contracts accruing after the Closing Date. (g) Contracts for Sale of Broadcast Time. All contracts for sale of broadcast time on the Station that provide for payment by the customer solely on a cash basis and that are to be in effect on the Closing Date listed and identified in Section 1.1(g) of the Disclosure Schedule (the "Broadcast Agreements"). Buyer shall assume, pay and perform all obligations under the Broadcast Agreements arising after the Closing Date, provided, however, Buyer will not assume any contract for the sale of time pursuant to which payment is to be received in whole or in part in services, merchandise or other non-cash considerations ("Trade Agreements") entered into prior to the date of this Agreement, except as agreed to by Buyer and set forth in Section 1.1(g) of the Disclosure Schedule, and Buyer will not assume any contract for the sale of time pursuant to such a Trade Agreement entered into subsequent to the date of this Agreement unless Buyer has consented in writing to the execution of such contract. (h) Operating and Business Records. All files, records, logs and program materials pertaining to the operation of the Station required to be maintained and kept under the rules of the Commission and such other files and records as Buyer shall reasonably require for the continuing business and operation of the Station. Seller shall have the right to reasonable access to such business records that Seller delivers to Buyer under this Section 1.1(h) upon Seller's request for five years after the Closing Date. (i) Future Contracts. All leases, contracts, agreements and franchises (other than Broadcast Agreements, which are governed by Section 5.13 hereof) entered into between the date hereof and the Closing Date in the usual and ordinary course of business, except that those exceeding two months in duration or $5,000.00 in amount will not be assumed by Buyer unless consented to by Buyer in advance in writing and set forth in Section 1.1(i) of the Disclosure Schedule. (j) Inventory and Computer Software. All of Seller's items of inventory related to the business of the Station, including, without limitation, broadcast programs, as well as all computer software used or useable by the Station. (k) Other Rights and Privileges. Any and all other franchises, materials, supplies, easements, rights-of-way, licenses, and other rights and privileges of Seller relating to and used, useable or necessary in the operation of the Station. 1.2 Excluded Assets. There shall be excluded from the sale transaction described herein the following assets relating to the Station: (a) Cash and Deposits. Cash-on-hand or in banks (or their equivalents) and other investments belonging to Seller and relating to the operation of the Station as of the Closing Date. (b) Accounts Receivable. All accounts receivable of the Seller with regard to the operation of the Station prior to the Closing Date (as that term is defined therein). (c) Property Consumed. All property of the Station disposed of or consumed (including ordinary wear and tear) in the ordinary course of business between the date hereof and the Closing Date. (d) Expired Leases, Contracts and Agreements. All contracts described in Sections 1.1(f), (g) and (i) to the Disclosure Schedule that are terminated or will have expired prior to the Closing Date in the ordinary course of business. (e) Pension and Profit-Sharing Plans. All pension and profit-sharing plans, trusts established thereunder and assets thereof, if any, of Seller. (f) Other Employee Benefit Plans. All other employee benefit plans (including health insurance) of Seller and the assets thereof. (g) Employment and Collective Bargaining Agreements. All employment agreements and collective bargaining agreements of Seller. (h) Other Assets. Those assets, if any, listed in Section 1.2(h) of the Disclosure Schedule. 1.3 Liabilities to be Assumed. Except as otherwise provided herein, Buyer assumes no liabilities or obligations of Seller of any nature whatsoever, contingent or otherwise, except for post-closing obligations related to Real Estate Contracts, Contracts, Broadcast Agreements and Trade Agreements (the "Assumed Contracts") assigned to and specifically assumed by Buyer. Without limiting the generality of the foregoing, the Parties particularly agree that Buyer should have no responsibility or liability regarding (i) federal, state or local tax liability of any kind whatsoever incurred by Seller or (ii) any employee benefit plan maintained by Seller, and Seller expressly agrees to defend and indemnify Buyer against same. On or prior to the Closing Date Seller shall pay or else have made arrangements, satisfactory to Buyer, to assume all liabilities, debts and other obligations of the Station arising prior to the Closing Date and not assigned to and specifically assumed by Buyer. 1.4 Purchase Price. In consideration of Seller's performance of this Agreeement, Buyer shall pay to Seller the sum of Seven Hundred Fifty Thousand Dollars($750,000) (the "Purchase Price") as follows: (a) Escrow Deposit. As security for Buyer's failure to close, and as an inducement for Seller to perform its obligations under this Agreement, Buyer, upon execution of this Agreement, shall deposit the sum of Forty-Thousand Dollars ($40,000.00) (the "Escrow Deposit") in the One Valley Bank. Sam E. Schafer, Esq., and Harry Buch, Esq., shall act as escrow agents (the "Escrow Agents") with respect to such accounts. At the Closing, the Escrow Deposit, and any interest that has accrued thereon, shall be delivered to Seller and credited against the Purchase Price. If the Closing fails to occur because Buyer is in material breach of this Agreement, the Escrow Deposit shall be paid to Seller as liquidated damages and as Seller's exclusive remedy for such breach and any interest on the Escrow Deposit shall be paid to Buyer. If the Closing fails to occur for any other reason, the Escrow Deposit and any interest that has accrued thereon shall be paid to Buyer. (b) On the Closing Date at the Closing, Buyer shall pay the Purchase Price, minus any sums that have been credited against the Purchase Price pursuant to Subparagraph 1.4(a), above, by wire transfer of federal funds. 1.5 Proration of Income and Expenses. Except as otherwise provided herein, all income and expenses arising from the conduct of the business and operations of the Station shall be prorated between Buyer and Seller in accordance with generally accepted accounting principles as of 11:59 p.m., Eastern time, on the date immediately preceding the Closing Date. Such prorations shall include, without limitation, all ad valorem and other property taxes (but excluding taxes arising by reason of the transfer of Station Assets as contemplated hereby, which shall be paid as set forth in Section 10.4 of this Agreement), business and license fees, music and other license fees (including any retroactive adjustments thereof, which retroactive adjustments shall not be subject to the ninety day limitation set forth in Section 1.5(a)), wages and salaries of employees hired by Buyer, including accruals up to the Closing Date for bonuses, commissions, vacation and sick pay, and related payroll taxes, utility expenses, time sales agreements, Trade Agreements to the extent provided in Section 1.1(g) hereof, rents and similar prepaid deferred items attributable to the ownership and operation of the Station. (a) Time for Payment. The prorations and adjustments contemplated by this Section 1.5, to the extent practicable, shall be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within 90 days of the Closing Date. (b) Dispute Resolution. In the event of any disputes between the Parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 1.5(a) and such disputes shall be determined by an independent certified public accountant mutually acceptable to the Parties whose determination shall be final, and the fees and expenses of such accountant shall be paid one-half by Seller and one-half by Buyer. 1.6 Allocation of Purchase Price. Buyer and Seller agree that the Purchase Price shall be allocated among the Station Assets in a manner to be determined by Buyer. Buyer and Seller agree to use such allocation in completing and filing Internal Revenue Service Form 8594 for federal income tax purposes. Buyer and Seller further agree that they shall not take any position inconsistent with such allocation upon examination of any return, in any refund claim, in any litigation, or otherwise. ARTICLE II CLOSING, TERMINATION, AND RISK OF LOSS 2.1 Closing. Unless otherwise agreed upon by the Parties, the purchase and sale of the Station Assets contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. on the fifth business day after the Commission's approval of the Assignment Application, as defined in Section 6.1 below, becomes a Final Order (the "Closing Date"). For purposes of this Agreement, a "Final Order" shall mean any action of the Commission which has not been reversed, stayed, enjoined, set aside, annulled or suspended and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal or stay, and the time for filing any such requests and the time for the Commission to set aside the action on its own motion shall have expired. Buyer may, at its sole election, waive the requirement that the Commission's approval of the Assignment Application shall have become a Final Order. 2.2 Transactions at the Closing. (a) At the Closing, Seller shall deliver to Buyer the following: (i) assignments of the Licenses and other pertinent authorizations transferring the same to the Buyer in customary form and substance; (ii) the certificates contemplated by Sections 7.2 and 7.4; (iii) a copy of the resolutions of the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the Non-compete Agreement to be delivered by Seller and its principals pursuant to Subparagraph 2.2(a)(ix) and the consummation of the transactions contemplated hereby and thereby, together with a certificate of the Secretary of Seller, dated as of the Closing Date, that such resolutions were duly adopted and are in full force and effect; (iv) a special warranty deed (or its equivalent in the State of West Virginia), in proper statutory form for recording, conveying each parcel of Owned Real Property; (v) an owner's extended coverage policy of title insurance with respect to each parcel of Real Property, in each case issued on the date of Closing by a title insurance company acceptable to counsel for Buyer (the "Title Company"). Each such title insurance policy shall be in an amount designated by Buyer and shall insure Buyer's ownership of fee title with respect to the Owned Real Property without any of the Scheduled B standard pre-printed exceptions (other than taxes not yet due and payable) and free and clear of title defects and other exceptions to or exclusions from coverage other than Permitted Owned Real Property Exceptions (as hereinafter defined in Section 3.7(a)); (vi) all real property transfer tax returns and other similar filings required by law in connection with the transactions contemplated hereby, all duly executed and acknowledged by Seller. Seller shall also have executed such affidavits in connection with such filings as shall have been required by law or reasonably requested by Buyer; (vii) affidavit of an officer of Seller, sworn to under penalty of perjury, setting forth Seller's name, address and Federal tax identification number and stating that Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986 (the "Code"). If, on or before the Closing Date, Buyer shall not have received such affidavit, Buyer may withhold from the Purchase Price payable at Closing to Seller pursuant hereto such sums as are required to be withheld therefrom unde (viii) a bill of sale and all other appropriate documents and instruments assigning to Buyer good and marketable title to the Station Assets free and clear of any security interests, mortgages, liens, pledges, attachments, conditional sales contracts, claims, charges or encumbrances of any kind whatsoever; (ix) a Non-compete Agreement, in the form attached hereto as Exhibit A, whereby Seller and its principals agree not to compete with Buyer in the Wheeling, West Virginia radio market, as defined by the Arbitron Company, for a period of five (5) years following the Closing, duly executed by Seller as appropriate; (x) written consents of the respective lessors, landowners, and any other persons or entities whose consents may be required to permit Buyer to assume the liabilities, contracts, leases, licenses, understandings and agreements constituting the Real Estate Contracts and the Contracts; (xi) evidence satisfactory to Buyer's counsel that no financing statements are outstanding on the Station Assets; (xii) all files, records, logs, and program materials relating to the Station; and all other records required to be maintained by the FCC with respect to the Station, including the Station's public file, which shall be left at the station and thereby delivered to Buyer. (xiii) the opinion of counsel for Seller, dated the Closing Date, as described in Section 7.9; (xiv) assignments to Buyer of all the Contracts and Real Estate Contracts in form satisfactory to Buyer; and (xv) a current estoppel certificate from the Landlord under each Real Property Contract in form satisfactory to counsel to Buyer. (xvi) such other documents and instruments as Buyer may reasonably request to consummate the transactions contemplated hereby. (b) At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: (i) the Purchase Price less any sums that have been credited against the Purchase Price pursuant to Section 1.4(a) of this Agreement; (ii) the consideration due under the Non-compete Agreement; (iii) a copy of the resolutions of the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, together with a certificate of the Secretary of Buyer dated as of Closing Date, that such resolutions were duly adopted and are in full force and effect; (iv) the certificates contemplated by Sections 8.1 and 8.2; (v) the opinion of counsel for Buyer, dated the Closing Date, as described in Section 8.5; and (vi) such other documents and instruments as Seller may reasonably request to consummate the transactions contemplated hereby. 2.3 Termination. (a) Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated at any time by: (i) the mutual written consent of the Parties hereto; (ii) either Buyer or Seller if the Closing does not occur before December 1, 1996, provided, however, that the Party seeking termination under this Section 2.3(a)(ii) shall not have prevented the Closing from occurring; (iii) either Buyer or Seller if the Assignment Application is not granted within nine (9) months from the date the Form 314 is placed on the Commission's public notice (through no fault of the terminating Party) or is denied by the Commission by a Final Order; (iv) Buyer, if any of the conditions set forth in Article VII shall have become incapable of fulfillment, and shall not have been waived by Buyer, or if Seller shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing; or (v) Seller, if any of the conditions set forth in Article VIII shall have become incapable of fulfillment, and shall not have been waived by Seller, or if Buyer shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing. (b) In the event of the termination of this Agreement by Buyer or Seller pursuant to this Section 2.3, written notice thereof shall promptly be given to the other Party and, except as otherwise provided herein, the transactions contemplated by this Agreement shall be terminated, without further action by any Party. Nothing in this Section 2.3 shall be deemed to release any Party from any liability for any breach by such Party of the terms and provisions of this Agreement or to impair the right of Buyer to compel specific performance of Seller of its obligations under this Agreement. (c) The time for Commission approval provided in Section 2.3(a)(iii) notwithstanding, either Party may terminate this Agreement upon written notice to the other, if, for any reason, the Assignment Application is designated for hearing by the Commission, provided, however, that written notice of termination must be given within twenty (20) days after release of the Hearing Designation Order and that the Party giving such notice is not in default and has otherwise complied with its obligations under this Agreement. Upon termination pursuant to this Section, the Parties shall be released and discharged from any further obligation hereunder and the Escrow Deposit shall be returned to the Buyer. (d) It is further provided, however, that no Party may terminate this Agreement if such Party is in default hereunder, or if a delay in any decision or determination by the Commission respecting the Assignment Application has been caused or materially contributed to (i) by any failure of such Party to furnish, file or make available to the Commission information within its control; (ii) by the willful furnishing by such Party of incorrect, inaccurate or incomplete information to the Commission; and (iii) nation respecting the Assignment Application. Upon such termination for failure of the Commission to act, the Parties shall be released and discharged from any further obligation hereunder. (e) A Party shall be deemed to be in default under this Agreement only if such Party has materially breached or failed to perform its obligations hereunder, and non-material breaches or failures shall not be grounds for declaring a Party to be in default, postponing the Closing, or terminating this Agreement. 2.4 Risk of Loss. The risk of any loss, damage or destruction to any of the Station Assets from fire or other casualty or cause shall be borne by Seller at all times prior to the Closing Date hereunder. Upon the occurrence of any loss or damage to any of the Station Assets as a result of fire, casualty, accident or other causes prior to the Closing Date, Seller shall notify Buyer of same in writing immediately stating with particularity the extent of loss or damage incurred, the cause thereof if known and the extent to which restoration, replacement and repair of the Station Assets lost or destroyed will be reimbursed under any insurance policy with respect thereto. In the event the loss exceeds $50,000 and the Station Assets cannot be substantially repaired or restored within forty-five (45) days after such loss, Buyer shall have the option, exercisable within ten (10) days after receipt of written notice from Seller, to: (i) terminate this Agreement; (ii) postpone the Closing until such time as the property has been completely repaired, replaced or restored to the satisfaction of Buyer, unless the same cannot be reasonably effected within thirty (30) days of notification; or (iii) elect to consummate the Closing and accept the property in its damaged condition, in which event Seller shall assign to Buyer all rights under any insurance claim covering the loss and pay over to Buyer any proceeds under any such insurance policy thereto received by Seller with respect thereto. 2.5 Interruption of Broadcast Transmissions. Notwithstanding any other provision hereof, if prior to the Closing any event occurs which prevents the broadcast transmission by the Station with substantially full licensed power and antenna height as described in the applicable FCC Licenses and in the manner it has heretofore been operating for periods of time in excess of six (6) hours, the Seller will give prompt written notice thereof to Buyer. If such facilities are not restored so that operation is resumed with substantially full licensed power within three (3) days of such event, or, in the case of more than one event, the aggregate number of days preceding such restorations from all such events is more than five (5) days, or if the Station is off the air more than three (3) times for a period in each case exceeding six (6) hours, Buyer shall have the right, by giving written notice to Seller of its election to do so, to terminate this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 Due Incorporation. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of West Virginia, and is duly qualified to do business in and is in good standing in the State of West Virginia. Seller has the corporate power and authority to own and to operate the Station and the Station Assets. 3.2 Authority; No Conflict. The execution and delivery of this Agreement and the Non-compete Agreement have been duly and validly authorized and approved by the board of directors of Seller, and Seller has the corporate power and authority to execute, deliver and perform this Agreement and the Non-compete Agreement and to consummate the transactions contemplated hereby and thereby. Neither such execution, delivery or performance nor compliance by Seller with the terms and provisions hereof, or with respect to the Non-compete Agreement, will (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Seller,(b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Seller is subject, or (c) any material agreement, lease or contract, written or oral, to which Seller is subject. This Agreement shall constitute the valid and binding obligation of Seller with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 3.3 Government Authorizations. Section 1.1(a) of the Disclosure Schedule contains a true and complete list of all the Licenses, which Licenses are sufficient for the lawful conduct of the business and operation of the Station in the manner and to the full extent they are currently conducted. Seller is the authorized legal holder of the Licenses, none of which is subject to any restriction or condition which would limit in any material respect the full operation of the Station as now operated. There are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened as of the date hereof before the Commission or any other governmental authority relating to the business or operations of the Station, other than applications, complaints or proceedings which generally affect the broadcasting industry as a whole, and other than reports and forms filed in the ordinary course of the Station's business. Seller has delivered to Buyer true and complete copies of the Licenses, including any and all additions, amendments and other modifications thereto. The Licenses are in good standing, are in full force and effect and are unimpaired by any act or omission of Seller or its officers, directors or employees; and the operation of the Station is in accordance with the Licenses and the underlying construction permits. No proceedings are pending or, to the knowledge of Seller, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the Licenses, the denial of any pending applications, the issuance of any cease and desist order, the imposition of any administrative actions by the Commission with respect to the Licenses or which may affect Buyer's ability to continue to operate the Station as it is currently operated. Seller has taken no action which, to its knowledge, could lead to revocation or non-renewal of the Licenses, nor omitted to take any action which, by reason of its omission, could lead to revocation of the Licenses. All material reports, forms and statements required to be filed with the Commission with respect to the Station since the grant of the last renewal of the Licenses have been filed and are complete and accurate. To the knowledge of Seller, there are no facts which, under the Communications Act of 1934, as amended, or the existing rules and regulations of the Commission, would disqualify Seller as assignor, and Buyer as assignee, in connection with the Assignment Application. 3.4 Compliance with Regulations. The operation of the Station is in compliance in all material respects with (i) all applicable engineering standards required to be met under Commission rules, and (ii) all other applicable rules, regulations, requirements and policies of the Commission and all other applicable governmental authorities, including, but not limited to, ANSI Radiation Standards, to the extent required to be met under applicable Commission rules and regulations; and there are no existing claims known to Seller to the contrary. 3.5 Taxes and Regulatory Fees. Seller has timely filed all federal, state, local and foreign income, franchise, sales, use, property, excise, payroll and other tax returns required by law and has paid in full all taxes, estimated taxes, interest, assessments, and penalties due and payable as shown thereon. All returns and forms which have been filed have been true and correct in all material respects and no tax or other payment in a material amount other than as shown on such returns and forms are required to be paid or have been paid by Seller. There are no present disputes as to taxes of any nature payable by Seller which in any event could materially adversely affect the Station Assets or operation of the Station. Each of the parcels included in the Owned Real Property is assessed for real estate purposes as a wholly independent tax lot, separate from any adjoining lot or improvements not constituting a part of such parcel. Seller has paid all FCC Regulatory Fees required to be paid by Seller with respect to the Station. 3.6 Personal Property. Section 1.1(b) of the Disclosure Schedule contains a true and complete list of all the Personal Property. Except for those assets designated on Section 1.1(b) of the Disclosure Schedule as being subject to lease agreements, Seller owns and has, and will have on the Closing Date, good and marketable title to such Personal Property, and none of such Personal Property on the Closing Date will be subject to any security interest, mortgage, pledge, conditional sales agreement or other lien or encumbrance. All items of Personal Property are in all material respects in good operating condition, ordinary wear and tear excepted, and are available for immediate use in the conduct of the business and operation of the Station. The technical equipment, including, without limitation, all transmitters and studio equipment, constituting part of the Personal Property, has been maintained in accordance with industry practice and is in good operating condition, ordinary wear and tear excepted, (except as noted in Section 1.1(b) of the Disclosure Schedule) and complies in all material respects with all applicable rules and regulations of the Commission and the terms of the Licenses. The Personal Property includes all such items and equipment necessary to conduct in all material respects the business and operations of the Station as now conducted. 3.7 Real Property. (a) Seller is the owner of good, marketable and insurable fee title to the real property described on Section 1.1(d) of the Disclosure Schedule and to all of the buildings, structures and other improvements located thereon (collectively, the "Owned Real Property") free and clear of all Title Defects (as hereinafter defined) except for the matters listed on Section 3.7 of the Disclosure Schedule and encumbrances of a minor nature that do not, in the reasonable opinion of Buyer's counsel, individually or in the aggregate (i) interfere in any material respect with the use, occupancy or operation of the Owned Real Property or (ii) materially reduce the fair market value of the Owned Real Property below the fair market value the Owned Real Property would have had but for such encumbrances (collectively, the "Permitted Owned Real Property Exceptions"). The Owned Real Property constitutes all of the real property owned by Seller on the date hereof in connection with the operation of the Station. There are no leases/subleases or other agreements granting to any person other than Seller any right to the possession, use or occupancy of the Owned Real Property. As used in this Agreement, "Title Defects" shall mean and include any mortgage, deed of trust, lien, pledge, security interest, claim, lease, charge, option, right of first refusal, easement, restrictive covenant, encroachment or other survey defect, encumbrance or other restriction or limitation whatsoever. Notwithstanding the cross-reference in Section 3.7 of the Disclosure Schedule to the Certificate of Title, the deeds of trust discussed in Note 1 to the Certificate of Title and the liens listed in Note 2 to the Certificate of Title shall not be considered Permitted Owned Real Property Exceptions and must be removed and released by Closing. (b) Section 1.1(d) of the Disclosure Schedule contains a true and complete list and summary of all the Real Estate Contracts. Seller holds the leasehold interest under each Real Estate Contract free and clear of all Title Defects. The Real Estate Contracts constitute valid and binding obligations of Seller and, to the best of Seller's knowledge, of all other persons purported to be parties thereto, and are in full force and effect as of the date hereof, and will on the Closing Date constitute valid and binding obligations of Buyer and, to the best of Seller's knowledge, of all other persons purported to be parties thereto. As of the date hereof, Seller is not in default under any of the Real Estate Contracts and has not received or given written notice of any default thereunder from or to any of the other parties thereto and will not have received any such notice at or prior to the Closing Date. Seller shall use reasonable efforts to obtain valid and binding third-party consents, if any are necessary, from all required third parties to the Real Estate Contracts to be conveyed and assigned to Buyer as part of the Station Assets. Subject to any required third-party consents, Seller will have full legal power and authority to assign its rights under the Real Estate Contracts to Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment shall not affect the validity, enforceability and continuity of any of the Real Estate Contracts. (c) Entire Premise. All of the land, buildings, structures and other improvements used by Seller in the conduct of the Business or involved in the Real Property are listed in the Disclosure Schedule. (d) No Options. Seller does not own or hold, and is not obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell or dispose of the Real Property or any portion thereof or interest therein. (e) Condition and Operation of Improvements. All components of all buildings, structures and other improvements included within the Real Property (the "Improvements") are in good working order and repair. All water, gas, electrical, steam, compressed air, telecommunication, sanitary and storm sewage lines and systems and other similar systems serving the Real Property are installed and operating and are sufficient to enable the Real Property to continue to be used and operated in the manner currently being used and operated, and any so-called hook-up fees or other associated charges have been fully paid. (f) Real Property Permits and Insurance. All certificates of occupancy, permits, licenses, franchises, approvals and authorizations (collectively, "Real Property Permits") of all governmental authorities having jurisdiction over the Real Property, required or appropriate to have been issued to Seller to enable the Real Property to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are, as of the date hereof, in full force and effect. (g) Condemnation. Seller has not received notice and has no knowledge of any pending, threatened or contemplated condemnation proceeding affecting the Real Property or any part thereof or of any sale or other disposition of the Owned Real Property or any part thereof in lieu of condemnation. (h) Casualty. No portion of the Real Property has suffered any material damage by fire or other casualty which has not heretofore been completely repaired and restored to its original condition. No portion of the Real Property is located in a special flood hazard area as designated by Federal governmental authorities. 3.8 Consents. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Seller of this Agreement or the Non-compete Agreement to which it is a Party, other than approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 3.8 of the Disclosure Schedule, no consent of any other party (including, without limitation, any party to any Real Estate Contract or Contract) is required for the execution, delivery and performance by Seller of this Agreement or the Non- compete Agreement. 3.9 Contracts. Section 1.1(f) of the Disclosure Schedule contains a true and complete list of all Contracts, and Section 1.1(g) contains a true and complete list of all Broadcast Agreements and Trade Agreements. Seller has delivered to Buyer true and complete copies of all written Contracts, Broadcast Agreements and Trade agreements in the possession of Seller, including any and all amendments and other modifications to same. All such Contracts, Broadcast Agreements and Trade Agreements are valid, binding and enforceable by Seller in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. Seller has complied in all material respects with all such Contracts, Broadcast Agreements and Trade Agreements, and Seller is not in default beyond any applicable grace periods under any of same, and no other contracting party is in material default under any of same. Seller has full legal power and authority to assign its respective rights under such Contracts, Broadcast Agreements and Trade Agreements to Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment will not materially affect the validity, enforceability and continuity of any such Contracts, Broadcast Agreements and Trade Agreements. 3.10 Environmental. Seller has not unlawfully disposed of any Hazardous Waste in a manner which has caused, or could cause, Buyer to incur a material liability under applicable law in connection therewith; and Seller warrants that the technical equipment included in the Personal Property does not contain any Hazardous Waste, including any Polychlorinated Biphenyls ("PCBs") that are required by law to be removed, and if any equipment does contain Hazardous Waste that is not required by law to be removed, including any PCBs, that such equipment is stored and maintained in compliance with applicable law. Seller has complied in all material respects with all federal, state and local environmental laws, rules and regulations applicable to the Station and its operations, including but not limited to the Commission's guidelines regarding RF radiation. No Hazardous Waste has been disposed of by Seller, and to the best of Seller's knowledge, no Hazardous Waste has been disposed of by any other person on the property subject to Real Estate Contracts. As used herein, the term "Hazardous Waste" shall mean all materials regulated by any federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata). If Seller learns between the date of this Agreement and the Closing Date that Seller is in breach of the representation and warranty set forth in this Section 3.10, Seller shall begin remedial action promptly and shall use reasonable best efforts to complete such remedial action to the satisfaction of Buyer before the Closing Date. 3.11 Intangibles. Section 1.1(e) of the Disclosure Schedule is a true and complete list of all trade names, copyrights, trademarks, service marks, patents or applications therefor (the "Intellectual Property") that have been duly registered by, filed by, or issued to the Seller. Seller has not granted any license or other rights with respect to the Intangibles (including the Intellectual Property). Seller has not received any written notice of any infringement or unlawful use of the Intangibles and Seller has not violated or infringed any patent, trademark, trade secret or copyright held by others or any license, authorization or permit held by it. 3.12 Financial Statements. Section 3.12 of the Disclosure Schedule contains complete unaudited copies of the statements of income, and the related balance sheets for Seller for the period after Seller acquired the Station (the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles and in accordance with the policies and procedures of the Seller applicable thereto, consistently applied. The Financial Statements present fairly the financial condition and results of operations of the Station for the periods indicated. 3.13 Personnel Information; Labor Contracts. (a) Section 3.13 of the Disclosure Schedule contains a true and complete list of all persons employed at the Station, including the date of hire, a description of material compensation arrangements (other than employee benefit plans set forth in Section 3.14 of the Disclosure Schedule) and a list of other terms of any and all material agreements affecting such persons. (b) Seller is not a party to any contract with any labor organization, nor has Seller agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any of Seller's employees. Seller has no knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees of the Station. During the past two years, Seller has not experienced any strikes, work stoppages, grievance proceedings, claims of unfair labor practices filed, or other significant labor difficulties of any nature. (c) Seller has complied in all material respects with all laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, equal employment opportunity and the payment and withholding of taxes. 3.14 Employee Benefit Plans. Section 3.14 of the Disclosure Schedule contains a true and complete list and summary, as of the date of this Agreement, of all employee benefit plans (as that term is defined in Section 3(3) of ERISA) applicable to the employees of Seller. Seller maintains no other employee benefit plan. Each of Seller's employee benefit plans has been operated and administered in all material respects in accordance with its terms and applicable law, including, without limitation, ERISA and the Internal Revenue Code. 3.15 Litigation. Except as set forth in Section 3.15 of the Disclosure Schedule, Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree, and there is no litigation, proceeding or investigation pending or, to the best of Seller's knowledge, threatened against Seller or the Station in any federal, state or local court, or before any administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Licenses), or before any other tribunal duly authorized to resolve disputes, which would reasonably be expected to have any material adverse effect upon the business, property, assets or condition (financial or otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. In particular, but without limiting the generality of the foregoing, except as set forth in Section 3.15 of the Disclosure Schedule, there are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened before the Commission or any other governmental organization with respect to the business or operation of the Station, other than applications, complaints or proceedings which affect the broadcast industry generally. 3.16 Compliance with Laws. Seller has not received any notice asserting any non-compliance with any applicable statute, rule or regulation (federal, state or local) whether or not related to the business or operation of the Station or the Real Property. Seller is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or to any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Seller is in compliance in all material respects with all laws, regulations and governmental orders whether or not applicable to the conduct of the business and operation of the Station and any other business or operations conducted by Seller. The Owned Real Property is in full compliance with all applicable building, zoning, subdivision, environmental and other land use and similar laws, codes, ordinances, rules, regulations and orders of governmental authorities (collectively, "Real Property Laws"), and Seller has not received any notice of violation or claimed violation of any Real Property Law. Seller has no knowledge of any pending change in any Real Property Law which would have a material adverse effect upon the ownership or use of the Owned Real Property. 3.17 Insurance. Seller has in full force and effect insurance on all of the Real Property, Personal Property, and all other Station Assets pursuant to insurance policies, true and complete copies of which are contained in Section 3.17 of the Disclosure Schedule. Seller shall continue to maintain such insurance in full force and effect up to the Closing Date or shall have obtained prior to the Closing Date other insurance policies with limits and coverage comparable to the current policies after prior notice to, and upon written consent of the Buyer, which consent shall not be unreasonably withheld. 3.18 Undisclosed Liabilities. Except as to, and to the extent of, the amounts specifically reflected or reserved against in Seller's balance sheets for the period ending December 31, 1994 (the "Balance Sheet Date"), and except for liabilities and obligations incurred since the Balance Sheet Date in the ordinary and usual course of business, Seller has no material liabilities or obligations of any nature whether accrued, absolute, contingent or otherwise and whether due or to become due, and, to the best of Seller's knowledge, there is no basis for the assertion against Seller of any such liability or obligations. No representation or warranty made by Seller in this Agreement, and no statement made in any exhibit or schedule hereto or any certificate or document delivered by Seller pursuant to the terms of this Agreement, contain or will contain any untrue statement of a material fact or omit or will omit to state any material fact necessary to make such representation or warranty or any such statement not misleading. 3.19 Instruments of Conveyance; Good Title. The instruments to be executed by Seller and delivered to Buyer at Closing, conveying the Station Assets, including without limitation the Owned Real Property, to Buyer, will be in a form sufficient to transfer good and marketable title to the Station Assets, including without limitation the Owned Real Property, free and clear of all liabilities, obligations and encumbrances, except as provided herein. 3.20 Absence of Certain Changes. Except as disclosed in Section 3.20 of the Disclosure Schedule, between the Balance Sheet Date and the date of this Agreement there has not been: (a) Any material adverse change in the working capital, financial condition, business, results of operations, assets or liabilities of Seller; (b) Any change in the manner in which Seller conducts its business and operations other than changes in the ordinary and usual course of business consistent with past practice; (c) Any amendment to the Certificate of Incorporation or Bylaws of Seller; (d) Any contract or commitment, to which Seller is a party, entered into, modified or terminated, except in the ordinary and usual course of business; (e) Any creation or assumption of any mortgage, pledge or other lien or encumbrance upon any of the Station Assets except in the ordinary and usual course of business; (f) Any sale, assignment, lease, transfer, or other disposition of any of the Station Assets, except in the ordinary and usual course of business; (g) The incurring of any liabilities or obligations, except items incurred in the ordinary and usual course of business; (h) The write-off or determination to write off as uncollectible any accounts receivable or portion thereof, except for write-offs in the ordinary course of business consistent with past practice at a rate no greater than during the twelve months prior to the Balance Sheet Date; (i) The cancellation of any debts or claims, or waiver of any rights, having an aggregate value in excess of $5,000; (j) The disposition, lapse or termination of any Intellectual Property; (k) The increase or promise to increase the rate of commissions, fixed salary or wages, draw, bonus or other compensation payable to any employee of Seller, except in the ordinary and usual course of business consistent with past practice; (l) The issuance of, or authorization to issue, any additional shares of capital stock of Seller, or rights, warrants or options to acquire, any such shares, or convertible securities; (m) Any default under any contract or lease to which Seller is a party; (n) Any change in any method of accounting or accounting practice used by Seller; or (o) Any other event or condition of any character materially and adversely affecting the business or properties of Seller or the Station. 3.21 Insolvency Proceedings. No insolvency proceedings of any character including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting Seller or the Station Assets are pending or, to Seller's knowledge, threatened, and Seller has made no assignment for the benefit of creditors, nor taken any action with a view to, or which would constitute the basis for, the institution of any such insolvency proceedings. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Due Incorporation. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and as of the Closing Date shall be duly qualified to do business in and be in good standing in the State of West Virginia. 4.2 Authority; No Conflict. The execution and delivery of this Agreement has been duly and validly authorized and approved by the board of directors of Buyer, and Buyer has the corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, performance hereof, and compliance by Buyer with the terms and provisions hereof will not (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Buyer, (b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Buyer is subject, or (c) any material agreement, lease or contract, written or oral, to which Buyer is subject. This Agreement will constitute the valid and binding obligation of Buyer with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 4.3 Consents. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Buyer of this Agreement, other than the approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 4.3 of the Disclosure Schedule, no consent of any other party is required for the execution, delivery and performance by Buyer of this Agreement or the Non-Compete Agreement. 4.4 Litigation. There is no litigation, proceeding or investigation pending or, to the best of Buyer's knowledge, threatened against Buyer in any federal, state or local court, or before any administrative agency or arbitrator, or before any other tribunal duly authorized to resolve disputes, that would reasonably be expected to have any material adverse effect upon the ability of Buyer to perform its obligations hereunder, or that seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. 4.5 Compliance with Laws. Buyer is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or of any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Buyer is not in violation of any law, regulation or governmental order, the violation of which would have a material adverse effect on Buyer or its ability to perform its obligations pursuant to this Agreement. 4.6 Qualification. To the best of Buyer's knowledge, other than with respect to the ownership limitations imposed by the FCC, Buyer is legally, technically and financially qualified to be the assignee of the Licenses and the other Station Assets, and, prior to the Closing Date, Buyer will exercise its best efforts to refrain from doing any act which would disqualify Buyer from being the assignee of the Licenses and the other Station Assets. ARTICLE V COVENANTS OF SELLER Between the date of this Agreement and the Closing Date, Seller shall have complete control of the Station and its operations, and Seller covenants as follows with respect to such period: 5.1 Continued Operation of Station. Seller shall continue to operate the Station under the terms of the Licenses in the manner in which the Station has been operated heretofore, in the usual and ordinary course of business, in conformity with all material applicable laws, ordinances, regulations, rules and orders, and in a manner so as to preserve and foster the goodwill and business relationships of the Station and Seller, including, without limitation, relationships with advertisers, suppliers, customers, and employees. Seller shall file with the Commission and any other applicable governmental authority all applications and other documents required to be filed in connection with the continued operation of the Station. 5.2 Financial Obligations. Seller shall continue to conduct the financial operations of the Station, including its credit and collection policies, in the ordinary course of business with the same effort, to the same extent, and in the same manner, as in the prior conduct of the business of the Station; and shall continue to pay and satisfy all expenses, liabilities and obligations arising in the ordinary course of business in accordance with past accounting practices. Seller shall not enter into or amend any contracts or commitments involving expenditures by Seller in an aggregate amount in excess of $5,000 without the prior written consent of Buyer. 5.3 Reasonable Access. Seller shall provide Buyer, and representatives of Buyer, with reasonable access during normal business hours to the Station and shall furnish such additional information concerning the Station as Buyer from time to time may reasonably request. 5.4 Maintenance of Assets. Seller shall maintain the Real Property, the Personal Property and all other tangible assets in their present good operating condition, repair and order, reasonable wear and tear in ordinary usage excepted. Seller shall not waive or cancel any claims or rights of substantial value, transfer or otherwise dispose of the Real Property, any Personal Property, or permit to lapse or dispose of any right to the use of any Intellectual Property. 5.5 Notification of Developments. Seller shall notify Buyer of any problems or developments with respect to the Station Assets or operation of the Station; and provide Buyer with prompt written notice of any change in any of the information contained in the representations and warranties made herein or in the Disclosure Schedule or any other documents delivered in connection with this Agreement. 5.6 Payment of Taxes. Seller shall pay or cause to be paid all property and all other taxes relating to the Station, the Real Property and the assets and employees of the Station required to be paid to city, county, state, federal and other governmental units through the Closing Date. 5.7 Third Party Consents. Seller shall use commercially reasonable efforts to obtain from any third party waivers, permits, licenses, approvals, authorizations, qualifications, orders and consents necessary for the consummation of the transactions contemplated by this Agreement, including, without limitation, approval from the Commission of the Assignment Application contemplated hereby. 5.8 Encumbrances. Seller shall not suffer or permit the creation of any mortgage, conditional sales agreement, security interest, lease, lien, hypothecation, deed of trust or pledge, encumbrance, restriction, liability, charge, or imperfection of title with respect to the Station Assets. 5.9 Assignment of Assets. Seller shall not sell, assign, lease or otherwise transfer or dispose of any Station Assets, whether now owned or hereafter acquired, except for retirements in the normal and usual course of business or in connection with the acquisition of similar property or assets, as provided for herein. 5.10 Commission Licenses and Authorizations. Seller shall not by any act or omission surrender, modify adversely, forfeit or fail to renew under regular terms the Licenses, cause the Commission or any other governmental authority to institute any proceeding for the revocation, suspension or modification of any such License, or fail to prosecute with due diligence any pending applications with respect to the Licenses at the Commission or any other applicable governmental authority. 5.11 Technical Equipment. Seller shall not fail to repair, maintain or replace the technical equipment transferred hereunder in accordance with the normal standards of maintenance applicable in the broadcast industry. 5.12 Compensation Increases. Seller shall not permit any increase in the rate of commissions, fixed salary or wages, draw or other compensation payable to any employees of Seller. 5.13 Sale of Broadcast Time. Seller shall not enter into, extend or renew any Broadcast Agreement not consistent with the usual and ordinary course of business. In addition Seller shall not enter into, extend or renew any Broadcast Agreement exceeding $10,000 in amount unless such Broadcast Agreement is terminable on 30 days' notice, and Seller shall not enter into any Trade Agreement without the prior written consent of Buyer. 5.14 Insurance. Seller shall maintain at all times between the date hereof and the Closing Date, those insurance policies listed in Section 3.17 of the Disclosure Schedule. 5.15 Negotiations with Third Parties. Seller shall not, before Closing or the termination of this Agreement, enter into discussions with respect to any sale or offer of the Station, any Station Assets or any stock of Seller to any third party, nor shall Seller offer the Station, any Station Assets or any stock of Seller to any third party. 5.16 Covenant Not to Compete. (a) Seller agrees not to compete with Buyer, or to solicit Buyer's employees, for a period of five (5) years from the Closing Date. Seller shall not directly or indirectly own, manage, operate, control or be employed by any radio station with a transmission tower within a seventy-five (75) mile radius of Bethlehem, West Virginia (the "Non-Compete Area"). For the purposes of this Section 5.16, the term "Seller" shall include Bethlehem Radio, Inc. and its principal shareholders, Neil Fondas and Raymond Schreiber. (b) The consideration for this covenant not to compete shall be $50,000 payable at Closing. ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER Buyer and Seller covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 6.1 Assignment Application. As promptly as practicable after the date of this Agreement, and in no event later than March 1, 1996, Seller and Buyer shall join in and file an application on FCC Form 314 with the Commission requesting its consent to the assignment of the Licenses from Seller to Buyer (the "Assignment Application"). Seller and Buyer agree to prosecute the Assignment Application with all reasonable diligence and to use their best efforts to obtain prompt Commission grant of the Assignment Application filed at the Commission. 6.2 Performance. Buyer and Seller shall perform all acts required of them under this Agreement and shall refrain from taking or omitting to take any action that would violate their representations and warranties hereunder or render those representations and warranties inaccurate as of the Closing Date. 6.3 Conditions. If any event should occur, either within or without the control of any Party hereto, which would prevent fulfillment of the conditions placed upon the obligations of any Party hereto to consummate the transactions contemplated by this Agreement, the Parties hereto shall use their best efforts to cure the event as expeditiously as possible. 6.4 Confidentiality. Buyer and Seller shall each keep confidential all information they obtain with respect to any other Party hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions con- templated by this Agreement. If the transactions contemplated hereby are not consummated for any reason, each Party hereto shall return to the Party so providing, without retaining a copy thereof, any schedules, documents or other written information obtained from the Party so providing such information in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no Party shall be required to keep confidential or return any information which (i) is known or available through other lawful sources, (ii) is or becomes publicly known through no fault of the receiving Party or its agents, (iii) is required to be disclosed pursuant to an order or request of a judicial or governmental authority (provided the disclosing Party is given reasonable prior notice), or (iv) is developed by the receiving Party independently of the disclosure by the disclosing Party. 6.5 Cooperation. Buyer and Seller shall cooperate fully and with each other in taking any actions to obtain the required consent of any governmental instrumentality or any third party necessary or helpful to accomplish the transactions contemplated by this Agreement provided, however, that no Party shall be required to take any action which would have a material adverse effect upon it or any entity affiliated with it. 6.6 Environmental Reports. If desired by Buyer, Seller and Buyer agree to arrange for the preparation of, at the expense of Buyer, appropriate environmental reports for the real property subject to Real Estate Contracts. Such environmental reports shall conclude that: (i) the real property subject to Real Estate Contracts is not in any way contaminated with any Hazardous Waste requiring remediation, clean-up or removal under applicable laws relating to Hazardous Waste; (ii) the real property subject to Real Estate Contracts is not subject to any federal, state or local "superfund" or "Act 307" lien, proceeding, claim, liability or action, or the threat or likelihood thereof, for the clean-up, removal or remediation of any Hazardous Waste from same; (iii) there is no asbestos located in the buildings situated on the real property subject to Real Estate Contracts requiring remediation, encapsulation or removal under applicable laws relating to asbestos clean-up; and (iv) there are no underground storage tanks located at the real property subject to Real Estate Contracts requiring remediation, clean-up or removal under applicable laws relating to Hazardous Waste, and if any have previously been removed, such removal was done in accordance with all applicable laws, rules and regulations. The environmental review to be conducted shall initially be a Phase I review. Any further investigations recommended in the environmental reports obtained pursuant to this Section 6.6 shall be conducted with the cost to be shared equally by Seller and Buyer. 6.7 Consents to Assignment. To the extent that any Contract, Broadcast Agreement, Trade Agreement, Real Estate Contract or other contract identified in the Disclosure Schedule that is to be assigned under this Agreement is not capable of being sold, assigned, transferred, delivered or subleased without the waiver or consent of any third person withholding same (including a government or governmental unit), or if such sale, assignment, transfer, delivery or sublease or attempted sale, transfer, delivery or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant hereto shall not constitute a sale, assignment, transfer, delivery or sublease or an attempted sale, assignment, transfer, delivery or sublease thereof. In those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Closing Date to the transfer and assignment to Buyer of such contracts, Buyer may in its sole discretion elect to have this Agreement and any assignments executed pursuant hereto, to the extent permitted by law, constitute an equitable assignment by Seller to Buyer of all of Seller's rights, benefits, title and interest in and to such contracts, and where necessary or appropriate, Buyer shall be deemed to be Seller's agent for the purpose of completing, fulfilling and discharging all of Seller's rights and liabilities arising after the Closing Date under such contracts. Seller shall use its reasonable best efforts to provide Buyer with the benefits of such contracts (including, without limitation, permitting Buyer to enforce any rights of Seller arising under such contracts), and Buyer shall, to the extent Buyer is provided with the benefits of such contracts, assume, perform and in due course pay and discharge all debts, obligations and liabilities of Seller under such contracts. The Parties recognize, however, that the FCC licenses to be assigned under this Agreement may not be assigned without the prior approval of the FCC and will not attempt to effectuate such an assignment without the FCC's prior approval. 6.8 Employee Matters. While under no obligation to hire any employees of the Station, Buyer shall make reasonable efforts to offer employment at will to certain employees of the Station. Upon review of a full list of employees and salaries, Buyer shall notify Seller of (i) those employees to whom it will so offer employment as soon as practicable and (ii) those employees that Buyer intends to discharge not less than thirty (30) days prior to the Closing Date. Seller shall be responsible for all salary and benefits of the employees of the Station who do not accept, or are not offered, employment with Buyer. Seller shall be responsible for all salary and other compensation due to be paid for work for Seller for employees of the Station who become employees of Buyer and Buyer shall be responsible for the salary and other compensation due to be paid for work for Buyer on or after the date of hire by Buyer for such employees. Seller shall be responsible for severance payments which may be applicable under its employee benefit plans to any employees not so offered employment and hired by Buyer. 6.9 Survey. Buyer and Seller shall obtain, at Seller's expense, a survey of each parcel of Real Property certified to Buyer or its permitted assigns and the Title Company. The certification shall be by a Registered Land Surveyor and shall be made on the ground in accordance with the minimum technical standards of land surveying in West Virginia. The survey shall be delivered to Buyer at least fifteen (15) days prior to the Closing Date. If the survey shows: (i) the Real Property does not have access to an abutting public road, (ii) easements exist that are not approved by Buyer, (iii) violations of restrictions or governmental zoning or building regulations, (iv) buildings, structures or other improvements are constructed over any easement; provided that unless the construction of a building, structure or other improvement over an easement constitutes a violation of an easement it shall not constitute a defect or encroachment, (v) any building, structure or other improvement is not entirely within the boundaries of the applicable parcel of Real Property, (vi) any drainage facilities are not entirely within the applicable parcel of Real Property or appropriate public or private easements, or (vii) there are other material encroachments, gaps or overlaps rendering title to the Real Property unmarketable; then Buyer shall within seven (7) days of receipt of the survey notify Seller in writing specifying the defects and encroachments reflected by the survey, and Seller shall have ten (10) days within which to remove such defects and encroachments. 6.10 Escrow Agreement. Seller and Buyer shall enter into an Escrow Agreement substantially in the form attached hereto as Exhibit B. ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER The performance of the obligations of the Buyer hereunder is subject, at the election of the Buyer, to the following conditions precedent: 7.1 Commission Approvals. Notwithstanding anything herein to the contrary, the consummation of this Agreement is conditioned upon (a) a grant by the Commission of the Assignment Application, and (b) compliance by the Parties with the conditions, if any, imposed by the Commission in connection with the grant of the Assignment Application (provided that neither Party shall be required to accept or comply with any condition which would be unreasonably burdensome or which would have a materially adverse effect upon it). All required governmental filings shall have been made, and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted and become Final Orders. The Licenses shall be in unconditional full force and effect, shall be valid for the balance of the current license term applicable generally to radio stations licensed to communities located in the State of West Virginia, and shall be unimpaired by any acts or omissions of Seller or Seller's employees or agents. 7.2 Performance. The Station Assets shall have been transferred to Buyer by Seller, and all of the terms, conditions and covenants to be complied with or performed by Seller on or before the Closing Date shall have been duly complied with and performed in all material respects, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.3 Failure of Transfer. Notwithstanding anything to the contrary contained in this Agreement, in the event that any law, regulation or official policy prevents the transfer or assignment of the Station Assets from Seller to Buyer or any Buyer affiliate, the Parties shall have amended this Agreement and/or executed such supplemental agreements, as necessary, to achieve for both Buyer and Seller, to the maximum extent possible, the benefits of the transactions contemplated by this Agreement in a manner consistent with applicable law. 7.4 Representations and Warranties. The representations and warranties of Seller to Buyer shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.5 Consents. Seller shall have received all consents (including landlords' consents for the studio and tower sites) specified in Section 3.8 of the Disclosure Schedule. 7.6 No Litigation. No litigation, proceeding, or investigation of any kind shall have been instituted or, to Seller's knowledge, threatened which would materially adversely affect the ability of Seller to comply with the provisions of this Agreement or would materially adversely affect the operation of the Station. 7.7 No Adverse Change. Buyer shall have completed its due diligence which shall, in its sole judgment, be satisfactory and no material adverse change shall have occurred with respect to the operation of the Station since the conclusion of such due diligence. 7.8 Documents. Seller shall have obtained, executed, where necessary, and delivered, to Buyer where applicable, all of the documents, reports, orders and statements required of it herein, as well as any other documents (including collateral assignments) required by any entity providing financing for the transactions contemplated by this Agreement and the Non- Compete Agreement. 7.9 Opinions of Counsel. Seller shall have delivered to Buyer an opinion of Sam E. Schafer, counsel to Seller, addressed to Buyer and in the form attached hereto as Exhibit C. In addition, Seller shall have delivered to Buyer a written opinion of Seller's FCC counsel, dated as of the Closing Date, addressed to Buyer and in the form attached hereto as Exhibit D. 7.10 Financing. Buyer shall have obtained financing for the transactions contemplated by this Agreement on terms and conditions satisfactory to Buyer in Buyer's sole discretion. 7.11 Survey. Buyer shall have received the survey of the Real Property in accordance with Section 6.9 herein. 7.12 Non-compete Agreement. Buyer, Seller, Neil Fondas and Raymond Schreiber shall have entered into a Non-compete Agreement in the form and substance of Exhibit A, hereto. ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER The performance of the obligations of Seller hereunder is subject, at the election of Seller, to the following conditions precedent: 8.1 Performance. All of the terms, conditions and covenants to be complied with or performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.2 Representations and Warranties. The representations and warranties of Buyer to Seller shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.3 Government Approvals. All required governmental filings shall have been made and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted. 8.4 Documents. Buyer shall have obtained, executed, where necessary, and delivered to Seller where applicable, all of the documents, reports, orders and statements required of it herein. 8.5 Opinion of Counsel. Buyer shall have delivered to Seller an opinion of counsel to Buyer, addressed to Seller and in the form attached hereto as Exhibit E. ARTICLE IX INDEMNIFICATION 9.1 Indemnification by Seller. From and after the Closing Date, Seller agrees to and shall jointly and severally indemnify, defend and hold Buyer harmless, and shall reimburse Buyer for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto) resulting from or arising out of: (a) Any breach by Seller of any representation, or warranty contained in this Agreement, the Non-compete Agreement or in any certificate, exhibit, schedule, or other document furnished to or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment or breach by Seller of any covenant, agreement, term or condition contained in this Agreement, the Non- compete Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (c) Any material inaccuracy in any covenant, representation, agreement or warranty by Seller including all material statements or figures contained in the Financial Statements heretofore furnished to Buyer; and (d) Any liabilities of any kind or nature, absolute or contingent not assumed by Buyer including, without limitation, any liabilities relating to or arising from the business and operation of the Station by Seller prior to the Closing Date. Notwithstanding any other provision contained herein, Seller shall be solely responsible for any fine or forfeiture imposed by the Commission relating to the operation of the Station prior to the Closing Date. 9.2 Indemnification by Buyer. From and after the Closing Date, Buyer agrees to and shall indemnify, defend and hold Seller harmless, and shall reimburse Seller for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto), resulting from or arising out of: (a) Any breach by Buyer of any covenant, agreement, term, condition, representation, or warranty contained in this Agreement, the Non-compete Agreement or in any certificate, exhibit, schedule, or any other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment by Buyer of any covenant contained in this Agreement, the Non-compete Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; and (c) Any liabilities of any kind or nature, absolute or contingent, relating to or arising from the business and operation of the Station subsequent to the Closing Date. 9.3 Notification of Claims. (a) A Party entitled to be indemnified pursuant to Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the Party liable for such indemnification (the "Indemnifying Party") in writing of any claim or demand which the Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement. Subject to the Indemnifying Party's right to defend in good faith third party claims as hereinafter provided, the Indemnifying Party shall satisfy its obligations under this Article IX within thirty (30) days after the receipt of a written notice thereof from the Indemnified Party. (b) If the Indemnified Party shall notify the Indemnifying Party of any claim or demand pursuant to Section 9.3(a), and if such claim or demand relates to a claim or demand asserted by a third party against the Indemnified Party which the Indemnifying Party acknowledges is a claim or demand for which it must indemnify or hold harmless the Indemnified Party under Sections 9.1 or 9.2, the Indemnifying Party shall have the right to employ counsel acceptable to the Indemnified Party to defend any such claim or demand asserted against the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any such claim or demand. The Indemnifying Party shall notify the Indemnified Party in writing, as promptly as possible (but in any case before the due date for the answer or response to a claim) after the date of the notice of claim given by the Indemnified Party to the Indemnifying Party under Section 9.3(a) of its election to defend in good faith any such third party claim or demand. So long as the Indemnifying Party is defending in good faith any such claim or demand asserted by a third party against the Indemnified Party, the Indemnified Party shall not settle or compromise such claim or demand. The Indemnified Party shall make available to the Indemnifying Party or its agents all records and other materials in the Indemnified Party's possession reasonably required by it for its use in contesting any third party claim or demand. Whether or not the Indemnifying Party elects to defend any such claim or demand, the Indemnified Party shall have no obligations to do so. Upon payment of any claim or demand pursuant to this Article IX, the Indemnifying Party shall, to the extent of payment, be subrogated to all rights of the Indemnified Party. ARTICLE X MISCELLANEOUS 10.1 Assignment. (a) This Agreement shall not be assigned or conveyed by either Party hereto to any other person or entity without the prior written consent of the other Party hereto; provided, however, that Buyer may assign this Agreement without Seller's prior consent to one or more corporations or other entities controlled by Buyer; or as needed to ensure that the transactions contemplated by this Agreement comply with applicable law, regulations or policy provided, further, that Seller shall have recourse to Buyer in the event Buyer's assignee defaults hereunder. Subject to the foregoing, this Agreement shall be binding and shall inure to the benefit of the Parties hereto, their successors and assigns. (b) Notwithstanding anything to the contrary set forth herein, Buyer may assign and transfer to any entity providing financing for the transactions contemplated by this Agreement (or any refinancing of such financing) as security for such financing all of the interest, rights and remedies of Buyer with respect to this Agreement and the Non-compete Agreement, and Seller shall expressly consent to such assignment. Any such assignment will be made for collateral security purposes only and will not release or discharge Buyer from any obligations it may have pursuant to this Agreement. Notwithstanding anything to the contrary set forth herein, Buyer may (i) authorize and empower such financing sources to assert, either directly or on behalf of Buyer, any claims Buyer may have against Seller under this Agreement and (ii) make, constitute and appoint one agent bank in respect of such financing (and all officers, employees and agents designated by such agent) as the true and lawful attorney and agent-in-fact of Buyer for the purpose of enabling the financing sources to assert and collect any such claims. 10.2 Survival of Indemnification. The indemnification obligations of Seller contained in this Agreement including, without limitation, Section 1.3 shall survive indefinitely, except that any indemnification arising under Section 9.1(a) hereof (other than any indemnification required as a result of Seller's breach of Sections 3.1, 3.2 or 3.3 hereof, which indemnification shall survive indefinitely) shall be binding for a period of three (3) years following the date hereof. 10.3 Brokerage. Seller and Buyer warrant and represent to one another that there has been no broker in any way involved in the transactions contemplated hereby and that no one is or will be entitled to any fee or other compensation in the nature of a brokerage fee or finder's fee as a result of the Closing hereunder. 10.4 Expenses of the Parties. It is expressly understood and agreed that all expenses of preparing this Agreement and of preparing and prosecuting the Assignment Application with the Commission, and all other expenses, whether or not the transactions contemplated hereby are consummated, shall be borne solely by the Party who shall have incurred the same and the other Party shall have no liability in respect thereto, except as otherwise provided herein. All costs of transferring the Station Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be borne equally by Seller and Buyer. Any filing or grant fees imposed by any governmental authority the consent of which is required for the transactions contemplated hereby shall be borne equally by Seller and Buyer. 10.5 Entire Agreement. This Agreement, together with any related Schedules or Exhibits, contains all the terms agreed upon by the Parties with respect to the subject matter herein, and supersedes all prior agreements and understandings among the Parties and may not be changed or terminated orally. No attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the Party against whom the same is sought to be enforced. 10.6 Headings. The headings set forth in this Agreement have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any manner, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement. Unless otherwise specified herein, the section references contained herein refer to sections of this Agreement. 10.7 Governing Law. This Agreement shall be construed and enforced in accordance with the internal laws of the State of New York. 10.8 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of such shall constitute one and the same instrument. 10.9 Notices. Any notices or other communications shall be in writing and shall be considered to have been duly given when deposited into first class, certified mail, postage prepaid, return receipt requested, delivered personally (which shall include delivery by Federal Express or other recognized overnight courier service that issues a receipt or other confirmation of delivery) or delivered via facsimile machine; If to Seller: Neil Fondas Raymond Schreiber Bethlehem Radio, Inc. 27 Highland Lane Bethlehem, WV 26003 Fax: (941) 637-6187 Phone: (941) 639-1112 With a copy to: Sam E. Schafer 300 Board of Trade Building Wheeling, WV 26003 If to Buyer: Frank D. Osborn Osborn Communications Corporation 130 Mason Street Greenwich, CT 06830 With a copy to: John M. Pelkey Haley Bader & Potts P.L.C. 4350 North Fairfax Drive Arlington, Virginia 22203-1633 Fax: (703) 841-2345 Phone: (703) 841-0606 Any Party may at any time change the place of receiving notice by giving notice of such change to the other as provided herein. 10.10 Specific Performance. Seller acknowledges that the Station is of a special, unique and extraordinary character and that damages are inadequate to compensate Buyer for Seller's breach of this Agreement. Accordingly, in the event of a material breach by Seller of its representations, warranties, covenants and agreements under this Agreement, Buyer may sue at law for damages or, at Buyer's sole election in addition to any other remedy available to it, Buyer may also seek a decree of specific performance requiring Seller to fulfill its obligations under this Agreement, and Seller agrees to waive its defense that an adequate remedy at law exists. 10.11 Consent to Jurisdiction. Seller and Buyer hereby submit to the nonexclusive jurisdiction of the courts of the State of New York and the federal courts of the United States of America located in such state solely in respect of the interpretation and enforcement of the provisions hereof and of the documents referred to herein, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that they are not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that this Agreement or any of such documents may not be enforced in or by said courts or that the Station property is exempt or immune from execution, that the suit, action or proceeding is brought in an inconvenient forum, or that the venue of the suit, action or proceeding is improper. 10.12 Further Assurances. Seller and Buyer agree to execute all such documents and take all such actions after the Closing Date as the other Party shall reasonably request in connection with carrying out and effectuating the intent and purpose hereof and all transactions and things contemplated by this Agreement, including, without limitation, the execution and delivery of any and all confirmatory and other documents in addition to those to be delivered on the Closing Date and all actions which may reasonably be necessary or desirable to complete the transactions contemplated hereby. 10.13 Public Announcements. No public announcement (including an announcement to employees) or press release concerning the transactions provided for herein shall be made by either Party without the prior approval of the other Party, except as required by law. IN WITNESS WHEREOF, the Parties hereto have executed or have caused this Agreement to be executed by a duly authorized officer on the day and year first above written. SELLER BETHLEHEM RADIO, INC. BY: _____________________________ TITLE: BUYER MOUNTAIN RADIO CORPORATION BY: _____________________________ TITLE: President EX-10 6 WFXK ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT AND AMENDMENT TO PROGRAM SERVICE AGREEMENT dated as of February 12, 1996 by and among GREAT AMERICAN EAST, INC. (Seller), OSBORN COMMUNICATIONS CORPORATION (Guarantor), WFXC AND WDUR, INC. (Programmer) and PINNACLE MYRTLE CORP. (Buyer) TABLE OF CONTENTS
Page ARTICLE I - ASSIGNMENT AND PURCHASE OF ASSETS 1.1 Assignment of Assets 2 1.2 Excluded Assets 4 1.3 Liabilities to be Assumed 5 1.4 Purchase Price 5 1.5 Proration of Income and Expenses 6 1.6 Allocation of Purchase Price 7 ARTICLE II - CLOSING, TERMINATION, AND RISK OF LOSS 2.1 Closing 7
2.2 Transactions at the Closing 7 2.3 Termination 10 2.4 Breach by Buyer 12 2.5 Risk of Loss 12 ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER 3.1 Due Incorporation 13 3.2 Authority; No Conflict 13 3.3 Government Authorizations 13 3.4 Taxes and Regulatory Fees 14 3.5 Personal Property 14 3.6 Real Property 15 3.7 Consents 17 3.8 Contracts 17 3.9 Environmental 18 3.10 Intangibles 20 3.11 Personnel Information; Labor Contracts 21 3.12 Employee Benefit Plans 21 3.13 Litigation 21 3.14 Compliance with Laws 22 3.15 Insurance 22 3.16 Instruments of Conveyance; Good Title 22 3.17 Insolvency Proceedings 23 ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Due Incorporation 23 4.2 Authority; No Conflict 23 4.3 Consents 24 4.4 Litigation 24 4.5 Compliance with Laws 24 4.6 Qualification 24 ARTICLE V - COVENANTS OF SELLER 5.1 Continued Operation of Station 25 5.2 Reasonable Access 25 5.3 Notification of Developments 25 5.4 Payment of Taxes 25 5.5 Third Party Consents 25 5.6 Encumbrances 25 5.7 Assignment of Assets 26 5.8 Commission Licenses and Authorizations 26 5.9 Insurance 26
5.10 Negotiations with Third Parties 26 ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER 6.1 Assignment Application 26 6.2 Performance 27 6.3 Conditions 27 6.4 Confidentiality 27 6.5 Cooperation 27 6.6 Escrow Agreement 28 ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER 7.1 Commission Approvals 28 7.2 Performance 28 7.3 Representations and Warranties 28 7.4 Consents 28 7.5 No Litigation 29 7.6 Documents 29 7.7 Opinions of Counsel 29 7.8 Title Insurance Policies 29 7.9 Surveys 29 ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER 8.1 Performance 30 8.2 Representations and Warranties 30 8.3 Government Approvals 30 8.4 Documents 30 8.5 Opinion of Counsel 30 8.6 No Litigation 30 ARTICLE IX - INDEMNIFICATION 9.1 Indemnification by Seller 31 9.2 Guarantee 32 9.3 Indemnification by Buyer 33 9.4 Notification of Claims 33 ARTICLE X - MISCELLANEOUS 10.1 Assignment 34 10.2 Survival of Representations and Warranties 35 10.3 Brokerage 35 10.4 Expenses of the Parties 35
10.5 Entire Agreement 35 10.6 Headings 36 10.7 Governing Law 36 10.8 Counterparts 36 10.9 Notices 36 10.10 Specific Performance 37 10.11 Consent to Jurisdiction 37 10.12 Further Assurances 38 10.13 Public Announcements 38 10.14 Severability 38
DISCLOSURE SCHEDULE 1.1(a) Licenses 1.1(b) Personal Property 1.1(d) Leased Real Property and Owned Real Property 1.1(e) Intellectual Property 1.1(f) Contracts 1.1(h) Future Contracts 1.2(h) Other Excluded Assets 3.6(a) Title Defects 3.6(d) Real Property Permits 3.7 Seller's Consents 3.9 Hazardous Substances 3.11 Personnel Information 3.12 Employee Benefit Plans 3.13 Litigation 3.15 Insurance 4.3 Consents Required for Buyer's Performance EXHIBITS A Assignment and Assumption of Contracts and Leases B Non-Compete Agreement C Escrow Agreement D Form of Opinion of Seller's Counsel E Form of Opinion of Seller's FCC Counsel F Form of Opinion of Buyer's Counsel This ASSET PURCHASE AGREEMENT AND AMENDMENT TO PROGRAM SERVICE AGREEMENT is entered into this 12th day of February, 1996 by and among Great American East, Inc., a corporation formed under the laws of the State of North Carolina ("Seller"), Osborn Communications Corporation ("Guarantor"), WFXC and WDUR, Inc., a corporation formed under the laws of the State of Delaware ("Programmer"), and Pinnacle Myrtle Corp., a corporation formed under the laws of the State of Delaware ("Buyer") (Seller and Buyer sometimes being referred to herein individually as a "Party" and jointly as "Parties"). R E C I T A L S WHEREAS, Seller owns and operates and has been duly licensed by the Federal Communications Commission (the "FCC" or the "Commission") to operate radio station WFXK-FM, Tarboro, North Carolina (the "Station"); WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase, the assets utilized or held for use in connection with the operation of the Station, and Seller and Buyer further desire that Seller assign to Buyer the licenses and other authorizations issued to Seller by the Commission for the purpose of operating the Station; WHEREAS, Guarantor, which is the corporate parent of Seller, wishes to guarantee certain of Seller's obligations hereunder as an inducement to Buyer and Programmer to enter into this Agreement; WHEREAS, pursuant to that certain Program Service Agreement of April 3, 1992 ("Program Service Agreement"), Programmer has the right to provide programming over the Station, holds a right of first refusal with respect to the sale of the Station and has deposited the sum of Thirty-Three Thousand Dollars ($33,000.00) with Seller (the "Deposit"); and WHEREAS, Programmer wishes to amend the Program Service Agreement in accordance herewith as an inducement to Seller and Guarantor to enter into this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows: ARTICLE I ASSIGNMENT AND PURCHASE OF ASSETS 1.1 Assignment of Assets. Seller agrees to assign, transfer, convey and deliver to Buyer and Buyer agrees to acquire, accept and receive from Seller, on the Closing Date (as defined herein), all of Seller's right, title and interest in and to all of the assets used or held for use in connection with the Station including, but not limited to, the following assets relating to the Station (the "Station Assets") free and clear of all liens and encumbrances: (a) Licenses and Authorizations. All licenses, permits and other authorizations issued by the FCC or any other state or federal regulatory agency pertaining to the Station, including, without limitation, those licenses, permits or authorizations listed in Section 1.1(a) of the Disclosure Schedule delivered by Seller to Buyer and dated of even date herewith (the "Disclosure Schedule"), together with any renewals, extensions or modifications thereof and additions thereto made between the date of this Agreement and the Closing Date (the "Licenses"). (b) Tangible Personal Property. All of the tangible personal property owned by Seller and used or usable in the operation of the Station, including but not limited to the items of personal property listed in Section 1.1(b) of the Disclosure Schedule, together with all additions, modifications or replacements thereto made in the ordinary course of business between the date of this Agreement and the Closing Date, as hereafter defined (the "Personal Property"). (c) Real Estate Contracts. All of the leasehold interests and licenses in real property leased or licensed by Seller and used or held for use in the business and operations of the Station (the "Real Estate Contracts"), which Real Estate Contracts are described in Section 1.1(d) of the Disclosure Schedule (the land, buildings, structures, transmitter sites, towers, antennae and other improvements covered by the Real Estate Contracts being herein called the "Leased Real Property"). The Buyer shall assume, pay and perform all obligations under such Real Estate Contracts accruing after the Closing Date to the extent such obligations relate to the period after the Closing Date. (d) Real Estate Assets. All of Seller's interest in the real property owned by Seller and listed in Section 1.1(d) of the Disclosure Schedule and all of the buildings, structures, transmitter sites, towers, antennae and other improvements located thereon (collectively, the "Owned Real Property"). The Owned Real Property and the Leased Real Property are collectively referred to herein as the Real Property. (e) Intangibles. The good will of the Station and other intangible assets used or useful in the operation of the Station, including all of Seller's rights in the trade names, copyrights, trademarks, service marks, patents, patent applications, slogans, jingles, logos or other similar rights relating to the operation of the Station including, but not limited to, those listed in Section 1.1(e) of the Disclosure Schedule, together with any necessary additions or modifications thereto between the date hereof and the Closing Date (the "Intangibles"). (f) Leases and Contracts. All leases, contracts, agreements and franchises relating to the operation of the Station (other than contracts for real property) listed and identified in Section 1.1(f) of the Disclosure Schedule and those leases, contracts, agreements and franchises described in Section 1.1(h) of this Agreement (the "Contracts"). Buyer shall assume, pay and perform all obligations under such Contracts accruing after the Closing Date to the extent such obligations relate to the period after the Closing Date. (g) Operating and Business Records. All files, records, logs and program materials pertaining to the operation of the Station required to be maintained and kept under the rules of the Commission and such other files and records as Buyer shall reasonably require for the continuing business and operation of the Station. Seller shall have the right to reasonable access to such business records that Seller delivers to Buyer under this Section 1.1(g) upon Seller's request for five years after the Closing Date. (h) Future Contracts. All leases, contracts, agreements and franchises entered into between the date hereof and the Closing Date in the usual and ordinary course of business, except that those exceeding two months in duration or $5,000.00 in amount will not be assumed by Buyer unless consented to by Buyer in advance in writing and set forth in Section 1.1(h) of the Disclosure Schedule. (i) Inventory and Computer Software. All of Seller's items of inventory related to the business of the Station, including, without limitation, broadcast programs, as well as all computer software used or usable by the Station. (j) Other Rights and Privileges. Any and all other franchises, materials, supplies, easements, rights-of-way, licenses, and other rights and privileges of Seller relating to and used, usable or necessary in the operation of the Station. 1.2 Excluded Assets. There shall be excluded from the sale transaction described herein the following assets relating to the Station: (a) Cash and Deposits. Cash-on-hand or in banks (or their equivalents), pre-paid and security deposits and other investments belonging to Seller and relating to the operation of the Station as of the Closing Date. (b) Accounts Receivable. All accounts receivable of the Seller with regard to the operation of the Station prior to the Closing Date (as that term is defined therein). (c) Property Consumed. All property of the Station disposed of or consumed (including ordinary wear and tear) in the ordinary course of business between the date hereof and the Closing Date. (d) Expired Leases, Contracts and Agreements. All contracts described in Sections 1.1(d) and (f) to the Disclosure Schedule that are terminated or will have expired prior to the Closing Date in the ordinary course of business. (e) Pension and Profit-Sharing Plans. All pension and profit-sharing plans, trusts established thereunder and assets thereof, if any, of Seller. (f) Other Employee Benefit Plans. All other employee benefit plans (including health insurance) of Seller and the assets thereof. (g) Employment and Collective Bargaining Agreements. All employment agreements and collective bargaining agreements of Seller. (h) Other Excluded Assets. Those assets, if any, listed in Section 1.2(h) of the Disclosure Schedule. 1.3 Liabilities to be Assumed. Except as otherwise expressly provided in an assumption agreement, in the form of Exhibit A, setting forth the obligations being assumed by Buyer and to be executed at Closing (the "Assumed Contracts"), Buyer assumes no liabilities or obligations of Seller of any nature whatsoever, contingent or otherwise. Without limiting the generality of the foregoing, the Parties particularly agree that Buyer should have no responsibility or liability regarding (i) federal, state or local tax liability of any kind whatsoever incurred by Seller, (ii) any employee benefit plan maintained by Seller or (iii) severance payments, and Seller expressly agrees to defend and indemnify Buyer against same. On or prior to the Closing Date, Seller shall pay or else have made arrangements, satisfactory to Buyer, to assume all liabilities, debts and other obligations of the Station arising prior to the Closing Date or otherwise not assigned to and specifically assumed by Buyer. 1.4 Purchase Price. In consideration of Seller's performance of this Agreement, Buyer shall pay to Seller the sum of Five Million, Nine Hundred Thousand Dollars ($5,900,000.00) (the "Purchase Price"), plus the Deposit of Thirty-Three Thousand Dollars ($33,000.00) under the Program Service Agreement and any accrued interest on the Deposit shall be remitted to Seller, as follows: (a) Escrow Deposit. As security for Buyer's failure to close, and as an inducement for Seller to perform its obligations under this Agreement, Buyer, upon execution of this Agreement, shall deposit with Star Media Group, Inc. (the "Escrow Agent") the sum of Three Hundred Thousand Dollars ($300,000.00) (the "Escrow Deposit") to be invested in accordance with the terms of the Escrow Agreement into which the Parties are entering concurrently herewith. At the Closing, the Escrow Deposit shall be delivered to Seller and credited against the Purchase Price and any interest that has accrued on the Escrow Deposit shall be remitted to Buyer. If the Closing fails to occur because Buyer is in material breach of this Agreement, the Escrow Deposit and any interest that has accrued thereon shall be paid to Seller. If the Closing fails to occur for any other reason, the Escrow Deposit and any interest that has accrued thereon shall be paid to Buyer. (b) On the Closing Date at the Closing, Buyer shall pay the Purchase Price, minus any sums that have been credited against the Purchase Price pursuant to Section 1.4(a), above, by wire transfer of federal funds. In addition, the Deposit of Thirty-Three Thousand Dollars ($33,000.00) plus any interest that has accrued thereon, will be released to Seller free of any claim by Buyer thereto and the Program Service Agreement will be deemed to be amended to provide for such payment of the Deposit, plus accrued interest, to Seller. In consideration for the receipt of the Deposit, and the interest accrued thereon, Seller relinquishes any rights it may have to, and releases Programmer in respect of, any additional fees that may have been payable to Seller by Programmer under paragraph A.4 of Schedule A to the Program Service Agreement. 1.5 Proration of Income and Expenses. Except as otherwise provided herein or in the Program Service Agreement, all income and expenses arising from the conduct of the business and operations of the Station shall be prorated between Buyer and Seller in accordance with generally accepted accounting principles as of 11:59 p.m., Eastern time, on the date immediately preceding the Closing Date. Such prorations shall include, without limitation, all ad valorem and other property taxes (but excluding taxes arising by reason of the transfer of Station Assets as contemplated hereby, which shall be paid as set forth in Section 10.4 of this Agreement), business and license fees, music and other license fees (including any retroactive adjustments thereof, which retroactive adjustments shall not be subject to the ninety day limitation set forth in Section 1.5(a)), wages and salaries of employees hired by Buyer, including accruals up to the Closing Date for bonuses, commissions, vacation and sick pay, and related payroll taxes, utility expenses, time sales agreements, trade agreements, rents and similar prepaid deferred items attributable to the ownership and operation of the Station. (a) Time for Payment. The prorations and adjustments contemplated by this Section 1.5, to the extent practicable, shall be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within 90 days of the Closing Date. (b) Dispute Resolution. In the event of any disputes between the Parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 1.5(a) and such disputes shall be determined by an independent certified public accountant mutually acceptable to the Parties whose determination shall be final, and the fees and expenses of such accountant shall be paid one-half by Seller and one-half by Buyer. 1.6 Allocation of Purchase Price. Buyer and Seller agree that the Purchase Price shall be allocated among the Station Assets in a manner to be jointly determined by Buyer and Seller. Buyer and Seller agree to use such allocation in completing and filing Internal Revenue Service Form 8594 for federal income tax purposes. Buyer and Seller further agree that they shall not take any position inconsistent with such allocation upon examination of any return, in any refund claim, in any litigation, or otherwise. ARTICLE II CLOSING, TERMINATION, AND RISK OF LOSS 2.1 Closing. Unless otherwise agreed upon by the Parties, the purchase and sale of the Station Assets contemplated by this Agreement (the "Closing") shall take place at the offices of Haley Bader & Potts P.L.C., 4350 North Fairfax Drive, Suite 900, Arlington, VA at 10:00 a.m. on the fifth business day after the Commission's approval of the Assignment Application, as defined in Section 6.1 below, becomes a Final Order (the "Closing Date"). For purposes of this Agreement, a "Final Order" shall mean any action of the Commission which has not been reversed, stayed, enjoined, set aside, annulled or suspended and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal or stay, and the time for filing any such requests and the time for the Commission to set aside the action on its own motion shall have expired. 2.2 Transactions at the Closing. (a) At the Closing, Seller shall deliver to Buyer the following: (i) assignments of the Licenses and other pertinent authorizations transferring the same to the Buyer in customary form and substance; (ii) the certificates contemplated by Sections 7.2 and 7.3; (iii) a copy of the resolutions of the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, together with a certificate of the Secretary of Seller, dated as of the Closing Date, that such resolutions were duly adopted and are in full force and effect; (iv) a warranty deed (or its equivalent in the State of North Carolina), in proper statutory form for recording, and otherwise reasonably satisfactory in form and substance to Buyer's counsel, sufficient to vest in Buyer good, marketable and insurable title to each parcel of Owned Real Property; (v) all real property transfer tax returns and other similar filings required by law in connection with the transactions contemplated hereby, all duly executed and acknowledged by Seller. Seller shall also have executed such affidavits in connection with such filings as shall have been required by law or reasonably requested by Buyer; (vi) affidavit of an officer of Seller, sworn to under penalty of perjury, setting forth Seller's name, address and Federal tax identification number and stating that Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986 (the "Code"). If, on or before the Closing Date, Buyer shall not have received such affidavit, Buyer may withhold from the Purchase Price payable at Closing to Seller pursuant hereto such sums as are required to be withheld therefrom under Section 1445 of the Code. (vii) a bill of sale and all other appropriate documents and instruments assigning to Buyer good and marketable title to the Station Assets free and clear of any security interests, mortgages, liens, pledges, attachments, conditional sales contracts, claims, charges or encumbrances of any kind whatsoever; (viii) written consents of the respective lessors, landowners, and any other persons or entities whose consents may be required to permit Seller to assign and Buyer to assume the Assumed Contracts; (ix) evidence satisfactory to Buyer's counsel that no financing statements are outstanding on the Station Assets; (x) all files, records, logs, and program materials relating to the Station; and all other records required to be maintained by the FCC with respect to the Station, including the Station's local public inspection file, which shall be left at the station and thereby delivered to Buyer. (xi) the opinion of counsel for Seller, dated the Closing Date, as described in Section 7.7; (xii) assignments to Buyer of all the Contracts and Real Estate Contracts in form satisfactory to Buyer; (xiii) certificates from each of the lessors of the Leased Real Property, dated not more than thirty (30) days prior to the Closing, certifying (1) that the lease is in good standing and in full force and effect in accordance with its terms and has not been modified (except for modifications set forth therein), (2) the date(s) to which rent and all other charges thereunder have been paid, (3) that there is no default thereunder on the part of any party thereto, and (4) to such other matters as Buyer shall reasonably request; (xiv) such documentation as may be necessary to release to Buyer the escrow deposit, including any accrued interest, that has been deposited with the Bank of New York pursuant to paragraph A.5 to Schedule A to the Program Service Agreement to secure Programmer's performance under the Program Service Agreement; (xv) a Non-Compete Agreement substantially in the form of Exhibit B hereto; and (xvi) such other documents and instruments as Buyer may reasonably request to consummate the transactions contemplated hereby, including, without limitation, title affidavits and such evidence as may be required by Buyer or its title insurer of the due authorization, execution and delivery of this Agreement and the consummation of the transfers of Real Property contemplated hereunder. (b) At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: (i) the Purchase Price less any sums that have been credited against the Purchase Price pursuant to Section 1.4(a) of this Agreement; (ii) a copy of the resolutions of the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, together with a certificate of the Secretary of Buyer dated as of the Closing Date, that such resolutions were duly adopted and are in full force and effect; (iii) the certificates contemplated by Sections 8.1 and 8.2; (iv) the opinion of counsel for Buyer, dated the Closing Date, as described in Section 8.5; and (v) such other documents and instruments as Seller may reasonably request to consummate the transactions contemplated hereby. 2.3 Termination. (a) Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated at any time by: (i) the mutual written consent of the Parties hereto; (ii) either Buyer or Seller if the Closing does not occur before December 1, 1996, provided, however, that the Party seeking termination under this Section 2.3(a)(ii) shall not be in breach of this Agreement in any material respect; (iii) either Buyer or Seller if the Assignment Application (as that term is defined herein) is not granted within nine (9) months from the date the Form 314 is placed on the Commission's public notice (through no fault of the terminating Party) or is denied by the Commission by a Final Order; (iv) Buyer, if any of the conditions set forth in Article VII shall have become incapable of fulfillment, and shall not have been waived by Buyer, or if Seller shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing; or (v) Seller, if any of the conditions set forth in Article VIII shall have become incapable of fulfillment, and shall not have been waived by Seller, or if Buyer shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing. (b) In the event of the termination of this Agreement by Buyer or Seller pursuant to this Section 2.3, written notice thereof shall promptly be given (as provided for in Section 10.9 herein) to the other Party and, except as otherwise provided herein, the transactions contemplated by this Agreement shall be terminated, without further action by any Party. Subject to Section 2.4, nothing in this Section 2.3 shall be deemed to release any Party from any liability for any breach by such Party of the terms and provisions of this Agreement or to impair the right of Buyer to compel specific performance of Seller of its obligations under this Agreement. (c) The time for Commission approval provided in Section 2.3(a)(iii) notwithstanding, either Party may terminate this Agreement upon written notice to the other, if, for any reason, the Assignment Application is designated for hearing by the Commission ("Hearing Designation Order"), provided, however, that written notice of termination must be given within twenty (20) days after release of the Hearing Designation Order and that the Party giving such notice is not in default and has otherwise complied with its obligations under this Agreement. Upon termination pursuant to this Section, the Parties shall be released and discharged from any further obligation to consummate the Closing hereunder and the Escrow Deposit and all accrued interest shall be returned to the Buyer. (d) It is further provided, however, that no Party may terminate this Agreement if such Party is in default hereunder. (e) A Party shall be deemed to be in default under this Agreement only if such Party has materially breached or failed to perform its obligations hereunder, and non-material breaches or failures shall not be grounds for declaring a Party to be in default, postponing the Closing, or terminating this Agreement. 2.4 Breach by Buyer. If the Closing shall fail to occur due to a breach in any material respect by Buyer of its representations, warranties or obligations and Seller terminates this Agreement pursuant to Section 2.3(a)(v), the right of first refusal granted to Buyer in the Program Service Agreement will automatically terminate and Seller may, at its option, terminate the Program Service Agreement. In the event of such termination of the Program Service Agreement by Seller, the Deposit of Thirty-Three Thousand Dollars ($33,000.00) that has been established pursuant to Schedule A of the Program Service Agreement, along with any interest that has accrued thereon, will be released to Seller, free of any claim by Buyer thereto. The release of the Escrow Deposit (plus the interest that has accrued thereon) and the relief afforded by this Section 2.4 shall constitute Seller's exclusive remedy, and Buyer's sole liability, for Buyer's breach, on or before the Closing, of its representations, warranties or obligations hereunder. 2.5 Risk of Loss. The risk of any loss, damage or destruction to any of the Station Assets from fire or other casualty or cause shall be borne by Seller at all times prior to the Closing Date hereunder. Upon the occurrence of any loss or damage to any of the Station Assets as a result of fire, casualty, accident or other causes prior to the Closing Date, Seller shall notify Buyer of same in writing immediately stating with particularity the extent of loss or damage incurred, the cause thereof if known and the extent to which restoration, replacement and repair of the Station Assets lost or destroyed will be reimbursed under any insurance policy with respect thereto. In the event the loss is less than Fifty-Thousand Dollars ($50,000.00), Seller shall repair or replace the property on or before the Closing, or shall grant Buyer an adjustment to the Purchase Price to compensate Buyer for such loss. In the event the loss exceeds Fifty Thousand Dollars ($50,000.00) and the Station Assets cannot be substantially repaired or restored within forty-five (45) days after such loss, Buyer shall have the option, exercisable within ten (10) days after receipt of written notice from Seller, to: (i) terminate this Agreement; (ii) postpone the Closing until such time as the property has been completely repaired, replaced or restored to the satisfaction of Buyer, unless the same cannot be reasonably effected within thirty (30) days of notification; or (iii) elect to consummate the Closing and accept the property in its damaged condition, in which event Seller shall assign to Buyer all rights under any insurance claim covering the loss and pay over to Buyer any proceeds under any such insurance policy thereto received by Seller with respect thereto. Anything to the contrary in this section notwithstanding, however, if any loss, damage or destruction to any of the Station Assets is caused prior to the Closing Date by Buyer or its agents, Buyer may not terminate this Agreement but shall proceed to Closing at the time and on the date prescribed in Section 2.1 of this Agreement and shall accept the property in its damaged condition and receive an assignment of any insurance proceeds. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 Due Incorporation. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina, and is duly qualified to do business in the State of North Carolina. Seller has the corporate power and authority to own and to operate the Station and the Station Assets. 3.2 Authority; No Conflict. The execution and delivery of this Agreement, the Non-Compete Agreement, the Escrow Agreement, the bill of sale, the deed and the assignment agreements (the "Transaction Documents") have been duly and validly authorized and approved by the board of directors of Seller, and Seller has the corporate power and authority to execute, deliver and perform the Transaction Documents and to consummate the transactions contemplated hereby and thereby. Neither such execution, delivery or performance nor compliance by Seller with the terms and provisions hereof or thereof will (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Seller, (b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Seller is subject, or (c) any material agreement, mortgage, deed of trust, permit, easement, license, lease or contract, written or oral, to which Seller is subject. This Agreement shall constitute the valid and binding obligation of Seller with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. Each of the Transaction Documents has been, or will be, duly executed and is enforceable in accordance with its terms. 3.3 Government Authorizations. Section 1.1(a) of the Disclosure Schedule contains a true and complete list of all the Licenses, which Licenses are those permits, licenses and authorizations necessary for the lawful conduct of the business and operation of the Station in the manner and to the full extent they are currently conducted. Seller is the authorized legal holder of the Licenses, none of which is subject to any restriction or condition which would limit in any material respect the full operation of the Station as now operated. There are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened as of the date hereof before the Commission or any other governmental authority relating to the business or operations of the Station, other than applications, complaints or proceedings which generally affect the broadcasting industry as a whole. The Licenses are in good standing and are in full force and effect and have been renewed by Final Order without condition for a license term expiring no earlier than December 1, 2002. Seller is in material compliance with the terms and conditions of the Licenses. To the knowledge of Seller, there are no facts which, under the Communications Act of 1934, as amended, or the rules and regulations of the Commission, in each case as in effect on the date hereof, would disqualify Seller as assignor, and Buyer as assignee, in connection with the Assignment Application. 3.4 Taxes and Regulatory Fees. Seller has timely filed all federal, state, local and foreign income, franchise, sales, use, property, excise, payroll and other tax returns required by law and has paid in full all regulatory fees, taxes, estimated taxes, interest, assessments, and penalties due and payable as shown thereon. All returns and forms which have been filed have been true and correct in all material respects and no tax or other payment in a material amount other than as shown on such returns and forms are required to be paid or have been paid by Seller. There are no present disputes as to regulatory fees or taxes of any nature payable by Seller which in any event could materially adversely affect the Station Assets or operation of the Station. 3.5 Personal Property. Section 1.1(b) of the Disclosure Schedule contains a true and complete list of all the Personal Property. Except for those assets designated on Section 1.1(f) of the Disclosure Schedule as being subject to lease agreements, Seller owns and has, and will have on the Closing Date, good and marketable title to such Personal Property, and none of such Personal Property on the Closing Date will be subject to any security interest, mortgage, pledge, conditional sales agreement or other lien or encumbrance. The Personal Property shall be in good operating condition, normal wear and tear excepted, on the Closing Date. 3.6 Real Property. (a) Seller is the owner of good, marketable and insurable fee title to the real property described on Section 1.1(d) of the Disclosure Schedule and to all of the buildings, structures, transmitter sites, towers, antennae and other improvements located thereon (collectively, the "Owned Real Property") free and clear of all Title Defects (as hereinafter defined) except for (i) the matters listed on Section 3.6(a) of the Disclosure Schedule and (ii) encumbrances on real estate for real estate taxes, assessments, governmental charges or levies not yet delinquent (collectively, the "Permitted Owned Real Property Exceptions"). Section 1.1(d) of the Disclosure Schedule sets forth complete and correct legal descriptions (including lot and block number, if any) of the Owned Real Property. The Owned Real Property constitutes all of the real property owned by Seller, or held for the benefit of Seller under a title-holding agreement, on the date hereof in connection with the operation of the Station. Other than as set forth in Section 1.1(f) of the Disclosure Schedule, there are no leases/subleases, licenses or other agreements or instruments granting to any person other than Seller any right to the possession, use or occupancy of the Owned Real Property. As used in this Agreement, "Title Defects" shall mean and include any mortgage, deed of trust, lien, pledge, security interest, claim, lease, charge, option, right of first refusal, easement, restrictive covenant, encroachment or other survey defect, encumbrance or other restriction or limitation whatsoever. (b) Section 1.1(d) of the Disclosure Schedule contains a true and complete list and summary of all the Real Estate Contracts. Seller holds the leasehold interest under each Real Estate Contract free and clear of all Title Defects. The Real Estate Contracts constitute valid and binding obligations of Seller and, to the best of Seller's knowledge, of all other persons purported to be parties thereto, and are in full force and effect as of the date hereof, and will on the Closing Date constitute valid and binding obligations of Buyer and, to the best of Seller's knowledge, of all other persons purported to be parties thereto. As of the date hereof, Seller is not in default under any of the Real Estate Contracts and has not received or given written notice of any default thereunder from or to any of the other parties thereto and will not have received any such notice at or prior to the Closing Date. Seller shall use reasonable efforts to obtain (i) valid and binding third-party consents, if any are necessary, from all required third parties to the Real Estate Contracts to be conveyed and assigned to Buyer as part of the Station Assets and (ii) estoppel certificates in the form described in Section 2.2(a)(xiii) hereof. Subject to any required third-party consents, Seller will have full legal power and authority to assign its rights under the Real Estate Contracts to Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment shall not affect the validity, enforceability and continuity of any of the Real Estate Contracts. (c) Entire Premise. All of the land, buildings, structures, transmitter sites, towers, and antennae and other improvements used by Seller in the conduct of the Business or involved in the Real Property are listed in Section 1.1(d) of the Disclosure Schedule. (d) Real Property Permits and Insurance. All certificates of occupancy, permits, licenses, franchises, approvals and authorizations including, without limitation, those required pursuant to environmental laws (collectively, "Real Property Permits") of all governmental authorities having jurisdiction over the Real Property, required or appropriate to have been issued to Seller to enable the Real Property to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are, as of the date hereof, and shall be on the Closing Date, in full force and effect, no appeal or any other action is pending to revoke any such Real Property Permits, and Seller is in full compliance with all terms and conditions of all such Real Property Permits. Section 3.6(d) of the Disclosure Schedule sets forth all Real Property Permits and all reports of inspection of the Station Assets to the date hereof under all applicable laws. Seller has heretofore delivered to Buyer complete and correct copies of all of the foregoing and applications relating thereto. (e) Condemnation. Seller has not received notice and has no knowledge of any pending, threatened or contemplated appropriation or condemnation proceeding affecting the Real Property or any part thereof or of any sale or other disposition of the Owned Real Property or any part thereof in lieu of condemnation. (f) Seller has complete and good and valid rights of ingress and egress to and from the Real Property from and to the public street systems for all usual street, road and utility purposes. Seller has not received and does not know of any non-conformance or violation of any applicable zoning law, regulation or other law, order, regulation or requirement relating to or affecting any of the operations and business of the Station and the Real Property. All of the buildings, structures, transmitter sites, towers, antennae and other improvements which constitute part of the Real Property (i) are located within the boundary lines and applicable set back lines of the respective properties, (ii) do not encroach on any easements or on any real property not constituting Real Property, and (iii) comply with all local zoning requirements and conform with the uses permitted thereunder and do not constitute "non- conforming uses". All parcels of Real Property used by Seller as units are contiguous to one another and no strips or gores intervene between any such parcels. (g) All of the buildings, structures, transmitter sites, towers, antennae and other improvements which constitute part of the Real Property are in a good state of repair, maintenance and operating condition, ordinary wear and tear excepted, and there are no defects with respect thereto which would impair the day-to-day use of any such buildings, structures, transmitter sites, towers, antennae and other improvements or which would subject Buyer to liability under applicable law. (h) Seller has delivered to Buyer complete and correct copies of each and every of the following in possession of Seller: (i) title report, title binder, survey document and datum affording information or opinions with respect to, certifying to, or evidencing the extent of, current title, title history, title marketability, use, possession, restriction or regulation, if any (governmental or otherwise), conformance to and compliance with applicable laws of the Real Property, (ii) deed or title-holding or trust agreement, if any, under which any of the Real Property may have been conveyed to Seller or under which the same may be held for the benefit of Seller, (iii) Real Estate Contracts, and (iv) certificates of occupancies. 3.7 Consents. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Seller of this Agreement other than approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 3.7 of the Disclosure Schedule, no consent of any other party (including, without limitation, any party to any Real Estate Contract or Contract) is required for the execution, delivery and performance by Seller of this Agreement or the Non-Compete Agreement. 3.8 Contracts. Section 1.1(f) of the Disclosure Schedule contains a true and complete list of all Contracts. Seller has delivered to Buyer true and complete copies of all written Contracts and descriptions of terms of any oral Contracts, including any and all amendments and other modifications to same. All such Contracts are valid, binding and enforceable by Seller in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. Seller has complied in all material respects with all such Contracts and Seller is not in default beyond any applicable grace periods under any of same, and no other contracting party is in material default under any of same. Seller has full legal power and authority to assign its respective rights under such Contracts to Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment will not materially affect the validity, enforceability and continuity of any such Contracts. 3.9 Environmental. (a) Except as disclosed in Section 3.9 of the Disclosure Schedule, Seller has not, and to Seller's best knowledge, no other person has, released, placed, stored, buried or dumped any Hazardous Substances or other wastes produced by, or resulting from any business, commercial or industrial activity, operation or process, on, beneath, or adjacent to the Real Property (or any other property or facility formerly owned, operated or leased by Seller) except for Hazardous Substances and inventories or such substances to be used or generated therefrom in the ordinary course of business of Seller (which Hazardous Substances, inventories and wastes, if any, were and are stored or disposed of in accordance with applicable laws and regulations and in a manner that there has been no release of any such substances into the environment). (b) The technical equipment included in the Personal Property does not contain any Hazardous Substances, including any Polychlorinated Biphenyls ("PCBs") that are required by law to be removed, and if any equipment does contain Hazardous Substances that are not required by law to be removed, including any PCBs, that such equipment is stored and maintained in compliance with applicable law. (c) Seller has complied, and is in compliance, in all material respects with all federal, state and local environmental laws, rules and regulations applicable to the Station and its operations, and the Station Assets, including but not limited to (i) all orders, decrees, judgments, plan, notice or demand letter issued, entered, promulgated or approved thereunder, and (ii) the Commission's guidelines regarding radio frequency radiation. (d) Except as disclosed in Section 3.9 of the Disclosure Schedule, the operations and activities of the Station and the Station Assets have complied and are in compliance in all material respects with all applicable federal, state and local laws and regulations. (e) Except as disclosed in Section 3.9 of the Disclosure Schedule, no release or cleanup has occurred at the Real Property (or any other property or facility formerly owned, operated or leased by Seller) which could result in the assertion or creation of a lien on the Station Assets by any governmental body or agency with respect thereto, nor to the Seller's best knowledge has any assertion of a lien been made by any governmental body or agency with respect thereto. (f) Except as disclosed in Section 3.9 of the Disclosure Schedule, no employee of Seller in the course of his or her employment with Seller has been exposed to any Hazardous Substances or other substances generated, produced or used by Seller which could give rise to any claim against the Station Assets. (g) To the extent within Seller's possession or control, Seller has heretofore delivered to Buyer true and complete copies of all (i) environmental studies relating to the Real Property, and (ii) all material reports of inspection of the Station and/or the Station Assets pursuant to applicable federal, state and local laws and regulations. (h) Except as disclosed in Section 3.9 of the Disclosure Schedule, the Real Property does not contain any: (i) underground storage tanks, (ii) asbestos, (iii) PCBs, (iv) underground injection wells, or (v) septic tanks in which process waste water or any Hazardous Substances have been disposed and no such tanks, asbestos, equipment, wells or septic tanks have been removed from any of the Real Property. (i) Except as disclosed in Section 3.9 of the Disclosure Schedule, with respect to Seller and the Real Property (or any other property or facility formerly owned, operated or leased by Seller), there are no past or present (or, to Seller's best knowledge, future) events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance with any environmental laws as in effect on the date hereof or with any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, or which may give rise to any common law or legal liability under any environmental laws, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, notice of violation, study or investigation, based on or related to the manufacture, generation, processing, distribution, use, treatment, storage, place of disposal, transport or handling, or the release or threatened release into the indoor or outdoor environment at or from the Real Property, or any Hazardous Substances. (j) Except as set forth in Section 3.9 of the Disclosure Schedule, Seller has not received any notice or order from any governmental agency or private or public entity advising it that Seller is responsible for or potentially responsible for cleanup or paying for the cost of cleanup of any Hazardous Substances or any other wastes or substances, and Seller has not entered into any agreements concerning such cleanup, nor is Seller aware of any facts which might reasonably give rise to such notice, order or agreement. (k) Seller has not entered into any agreement that may require it to pay, reimburse, guarantee, pledge, defer, indemnify or hold harmless any person for or against liabilities and costs relating to environmental matters concerning the Station Assets. (l) As used herein, the term "Hazardous Substances" shall mean all materials, substances, oils, pollutants, contaminants and wastes regulated by any applicable federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata). (m) If Seller learns between the date of this Agreement and the Closing Date that Seller is in breach of the representation and warranty set forth in this Section 3.9, Seller shall, unless such breach is caused by Buyer, begin remedial action promptly and shall use reasonable efforts to complete such remedial action to the satisfaction of Buyer and applicable governmental authorities before the Closing Date. In the event that such breach is caused by Buyer, Buyer shall be responsible for the costs of any such remediation and the fact of such breach shall not excuse Buyer from closing on the sale of the Station Assets as provided for in this Agreement. 3.10 Intangibles. Section 1.1(e) of the Disclosure Schedule is a true and complete list of all trade names, copyrights, trademarks, service marks, patents or applications therefor (the "Intellectual Property") that have been duly registered by, filed by, or issued to the Seller. Seller has not granted any license or other rights with respect to the Intangibles (including the Intellectual Property). Seller has not received any written notice of any infringement or unlawful use of the Intangibles and Seller has not violated or infringed any patent, trademark, trade secret or copyright held by others or any license, authorization or permit held by it. 3.11 Personnel Information; Labor Contracts. (a) Section 3.11 of the Disclosure Schedule contains a true and complete list of all persons employed at the Station, including the date of hire, a description of material compensation arrangements (other than employee benefit plans set forth in Section 3.12 of the Disclosure Schedule) and a list of other terms of any and all material agreements affecting such persons. (b) Seller is not a party to any contract with any labor organization, nor has Seller agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any of Seller's employees. Seller has no knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees of the Station. During the past two years, Seller has not experienced any strikes, work stoppages, grievance proceedings, claims of unfair labor practices filed, or other significant labor difficulties of any nature. (c) Seller has complied in all material respects with all laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, equal employment opportunity and the payment and withholding of taxes. 3.12 Employee Benefit Plans. Section 3.12 of the Disclosure Schedule contains a true and complete list and summary, as of the date of this Agreement, of all employee benefit plans (as that term is defined in Section 3(3) of ERISA) applicable to the employees of Seller. Seller maintains no other employee benefit plan. Each of Seller's employee benefit plans has been operated and administered in all material respects in accordance with its terms and applicable law, including, without limitation, ERISA and the Internal Revenue Code. 3.13 Litigation. Except as set forth in Section 3.13 of the Disclosure Schedule, Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree, and there is no litigation, proceeding or investigation pending or, to the best of Seller's knowledge, threatened against Seller or the Station in any federal, state or local court, or before any administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Licenses), or before any other tribunal duly authorized to resolve disputes, which would reasonably be expected to have any material adverse effect upon the business, property, assets or condition (financial or otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. 3.14 Compliance with Laws. Seller has not received any notice asserting any non-compliance with, or any non-conformance to, any applicable statute, rule or regulation (federal, state or local) whether or not related to the business or operation of the Station or the Real Property. Seller is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or to any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. The Real Property is in full compliance with, and conforms to, all applicable building, zoning, subdivision, environmental and other land use and similar laws, codes, ordinances, rules, regulations and orders of governmental authorities (collectively, "Real Property Laws"), and Seller has not received any notice of (i) violation, claimed violation, or non-conformance or claimed non-conformance with any Real Property Law or (ii) remediation required to be performed pursuant to environmental laws with respect to any of the Real Property. To the best knowledge of Seller, Seller is in compliance with all applicable laws. 3.15 Insurance. Seller has in full force and effect insurance on all of the Real Property, Personal Property, and all other Station Assets pursuant to insurance policies, summaries of which are contained in Section 3.15 of the Disclosure Schedule. Seller shall continue to maintain such insurance in full force and effect up to the Closing Date or shall have obtained prior to the Closing Date other insurance policies with limits and coverage comparable to the current policies after prior notice to, and upon written consent of the Buyer, which consent shall not be unreasonably withheld. 3.16 Instruments of Conveyance; Good Title. The instruments to be executed by Seller and delivered to Buyer at Closing, conveying the Station Assets, including without limitation the Owned Real Property, to Buyer, will be in a form sufficient to transfer good, marketable, and with respect to the Real Property, insurable title to the Station Assets, including without limitation the Owned Real Property, free and clear of all liabilities, obligations and encumbrances, except as provided herein and otherwise reasonably satisfactory in form and substance to Buyer's counsel. 3.17 Insolvency Proceedings. No insolvency proceedings of any character including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting Seller or the Station Assets are pending or, to Seller's knowledge, threatened, and Seller has made no assignment for the benefit of creditors, nor taken any action with a view to, or which would constitute the basis for, the institution of any such insolvency proceedings. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Due Incorporation. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and as of the Closing Date shall be duly qualified to do business in and be in good standing in the State of North Carolina. 4.2 Authority; No Conflict. The execution and delivery of this Agreement has been duly and validly authorized and approved by the board of directors of Buyer, and Buyer has the corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, performance hereof, and compliance by Buyer with the terms and provisions hereof will not (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Buyer, (b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Buyer is subject, or (c) any material agreement, lease or contract, written or oral, to which Buyer is subject. This Agreement will constitute the valid and binding obligation of Buyer with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 4.3 Consents. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Buyer of this Agreement, other than the approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 4.3 of the Disclosure Schedule, no consent of any other party is required for the execution, delivery and performance by Buyer of this Agreement or the Non-Compete Agreement. 4.4 Litigation. There is no litigation, proceeding or investigation pending or, to the best of Buyer's knowledge, threatened against Buyer in any federal, state or local court, or before any administrative agency or arbitrator, or before any other tribunal duly authorized to resolve disputes, that would reasonably be expected to have any material adverse effect upon the ability of Buyer to perform its obligations hereunder, or that seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. 4.5 Compliance with Laws. Buyer is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or of any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Buyer is not in violation of any law, regulation or governmental order, the violation of which would have a material adverse effect on Buyer or its ability to perform its obligations pursuant to this Agreement. 4.6 Qualification. To the best of Buyer's knowledge, Buyer is legally and financially qualified to be the assignee of the Licenses and the other Station Assets under the Communications Act of 1934, as amended, and the FCC's rules, regulations and policies, in each case as in effect on the date hereof, and, prior to the Closing Date, Buyer will exercise its reasonable efforts to refrain from doing any act which would disqualify Buyer under such Act, rules, regulation or policies from being the assignee of the Licenses and the other Station Assets. ARTICLE V COVENANTS OF SELLER Between the date of this Agreement and the Closing Date, Seller shall have complete control of the Station and its operations, and Seller covenants as follows with respect to such period: 5.1 Continued Operation of Station. Seller shall file with the Commission and any other applicable governmental authority all applications and other documents required to be filed in connection with the continued operation of the Station. 5.2 Reasonable Access. Seller shall provide Buyer, and representatives of Buyer, with reasonable access during normal business hours to the Station and shall furnish such additional information concerning the Station as Buyer from time to time may reasonably request. 5.3 Notification of Developments. Seller shall provide Buyer with prompt written notice of any change in any of the information contained in the representations and warranties made herein or in the Disclosure Schedule or any other documents delivered in connection with this Agreement. 5.4 Payment of Taxes. Seller shall pay or cause to be paid all property and all other taxes relating to the Station, the Real Property and the assets and employees of the Station required to be paid to city, county, state, federal and other governmental units through the Closing Date. 5.5 Third Party Consents. Seller shall use commercially reasonable efforts to obtain from any third party waivers, permits, licenses, approvals, authorizations, qualifications, orders and consents necessary for the consummation of the transactions contemplated by this Agreement, including, without limitation, approval from the Commission of the Assignment Application contemplated hereby. 5.6 Encumbrances. Seller shall not suffer or permit the creation of any mortgage, conditional sales agreement, security interest, lease, license, lien, hypothecation, deed of trust or pledge, encumbrance, restriction, liability, charge, or imperfection of title with respect to the Station Assets. 5.7 Assignment of Assets. Seller shall not sell, assign, lease or otherwise transfer or dispose of any Station Assets, whether now owned or hereafter acquired, except for retirements in the normal and usual course of business or in connection with the acquisition of similar property or assets, as provided for herein. 5.8 Commission Licenses and Authorizations. Seller shall not by any act or omission surrender, modify adversely, forfeit or fail to renew under regular terms the Licenses, cause the Commission or any other governmental authority to institute any proceeding for the revocation, suspension or modification of any such License, or fail to prosecute with due diligence any pending applications with respect to the Licenses at the Commission or any other applicable governmental authority. 5.9 Insurance. Seller shall maintain at all times between the date hereof and the Closing Date, those insurance policies listed in Section 3.15 of the Disclosure Schedule. 5.10 Negotiations with Third Parties. Seller shall not, before Closing or the termination of this Agreement, enter into discussions with respect to any sale or offer of the Station, any Station Assets or any stock of Seller to any third party, nor shall Seller offer the Station, any Station Assets or any stock of Seller to any third party. ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER Buyer and Seller covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 6.1 Assignment Application. As promptly as practicable after the date of this Agreement, and in no event later than ten (10) days after execution of this Agreement, Seller and Buyer shall join in and file an application on FCC Form 314 with the Commission requesting its consent to the assignment of the Licenses from Seller to Buyer (the "Assignment Application"). Seller and Buyer agree to prosecute the Assignment Application with all reasonable diligence and to use reasonable efforts to obtain prompt Commission grant of the Assignment Application filed at the Commission. Without in any way limiting the foregoing, the Parties agree to promptly furnish, file and make available to the Commission such information as the Commission may request and not to take action for the purpose of delaying the Commission's decision or determination respecting the Assignment Application. 6.2 Performance. Buyer and Seller shall perform all acts required of them under this Agreement and shall refrain from taking or omitting to take any action that would violate their representations and warranties hereunder or render those representations and warranties inaccurate as of the Closing Date. 6.3 Conditions. If any event should occur, either within or without the control of any Party hereto, which would prevent fulfillment of the conditions placed upon the obligations of any Party hereto to consummate the transactions contemplated by this Agreement, the Parties hereto shall use reasonable efforts to cure the event as expeditiously as possible. 6.4 Confidentiality. Buyer and Seller shall each keep confidential all information they obtain with respect to any other Party hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions con- templated by this Agreement. If the transactions contemplated hereby are not consummated for any reason, each Party hereto shall return to the Party so providing, without retaining a copy thereof, any schedules, documents or other written information obtained from the Party so providing such information in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no Party shall be required to keep confidential or return any information which (i) is known or available through other lawful sources, (ii) is or becomes publicly known through no fault of the receiving Party or its agents, (iii) is required to be disclosed pursuant to law or regulation or an order or request of a judicial or governmental authority (provided the disclosing Party is given reasonable prior notice), or (iv) is developed by the receiving Party independently of the disclosure by the disclosing Party. 6.5 Cooperation. Buyer and Seller shall cooperate fully and with each other in taking any actions to obtain the required consent of any governmental instrumentality or any third party necessary or helpful to accomplish the transactions contemplated by this Agreement provided, however, that no Party shall be required to take any action which would have a material adverse effect upon it or any entity affiliated with it. 6.6 Escrow Agreement. Seller and Buyer shall enter into an Escrow Agreement substantially in the form attached hereto as Exhibit C. ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER The performance of the obligations of the Buyer hereunder is subject, at the election of the Buyer, to the following conditions precedent: 7.1 Commission Approvals. Notwithstanding anything herein to the contrary, the consummation of this Agreement is conditioned upon (a) a grant by the Commission of the Assignment Application, and (b) compliance by the Parties with the conditions, if any, imposed by the Commission in connection with the grant of the Assignment Application (provided that neither Party shall be required to accept or comply with any condition which would be unreasonably burdensome or which would have a materially adverse effect upon it). All required governmental filings shall have been made, and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted and become Final Orders. The Licenses shall be in unconditional full force and effect and shall be valid for the balance of the current license term applicable generally to radio stations licensed to communities located in the State of North Carolina. 7.2 Performance. The Station Assets shall have been transferred to Buyer by Seller, and all of the terms, conditions and covenants to be complied with or performed by Seller on or before the Closing Date shall have been duly complied with and performed in all material respects, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.3 Representations and Warranties. The representations and warranties of Seller to Buyer shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.4 Consents. Seller shall have received all consents specified in Section 3.7 of the Disclosure Schedule. 7.5 No Litigation. No litigation, proceeding, or investigation of any kind shall have been instituted or, to Seller's knowledge, threatened which would materially adversely affect the ability of Seller to comply with the provisions of this Agreement or would materially adversely affect the operation of the Station. 7.6 Documents. Seller shall have obtained, executed, where necessary, and delivered, to Buyer, where applicable, all of the documents, reports, orders and statements required of it herein. 7.7 Opinions of Counsel. Seller shall have delivered to Buyer an opinion of counsel to Seller, addressed to Buyer and in the form attached hereto as Exhibit D. In addition, Seller shall have delivered to Buyer a written opinion of Seller's FCC counsel, dated as of the Closing Date, addressed to Buyer and in the form attached hereto as Exhibit E. 7.8 Title Insurance Policies. Buyer shall have obtained, at its expense, binding commitments for owner's and mortgagee's title insurance policies (fee and leasehold) with respect to the Real Property, in form reasonably acceptable to Buyer, at standard rates, together with copies of all documents affecting title. The policies shall be issued and/or reinsured by companies reasonably acceptable to Buyer and Buyer's lender, in an amount not less than the full replacement value of each of the Real Property, insuring that title to the Real Property is good and marketable and free and clear of all Title Defects except for the matters listed on Section 3.6(a) of the Disclosure Schedule. The policies shall contain extended coverage and, if required by Buyer, contain zoning, contiguity, access, encroachment, easement and comprehensive endorsements and such other affirmative insurance as Buyer shall reasonably require and shall insure all appurtenant easements or servitudes. 7.9 Surveys. Buyer and Seller shall have obtained, at Buyer's expense, an "As Built" survey of each of the Real Property certified to Buyer, Buyer's lender and the title insurance company issuing the applicable policy in a manner reasonably acceptable to Buyer, Buyer's lender and the title insurance company by a registered land surveyor, dated not more than forty-five (45) days prior to the Closing, and complying with the minimum detail requirements for land title surveys as adopted by the American Land Title Association and American Congress on Surveying and Mapping. The "As Built" surveys received by Buyer hereto shall have indicated that the radio transmitter sites, towers and antennae used or held for use in the business and operation of the Station are located on real property constituting Owned Real Property. ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER The performance of the obligations of Seller hereunder is subject, at the election of Seller, to the following conditions precedent: 8.1 Performance. All of the terms, conditions and covenants to be complied with or performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.2 Representations and Warranties. The representations and warranties of Buyer to Seller shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.3 Government Approvals. All required governmental filings shall have been made and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted. 8.4 Documents. Buyer shall have obtained, executed, where necessary, and delivered to Seller where applicable, all of the documents, reports, orders and statements required of it herein. 8.5 Opinion of Counsel. Buyer shall have delivered to Seller an opinion of counsel to Buyer, addressed to Seller and in the form attached hereto as Exhibit F. 8.6 No Litigation. No litigation, proceeding, or investigation of any kind shall have been instituted or, to Buyer's knowledge, threatened which would materially adversely affect the ability of Buyer to comply with the provisions of this Agreement. ARTICLE IX INDEMNIFICATION 9.1 Indemnification by Seller. From and after the Closing Date, Seller agrees to and shall jointly and severally indemnify, defend and hold Buyer, its affiliates and their respective successors and assigns harmless, and shall reimburse Buyer for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto) resulting from or arising out of: (a) Any breach by Seller of any representation, or warranty contained in this Agreement, the Non-Compete Agreement, or in any certificate, exhibit, schedule, or other document furnished to or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment or breach by Seller of any covenant, agreement, term or condition contained in this Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (c) Any material inaccuracy in any covenant, representation, agreement or warranty by Seller; (d) Any liabilities of any kind or nature, absolute or contingent not expressly assumed by Buyer pursuant to this Agreement including, without limitation, any liabilities relating to or arising from the business and operation of the Station by Seller prior to the Closing Date; (e) The actual, alleged or threatened release, storage, transportation, treatment or generation of Hazardous Substances generated, stored, used, disposed of, treated, handled or shipped by Seller or any prior owner or lessee of any of the Real Property on or before the Closing Date, but regardless of whether discovered on, before or after the Closing Date; (f) Any cleanup of Hazardous Substances released, disposed of or discharged: (A) on, beneath or adjacent to any of the Real Property prior to or on the Closing Date, but regardless of whether discovered on, before or after the Closing Date; or (b) at any other location if such substances were generated, used, stored, disposed of, treated, transported or released by Seller or any prior owner of the Real Property prior to or on the Closing Date, but regardless of whether discovered on, before or after the Closing Date; and (g) The installation of any pollution control equipment or other equipment to bring the Station and the Station Assets into compliance with any environmental laws as of the Closing Date if such equipment was installed because the Station or the Station Assets were not in compliance with any then-current environmental laws as of the Closing Date. (h) The enforcement of this Article IX. Notwithstanding any other provision contained herein, Seller shall be solely responsible for any fine or forfeiture imposed by the Commission relating to the operation of the Station prior to the Closing Date. 9.2 Guarantee. Osborn Communications Corporation hereby irrevocably and unconditionally guarantees to Buyer the prompt and complete performance of the obligations imposed upon Seller under Section 9.1. Guarantor consents and agrees that Buyer and Seller may, at any time and from time to time, without notice or demand, whether before or after any actual or purported termination, repudiation or revocation of this Agreement by the Guarantor, and without affecting the enforceability or continuing effectiveness hereof as to Guarantor: (a) Supplement, restate, modify, amend, increase, decrease, extend, renew or otherwise change the time for payment or the terms of this Agreement or any part thereof; (b) Supplement, restate, modify, amend, increase, decrease or waive, or enter into or give any agreement, approval or consent with respect to, this Agreement or any part thereof, or any of the Transaction Documents, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder; (c) Accept partial payments; (d) Release any person from any personal liability with respect to this Agreement or any part thereof; or (e) Consent to the merger, change or any other restructuring or termination of the corporate or partnership existence of Buyer or any other person, and correspondingly restructure the obligations evidenced hereby, and any such merger, change, restructuring or termination shall not affect the liability of Guarantor or the continuing effectiveness hereof, or the enforceability hereof with respect to all or any part of the obligations evidenced hereby. 9.3 Indemnification by Buyer. From and after the Closing Date, Buyer agrees to and shall indemnify, defend and hold Seller harmless, and shall reimburse Seller for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto), resulting from or arising out of: (a) Any breach by Buyer of any covenant, agreement, term, condition, representation, or warranty contained in this Agreement or in any certificate, exhibit, schedule, or any other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment by Buyer of any covenant contained in this Agreement, or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; and (c) Any liabilities of any kind or nature, absolute or contingent, relating to or arising from the business and operation of the Station subsequent to the Closing Date. (d) The enforcement of this Article IX. 9.4 Notification of Claims. (a) A Party entitled to be indemnified pursuant to Sections 9.1 or 9.3 (the "Indemnified Party") shall notify the Party liable for such indemnification (the "Indemnifying Party") in writing of any claim or demand which the Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement. Subject to the Indemnifying Party's right to defend in good faith third party claims as hereinafter provided, the Indemnifying Party shall satisfy its obligations under this Article IX within thirty (30) days after the receipt of a written notice thereof from the Indemnified Party. The failure of the Indemnified Party to provide notice as required under this Section 9.4(a) shall not affect the liability of the Indemnifying Party under this Article IX unless the failure to give such notice materially adversely affects the Indemnifying Party's ability to defend against the claim giving rise to the Indemnified Party's claim. (b) If the Indemnified Party shall notify the Indemnifying Party of any claim or demand pursuant to Section 9.4(a), and if such claim or demand relates to a claim or demand asserted by a third party against the Indemnified Party which the Indemnifying Party acknowledges is a claim or demand for which it must indemnify or hold harmless the Indemnified Party under Sections 9.1 or 9.3, the Indemnifying Party shall have the right to employ counsel acceptable to the Indemnified Party to defend any such claim or demand asserted against the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any such claim or demand. The Indemnifying Party shall notify the Indemnified Party in writing, as promptly as possible (but in any case before the due date for the answer or response to a claim) after the date of the notice of claim given by the Indemnified Party to the Indemnifying Party under Section 9.4(a) of its election to defend in good faith any such third party claim or demand. So long as the Indemnifying Party is defending in good faith any such claim or demand asserted by a third party against the Indemnified Party, the Indemnified Party shall not settle or compromise such claim or demand. The Indemnified Party shall make available to the Indemnifying Party or its agents all records and other materials in the Indemnified Party's possession reasonably required by it for its use in contesting any third party claim or demand. Whether or not the Indemnifying Party elects to defend any such claim or demand, the Indemnified Party shall have no obligations to do so. Upon payment of any claim or demand pursuant to this Article IX, the Indemnifying Party shall, to the extent of payment, be subrogated to all rights of the Indemnified Party. ARTICLE X MISCELLANEOUS 10.1 Assignment. This Agreement shall not be assigned or conveyed by either Party hereto to any other person or entity without the prior written consent of the other Party hereto; provided, however, that Buyer may assign this Agreement without Seller's prior consent (i) to one or more corporations or other entities affiliated with Buyer if such assignment does not delay the Closing Date, and (ii) to Buyer's lender for security purposes. Subject to the foregoing, this Agreement shall be binding and shall inure to the benefit of the Parties hereto, their successors and assigns. 10.2 Survival of Representations and Warranties. The representations and warranties made by the Parties herein or pursuant hereto shall survive the Closing Date for a period of twelve (12) months notwithstanding any investigation made by Buyer with respect thereto. 10.3 Brokerage. Seller and Buyer warrant and represent to one another that, with the exception of Star Media Group, Inc., broker for the Buyer, there has been no broker in any way involved in the transactions contemplated hereby and that no one other than Star Media Group, Inc. is or will be entitled to any fee or other compensation in the nature of a brokerage fee or finder's fee as a result of the Closing hereunder. Buyer shall be wholly responsible for any brokerage or other fee due to Star Media Group, Inc. 10.4 Expenses of the Parties. It is expressly understood and agreed that all expenses of preparing this Agreement and of preparing and prosecuting the Assignment Application with the Commission, and all other expenses, whether or not the transactions contemplated hereby are consummated, shall be borne solely by the Party who shall have incurred the same and the other Party shall have no liability in respect thereto, except as otherwise provided herein. All costs of transferring the Station Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be borne equally by Seller and Buyer. Any filing or grant fees imposed by any governmental authority the consent of which is required for the transactions contemplated hereby shall be borne equally by Seller and Buyer. 10.5 Entire Agreement. This Agreement, together with any related disclosure schedule or exhibits, contains all the terms agreed upon by the Parties with respect to the subject matter herein, and supersedes all prior agreements and understandings among the Parties and may not be changed or terminated orally. No attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the Party against whom the same is sought to be enforced. 10.6 Headings. The headings set forth in this Agreement have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any manner, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement. Unless otherwise specified herein, the section references contained herein refer to sections of this Agreement. 10.7 Governing Law. This Agreement shall be construed and enforced in accordance with the internal laws of the State of New York. 10.8 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of such shall constitute one and the same instrument. 10.9 Notices. Any notices or other communications shall be in writing and shall be considered to have been duly given when deposited into first class, certified mail, postage prepaid, return receipt requested, delivered personally (which shall include delivery by Federal Express or other recognized overnight courier service that issues a receipt or other confirmation of delivery) or delivered via facsimile machine; If to Seller or Guarantor: Osborn Communications Corporation Attn: Frank D. Osborn 130 Mason Street Greenwich, CT 06830 Fax: (203) 629-1749 Phone: (203) 629-0905 With a copy (which shall not constitute notice) to: John M. Pelkey Haley Bader & Potts P.L.C. 4350 North Fairfax Drive Suite 900 Arlington, Virginia 22203-1633 Fax: (703) 841-2345 Phone: (703) 841-0606 If to Buyer or Programmer: Pinnacle Broadcasting Company, Inc. Attn: Edward J. Ferreri 2505 N. Highway 360 Suite 620 Grand Prairie, TX 75050-7801 Fax: (817) 649-1707 Phone: (817) 649-0184 With a copy (which shall not constitute notice) to: David Ambrosia, Esq. Winthrop, Stimson, Putnam & Roberts One Battery Park Plaza New York, New York 10004-1500 Fax: (212) 858-1500 Phone: (212) 858-1208 Any Party may at any time change the place of receiving notice by giving notice of such change to the other as provided herein. 10.10 Specific Performance. Seller acknowledges that the Station is of a special, unique and extraordinary character and that damages are inadequate to compensate Buyer for Seller's breach of this Agreement. Accordingly, in the event of a material breach by Seller of its representations, warranties, covenants and agreements under this Agreement, Buyer may sue at law for damages or, at Buyer's sole election and in lieu of any other remedy available to it, Buyer may seek a decree of specific performance requiring Seller to fulfill its obligations under this Agreement, and Seller agrees to waive its defense that an adequate remedy at law exists. 10.11 Consent to Jurisdiction. Seller and Buyer hereby submit to the nonexclusive jurisdiction of the courts of the State of New York and the federal courts of the United States of America located in such state solely in respect of the interpretation and enforcement of the provisions hereof and of the documents referred to herein, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that they are not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that this Agreement or any of such documents may not be enforced in or by said courts or that the Station property is exempt or immune from execution, that the suit, action or proceeding is brought in an inconvenient forum, or that the venue of the suit, action or proceeding is improper. 10.12 Further Assurances. Seller and Buyer agree to execute all such documents and take all such actions after the Closing Date as the other Party shall reasonably request in connection with carrying out and effectuating the intent and purpose hereof and all transactions and things contemplated by this Agreement, including, without limitation, the execution and delivery of any and all confirmatory and other documents in addition to those to be delivered on the Closing Date and all actions which may reasonably be necessary or desirable to complete the transactions contemplated hereby. 10.13 Public Announcements. No public announcement (including an announcement to employees) or press release concerning the transactions provided for herein shall be made by either Party without the prior approval of the other Party, except as required by law. 10.14 Severability. In case any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions will not in any way be affected or impaired. [Remainder of Page Intentionally Left Blank] IN WITNESS WHEREOF, the Parties hereto have executed or have caused this Agreement to be executed by a duly authorized officer on the day and year first above written. SELLER GREAT AMERICAN EAST, INC. By: Title: BUYER PINNACLE MYRTLE CORP. By: Title: President For purposes of Section 9.2 of this Asset Purchase Agreement OSBORN COMMUNICATIONS CORPORATION By: Title: For purposes of Sections 1.4, 2.2 and 2.4 of this Asset Purchase Agreement insofar as they amend the Program Service Agreement WFXC AND WDUR, INC. By: Title: EX-10 7 ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT dated as of February 20, 1996 by and between WKWK RADIO, INC. (Seller) and MOUNTAIN RADIO CORPORATION (Buyer) TABLE OF CONTENTS
Page ARTICLE I - ASSIGNMENT AND PURCHASE OF ASSETS 1.1 Assignment of Assets 1 1.2 Excluded Assets 4 1.3 Liabilities to be Assumed 4 1.4 Purchase Price 5 1.5 Proration of Income and Expenses 5 1.6 Allocation of Purchase Price 6 1.7 Submission of Schedules; Due Diligence by Buyer 6 ARTICLE II - CLOSING, TERMINATION, AND RISK OF LOSS 2.1 Closing 7 2.2 Transactions at the Closing 7 2.3 Termination 10 2.4 Risk of Loss 12 2.5 Interruption of Broadcast Transmissions 12 ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation 13 3.2 Authority; No Conflict 13 3.3 Government Authorizations 13 3.4 Compliance with Regulations 14 3.5 Taxes and Regulatory Fees 14 3.6 Personal Property 15 3.7 Real Property 15 3.8 Consents 17 3.9 Contracts 17 3.10 Environmental 18 3.11 Intangibles 18 3.12 Financial Statements 18 3.13 Personnel Information; Labor Contracts 19 3.14 Employee Benefit Plans 19 3.15 Litigation 20 3.16 Compliance with Laws 20 3.17 Insurance 21 3.18 Undisclosed Liabilities 21 3.19 Instruments of Conveyance; Good Title 21 3.20 Absence of Certain Changes 21 3.21 Insolvency Proceedings 23 ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Due Incorporation 23 4.2 Authority; No Conflict 23 4.3 Consents 23 4.4 Litigation 24 4.5 Compliance with Laws 24 4.6 Qualification 24 ARTICLE V - COVENANTS OF SELLER 5.1 Continued Operation of Stations 25 5.2 Financial Obligations 25 5.3 Reasonable Access 25 5.4 Maintenance of Assets 25 5.5 Notification of Developments 25 5.6 Payment of Taxes 25 5.7 Third Party Consents 26 5.8 Encumbrances 26 5.9 Assignment of Assets 26 5.10 Commission Licenses and Authorizations 26 5.11 Technical Equipment 26 5.12 Compensation Increases 26
5.13 Sale of Broadcast Time 26 5.14 Insurance 27 5.15 Negotiations with Third Parties 27 ARTICLE VI - JOINT COVENANTS OF BUYER AND SELLER 6.1 Assignment Application; Local Marketing Agreement 27 6.2 Performance 28 6.3 Conditions 28 6.4 Confidentiality 28 6.5 Cooperation 28 6.6 Environmental Reports 28 6.7 Consents to Assignment 29 6.8 Employee Matters 30 6.9 Survey 30 6.10 Escrow Agreement 31 ARTICLE VII - CONDITIONS TO OBLIGATIONS OF BUYER 7.1 Commission Approvals 31 7.2 Performance 31 7.3 Failure of Transfer 32 7.4 Representations and Warranties 32 7.5 Consents 32 7.6 No Litigation 32 7.7 No Adverse Change 32 7.8 Documents 32 7.9 Opinions of Counsel 32 7.10 Survey 33 ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF SELLER 8.1 Performance 33 8.2 Representations and Warranties 33 8.3 Government Approvals 33 8.4 Documents 33 8.5 Opinion of Counsel 33 ARTICLE IX - INDEMNIFICATION 9.1 Indemnification by Seller 34 9.2 Indemnification by Buyer 34 9.3 Notification of Claims 35 9.4 Limitation with Respecdt to Indemnification 36
ARTICLE X - MISCELLANEOUS 10.1 Assignment 36 10.2 Survival of Indemnification 37 10.3 Brokerage 37 10.4 Expenses of the Parties 37 10.5 Entire Agreement 38 10.6 Headings 38 10.7 Governing Law 38 10.8 Counterparts 38 10.9 Notices 38 10.10 Specific Performance 40 10.11 Consent to Jurisdiction 40 10.12 Further Assurances 41 10.13 Public Announcements 41 10.14 Accounts Receivable 41
DISCLOSURE SCHEDULE 1.1(a) Licenses and Authorizations 1.1(b) Tangible Personal Property 1.1(d) Real Estate Assets 1.1(e) Intangibles 1.1(f) Leases and Contracts 1.1(g) Contracts for Sale of Broadcast Time 1.1(i) Future Contracts 1.2(h) Excluded Assets 3.7 Title Defects 3.8 Consents Required by Seller 3.12 Financial Statements 3.13 Personnel 3.14 Employee Benefit Plans 3.15 Litigation 3.17 Insurance 3.20 Certain Changes 4.3 Consents Required by Buyer THIS ASSET PURCHASE AGREEMENT is entered into this 20th day of February, 1996 by and between WKWK Radio, Inc., a corporation formed under the laws of the State of West Virginia ("Seller"), and MOUNTAIN RADIO CORPORATION, a corporation formed under the laws of the State of Delaware ("Buyer") (Seller and Buyer sometimes being referred to herein individually as a "Party" and jointly as "Parties"). R E C I T A L S WHEREAS, Seller owns and operates and has been duly licensed by the Federal Communications Commission (the "FCC" or the "Commission") to operate radio stations WKWK-AM/FM, Wheeling, West Virginia (the "Stations"); and WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase, the assets utilized in connection with the operation of the Stations, and Seller and Buyer further desire that Seller assign to Buyer the licenses and other authorizations issued to Seller by the Commission for the purpose of operating the Stations; and NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows: ARTICLE I ASSIGNMENT AND PURCHASE OF ASSETS 1.1 Assignment of Assets. Seller agrees to assign, transfer, convey and deliver to Buyer and Buyer agrees to acquire, accept and receive from Seller, on the Closing Date (as defined herein), all of Seller's right, title and interest in and to the following assets relating to the Stations (the "Station Assets") free and clear of all liens and encumbrances: (a) Licenses and Authorizations. All licenses, permits and other authorizations issued by the FCC or any other state or federal regulatory agency pertaining to the Stations, including, without limitation, those licenses, permits or authorizations listed in Section 1.1(a) of the Disclosure Schedule delivered by Seller to Buyer and dated of even date herewith (the "Disclosure Schedule"), together with any renewals, extensions or modifications thereof and additions thereto made between the date of this Agreement and the Closing Date (the "Licenses"). The Licenses include the right to use the call letters of the Stations, including but not limited to the call letters WKWK. (b) Tangible Personal Property. All of the tangible personal property owned by Seller and used or useable in the operation of the Stations, including but not limited to the items of personal property listed in Section 1.1(b) of the Disclosure Schedule, together with all additions, modifications or replacements thereto made in the ordinary course of business between the date of this Agreement and the Closing Date, as hereafter defined (the "Personal Property"). (c) Intentionally Left Blank. (d) Real Estate Assets. All of Seller's interest in the real property owned by Seller and listed in Section 1.1(d) of the Disclosure Schedule and all of the buildings, structures and other improvements located thereon (collectively, the "Owned Real Property" or "Real Property"). (e) Intangibles. The good will of the Stations and other intangible assets used or useful in the operation of the Stations, including all of Seller's rights in the trade names, copyrights, trademarks, service marks, patents, patent applications, slogans, jingles, logos or other similar rights relating to the operation of the Stations including, but not limited to, those listed in Section 1.1(e) of the Disclosure Schedule, together with any necessary additions or modifications thereto between the date hereof and the Closing Date (the "Intangibles"). (f) Leases and Contracts. All leases, contracts, agreements and franchises relating to the operation of the Stations (other than contracts for the sale of broadcast time and leases for real property) listed and identified in Section 1.1(f) of the Disclosure Schedule and those leases, contracts, agreements and franchises described in Section 1.1(i) of this Agreement (the "Contracts"). Buyer shall assume, pay and perform all obligations under such Contracts accruing after the Closing Date. (g) Contracts for Sale of Broadcast Time. All contracts for sale of broadcast time on the Stations that provide for payment by the customer solely on a cash basis and that are to be in effect on the Closing Date listed and identified in Section 1.1(g) of the Disclosure Schedule (the "Broadcast Agreements"). Buyer shall assume, pay and perform all obligations under the Broadcast Agreements arising after the Closing Date, provided, however, Buyer will not assume any contract for the sale of time pursuant to which payment is to be received in whole or in part in services, merchandise or other non-cash considerations ("Trade Agreements") entered into prior to the date of this Agreement, except as agreed to by Buyer and set forth in Section 1.1(g) of the Disclosure Schedule, and Buyer will not assume any contract for the sale of time pursuant to such a Trade Agreement entered into subsequent to the date of this Agreement unless Buyer has consented in writing to the execution of such contract. (h) Operating and Business Records. All files, records, logs and program materials pertaining to the operation of the Stations required to be maintained and kept under the rules of the Commission and such other files and records as Buyer shall reasonably require for the continuing business and operation of the Stations. Seller shall have the right to reasonable access to such business records that Seller delivers to Buyer under this Section 1.1(h) upon Seller's request for five years after the Closing Date. (i) Future Contracts. All leases, contracts, agreements and franchises (other than Broadcast Agreements, which are governed by Section 5.13 hereof) entered into between the date hereof and the Closing Date in the usual and ordinary course of business, except that those exceeding two months in duration or $5,000.00 in amount will not be assumed by Buyer unless consented to by Buyer in advance in writing and set forth in Section 1.1(i) of the Disclosure Schedule. (j) Inventory and Computer Software. All of Seller's items of inventory related to the business of the Stations, including, without limitation, broadcast programs, as well as all computer software used or useable by the Stations. (k) Other Rights and Privileges. Any and all other franchises, materials, supplies, easements, rights-of-way, licenses, and other rights and privileges of Seller relating to and used, useable or necessary in the operation of the Stations. 1.2 Excluded Assets. There shall be excluded from the sale transaction described herein the following assets relating to the Stations: (a) Cash and Deposits. Cash-on-hand or in banks (or their equivalents), pre-paid deposits, and other investments belonging to Seller and relating to the operation of the Stations as of the Closing Date. (b) Accounts Receivable. All accounts receivable of the Seller with regard to the operation of the Stations prior to the Closing Date (as that term is defined therein), although Buyer agrees to collect such accounts pursuant to the terms of Section 10.14 of this Agreement. (c) Property Consumed. All property of the Stations disposed of or consumed (including ordinary wear and tear) in the ordinary course of business between the date hereof and the Closing Date. (d) Expired Leases, Contracts and Agreements. All contracts described in Sections 1.1(f), (g) and (i) to the Disclosure Schedule that are terminated or will have expired prior to the Closing Date in the ordinary course of business. (e) Pension and Profit-Sharing Plans. All pension and profit-sharing plans, trusts established thereunder and assets thereof, if any, of Seller. (f) Other Employee Benefit Plans. All other employee benefit plans (including health insurance) of Seller and the assets thereof. (g) Employment and Collective Bargaining Agreements. All employment agreements and collective bargaining agreements of Seller. (h) Other Assets. Those assets, if any, listed in Section 1.2(h) of the Disclosure Schedule. 1.3 Liabilities to be Assumed. Except as otherwise provided herein, Buyer assumes no liabilities or obligations of Seller of any nature whatsoever, contingent or otherwise, except for post-closing obligations related to Real Estate Contracts, Contracts, Broadcast Agreements and Trade Agreements (the "Assumed Contracts") assigned to and specifically assumed by Buyer. Without limiting the generality of the foregoing, the Parties particularly agree that Buyer should have no responsibility or liability regarding (i) federal, state or local tax liability of any kind whatsoever incurred by Seller or (ii) any employee benefit plan maintained by Seller, and Seller expressly agrees to defend and indemnify Buyer against same. On or prior to the Closing Date Seller shall pay or else have made arrangements, satisfactory to Buyer, to assume all liabilities, debts and other obligations of the Stations arising prior to the Closing Date and not assigned to and specifically assumed by Buyer. 1.4 Purchase Price. In consideration of Seller's performance of this Agreement, Buyer shall pay to Seller the sum of Two Million, Six Hundred Fifty Thousand Dollars($2,650,000) (the "Purchase Price") as follows: (a) Escrow Deposit. As security for Buyer's failure to close, and as an inducement for Seller to perform its obligations under this Agreement, Buyer, upon execution of this Agreement, shall deposit, in accordance with Paragraph 1.7 of this Agreement, the sum of One Hundred Thirty-Thousand Dollars ($130,000.00) (the "Escrow Deposit") in the One Valley Bank to be invested in accordance with the terms of the Escrow Agreement into which the Parties are entering concurrently herewith. John Allen, Esq., and Harry Buch, Esq., shall act as escrow agents (the "Escrow Agents") with respect to such Escrow Deposit and any interest accrued thereon. At the Closing, the Escrow Deposit, and any interest that has accrued thereon, shall be delivered to Seller and credited against the Purchase Price. If the Closing fails to occur because Buyer is in material breach of this Agreement, the Escrow Deposit shall be paid to Seller as liquidated damages and as Seller's exclusive remedy for such breach and any interest on the Escrow Deposit shall be paid to Buyer. If the Closing fails to occur for any other reason, the Escrow Deposit and any interest that has accrued thereon shall be paid to Buyer. (b) On the Closing Date at the Closing, Buyer shall pay the Purchase Price, minus any sums that have been credited against the Purchase Price pursuant to Subparagraph 1.4(a), above, by wire transfer of federal funds. 1.5 Proration of Income and Expenses. Except as otherwise provided herein and in the Local Marketing Agreement ("LMA") to be entered into by Buyer and Seller pursuant to Section 6.1 of this Agreement, all income and expenses arising from the conduct of the business and operations of the Stations shall be prorated between Buyer and Seller in accordance with generally accepted accounting principles as of 11:59 p.m., Eastern time, on the date immediately preceding the Closing Date. Such prorations shall include, without limitation, all ad valorem and other property taxes (but excluding taxes arising by reason of the transfer of Station Assets as contemplated hereby, which shall be paid as set forth in Section 10.4 of this Agreement), business and license fees, music and other license fees (including any retroactive adjustments thereof, which retroactive adjustments shall not be subject to the ninety day limitation set forth in Section 1.5(a)), wages and salaries of employees hired by Buyer, including accruals up to the Closing Date for bonuses, commissions, vacation and sick pay, and related payroll taxes, utility expenses, time sales agreements, Trade Agreements to the extent provided in Section 1.1(g) hereof, rents and similar prepaid deferred items attributable to the ownership and operation of the Stations. (a) Time for Payment. The prorations and adjustments contemplated by this Section 1.5, to the extent practicable, shall be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within 90 days of the Closing Date. (b) Dispute Resolution. In the event of any disputes between the Parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 1.5(a) and such disputes shall be determined by an independent certified public accountant mutually acceptable to the Parties whose determination shall be final, and the fees and expenses of such accountant shall be paid one-half by Seller and one-half by Buyer. 1.6 Allocation of Purchase Price. Buyer and Seller agree that the Purchase Price shall be allocated among the Station Assets in a manner to be determined by Buyer. Buyer and Seller agree to use such allocation in completing and filing Internal Revenue Service Form 8594 for federal income tax purposes. Buyer and Seller further agree that they shall not take any position inconsistent with such allocation upon examination of any return, in any refund claim, in any litigation, or otherwise. 1.7 Submission of Schedules; Due Diligence by Buyer. Seller agrees that, no later than February 23, 1996, it shall provide Buyer with all sections of the Disclosure Schedule called for in this Agreement other than Section 4.3. Buyer shall then have a period of fourteen (14) days, i.e., until March 8, 1996, to complete its due diligence inspection of the Stations and the Station Assets and to designate those Assumed Contracts that Buyer deems to be material ("Material Contracts"). If that due diligence inspection reveals that the representations and warranties of Seller are not true, complete and correct in all material respects including, without limitation, if that due diligence inspection reveals a material adverse change in the working capital, financial condition, business, results of operations, assets or liabilities of Seller in comparison to the Financial Statements provided to Buyer up to the date of execution of this Agreement (but taking into account the seasonal differences in the financial condition of the Stations as experienced by the Station in the past), Buyer may terminate this Agreement by providing written notice of such termination to Seller no later than March 13, 1996. In the event of such termination, the Escrow Deposit and any interest accrued thereon shall be immediately returned to Buyer. ARTICLE II CLOSING, TERMINATION, AND RISK OF LOSS 2.1 Closing. Unless otherwise agreed upon by the Parties, the purchase and sale of the Station Assets contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. on the fifth business day after the Commission's approval of the Assignment Application, as defined in Section 6.1 below, becomes a Final Order (the "Closing Date"). For purposes of this Agreement, a "Final Order" shall mean any action of the Commission which has not been reversed, stayed, enjoined, set aside, annulled or suspended and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal or stay, and the time for filing any such requests and the time for the Commission to set aside the action on its own motion shall have expired. Buyer may, at its sole election, waive the requirement that the Commission's approval of the Assignment Application shall have become a Final Order. 2.2 Transactions at the Closing. (a) At the Closing, Seller shall deliver to Buyer the following: (i) assignments of the Licenses and other pertinent authorizations transferring the same to the Buyer in customary form and substance; (ii) the certificates contemplated by Sections 7.2 and 7.4; (iii) a copy of the resolutions of the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and the unanimous consent of the Seller's stockholders to the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, together with a certificate of the Secretary of Seller, dated as of the Closing Date, that such resolutions were duly adopted, that the consent was duly given and that the resolutions and consent are in full force and effect; (iv) a special warranty deed (or its equivalent in the State of West Virginia), in proper statutory form for recording, conveying each parcel of Owned Real Property; (v) an owner's extended coverage policy of title insurance with respect to each parcel of Real Property, in each case issued on the date of Closing by a title insurance company acceptable to counsel for Buyer (the "Title Company"). Each such title insurance policy shall be in an amount designated by Buyer, but which shall not exceed the sum allocated to the Owned Real Property pursuant to this Agreement, and shall insure Buyer's ownership of fee title with respect to the Owned Real Property without any of the Scheduled B standard pre-printed exceptions (other than taxes not yet due and payable) and free and clear of title defects and other exceptions to or exclusions from coverage other than Permitted Owned Real Property Exceptions (as hereinafter defined in Section 3.7(a)); (vi) all real property transfer tax returns and other similar filings required by law in connection with the transactions contemplated hereby, all duly executed and acknowledged by Seller. Seller shall also have executed such affidavits in connection with such filings as shall have been required by law or reasonably requested by Buyer; (vii) affidavit of an officer of Seller, sworn to under penalty of perjury, setting forth Seller's name, address and Federal tax identification number and stating that Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986 (the "Code"). If, on or before the Closing Date, Buyer shall not have received such affidavit, Buyer may withhold from the Purchase Price payable at Closing to Seller pursuant hereto such sums as are required to be withheld therefrom unde (viii) a bill of sale and all other appropriate documents and instruments assigning to Buyer good and marketable title to the Station Assets free and clear of any security interests, mortgages, liens, pledges, attachments, conditional sales contracts, claims, charges or encumbrances of any kind whatsoever; (ix) written consents of the respective lessors, landowners, and any other persons or entities whose consents may be required to permit Buyer to assume the liabilities, contracts, leases, licenses, understandings and agreements constituting the Real Estate Contracts and the Contracts; (x) evidence satisfactory to Buyer's counsel that no financing statements are outstanding on the Station Assets except for financing statements related to obligations that Buyer expressly assumes; (xi) all files, records, logs, and program materials relating to the Stations; and all other records required to be maintained by the FCC with respect to the Stations, including the Stations' public file, which shall be left at the Stations and thereby delivered to Buyer. (xii) the opinion of counsel for Seller, dated the Closing Date, as described in Section 7.9; (xiii) assignments to Buyer of all the Material Contracts in form satisfactory to Buyer; and (xiv) such other documents and instruments as Buyer may reasonably request to consummate the transactions contemplated hereby. (b) At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: (i) the Purchase Price less any sums that have been credited against the Purchase Price pursuant to Section 1.4(a) of this Agreement; (ii) a copy of the resolutions of the board of directors of Buyer authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, together with a certificate of the Secretary of Buyer dated as of Closing Date, that such resolutions were duly adopted and are in full force and effect; (iii) the certificates contemplated by Sections 8.1 and 8.2; (iv) the opinion of counsel for Buyer, dated the Closing Date, as described in Section 8.5; and (v) such other documents and instruments as Seller may reasonably request to consummate the transactions contemplated hereby. 2.3 Termination. (a) Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated at any time by: (i) the mutual written consent of the Parties hereto; (ii) either Buyer or Seller if the Closing does not occur before December 31, 1997, provided, however, that the Party seeking termination under this Section 2.3(a)(ii) shall not have prevented the Closing from occurring; (iii) either Buyer or Seller if the Assignment Application is not granted within nine (9) months from the date the Form 314 is placed on the Commission's public notice (through no fault of the terminating Party) or is denied by the Commission by a Final Order; (iv) Buyer, if any of the conditions set forth in Article VII shall have become incapable of fulfillment, and shall not have been waived by Buyer, or if Seller shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing; or (v) Seller, if any of the conditions set forth in Article VIII shall have become incapable of fulfillment, and shall not have been waived by Seller, or if Buyer shall have breached in any material respect any of its representations, warranties or obligations hereunder and such breach shall not have been cured in all material respects or waived prior to the Closing. (b) In the event that the Local Marketing Agreement ("LMA") into which the Parties are entering pursuant to Paragraph 6.1 of this Agreement is terminated upon the occurrence of an event of default under the LMA, the non-defaulting party may, by providing written notice to the defaulting party within five (5) business days of the termination of the LMA, terminate this Agreement. (c) In the event of the termination of this Agreement by Buyer or Seller pursuant to this Section 2.3, written notice thereof shall promptly be given to the other Party and, except as otherwise provided herein, the transactions contemplated by this Agreement shall be terminated, without further action by any Party. Nothing in this Section 2.3 shall be deemed to release any Party from any liability for any breach by such Party of the terms and provisions of this Agreement or to impair the right of Buyer to compel specific performance of Seller of its obligations under this Agreement. (d) The time for Commission approval provided in Section 2.3(a)(iii) notwithstanding, either Party may terminate this Agreement upon written notice to the other, if, for any reason, the Assignment Application is designated for hearing by the Commission, provided, however, that written notice of termination must be given within twenty (20) days after release of the Hearing Designation Order and that the Party giving such notice is not in default and has otherwise complied with its obligations under this Agreement. Upon termination pursuant to this Section, the Parties shall be released and discharged from any further obligation hereunder and the Escrow Deposit shall be returned to the Buyer. (e) It is further provided, however, that no Party may terminate this Agreement if such Party is in default hereunder, or if a delay in any decision or determination by the Commission respecting the Assignment Application has been caused or materially contributed to (i) by any failure of such Party to furnish, file or make available to the Commission information within its control; (ii) by the willful furnishing by such Party of incorrect, inaccurate or incomplete information to the Commission; and (iii) by any other action taken by such Party for the purpose of delaying the Commission's decision or determination respecting the Assignment Application. Upon such termination for failure of the Commission to act, the Parties shall be released and discharged from any further obligation hereunder. (f) A Party shall be deemed to be in default under this Agreement only if such Party has materially breached or failed to perform its obligations hereunder, and non-material breaches or failures shall not be grounds for declaring a Party to be in default, postponing the Closing, or terminating this Agreement. 2.4 Risk of Loss. The risk of any loss, damage or destruction to any of the Station Assets from fire or other casualty or cause shall be borne by Seller at all times prior to the Closing Date hereunder. Upon the occurrence of any loss or damage to any of the Station Assets as a result of fire, casualty, accident or other causes prior to the Closing Date, Seller shall notify Buyer of same in writing immediately stating with particularity the extent of loss or damage incurred, the cause thereof if known and the extent to which restoration, replacement and repair of the Station Assets lost or destroyed will be reimbursed under any insurance policy with respect thereto. In the event the loss exceeds $50,000 and the Station Assets cannot be substantially repaired or restored within forty-five (45) days after such loss, Buyer shall have the option, exercisable within ten (10) days after receipt of written notice from Seller, to: (i) terminate this Agreement; (ii) postpone the Closing until such time as the property has been completely repaired, replaced or restored to the satisfaction of Buyer, unless the same cannot be reasonably effected within thirty (30) days of notification; or (iii) elect to consummate the Closing and accept the property in its damaged condition, in which event Seller shall assign to Buyer all rights under any insurance claim covering the loss and pay over to Buyer any proceeds under any such insurance policy thereto received by Seller with respect thereto. 2.5 Interruption of Broadcast Transmissions. Notwithstanding any other provision hereof, if prior to the Closing any event occurs which prevents the broadcast transmission by either of the Stations with substantially full licensed power and antenna height as described in the applicable FCC Licenses and in the manner it has heretofore been operating for periods of time in excess of six (6) hours, the Seller will give prompt written notice thereof to Buyer. If such facilities are not restored so that operation is resumed with substantially full licensed power within three (3) days of such event, or, in the case of more than one event, the aggregate number of days preceding such restorations from all such events is more than five (5) days, or if either of the Stations is off the air more than three (3) times for a period in each case exceeding six (6) hours other than for planned routine maintenance which the Parties agree shall be scheduled between the hours of midnight and 6 AM to the extent feasible, Buyer shall have the right, by giving written notice to Seller of its election to do so, within five (5) business days of Buyer's becoming entitled to terminate this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 Due Incorporation. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of West Virginia. Seller has the corporate power and authority to own and to operate the Stations and the Station Assets. 3.2 Authority; No Conflict. The execution and delivery of this Agreement have been duly and validly authorized and approved by the board of directors of Seller, and Seller has the corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. Neither such execution, delivery or performance nor compliance by Seller with the terms and provisions hereof will (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Seller,(b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Seller is subject, or (c) any material agreement, lease or contract, written or oral, to which Seller is subject. This Agreement shall constitute the valid and binding obligation of Seller with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 3.3 Government Authorizations. Section 1.1(a) of the Disclosure Schedule contains a true and complete list of all the Licenses, which Licenses are sufficient for the lawful conduct of the business and operation of the Stations in the manner and to the full extent they are currently conducted. Seller is the authorized legal holder of the Licenses, none of which is subject to any restriction or condition which would limit in any material respect the full operation of the Stations as now operated. Except for the application seeking the renewal of the licenses for the Stations, there are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened as of the date hereof before the Commission or any other governmental authority relating to the business or operations of the Stations, other than applications, complaints or proceedings which generally affect the broadcasting industry as a whole, and other than reports and forms filed in the ordinary course of the Stations' business. Seller has delivered to Buyer true and complete copies of the Licenses, including any and all additions, amendments and other modifications thereto. The Licenses are in good standing, are in full force and effect and are unimpaired by any act or omission of Seller or its officers, directors or employees; and the operation of the Stations is in accordance with the Licenses and the underlying construction permits. No proceedings are pending or, to the knowledge of Seller, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the Licenses, the denial of any pending applications, the issuance of any cease and desist order, the imposition of any administrative actions by the Commission with respect to the Licenses or which may affect Buyer's ability to continue to operate the Stations as they are currently operated. Seller has taken no action which, to its knowledge, could lead to revocation or non-renewal of the Licenses, nor omitted to take any action which, by reason of its omission, could lead to revocation of the Licenses. All material reports, forms and statements required to be filed with the Commission with respect to the Stations since the grant of the last renewal of the Licenses have been filed and are complete and accurate. To the knowledge of Seller, there are no facts which, under the Communications Act of 1934, as amended, or the existing rules and regulations of the Commission, would disqualify Seller as assignor, and Buyer as assignee, in connection with the Assignment Application. 3.4 Compliance with Regulations. The operation of the Stations is in compliance in all material respects with (i) all applicable engineering standards required to be met under Commission rules, and (ii) all other applicable rules, regulations, requirements and policies of the Commission and all other applicable governmental authorities, including, but not limited to, ANSI Radiation Standards, to the extent required to be met under applicable Commission rules and regulations; and there are no existing claims known to Seller to the contrary. 3.5 Taxes and Regulatory Fees. Seller has timely filed all federal, state, local and foreign income, franchise, sales, use, property, excise, payroll and other tax returns required by law and has paid in full all taxes, estimated taxes, interest, assessments, and penalties due and payable as shown thereon. All returns and forms which have been filed have been true and correct in all material respects and no tax or other payment in a material amount other than as shown on such returns and forms are required to be paid or have been paid by Seller. There are no present disputes as to taxes of any nature payable by Seller which in any event could materially adversely affect the Station Assets or operation of the Stations. Each of the parcels included in the Owned Real Property is assessed for real estate purposes as a wholly independent tax lot, separate from any adjoining lot or improvements not constituting a part of such parcel. Seller has paid all FCC Regulatory Fees required to be paid by Seller with respect to the Stations. 3.6 Personal Property. Section 1.1(b) of the Disclosure Schedule contains a true and complete list of all the Personal Property. Except for those assets designated on Section 1.1(b) of the Disclosure Schedule as being subject to lease agreements, Seller owns and has, and will have on the Closing Date, good and marketable title to such Personal Property, and none of such Personal Property on the Closing Date will be subject to any security interest, mortgage, pledge, conditional sales agreement or other lien or encumbrance. All items of Personal Property are in all material respects in good operating condition, ordinary wear and tear excepted, and are available for immediate use in the conduct of the business and operation of the Stations. The technical equipment, including, without limitation, all transmitters and studio equipment, constituting part of the Personal Property, has been maintained in accordance with industry practice and is in good operating condition, ordinary wear and tear excepted, (except as noted in Section 1.1(b) of the Disclosure Schedule) and complies in all material respects with all applicable rules and regulations of the Commission and the terms of the Licenses. The Personal Property includes all such items and equipment necessary to conduct in all material respects the business and operations of the Stations as now conducted and in material compliance with the terms and conditions of the Licenses. 3.7 Real Property. (a) Seller is the owner of good, marketable and insurable fee title to the Owned Real Property free and clear of all Title Defects (as hereinafter defined) except for encumbrances of a minor nature that do not, in the reasonable opinion of Buyer's counsel, individually or in the aggregate (i) interfere in any material respect with the use, occupancy or operation of the Owned Real Property or (ii) materially reduce the fair market value of the Owned Real Property below the fair market value the Owned Real Property would have had but for such encumbrances (collectively, the "Permitted Owned Real Property Exceptions"). The Owned Real Property constitutes all of the real property owned by Seller on the date hereof in connection with the operation of the Stations. There are no leases/subleases or other agreements granting to any person other than Seller any right to the possession, use or occupancy of the Owned Real Property. As used in this Agreement, "Title Defects" shall mean and include any mortgage, deed of trust, lien, pledge, security interest, claim, lease, charge, option, right of first refusal, easement, restrictive covenant, encroachment or other survey defect, encumbrance or other restriction or limitation whatsoever. Notwithstanding the foregoing, Buyer recognizes that certain radials constituting a portion of the antenna system used by WKWK(AM) extend slightly beyond the surveyed boundaries of the real property owned by Seller, but are permitted by virtue of an easement granted by the landowner of the property into which the radials extend. This encroachment shall be deemed a Permitted Owned Real Property Exception. (b) Entire Premises. All of the land, buildings, structures and other improvements used by Seller in the conduct of the business of the Stations or involved in the Real Property are listed in the Disclosure Schedule. (c) No Options. Seller does not own or hold, and is not obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell or dispose of the Real Property or any portion thereof or interest therein. (d) Condition and Operation of Improvements. All components of all buildings, structures and other improvements included within the Real Property (the "Improvements") are in good working order and repair. All water, gas, electrical, steam, compressed air, telecommunication, sanitary and storm sewage lines and systems and other similar systems serving the Real Property are installed and operating and are sufficient to enable the Real Property to continue to be used and operated in the manner currently being used and operated, and any so-called hook-up fees or other associated charges have been fully paid. (e) Real Property Permits and Insurance. All certificates of occupancy, permits, licenses, franchises, approvals and authorizations (collectively, "Real Property Permits") of all governmental authorities having jurisdiction over the Real Property, required or appropriate to have been issued to Seller to enable the Real Property to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are, as of the date hereof, in full force and effect. (f) Condemnation. Seller has not received notice and has no knowledge of any pending, threatened or contemplated condemnation proceeding affecting the Real Property or any part thereof or of any sale or other disposition of the Owned Real Property or any part thereof in lieu of condemnation. (g) Casualty. No portion of the Real Property has suffered any material damage by fire or other casualty which has not heretofore been completely repaired and restored to its original condition. No portion of the Real Property is located in a special flood hazard area as designated by Federal governmental authorities. 3.8 Consents. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Seller of this Agreement, other than approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 3.8 of the Disclosure Schedule, no consent of any other party (including, without limitation, any party to any Real Estate Contract or Contract) is required for the execution, delivery and performance by Seller of this Agreement. 3.9 Contracts. Section 1.1(f) of the Disclosure Schedule contains a true and complete list of all Contracts, including all such Contracts necessary to permit continued operation of the Stations in the manner in which they are being operated as of the date of this Agreement, and Section 1.1(g) contains a true and complete list of all Broadcast Agreements and Trade Agreements. Seller has delivered to Buyer true and complete copies of all written Contracts, Broadcast Agreements and Trade agreements in the possession of Seller, including any and all amendments and other modifications to same. All such Contracts, Broadcast Agreements and Trade Agreements are valid, binding and enforceable by Seller in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. Seller has complied in all material respects with all such Contracts, Broadcast Agreements and Trade Agreements, and Seller is not in default beyond any applicable grace periods under any of same, and no other contracting party is in material default under any of same. Seller has full legal power and authority to assign its respective rights under such Contracts, Broadcast Agreements and Trade Agreements to Buyer in accordance with this Agreement on terms and conditions no less favorable than those in effect on the date hereof, and such assignment will not materially affect the validity, enforceability and continuity of any such Contracts, Broadcast Agreements and Trade Agreements. 3.10 Environmental. Seller has not unlawfully disposed of any Hazardous Waste in a manner which has caused, or could cause, Buyer to incur a material liability under applicable law in connection therewith; and Seller warrants that the technical equipment included in the Personal Property does not contain any Hazardous Waste, including any Polychlorinated Biphenyls ("PCBs") that are required by law to be removed, and if any equipment does contain Hazardous Waste that is not required by law to be removed, including any PCBs, that such equipment is stored and maintained in compliance with applicable law. Seller has complied in all material respects with all federal, state and local environmental laws, rules and regulations applicable to the Stations and its operations, including but not limited to the Commission's guidelines regarding RF radiation. No Hazardous Waste has been disposed of by Seller, and to the best of Seller's knowledge, no Hazardous Waste has been disposed of by any other person on the property subject to Real Estate Contracts. As used herein, the term "Hazardous Waste" shall mean all materials regulated by any federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata). If Seller learns between the date of this Agreement and the Closing Date that Seller is in breach of the representation and warranty set forth in this Section 3.10, Seller shall begin remedial action promptly and shall use reasonable best efforts to complete such remedial action to the satisfaction of Buyer before the Closing Date. 3.11 Intangibles. Section 1.1(e) of the Disclosure Schedule is a true and complete list of all trade names, copyrights, trademarks, service marks, patents or applications therefor (the "Intellectual Property") that have been duly registered by, filed by, or issued to the Seller. Seller has not granted any license or other rights with respect to the Intangibles (including the Intellectual Property). Seller has not received any written notice of any infringement or unlawful use of the Intangibles and Seller has not violated or infringed any patent, trademark, trade secret or copyright held by others or any license, authorization or permit held by it. 3.12 Financial Statements. Seller previously has provided Buyer with complete copies of the audited statements of income, and the related balance sheets, for the years ended December 31, 1993 and December 31, 1994 and unaudited statements of income and related balance sheets through November 30, 1995. These financial statements are included in Section 3.12 of the Disclosure Schedule. Pursuant to Paragraph 1.7 of this Agreement, Seller will supplement Section 3.12 of the Disclosure Schedule with complete unaudited copies (or audited copies, if available) of the statements of income, and the related balance sheets for Seller, for the period after November, 1995. The schedules supplied, and to be supplied, in Section 3.12 of the Disclosure Schedule have been prepared in accordance with generally accepted accounting principles and in accordance with the policies and procedures of the Seller applicable thereto, consistently applied, and present fairly the financial condition and results of operations of the Stations for the periods indicated. 3.13 Personnel Information; Labor Contracts. (a) Section 3.13 of the Disclosure Schedule contains a true and complete list of all persons employed at the Stations, including the date of hire and a description of material compensation arrangements (other than employee benefit plans set forth in Section 3.14 of the Disclosure Schedule). Seller has not entered into any employment agreements with any of its employees. (b) Seller is not a party to any contract with any labor organization, nor has Seller agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any of Seller's employees. Seller has no knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees of the Stations. During the past two years, Seller has not experienced any strikes, work stoppages, grievance proceedings, claims of unfair labor practices filed, or other significant labor difficulties of any nature. (c) Seller has complied in all material respects with all laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, equal employment opportunity and the payment and withholding of taxes. 3.14 Employee Benefit Plans. The only employee benefit plan (as that term is defined in Section 3(3) of ERISA) is the 401(k) plan summarized in Section 3.14 of the Disclosure Schedule. Seller maintains no other employee benefit plan. Seller's employee benefit plan has been operated and administered in all material respects in accordance with its terms and applicable law, including, without limitation, ERISA and the Internal Revenue Code. 3.15 Litigation. Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree, and there is no litigation, proceeding or investigation pending or, to the best of Seller's knowledge, threatened against Seller or the Stations in any federal, state or local court, or before any administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Licenses), or before any other tribunal duly authorized to resolve disputes, which would reasonably be expected to have any material adverse effect upon the business, property, assets or condition (financial or otherwise) of the Stations or which seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. In particular, but without limiting the generality of the foregoing, there are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened before the Commission or any other governmental organization with respect to the business or operation of the Stations, other than applications, complaints or proceedings which affect the broadcast industry generally. 3.16 Compliance with Laws. Seller has not received any notice asserting any non-compliance with any applicable statute, rule or regulation (federal, state or local) whether or not related to the business or operation of the Stations or the Real Property. Seller is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or to any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Seller is in compliance in all material respects with all laws, regulations and governmental orders whether or not applicable to the conduct of the business and operation of the Stations and any other business or operations conducted by Seller. The Owned Real Property is in full compliance with all applicable building, zoning, subdivision, environmental and other land use and similar laws, codes, ordinances, rules, regulations and orders of governmental authorities (collectively, "Real Property Laws"), and Seller has not received any notice of violation or claimed violation of any Real Property Law. Seller has no knowledge of any pending change in any Real Property Law which would have a material adverse effect upon the ownership or use of the Owned Real Property. 3.17 Insurance. Seller has in full force and effect insurance on all of the Real Property, Personal Property, and all other Station Assets pursuant to insurance policies, true and complete copies of which are contained in Section 3.17 of the Disclosure Schedule. Seller shall continue to maintain such insurance in full force and effect up to the Closing Date or shall have obtained prior to the Closing Date other insurance policies with limits and coverage comparable to the current policies after prior notice to, and upon written consent of the Buyer, which consent shall not be unreasonably withheld. 3.18 Undisclosed Liabilities. Except as to, and to the extent of, the amounts specifically reflected or reserved against in Seller's balance sheets for the period ending November 30, 1995 (the "Balance Sheet Date"), and except for liabilities and obligations incurred since the Balance Sheet Date in the ordinary and usual course of business, Seller has no material liabilities or obligations of any nature whether accrued, absolute, contingent or otherwise and whether due or to become due, and, to the best of Seller's knowledge, there is no basis for the assertion against Seller of any such liability or obligations. No representation or warranty made by Seller in this Agreement, and no statement made in any exhibit or schedule hereto or any certificate or document delivered by Seller pursuant to the terms of this Agreement, contain or will contain any untrue statement of a material fact or omit or will omit to state any material fact necessary to make such representation or warranty or any such statement not misleading. 3.19 Instruments of Conveyance; Good Title. The instruments to be executed by Seller and delivered to Buyer at Closing, conveying the Station Assets, including without limitation the Owned Real Property, to Buyer, will be in a form sufficient to transfer good and marketable title to the Station Assets, including without limitation the Owned Real Property, free and clear of all liabilities, obligations and encumbrances, except as provided herein. 3.20 Absence of Certain Changes. Between the Balance Sheet Date and the date of this Agreement there has not been: (a) Any material adverse change in the working capital, financial condition, business, results of operations, assets or liabilities of Seller; (b) Any change in the manner in which Seller conducts its business and operations other than changes in the ordinary and usual course of business consistent with past practice; (c) Any amendment to the Certificate of Incorporation or Bylaws of Seller; (d) Any contract or commitment, to which Seller is a party, entered into, modified or terminated, except in the ordinary and usual course of business; (e) Any creation or assumption of any mortgage, pledge or other lien or encumbrance upon any of the Station Assets except in the ordinary and usual course of business; (f) Any sale, assignment, lease, transfer, or other disposition of any of the Station Assets, except in the ordinary and usual course of business; (g) The incurring of any liabilities or obligations, except items incurred in the ordinary and usual course of business; (h) The write-off or determination to write off as uncollectible any accounts receivable or portion thereof, except for write-offs in the ordinary course of business consistent with past practice at a rate not materially greater than during the twelve months prior to the Balance Sheet Date; (i) The disposition, lapse or termination of any Intellectual Property; (j) The increase or promise to increase the rate of commissions, fixed salary or wages, draw, bonus or other compensation payable to any employee of Seller, except in the ordinary and usual course of business consistent with past practice; (k) Any default under any contract or lease to which Seller is a party; (l) Any change in any method of accounting or accounting practice used by Seller; or (m) Any other event or condition of any character materially and adversely affecting the business or properties of Seller or the Stations. 3.21 Insolvency Proceedings. No insolvency proceedings of any character including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting Seller or the Station Assets are pending or, to Seller's knowledge, threatened, and Seller has made no assignment for the benefit of creditors, nor taken any action with a view to, or which would constitute the basis for, the institution of any such insolvency proceedings. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Due Incorporation. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and as of the Closing Date shall be duly qualified to do business in and be in good standing in the State of West Virginia. 4.2 Authority; No Conflict. The execution and delivery of this Agreement has been duly and validly authorized and approved by the board of directors of Buyer, and Buyer has the corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, performance hereof, and compliance by Buyer with the terms and provisions hereof will not (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Buyer, (b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Buyer is subject, or (c) any material agreement, lease or contract, written or oral, to which Buyer is subject. This Agreement will constitute the valid and binding obligation of Buyer with respect to the terms hereof, subject to Commission approval of the transactions contemplated hereby. 4.3 Consents. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Buyer of this Agreement, other than the approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 4.3 of the Disclosure Schedule, no consent of any other party is required for the execution, delivery and performance by Buyer of this Agreement. 4.4 Litigation. There is no litigation, proceeding or investigation pending or, to the best of Buyer's knowledge, threatened against Buyer in any federal, state or local court, or before any administrative agency or arbitrator, or before any other tribunal duly authorized to resolve disputes, that would reasonably be expected to have any material adverse effect upon the ability of Buyer to perform its obligations hereunder, or that seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. 4.5 Compliance with Laws. Buyer is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or of any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Buyer is not in violation of any law, regulation or governmental order, the violation of which would have a material adverse effect on Buyer or its ability to perform its obligations pursuant to this Agreement. 4.6 Qualification. To the best of Buyer's knowledge, other than with respect to the ownership limitations set forth in current FCC regulations which must be revised by the Telecommunications Act of 1966 in such a way as to remove the ownership limitation currently imposed on the Buyer by the FCC, Buyer is legally, technically and financially qualified to be the assignee of the Licenses and the other Station Assets, and, prior to the Closing Date, Buyer will exercise its best efforts to refrain from doing any act which would disqualify Buyer from being the assignee of the Licenses and the other Station Assets. ARTICLE V COVENANTS OF SELLER Between the date of this Agreement and the Closing Date, Seller shall have complete control of the Stations and its operations, and Seller covenants as follows with respect to such period: 5.1 Continued Operation of Stations. Seller shall continue to operate the Stations under the terms of the Licenses in the manner in which the Stations have been operated heretofore, in the usual and ordinary course of business, in conformity with all material applicable laws, ordinances, regulations, rules and orders, and in a manner so as to preserve and foster the goodwill and business relationships of the Stations and Seller, including, without limitation, relationships with advertisers, suppliers, customers, and employees. Seller shall file with the Commission and any other applicable governmental authority all applications and other documents required to be filed in connection with the continued operation of the Stations. 5.2 Financial Obligations. Seller shall continue to conduct the financial operations of the Stations, including their credit and collection policies, in the ordinary course of business with the same effort, to the same extent, and in the same manner, as in the prior conduct of the business of the Stations; and shall continue to pay and satisfy all expenses, liabilities and obligations arising in the ordinary course of business in accordance with past accounting practices. Seller shall not enter into or amend any contracts or commitments involving expenditures by Seller in an aggregate amount in excess of $5,000 without the prior written consent of Buyer. 5.3 Reasonable Access. Seller shall provide Buyer, and representatives of Buyer, with reasonable access during normal business hours to the Stations and shall furnish such additional information concerning the Stations as Buyer from time to time may reasonably request. 5.4 Maintenance of Assets. Seller shall maintain the Real Property, the Personal Property and all other tangible assets in their present good operating condition, repair and order, reasonable wear and tear in ordinary usage excepted. Seller shall not waive or cancel any claims or rights of substantial value, transfer or otherwise dispose of the Real Property, any Personal Property, or permit to lapse or dispose of any right to the use of any Intangibles. 5.5 Notification of Developments. Seller shall provide Buyer with prompt written notice of any material change in any of the information contained in the representations and warranties made herein or in the Disclosure Schedule or any other documents delivered in connection with this Agreement. 5.6 Payment of Taxes. Seller shall pay or cause to be paid all property and all other taxes relating to the Stations, the Real Property and the assets and employees of the Stations required to be paid to city, county, state, federal and other governmental units through the Closing Date. 5.7 Third Party Consents. Seller shall use commercially reasonable efforts to obtain from any third party waivers, permits, licenses, approvals, authorizations, qualifications, orders and consents necessary for the consummation of the transactions contemplated by this Agreement, including, without limitation, approval from the Commission of the Assignment Application contemplated hereby. 5.8 Encumbrances. Seller shall not suffer or permit the creation of any mortgage, conditional sales agreement, security interest, lease, lien, hypothecation, deed of trust or pledge, encumbrance, restriction, liability, charge, or imperfection of title with respect to the Station Assets. 5.9 Assignment of Assets. Seller shall not sell, assign, lease or otherwise transfer or dispose of any Station Assets, whether now owned or hereafter acquired, except for retirements in the normal and usual course of business or in connection with the acquisition of similar property or assets, as provided for herein. 5.10 Commission Licenses and Authorizations. Seller shall not by any act or omission surrender, modify adversely, forfeit or fail to renew under regular terms the Licenses, cause the Commission or any other governmental authority to institute any proceeding for the revocation, suspension or modification of any such License, or fail to prosecute with due diligence any pending applications with respect to the Licenses at the Commission or any other applicable governmental authority. 5.11 Technical Equipment. Seller shall not fail to repair, maintain or replace the technical equipment transferred hereunder in accordance with the normal standards of maintenance applicable in the broadcast industry. 5.12 Compensation Increases. Seller shall not permit any increase in the rate of commissions, fixed salary or wages, draw or other compensation payable to any employees of Seller, except in the ordinary course of business consistent with Seller's past business practice. 5.13 Sale of Broadcast Time. Seller shall not enter into, extend or renew any Broadcast Agreement not consistent with the usual and ordinary course of business. In addition Seller shall not enter into, extend or renew any Broadcast Agreement exceeding $10,000 in amount unless such Broadcast Agreement is terminable on 30 days' notice, and Seller shall not enter into any Trade Agreement without the prior written consent of Buyer. 5.14 Insurance. Seller shall maintain at all times between the date hereof and the Closing Date, those insurance policies listed in Section 3.17 of the Disclosure Schedule. 5.15 Negotiations with Third Parties. Seller shall not, before Closing or the termination of this Agreement, enter into discussions with respect to any sale or offer of the Stations, any Station Assets or any controlling stock interest in Seller to any third party, nor shall Seller offer the Stations, any Station Assets or any controlling stock interest in Seller to any third party. ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER Buyer and Seller covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 6.1 Assignment Application; Local Marketing Agreement. No later than ten (10) days after the date of this Agreement, Buyer and Seller shall join in and file with the FCC an application on FCC Form 314 requesting the Commission's consent to the assignment of the Licenses from Seller to Buyer (the "Assignment Application"). Seller and Buyer agree to prosecute the Assignment Application with all reasonable diligence and to use their best efforts to obtain prompt Commission grant of the Assignment Application. Buyer and Seller acknowledge that the revisions to the FCC's broadcast ownership rule mandated by the Telecommunications Act of 1996, PL 104-104, have, as of the date of this Agreement, not yet been implemented. Buyer and Seller agree to promptly amend or refile the Assignment Application as necessary in light of the revisions to the FCC's regulations and policies that are adopted by the FCC in implementation of the Telecommunications Act of 1996. Contemporaneously with the execution of this Agreement, Buyer and Seller shall execute an LMA in substantially the form of the agreement attached hereto as Exhibit E. 6.2 Performance. Buyer and Seller shall perform all acts required of them under this Agreement and shall refrain from taking or omitting to take any action that would violate their representations and warranties hereunder or render those representations and warranties inaccurate as of the Closing Date. 6.3 Conditions. If any event should occur, either within or without the control of any Party hereto, which would prevent fulfillment of the conditions placed upon the obligations of any Party hereto to consummate the transactions contemplated by this Agreement, the Parties hereto shall use their best efforts to cure the event as expeditiously as possible. 6.4 Confidentiality. Buyer and Seller shall each keep confidential all information they obtain with respect to any other Party hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions con- templated by this Agreement. If the transactions contemplated hereby are not consummated for any reason, each Party hereto shall return to the Party so providing, without retaining a copy thereof, any schedules, documents or other written information obtained from the Party so providing such information in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no Party shall be required to keep confidential or return any information which (i) is known or available through other lawful sources, (ii) is or becomes publicly known through no fault of the receiving Party or its agents, (iii) is required to be disclosed pursuant to an order or request of a judicial or governmental authority (provided the disclosing Party is given reasonable prior notice), or (iv) is developed by the receiving Party independently of the disclosure by the disclosing Party. 6.5 Cooperation. Buyer and Seller shall cooperate fully and with each other in taking any actions to obtain the required consent of any governmental instrumentality or any third party necessary or helpful to accomplish the transactions contemplated by this Agreement provided, however, that no Party shall be required to take any action which would have a material adverse effect upon it or any entity affiliated with it. 6.6 Environmental Reports. If desired by Buyer, Seller and Buyer agree to arrange for the preparation of, at the expense of Buyer, appropriate environmental reports for the real property subject to Real Estate Contracts. Such environmental reports shall conclude that: (i) the real property subject to Real Estate Contracts is not in any way contaminated with any Hazardous Waste requiring remediation, clean-up or removal under applicable laws relating to Hazardous Waste; (ii) the real property subject to Real Estate Contracts is not subject to any federal, state or local "superfund" or "Act 307" lien, proceeding, claim, liability or action, or the threat or likelihood thereof, for the clean-up, removal or remediation of any Hazardous Waste from same; (iii) there is no asbestos located in the buildings situated on the real property subject to Real Estate Contracts requiring remediation, encapsulation or removal under applicable laws relating to asbestos clean-up; and (iv) there are no underground storage tanks located at the real property subject to Real Estate Contracts requiring remediation, clean-up or removal under applicable laws relating to Hazardous Waste, and if any have previously been removed, such removal was done in accordance with all applicable laws, rules and regulations. The environmental review to be conducted shall initially be a Phase I review. Any further investigations recommended in the environmental reports obtained pursuant to this Section 6.6 shall be conducted with the cost to be shared equally by Seller and Buyer. 6.7 Consents to Assignment. To the extent that any Contract, Broadcast Agreement, Trade Agreement, Real Estate Contract or other contract identified in the Disclosure Schedule that is to be assigned under this Agreement is not capable of being sold, assigned, transferred, delivered or subleased without the waiver or consent of any third person withholding same (including a government or governmental unit), or if such sale, assignment, transfer, delivery or sublease or attempted sale, transfer, delivery or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant hereto shall not constitute a sale, assignment, transfer, delivery or sublease or an attempted sale, assignment, transfer, delivery or sublease thereof. In those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Closing Date to the transfer and assignment to Buyer of such contracts, Buyer may in its sole discretion elect to have this Agreement and any assignments executed pursuant hereto, to the extent permitted by law, constitute an equitable assignment by Seller to Buyer of all of Seller's rights, benefits, title and interest in and to such contracts, and where necessary or appropriate, Buyer shall be deemed to be Seller's agent for the purpose of completing, fulfilling and discharging all of Seller's rights and liabilities arising after the Closing Date under such contracts. Seller shall use its reasonable best efforts to provide Buyer with the benefits of such contracts (including, without limitation, permitting Buyer to enforce any rights of Seller arising under such contracts), and Buyer shall, to the extent Buyer is provided with the benefits of such contracts, assume, perform and in due course pay and discharge all debts, obligations and liabilities of Seller under such contracts. The Parties recognize, however, that the FCC licenses to be assigned under this Agreement may not be assigned without the prior approval of the FCC and will not attempt to effectuate such an assignment without the FCC's prior approval. 6.8 Employee Matters. While under no obligation to hire any employees of the Stations, Buyer shall make reasonable efforts to offer employment at will to certain employees of the Stations. Upon review of a full list of employees and salaries, Buyer shall notify Seller of (i) those employees to whom it will so offer employment as soon as practicable and (ii) those employees that Buyer intends to discharge not less than thirty (30) days prior to the Closing Date. Seller shall be responsible for all salary and benefits of the employees of the Stations who do not accept, or are not offered, employment with Buyer. Seller shall be responsible for all salary and other compensation due to be paid for work for Seller for employees of the Stations who become employees of Buyer and Buyer shall be responsible for the salary and other compensation due to be paid for work for Buyer on or after the date of hire by Buyer for such employees. Seller shall be responsible for severance payments which may be applicable under its employee benefit plans to any employees not so offered employment and hired by Buyer. 6.9 Survey. Buyer and Seller shall obtain, at Seller's expense, a survey of each parcel of Real Property certified to Buyer or its permitted assigns and the Title Company. The certification shall be by a Registered Land Surveyor and shall be made on the ground in accordance with the minimum technical standards of land surveying in West Virginia. The survey shall be delivered to Buyer at least fifteen (15) days prior to the Closing Date. If the survey shows: (i) the Real Property does not have access to an abutting public road, (ii) easements exist that are not approved by Buyer, (iii) violations of restrictions or governmental zoning or building regulations, (iv) buildings, structures or other improvements are constructed over any easement; provided that unless the construction of a building, structure or other improvement over an easement constitutes a violation of an easement it shall not constitute a defect or encroachment, (v) any building, structure or other improvement is not entirely within the boundaries of the applicable parcel of Real Property, (vi) any drainage facilities are not entirely within the applicable parcel of Real Property or appropriate public or private easements, or (vii) there are other material encroachments, gaps or overlaps rendering title to the Real Property unmarketable; then Buyer shall within seven (7) days of receipt of the survey notify Seller in writing specifying the defects and encroachments reflected by the survey, and Seller shall have ten (10) days within which to remove such defects and encroachments except that Seller shall have no obligation to remove a defect that is a Permitted Owned Real Property Exception. 6.10 Escrow Agreement. Seller and Buyer shall enter into an Escrow Agreement substantially in the form attached hereto as Exhibit A. ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER The performance of the obligations of the Buyer hereunder is subject, at the election of the Buyer, to the following conditions precedent: 7.1 Commission Approvals. Notwithstanding anything herein to the contrary, the consummation of this Agreement is conditioned upon (a) a grant by the Commission of the Assignment Application, (b) compliance by the Parties with the conditions, if any, imposed by the Commission in connection with the grant of the Assignment Application (provided that neither Party shall be required to accept or comply with any condition which would be unreasonably burdensome or which would have a materially adverse effect upon it, it being agreed, however, that any condition requiring Buyer to divest itself of an interest in WHLX(FM) shall not be deemed to be unreasonably burdensome or to have a materially adverse effect on Buyer) and (c) grant by the Commission of the renewal applications pending for the Stations without condition and for a minimum license term of seven years. All required governmental filings shall have been made, and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted and become Final Orders. The Licenses shall be in unconditional full force and effect and shall be unimpaired by any acts or omissions of Seller or Seller's employees or agents. 7.2 Performance. The Station Assets shall have been transferred to Buyer by Seller, and all of the terms, conditions and covenants to be complied with or performed by Seller on or before the Closing Date shall have been duly complied with and performed in all material respects, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.3 Failure of Transfer. Notwithstanding anything to the contrary contained in this Agreement, in the event that any law, regulation or official policy prevents the transfer or assignment of the Station Assets from Seller to Buyer or any Buyer affiliate, the Parties shall have amended this Agreement and/or executed such supplemental agreements, as necessary, to achieve for both Buyer and Seller, to the maximum extent possible, the benefits of the transactions contemplated by this Agreement in a manner consistent with applicable law. 7.4 Representations and Warranties. The representations and warranties of Seller to Buyer shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Buyer shall have received from Seller a certificate or certificates to such effect, in form and substance reasonably satisfactory to Buyer. 7.5 Consents. Seller shall have received all consents (including landlords' consents for the studio and tower sites) specified in Section 3.8 of the Disclosure Schedule. With respect to consents for Assumed Contracts, however, only the obtaining of consents for Material Contracts is a condition precedent to the Buyer's obligation to purchase the Stations. 7.6 No Litigation. No litigation, proceeding, or investigation of any kind shall have been instituted or, to Seller's knowledge, threatened which would materially adversely affect the ability of Seller to comply with the provisions of this Agreement or would materially adversely affect the operation of the Stations. 7.7 No Adverse Change. Buyer shall have completed its due diligence which shall, in its sole judgment, be satisfactory and no material adverse change shall have occurred with respect to the operation of the Stations since the conclusion of such due diligence. 7.8 Documents. Seller shall have obtained, executed, where necessary, and delivered, to Buyer where applicable, all of the documents, reports, orders and statements required of it herein, as well as any other documents (including collateral assignments) required by any entity providing financing for the transactions contemplated by this Agreement. 7.9 Opinions of Counsel. Seller shall have delivered to Buyer an opinion of Bachman, Hess, Bachman and Garden, counsel to Seller, addressed to Buyer and in the form attached hereto as Exhibit B. In addition, Seller shall have delivered to Buyer a written opinion of Seller's FCC counsel, dated as of the Closing Date, addressed to Buyer and in the form attached hereto as Exhibit C. 7.10 Survey. Buyer shall have received the survey of the Real Property in accordance with Section 6.9 herein. ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER The performance of the obligations of Seller hereunder is subject, at the election of Seller, to the following conditions precedent: 8.1 Performance. All of the terms, conditions and covenants to be complied with or performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.2 Representations and Warranties. The representations and warranties of Buyer to Seller shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.3 Government Approvals. All required governmental filings shall have been made and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted. 8.4 Documents. Buyer shall have obtained, executed, where necessary, and delivered to Seller where applicable, all of the documents, reports, orders and statements required of it herein. 8.5 Opinion of Counsel. Buyer shall have delivered to Seller an opinion of counsel to Buyer, addressed to Seller and in the form attached hereto as Exhibit D. ARTICLE IX INDEMNIFICATION 9.1 Indemnification by Seller. From and after the Closing Date, Seller agrees to, and shall, indemnify, defend and hold Buyer harmless, and shall reimburse Buyer for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto) resulting from or arising out of: (a) Any breach by Seller of any representation, or warranty contained in this Agreement or in any certificate, exhibit, schedule, or other document furnished to or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment or breach by Seller of any covenant, agreement, term or condition contained in this Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (c) Any material inaccuracy in any covenant, representation, agreement or warranty by Seller including all material statements or figures contained in the Financial Statements heretofore furnished to Buyer; and (d) Any liabilities of any kind or nature, absolute or contingent not assumed by Buyer including, without limitation, any liabilities relating to or arising from the business and operation of the Stations by Seller prior to the Closing Date. Notwithstanding any other provision contained herein, Seller shall be solely responsible for any fine or forfeiture imposed by the Commission relating to the operation of the Stations prior to the Closing Date. 9.2 Indemnification by Buyer. From and after the Closing Date, Buyer agrees to and shall indemnify, defend and hold Seller harmless, and shall reimburse Seller for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto), resulting from or arising out of: (a) Any breach by Buyer of any covenant, agreement, term, condition, representation, or warranty contained in this Agreement or in any certificate, exhibit, schedule, or any other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; (b) Any non-fulfillment by Buyer of any covenant contained in this Agreement or in any certificate, exhibit, schedule, or other document furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby; and (c) Any liabilities of any kind or nature, absolute or contingent, relating to or arising from the business and operation of the Stations subsequent to the Closing Date. 9.3 Notification of Claims. (a) A Party entitled to be indemnified pursuant to Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the Party liable for such indemnification (the "Indemnifying Party") in writing of any claim or demand which the Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement. Subject to the Indemnifying Party's right to defend in good faith third party claims as hereinafter provided, the Indemnifying Party shall satisfy its obligations under this Article IX within thirty (30) days after the receipt of a written notice thereof from the Indemnified Party. (b) If the Indemnified Party shall notify the Indemnifying Party of any claim or demand pursuant to Section 9.3(a), and if such claim or demand relates to a claim or demand asserted by a third party against the Indemnified Party which the Indemnifying Party acknowledges is a claim or demand for which it must indemnify or hold harmless the Indemnified Party under Sections 9.1 or 9.2, the Indemnifying Party shall have the right to employ counsel acceptable to the Indemnified Party to defend any such claim or demand asserted against the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any such claim or demand. The Indemnifying Party shall notify the Indemnified Party in writing, as promptly as possible (but in any case before the due date for the answer or response to a claim) after the date of the notice of claim given by the Indemnified Party to the Indemnifying Party under Section 9.3(a) of its election to defend in good faith any such third party claim or demand. So long as the Indemnifying Party is defending in good faith any such claim or demand asserted by a third party against the Indemnified Party, the Indemnified Party shall not settle or compromise such claim or demand. The Indemnified Party shall make available to the Indemnifying Party or its agents all records and other materials in the Indemnified Party's possession reasonably required by it for its use in contesting any third party claim or demand. Whether or not the Indemnifying Party elects to defend any such claim or demand, the Indemnified Party shall have no obligations to do so. Upon payment of any claim or demand pursuant to this Article IX, the Indemnifying Party shall, to the extent of payment, be subrogated to all rights of the Indemnified Party. 9.4 Limitation with Respect to Indemnification. Notwithstanding the foregoing, an Indemnifying Party shall not be under any obligation to indemnify, defend and hold the Indemnified Party harmless or to reimburse the Indemnified Party until and unless the amount that otherwise would be due to the Indemnified Party pursuant to this Article IX equals or exceeds Twenty-Five Thousand Dollars ($25,000.00), in which event the Indemnifying Party shall indemnify, defend and hold the Indemnified Party harmless and reimburse the Indemnified Party for all amounts (including such amounts up to Twenty-Five Thousand Dollars ($25,000.00)) without regard to the indemnification floor established by this Paragraph 9.4. ARTICLE X MISCELLANEOUS 10.1 Assignment. (a) This Agreement shall not be assigned or conveyed by either Party hereto to any other person or entity without the prior written consent of the other Party hereto; provided, however, that Buyer may assign this Agreement without Seller's prior consent to one or more corporations or other entities controlled by Buyer; or as needed to ensure that the transactions contemplated by this Agreement comply with applicable law, regulations or policy provided, further, that Seller shall have recourse to Buyer in the event Buyer's assignee defaults hereunder. Subject to the foregoing, this Agreement shall be binding and shall inure to the benefit of the Parties hereto, their successors and assigns. (b) Notwithstanding anything to the contrary set forth herein, Buyer may assign and transfer to any entity providing financing for the transactions contemplated by this Agreement (or any refinancing of such financing) as security for such financing all of the interest, rights and remedies of Buyer with respect to this Agreement and Seller shall expressly consent to such assignment. Any such assignment will be made for collateral security purposes only and will not release or discharge Buyer from any obligations it may have pursuant to this Agreement. Notwithstanding anything to the contrary set forth herein, Buyer may (i) authorize and empower such financing sources to assert, either directly or on behalf of Buyer, any claims Buyer may have against Seller under this Agreement and (ii) make, constitute and appoint one agent bank in respect of such financing (and all officers, employees and agents designated by such agent) as the true and lawful attorney and agent-in- fact of Buyer for the purpose of enabling the financing sources to assert and collect any such claims. 10.2 Survival of Indemnification. The indemnification obligations of Seller contained in this Agreement including, without limitation, Section 1.3 shall survive indefinitely, except that any indemnification arising under Section 9.1(a) hereof (other than any indemnification required as a result of Seller's breach of Sections 3.1, 3.2 or 3.3 hereof, which indemnification shall survive indefinitely) shall be binding for a period of three (3) years following the date hereof. 10.3 Brokerage. Seller and Buyer warrant and represent to one another that there has been no broker in any way involved in the transactions contemplated hereby and that no one is or will be entitled to any fee or other compensation in the nature of a brokerage fee or finder's fee as a result of the Closing hereunder. 10.4 Expenses of the Parties. It is expressly understood and agreed that all expenses of preparing this Agreement and of preparing and prosecuting the Assignment Application with the Commission, and all other expenses, whether or not the transactions contemplated hereby are consummated, shall be borne solely by the Party who shall have incurred the same and the other Party shall have no liability in respect thereto, except as otherwise provided herein. All costs of transferring the Station Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be borne equally by Seller and Buyer. Any filing or grant fees imposed by any governmental authority the consent of which is required for the transactions contemplated hereby shall be borne equally by Seller and Buyer. 10.5 Entire Agreement. This Agreement, together with any related Schedules or Exhibits, contains all the terms agreed upon by the Parties with respect to the subject matter herein, and supersedes all prior agreements and understandings among the Parties and may not be changed or terminated orally. No attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the Party against whom the same is sought to be enforced. 10.6 Headings. The headings set forth in this Agreement have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any manner, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement. Unless otherwise specified herein, the section references contained herein refer to sections of this Agreement. 10.7 Governing Law. This Agreement shall be construed and enforced in accordance with the internal laws of the State of West Virginia. 10.8 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of such shall constitute one and the same instrument. 10.9 Notices. Any notices or other communications shall be in writing and shall be considered to have been duly given when deposited into first class, certified mail, postage prepaid, return receipt requested, delivered personally (which shall include delivery by Federal Express or other recognized overnight courier service that issues a receipt or other confirmation of delivery) or delivered via facsimile machine; If to Seller: James Glassman President WKWK Radio, Inc. 22484 Groschenbach Road Washington, IL 61571 Fax: (309) 694-2233 Phone: (309) 694-6262 and Fred W. Schwarz The Hawthorne Group 500 Greentree Commons 381 Mansfield Avenue Pittsburgh, PA 15220 Fax: (412) 928-7715 Phone: (412) 928-7703 With a copy to: G. W. Howard III Howard, Leggans, Piercy & Howard 1008 Main Street Howard Building, Drawer U Mt. Vernon, IL 62864 Fax: (618) 244-7197 Phone: (618) 242-6594 and Louis J. Moraytis Eckert Seamans Cherin Mellott 42nd Floor USX Tower 600 Grant Street Pittsburgh, PA 15219 Fax: (412) 566-6099 & 5952 Phone: (412) 566-6141 and John C. Quale Wiley, Rein & Fielding 1776 K Street, N.W. Washington, D.C. 20006 Fax: (202) 429-7049 Phone: (202) 429-7032 If to Buyer: Frank D. Osborn Osborn Communications Corporation 130 Mason Street Greenwich, CT 06830 Fax: (203) 629-1749 Phone: (203) 629-0905 With a copy to: John M. Pelkey Haley Bader & Potts P.L.C. 4350 North Fairfax Drive Arlington, Virginia 22203-1633 Fax: (703) 841-2345 Phone: (703) 841-0606 Any Party may at any time change the place of receiving notice by giving notice of such change to the other as provided herein. 10.10 Specific Performance. Seller acknowledges that the Stations are of a special, unique and extraordinary character and that damages are inadequate to compensate Buyer for Seller's breach of this Agreement. Accordingly, in the event of a material breach by Seller of its representations, warranties, covenants and agreements under this Agreement, Buyer may sue at law for damages or, at Buyer's sole election in addition to any other remedy available to it, Buyer may also seek a decree of specific performance requiring Seller to fulfill its obligations under this Agreement, and Seller agrees to waive its defense that an adequate remedy at law exists. 10.11 Consent to Jurisdiction. Seller and Buyer hereby submit to the nonexclusive jurisdiction of the courts of the State of West Virginia and the federal courts of the United States of America located in such state solely in respect of the interpretation and enforcement of the provisions hereof and of the documents referred to herein, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that they are not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that this Agreement or any of such documents may not be enforced in or by said courts or that the Station property is exempt or immune from execution, that the suit, action or proceeding is brought in an inconvenient forum, or that the venue of the suit, action or proceeding is improper. 10.12 Further Assurances. Seller and Buyer agree to execute all such documents and take all such actions after the Closing Date as the other Party shall reasonably request in connection with carrying out and effectuating the intent and purpose hereof and all transactions and things contemplated by this Agreement, including, without limitation, the execution and delivery of any and all confirmatory and other documents in addition to those to be delivered on the Closing Date and all actions which may reasonably be necessary or desirable to complete the transactions contemplated hereby. 10.13 Public Announcements. No public announcement (including an announcement to employees) or press release concerning the transactions provided for herein shall be made by either Party without the prior approval of the other Party, except as required by law. 10.14 Accounts Receivable. Subject to the terms of the LMA, Buyer, commencing on the Closing Date and continuing for a period of six (6) months following the Closing Date, shall collect all of Seller's accounts receivable arising from the operation of the Stations in the same manner and with the same diligence that Buyer uses to collect its own accounts receivable. This obligation, however, shall not extend to the institution of litigation, employment of any collection agency, legal counsel, or other third party, or any other extraordinary means of collection. During the sixth-month period following the Closing Date, neither Seller nor its agents shall make any solicitation of these accounts for collection purposes and shall not institute litigation for the collection of any amounts due. Every thirty (30) days after the Closing Date, Buyer shall account to Seller in writing for and pay over to Seller the amount of the collections made on Seller's behalf. Except as is set forth in the last sentence of this paragraph, all payments received by Buyer during the sixth-month period following the Closing Date from any person obligated with respect to any of such accounts receivable shall be allocated so that the oldest such account receivable shall be paid first and the most recent last. Notwithstanding the foregoing, no payments shall be applied to obligations disputed by any account debtor. Upon the provision of notice to Seller, in the manner specified in Section 10.9, above, that an account debtor disputes an account receivable of Seller, Buyer may cease efforts to collect such account receivable and thereafter any amounts received by Buyer from the disputed account debtor may be applied to Buyer's account with such debtor and Seller may take whatever steps it deems necessary to attempt to collect its account(s) receivable from such account debtor. Buyer shall not have the right to compromise, settle, or adjust the amounts of any of Seller's accounts receivable without Seller's written consent. Any amounts received by Buyer in payment of any account receivable (without time limitation) which can be identified as a payment on a specific account, whether by accompanying invoice or otherwise, shall be promptly paid over to the owner of that account, regardless of whether the account debtor has an outstanding balance on older accounts. IN WITNESS WHEREOF, the Parties hereto have executed or have caused this Agreement to be executed by a duly authorized officer on the day and year first above written. SELLER WKWK RADIO, INC. BY: TITLE: BUYER MOUNTAIN RADIO CORPORATION BY: TITLE: President EX-10 8 ASSET PURCHASE AGREEMENT ___________________________________________________________ ASSET PURCHASE AGREEMENT dated as of March 1, 1996 by and between ATLANTIC CITY BROADCASTING CORP. (Seller) and EQUITY COMMUNICATIONS, L.P. (Buyer) ___________________________________________________________ TABLE OF CONTENTS ARTICLE I PURCHASE AND SALE OF ASSETS 1.1 Transfer of Assets 1 1.2 Excluded Assets 3 1.3 Liabilities to be Assumed 4 1.4 Purchase Price 4 1.5 Allocation of Purchase Price 4 1.6 Escrow Deposit 4 ARTICLE II CLOSING AND TERMINATION 2.1 Closing 5 2.2 Transactions at the Closing 5 2.3 Proration of Expenses 7 2.4 Termination 8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER 3.1 Due Incorporation 10 3.2 Authority; No Conflict 10 3.3 Government Authorizations 10 3.4 Compliance with Regulations 11 3.5 Personal Property 11 3.6 Real Property 12 3.7 Real Estate Contracts 12 3.8 Consents 13 3.9 Contracts 13 3.10 Environmental 13 3.11 Intellectual Property 14 3.12 Financial Statements 15 3.13 Personnel Information; Labor Contracts 15 3.14 Employee Benefit Plans 15 3.15 Litigation 15 3.16 Compliance with Laws 16 3.17 Insurance 16 3.18 Instruments of Conveyance; Good Title 16 3.19 Absence of Certain Changes 16 3.20 Insolvency Proceedings 17 3.21 Location of Assets 18 3.22 Citizenship 18 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Due Incorporation 19 4.2 Authority; No Conflict 19 4.3 Consents 19 4.4 Litigation 19 4.5 Compliance with Laws 20 4.6 Qualification 20 4.7 Financing 20 ARTICLE V COVENANTS OF SELLER 5.1 Continued Operation of Station 20 5.2 Financial Obligations 20 5.3 Access 21 5.4 Maintenance of Assets 21 5.5 Notification of Developments 21 5.6 Updated Financial Statements 21 5.7 Encumbrances 21 5.8 Assignment of Assets 21 5.9 Commission Licenses and Authorizations 21 5.10 Technical Equipment 22 5.11 Employees 22 5.12 Sale of Broadcast Time 22 5.13 Contracts 22 5.14 Taxes 22 5.15 Commission Action 22 5.16 Insurance 23 5.17 Negotiations with Third Parties 23 5.18 Third Party Consents 23 5.19 Normal Operation 23 ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER 6.1 Assignment Application 23 6.2 Performance 23 6.3 Conditions 23 6.4 Confidentiality 24 6.5 Cooperation 24 6.6 Consents to Assignment 24 6.7 Bulk Sales Laws 25 6.8 Employee Matters 25 ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER 7.1 Commission Approvals 25 7.2 Performance 26 7.3 Representations and Warranties 26 7.4 Consents 26 7.5 Opinions of Counsel 26 7.6 Covenant Not to Compete 26 7.7 Release of Indebtedness 26 7.8 Environmental Audit 26 7.9 Occupancy Certificate 27 ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER 8.1 Performance 28 8.2 Representations and Warranties 28 8.3 Government Approvals 28 8.4 Purchase Price 28 8.5 Closing Certificate 28 ARTICLE IX INDEMNIFICATION 9.1 Indemnification by Seller 28 9.2 Indemnification by Buyer 29 ARTICLE X MISCELLANEOUS 10.1 Damage and Failure of Transmissions 29 10.2 Assignment 30 10.3 Survival of Representations 31 10.4 Brokerage 31 10.5 Expenses of the Parties 31 10.6 Entire Agreement 31 10.7 Headings 31 10.8 Governing Law 31 10.9 Counterparts 31 10.10 Notices 32 10.11 Specific Performance 33 10.12 Arbitration 33 10.13 Consent to Jurisdiction 34 10.14 Further Assurances 34 10.15 Amendments 34 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into this first day of March, 1996 by and between ATLANTIC CITY BROADCASTING CORP., a corporation formed under the laws of the State of Delaware ("Seller"), and EQUITY COMMUNICATIONS, L.P., a limited partnership formed under the laws of the State of Delaware ("Buyer"). R E C I T A L S WHEREAS, Seller owns and operates and has been duly licensed by the Federal Communications Commission (the "FCC" or the "Commission") to operate radio station WAYV- FM, Atlantic City, New Jersey on 95.1 MHz (the "Station"); WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the assets used or useful in connection with the operation of the Station, and Seller and Buyer further desire that Seller assign to Buyer the licenses and other authorizations issued to Seller by the Commission for the purpose of operating the Station; and WHEREAS, concurrently herewith, the parties are entering into a Time Brokerage Agreement (the "Time Brokerage Agreement"), providing for the sale of substantially all of the broadcast time of the Station to Buyer, subject to the rules and policies of the FCC. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I PURCHASE AND SALE OF ASSETS 1.1 Transfer of Assets. Seller agrees to assign, transfer, convey and deliver to Buyer and Buyer agrees to acquire, accept and receive from Seller, on the Closing Date, all of Seller's right, title and interest in and to all of the tangible and intangible assets and rights of every kind and nature, real, personal and mixed, now or hereafter owned or held by Seller and used or useful in the business and operation of the Station, wherever located, other than those assets described in Section 1.2 below, free and clear of any and all claims, liabilities, liens, encumbrances or conditions, including without limitation the following (collectively, the "Station Assets"): (a) Licenses and Authorizations. All licenses, permits and other authorizations issued by the FCC or any other state or federal government or agency thereof pertaining to the Station, including, without limitation, those licenses, permits or authorizations listed in Section 1.1(a) of the disclosure schedule delivered by Seller to Buyer and dated of even date herewith (the "Disclosure Schedule"), together with any renewals, extensions or modifications thereof and additions thereto made between the date of this Agreement and the Closing Date (the "Licenses"). The Licenses include the right to use the call letters of the Station, including but not limited to the call letters WAYV-FM. (b) Tangible Personal Property. All of the tangible personal property or fixtures owned by Seller and used or useable in the operation of the Station, including, without limitation, the property listed in Section 1.1(b) of the Disclosure Schedule together with all additions, modifications or replacements thereto made in the ordinary course of business between the date of this Agreement and the Closing Date, as hereafter defined (the "Personal Property"). (c) Real Estate Contracts. All of the leasehold interests in real property leased by Seller and used by the Station, including all material agreements, leases, and contracts of Seller relating to the tower, transmitter, studio site, and offices of the Station (the "Real Estate Contracts"), as described in Section 1.1(c) of the Disclosure Schedule. Buyer shall assume, pay and perform all obligations under such Real Estate Contracts arising after the Closing Date. (d) Intellectual Property. All of Seller's right, title and interest in all trade names, copyrights, trademarks, service marks, slogan, logos, patents, patent applications or other similar rights relating to or used in the operation of the Station including, but not limited to, those listed in Section 1.1(d) of the Disclosure Schedule, together with any necessary additions or modifications thereto between the date hereof and the Closing Date (the "Intellectual Property"). (e) Leases and Contracts. All leases, contracts, syndication agreements, programming agreements, franchises and all other agreements relating to the business and operation of the Station (other than contracts for the sale of broadcast time and leases for real property) listed and identified in Section 1.1(e) of the Disclosure Schedule and those leases, contracts, agreements and franchises described in Section 1.1(h) of this Agreement (the "Contracts"). Buyer shall assume, pay and perform all obligations under such Contracts arising after the Closing Date. (f) Contracts for Sale of Broadcast Time. All contracts for the sale of broadcast time on the Station that are to be in effect on the Closing Date (the "Broadcast Agreements"), including any contract for the sale of time pursuant to which payment is to be received in whole or in part in services, merchandise or other non-cash considerations ("Trade Agreements"). Broadcast Agreements in effect as of the date hereof are set forth on Section 1.1(f) of the Disclosure Schedule. Buyer shall assume, pay and perform all obligations under the Broadcast Agreements arising after the Closing Date, provided, however, that Buyer shall be obligated to assume only those Broadcast Agreements and Trade Agreements that were entered into at the Station's then-prevailing rates and that have terms consistent with the Station's past practice in the ordinary course of business. (g) Operating and Business Records. All files, records, logs, public file materials, engineering records, program materials and other business records of Seller pertaining to the operation of the Station, including but not limited to those required to be maintained and kept under the rules of the Commission and such other files and records as Buyer shall reasonably require for the continuing business and operation of the Station. Seller shall have the right to reasonable access to such business records that Seller delivers to Buyer under this Section 1.1(g) upon Seller's request for three years after the Closing Date. (h) Future Contracts. All leases, contracts, agreements and franchises entered into between the date hereof and the Closing Date (the "Post-signing Contracts") in connection with the business and operation of the Station in accordance with the provisions of Section 5.13. (i) Inventory and Computer Software. All of Seller's items of inventory related to the business of the Station, including, without limitation, broadcast programs, as well as all computer software used or useable by the Station. (j) Other Rights and Privileges. Any and all other franchises, materials, supplies, easements, rights-of-way, licenses, and other rights and privileges of Seller relating to and used, useable or necessary in the operation of the Station. (k) Intangible Property. All of Seller's right, title and interest in and to the goodwill and other intangible assets used or useful in or arising from the business of the Station, including but not limited to all customer lists, trade secrets, and sales, operating and business plans (the "Intangible Property"). (l) Accounts Receivable. All of Seller's accounts receivable. (m) Cash Proceeds. All proceeds generated from the sale of any Station Assets by the Seller between the date hereof and the Closing Date. 1.2 Excluded Assets. There shall be excluded from the sale transaction described herein the following assets relating to the Station: (a) Cash and Deposits. Cash-on-hand or in banks (or their equivalents) as of the date hereof. (b) Property Consumed. All property of the Station disposed of or consumed (including ordinary wear and tear) in the ordinary course of business between the date hereof and the Closing Date in accordance with the terms of this agreement; provided, however, that any proceeds of such sales shall not constitute Excluded Property. (c) Expired Leases, Contracts and Agreements. All contracts described in Sections 1.1(e), (f) and (h) to the Disclosure Schedule that are terminated or will have expired prior to the Closing Date, in either case, in the ordinary course of business. (d) Pension and Profit-Sharing Plans. All pension and profit-sharing plans, trusts established thereunder and assets thereof, if any, of Seller. (e) Other Assets. Those assets, if any, listed in Section 1.2(e) of the Disclosure Schedule. 1.3 Liabilities to be Assumed. Buyer assumes no liabilities or obligations of Seller of any nature whatsoever, contingent or otherwise, except for (a) those liabilities assumed under the Time Brokerage Agreement, including those liabilities listed on Schedules 4.1 and 4.1A thereto; and (b) obligations accruing after the Closing under Real Estate Contracts, Contracts, Broadcasting Agreements, Trade Agreements and Post-signing Contracts (collectively, the "Assumed Contracts") assigned to and specifically assumed by Buyer. 1.4 Purchase Price. In consideration of Seller's performance of this Agreement and the sale, assignment, transfer, conveyance and delivery of the Station Assets to Buyer free and clear of all liens and encumbrances, Buyer shall assume the liabilities in Section 1.3 and pay on the Closing Date, by wire transfer, the sum of Three Million One Hundred Thousand Dollars ($3,100,000.00), subject to adjustment as provided in Section 2.3 (the "Purchase Price"). Of such amount, $200,000 shall be paid by wire transfer to such account as Seller shall designate to Buyer prior to the Closing Date. The balance shall be paid by wire transfer to such account as Granite Equities, Inc. ("Granite") shall designate to Buyer prior to the Closing Date. 1.5 Allocation of Purchase Price. Buyer and Seller agree that the Purchase Price shall be allocated among the Station Assets prior to the Closing Date and to cooperate in all respects with regard to such allocation. Buyer and Seller agree to use such allocation in completing and filing Internal Revenue Service Form 8594 for federal income tax purposes. Buyer and Seller further agree that they shall not take any position inconsistent with such allocation upon examination of any return, in any refund claim, in any litigation, or otherwise. If Buyer and Seller are unable to agree on such allocation, they shall hire an appraiser to make such allocation, the cost of which appraisal shall be borne equally by Seller and Buyer. 1.6 Escrow Deposit. As security for Buyer's failure to Close and as an inducement for Seller to perform its obligations hereunder Buyer shall deposit within two (2) business days of the date hereof with Media Venture Partners (the "Escrow Agent") a $200,000 irrevocable letter of credit in substantially the form attached hereto as Exhibit A issued by Fleet Bank of Massachusetts, N.A. (the "Escrow Deposit"), which Escrow Deposit shall be held and disbursed by the Escrow Agent pursuant to the Escrow Agreement of even date herewith as follows: if this Agreement is terminated pursuant to Section 2.4(a)(iv) by reason of a breach by Buyer and if all conditions to Buyer's obligations to close shall have been satisfied or waived, (i) the Escrow Deposit shall be released to Granite, (ii) title to all of the Station's accounts receivable shall become vested in Seller, pursuant to Section 4.1 of the Time Brokerage Agreement, and (iii) all severance obligations (other than severance obligations assumed pursuant to Section 4.1 of the Time Brokerage Agreement and severance obligations to Gary Fisher), accrued expenses and trade payables relating to the operation of the Station (not to exceed in the aggregate, the amount of the Station's accounts receivable) shall be assumed by Seller, which together shall be deemed liquidated damages and shall constitute Seller's and Granite's sole remedy at law or in equity and Seller and Granite shall have no other recourse against Buyer or any of its affiliates under or on account of this Agreement. In all other cases, if this Agreement is terminated or if the transactions contemplated herein are consummated, then the Escrow Deposit shall be delivered to the Buyer. ARTICLE II CLOSING AND TERMINATION 2.1 Closing. The purchase and sale of the Station Assets contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. on a mutually agreed upon day within five (5) days after the Commission's approval of the Assignment Application, as defined in Section 6.1 below, becomes a Final Order, or such other time and at such place as shall be mutually agreed upon by the parties (the "Closing Date"). For purposes of this Agreement, a "Final Order" shall mean any action of the Commission which has not been reversed, stayed, enjoined, set aside, annulled or suspended and with respect to which no requests are pending for administrative or judicial review, reconsideration, appeal or stay, and the time for filing any such requests and the time for the Commission to set aside the action on its own motion shall have expired. Buyer may, at its sole election, waive the requirement that the Commission's approval of the Assignment Application shall have become a Final Order. 2.2 Transactions at the Closing. (a) At the Closing, Seller shall deliver to Buyer the following: (i) assignments of the Licenses and other pertinent authorizations transferring the same to the Buyer in customary form and substance; (ii) the certificates contemplated by Sections 7.2, 7.3 and the affidavit contemplated by Section 3.22; (iii) a copy of the resolutions of the board of directors and stockholders of Seller authorizing the execution, delivery and performance of this Agreement, the Time Brokerage Agreement and the Escrow Agreement, and the consummation of the transactions contemplated hereby and thereby, together with a certificate of the Secretary of Seller, dated as of the Closing Date, that such resolutions were duly adopted and are in full force and effect; (iv) a bill of sale and all other appropriate documents and instruments of transfer assigning to Buyer good and marketable title to the Station Assets free and clear of any security interests, mortgages, liens, pledges, attachments, conditional sales contracts, claims, charges or encumbrances of any kind whatsoever; (v) written consents (including satisfactory estoppel language as to the absence of defaults and the completeness of documentation) of the respective lessors, landowners, and any other persons or entities whose consents may be required to permit Seller to assign or Buyer to assume the liabilities, contracts, leases, licenses, understandings and agreements constituting the Assumed Contracts; (vi) evidence satisfactory to Buyer's counsel that no financing statements or other liens or encumbrances are outstanding on the Station Assets; (vii) all files, records, logs, and program materials relating to the Station and the Station Assets; (viii) the opinion of general counsel and FCC counsel for Seller, dated the Closing Date, as described in Section 7.5; (ix) assignments to Buyer of all the Assumed Contracts (including assignment of the Real Estate Contracts in recordable form); and (x) a copy of the lease or memorandum of lease pertaining to the transmitter site (and all amendments thereto) executed by Seller and the landlord and duly recorded with the recorder's office in the jurisdiction where the property is located. (xi) a Non-Compete Agreement in the form attached hereto as Exhibit B executed by Frank D. Osborn, individually, and in his capacity as president of Osborn Communications Corp., and Atlantic City Broadcasting Corp. (the "Non-Compete Agreement"); and (xii) such other documents and instruments as Buyer may reasonably request to consummate the transactions contemplated hereby; and (xiii) instructions releasing the Escrow Deposit to Buyer. (b) At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: (i) the Purchase Price; (ii) a copy of the resolutions of the board of directors of Buyer's general partner authorizing the execution, delivery and performance of this Agreement, the Time Brokerage Agreement and the Escrow Agreement and the consummation of the transactions contemplated hereby and thereby together with a certificate of the Secretary of Buyer's general partner dated as of Closing Date, that such resolutions were duly adopted and are in full force and effect; (iii) the certificates contemplated by Sections 8.1 and 8.2; and (iv) such other documents and instruments as Seller may reasonably request to consummate the transactions contemplated hereby. 2.3 Proration of Expenses. (a) All costs and expenses arising from the operations of the Station (other than costs and expenses incurred or assumed by Buyer in its capacity as Time Broker under the Time Brokerage Agreement) up to and including 11:59 p.m. of the day prior to the Closing Date (the "Cut Off Time"), will be prorated between Buyer and Seller so that Seller shall be responsible for all expenses, costs, liabilities and obligations allocable to the conduct of the business and the operation of the Station (other than Buyer's expenses as Time Broker) for the period prior to the Cut-Off Time; and Buyer (x) shall be entitled to receive all income and revenues and all refunds from and after the commencement of Buyer's activities under the Time Brokerage Agreement and (y) shall be responsible for all expenses, costs, liabilities and obligations allocable to the conduct of the business and the operation of the Station for the period after the Cut-Off Time. Items to be apportioned pursuant to this paragraph shall include the following: (i) all personal property taxes, real estate taxes, water taxes, ad valorem, and other property taxes or assessments on or with respect to the assets and property interests to be transferred or assigned to Buyer hereunder; (ii) business and license fees including any FCC Regulatory Fees (and any retroactive adjustments thereof); wages, salaries and benefits of employees (including accruals up to the Cut-Off Time for insurance premiums, bonuses, commissions, sick pay, vacation pay and the like and related payroll taxes) and similarly prepaid and deferred items; (iii) liabilities and obligations under all Broadcast Agreements and any negative balances under the Trade Agreements to be assigned and assumed hereunder; (iv) sewer rents and charges for water, electricity and other utility expenses and fuel; (v) property and equipment rentals, applicable copyright or other fees, sales and other charges; and (vi) rents, additional rents and similar prepaid and deferred items, taxes and other items payable under any lease, contract, commitment or other agreement or arrangement to be assigned and assumed hereunder and all other income and expenses attributable to the ownership and operation of the Station. Taxes to be apportioned pursuant to this Section 2.3 shall be apportioned in proportion to (x) the number of days in the taxable period before and including the Cut-Off Time and (y) the number of days in the taxable period after the Cut-Off Time. No apportionment shall be made pursuant to this Section of any federal, state, foreign or local income taxes. Any tax refunds or rebates accruing before the Cut-Off Time for taxes that were paid prior to Closing shall remain the property of Seller, whether such refund is paid before or after the Closing Date. (b) Time for Payment. The prorations and adjustments contemplated by this Section 2.3, to the extent practicable, shall be made on the Closing Date. Not less than three (3) Business Days prior to the Closing Date, Seller shall submit to Buyer a written estimate of adjustments and prorations to be made in accordance with this Article. Prior to the Closing, Buyer and Seller will attempt in good faith to agree on an amount of any adjustment and proration payment to be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within 90 days of the Closing Date. (c) Dispute Resolution. In the event of any disputes between the parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided in Section 2.3(a) and such disputes shall be determined by an independent certified public accountant mutually acceptable to the parties whose determination shall be final, and the fees and expenses of such accountant shall be paid one-half by Seller and one-half by Buyer. 2.4 Termination. (a) This Agreement may be terminated at any time by: (i) the mutual written consent of the parties hereto; (ii) either Buyer or Seller if the Closing Date does not occur on or before December 31, 1996; (iii) Buyer, if any of the conditions set forth in Article VII shall not have been either fulfilled or waived by Buyer on or before the Closing Date, or if Seller shall have breached any of its representations, warranties or obligations hereunder which are qualified by a standard of materiality or words of similar import, or if Seller shall have breached in any material respect any other representation, warranty or obligation hereunder and, in either case, such breach shall not have been cured in all material respects or waived prior to the earlier of the Closing Date and fifteen (15) days after the Buyer has given notice to Seller of such breach; or (iv) Seller, if any of the conditions set forth in Article VIII shall not have been either fulfilled or waived by Seller, or if Buyer shall have breached any of its representations, warranties or obligations hereunder which are qualified by a standard of materiality or words of similar import, or if Seller shall have breached in any material respect any other representation, warranty or obligation hereunder and, in either case, such breach shall not have been cured in all material respects or waived prior to the earlier of the Closing Date and fifteen (15) days after Seller has given notice to Buyer of such breach. (b) In the event of the termination of this Agreement by Buyer or Seller pursuant to this Section 2.4, written notice thereof shall promptly be given to the other party and, except as otherwise provided herein, the transactions contemplated by this Agreement shall be terminated, without further action by any party. Nothing in this Section 2.4 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of Buyer to compel specific performance of Seller of its obligations under this Agreement. (c) The time for Commission approval provided in this Agreement notwithstanding, either party may terminate this Agreement upon written notice to the other, if, for any reason, the Assignment Application is designated for hearing by the Commission, provided, however, that written notice of termination must be given within twenty (20) days after release of the Hearing Designation Order and that the party giving such notice is not in default and has otherwise complied with its obligations under this Agreement. Upon termination pursuant to this Section 2.4(c), the parties shall be released and discharged from any further obligation hereunder and the Escrow Deposit shall be returned to the Buyer. (d) Notwithstanding the provisions of Section 2.4(a) - (c) above, no party may terminate this Agreement if such party is in default hereunder, or if a delay in any decision or determination by the Commission respecting the Assignment Application has been caused or materially contributed to (i) by any failure of such party to furnish, file or make available to the Commission information within its control; (ii) by the willful furnishing by such party of incorrect, inaccurate or incomplete information to the Commission; and (iii) by any other action taken by such party for the purpose of delaying the Commission's decision or determination respecting the Assignment Application. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 Due Incorporation. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly qualified to conduct business and is in good standing in the State of New Jersey, and in any other jurisdiction in which the nature of its business or the ownership or leasing of its properties requires such qualifications. Seller has the corporate power and authority to (i) own, lease, and use the Station Assets and properties as now used, owned, and leased; and (ii) to conduct the business of operating the Station as now conducted. 3.2 Authority; No Conflict. The execution and delivery of this Agreement, the Escrow Agreement and the Time Brokerage Agreement and any other agreements and instruments contemplated herein or executed in connection herewith (collectively, the "Seller Agreements") have been duly and validly authorized and approved by the board of directors and stockholders of Seller, and Seller has the corporate power and authority to execute, deliver and perform all the Seller Agreements and to consummate the transactions contemplated hereby and thereby. Neither such execution, delivery or performance nor compliance by Seller with the terms and provisions hereof, or with respect to the Seller Agreements, will (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of Seller, (b) any law, judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Seller is subject or applicable to Seller or the Station, or (c) any agreement, lease or contract, written or oral, to which Seller is subject. This Agreement, the Escrow Agreement and the Time Brokerage Agreement constitute and as of the Closing Date, all other Seller Agreements will constitute, the legal, valid and binding obligations of the Seller, enforceable against it in accordance with their terms. 3.3 Government Authorizations. Section 1.1(a) of the Disclosure Schedule contains a true and complete list of all the Licenses, which Licenses and government authorizations of any kind held or used in the operation of the Station are sufficient for the lawful conduct of the business and operation of the Station in the manner and to the full extent they are currently conducted. Seller is the authorized legal holder of the Licenses, none of which is subject to any restriction or condition which would limit in any material respect the full operation of the Station as now operated. There are no applications, complaints or proceedings (judicial, administrative or otherwise) pending or, to the best of Seller's knowledge, threatened before the Commission or any other governmental authority relating to the business or operations of the Station, other than rule making and similar proceedings which generally affect the broadcasting industry as a whole, and other than reports and forms filed in the ordinary course of the Station's business. Seller has delivered to Buyer true and complete copies of the Licenses, including any and all additions, amendments and other modifications thereto. The Licenses and authorizations are in good standing, are in full force and effect and are unimpaired by any act or omission of Seller or its officers, directors or employees; and the operation of the Station is in accordance with the Licenses and the underlying construction permits. No proceedings are pending or, to the best of Seller's knowledge, are threatened which may result in the revocation, modification, non- renewal or suspension of any of the Licenses, the denial of any pending applications, the issuance of any cease and desist order, the imposition of any administrative actions by the Commission with respect to the Licenses or which may affect Buyer's ability to continue to operate the Station as it is currently operated. Seller has not taken any action which could lead to revocation or non- renewal of the Licenses, nor omitted to take any action which, by reason of its omission, could lead to revocation of the Licenses. All reports, forms and statements required to be filed with the Commission with respect to the Station since Seller has owned WAYV-FM have been filed and are complete and accurate. Without limiting the generality of the foregoing, all ownership reports, renewal applications, equal employment opportunity reports and other reports and documents required to be filed by Seller with the FCC have been properly filed. Since Seller has owned WAYV-FM the FCC's renewal of the Station Licenses has not been challenged by a petition to deny, or by a competing application. Seller has not entered into any agreement with any community group, governmental authority or other third party restricting programming or other aspects of the operation of the Station which would or could restrict Buyer's discretion to operate the Station when licensed to Buyer, and there has been no dispute with any community group, governmental authority or other third party as to the manner of operation of the Station. Seller is not aware of any reason why the FCC would deny its consents to the assignment of the Station Licenses to Buyer hereunder. There are no facts which, under the Communications Act of 1934, as amended, or the existing rules and regulations of the Commission, would disqualify Seller as assignor, in connection with the Assignment Application. 3.4 Compliance with Regulations. The operation of the Station is in compliance with (i) all standards of good engineering practice, (ii) all applicable engineering standards required to be met under Commission rules, and (iii) all other applicable rules, regulations, requirements and policies of the Commission and all other applicable governmental authorities, including, but not limited to, ANSI Radiation Standards; and there are no existing claims, citations or notices of any governmental authority to the contrary. 3.5 Personal Property. Except for those assets subject to lease agreements (but not excepting the lease agreements themselves), Seller owns and has good and marketable title to the Station Assets, and none of the Station Assets on the Closing Date will be subject to any security interest, mortgage, pledge, conditional sales agreement or other lien or encumbrance. The Personal Property is all the tangible personal property used in or necessary for the lawful operation of the Station as presently operated by Seller. Except as specifically indicated to the contrary in Section 1.1(b) of the Disclosure Schedule, all Personal Property is serviceable and in good operating condition (reasonable wear and tear excepted). All items of transmitting and studio equipment included in the Personal Property (i) have been maintained in a manner consistent with generally accepted standards of good engineering practice and (ii) permit the Station to operate in accordance with the terms of the Licenses. 3.6 Real Property. Neither Seller nor any affiliate of Seller owns any real property used in connection with the operation of the Station. 3.7 Real Estate Contracts. (a) Section 1.1(c) of the Disclosure Schedule contains a true and complete list and summary of all the Real Estate Contracts. Seller has a valid leasehold interest in the real property subject to the Real Estate Contracts. The present use by the Station of all real property leased pursuant to the Real Estate Contracts conforms with all applicable building, zoning, land use, environmental and other laws, ordinances, codes, orders and regulations and all other governmental regulations, including, without limitation, the standards, rules and regulations of the FCC. The transmitter for the Station is operating in accordance with and within the parameters established by the FCC and the Station's Licenses. The broadcast tower for the Station is in compliance with the Federal Aviation Act, and all rules and regulations promulgated thereunder and all other applicable laws, including, without limitation, all applicable building, zoning, land use and environmental laws, ordinances, codes and regulations. (b) As of the date hereof, Seller has complied with all of the Real Estate Contracts and has not received or given oral or written notice of any default thereunder from or to any of the other parties thereto. Seller shall use its best efforts to obtain valid and binding third-party consents, if any are necessary, from all required third parties to the Real Estate Contracts to be conveyed and assigned to Buyer as part of the Station Assets. (c) The real property subject to the Real Estate Contracts is all of the real property used in or necessary for the lawful operation of the Station as presently operated by Seller. Seller has and, after the Closing Date, Buyer will have, full legal and practical access to such real property pursuant to valid easements or pursuant to public rights of way. All utilities servicing the Station have access to such real property pursuant to valid easements or pursuant to public rights of way. There are no encroachments upon such real property by any buildings, structures, or improvements located on adjoining real estate. None of the buildings, structures, or improvements that are constructed on the real property and used in the present operation of the Station (including without limitation all guy wires and guy anchors) encroaches upon adjoining real estate, and all such buildings, structures, and improvements are constructed in conformity with all "set-back" lines, easements and other restrictions or rights of record, and all applicable building or safety codes and zoning ordinances. There are no pending or, to the best of Seller's knowledge, threatened condemnation or eminent domain proceedings that may affect such real property, nor has any of such real property been condemned. There are no structural defects in the towers, buildings, structures and other improvements located on such real property that are used in the operation of the Station. The Real Estate Contracts (or memoranda thereof) have been duly recorded in the land records of the jurisdictions where such real estate is located, or will be so recorded prior to Closing. True and correct copies of the Real Estate Contracts have been provided to Buyer. 3.8 Consents. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Seller of this Agreement or the Seller Agreements, other than approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 3.8 of the Disclosure Schedule, no consent of any other party (including, without limitation, any party to any Real Estate Contract or Contract) is required for the execution, delivery and performance by Seller of the Seller Agreements. 3.9 Contracts. Section 1.1(e) of the Disclosure Schedule contains a true and complete list of all Contracts, and Section 1.1(f) contains a true and complete list of all Broadcast Agreements and Trade Agreements, including the dollar amount of the broadcasting time owed by the Station under each such agreement as of the date of this Agreement. Seller has delivered to Buyer true and complete copies (or, in the case of unwritten Broadcast Agreements and Trade Agreements, accurate written summaries of all material provisions thereof) of all Contracts, Broadcast Agreements and Trade Agreements, and prior to the Closing Date Seller will have delivered to Buyer all Post-signing Contracts, including any and all amendments and other modifications to same. As of the date hereof, all of the Assumed Contracts are in full force and effect and enforceable in accordance with their terms, and the sale of the Assets as contemplated herein will in no way affect the validity, enforceability and continuity of any such contracts or agreements if properly assigned to Buyer as contemplated hereby. Seller has complied with the Assumed Contracts, and to the knowledge of Seller no other contracting party is in default under any of same. The Assumed Contracts include all agreements to which Seller is a party or by which it is bound relating to the ownership or operation of the Station. 3.10 Environmental. (a) Seller has not unlawfully disposed of any Hazardous Waste in a manner which has caused, or could cause, Buyer to incur a liability under applicable law in connection therewith; and Seller warrants that the technical equipment included in the Personal Property does not contain any Hazardous Waste, including any Polychlorinated Biphenyls ("PCBs") that are required by law to be removed, or if any equipment does contain Hazardous Waste, including any PCBs, that such equipment is stored and maintained in compliance with applicable law. Seller has complied with all federal, state and local environmental laws, rules and regulations applicable to the Station and its operations, including but not limited to the Commission's guidelines regarding RF radiation. Without limiting the generality of the foregoing, (i) no Hazardous Waste has been disposed of by Seller on the real property subject to the Real Estate Contracts, (ii) no "underground storage tank" (as that term is defined in regulations promulgated by the federal Environmental Protection Agency) is used in the operation of the Station or is located on such real property; (iii) no Hazardous Waste is located on or about such real property and such real property has not previously been used for the manufacture, refining, treatment, storage, or disposal of any Hazardous Waste; (iv) none of the soil, ground water, or surface water of such real property is contaminated by any Hazardous Waste and there is no reasonable potential for such contamination from neighboring real estate, (v) no Hazardous Waste is being emitted, discharged or released from such real property, directly or indirectly, into the environment; and (vi) Seller is not liable for cleanup or response costs with respect to any present or past emission, discharge, or release of any Hazardous Waste. As used herein, the term "Hazardous Waste" shall mean all materials regulated by any federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata). If Seller learns between the date of this Agreement and the Closing Date that Seller is in breach of the representation and warranty set forth in this Section 3.10, Seller shall begin remedial action promptly and shall use best efforts to complete such remedial action to the satisfaction of Buyer before the Closing Date. Buyer shall not be obligated to close until any such condition is corrected. (b) No notice of violation, lien, complaint, suit, order or other notice or communication concerning any alleged violation of any environmental standard, rules, regulations and laws in, on, under or about any of the real property subject to the Real Estate Contracts has been received by Seller or its affiliates, or to the best of Seller's knowledge, any owner or prior owner or occupant of any of the real property which has not been fully satisfied and complied with all federal, state and local environmental laws, standards, rules and regulations. (c) Seller has all permits and licenses required under any federal, state and local environmental laws, rules and regulations to be issued to it by any governmental authority on account of any or all of its activities on any of the real property and is in material compliance with the terms and conditions of such permits and licenses. Any and all such permits and licenses are described in Section 1.1(a) of the Disclosure Schedule. To the best of Seller's knowledge, no change in the facts or circumstances reported or assumed in the application for granting of such permits or licenses exist, and such permits and licenses are in full force and effect. (d) To the best of Seller's knowledge, no portion of any of the real property subject to the Real Estate Contracts has been listed, designed or identified in the National Priorities List (NPL) or the CERCLA Information System (CERCLIS), both as published by the United States Environmental Protection Agency, or any similar list of sites published by any federal, state or local authority proposed for or requiring cleanup, or remedial or corrective action under any federal, state or local environmental laws, rules and regulations. (e) Exceptions, if any, to the foregoing representations are set forth in Section 3.10 to the Disclosure Schedule. 3.11 Intellectual Property. Section 1.1(d) of the Disclosure Schedule is a true and complete list of all the material Intellectual Property used in connection with the operation of the Station, all of which are in good standing and uncontested. Such Intellectual Property has been duly registered in, filed with, or issued by the appropriate offices within all jurisdictions where such registration, filing or issuance is necessary to protect such Intellectual Property from infringement, including, without limitation, the United States Copyright Office and the United States Patent and Trademark Office. Seller has not granted any license or other rights with respect to such Intellectual Property. Seller has not received any written notice and has no knowledge of any infringement or unlawful use of the Intellectual Property and Seller has not violated or infringed any patent, trademark, trade secret or copyright held by others or any license, authorization or permit held by it. 3.12 Financial Statements. Section 3.12 of the Disclosure Schedule contains a copy of the unaudited statements of income, and the related balance sheets for Seller as at December 31, 1994 and December 31, 1995 and for the fiscal years then ended and statements of income for each month during 1995 (the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles, consistently applied. The Financial Statements present fairly the financial condition and results of operations of the Station for the periods indicated, and there has been no material adverse change in Seller's financial condition between December 31, 1995 and the date of this Agreement. 3.13 Personnel Information; Labor Contracts. (a) Section 3.13 of the Disclosure Schedule contains a true and complete list of all persons employed at the Station as of the date hereof, including the date of hire, a description of compensation arrangements and a list of any and all agreements affecting such persons. Seller has provided Buyer with true and correct copies of all such agreements. (b) Seller is not a party to any contract with any labor organization, nor has Seller agreed to recognize any union or other collective bargaining unit, nor has any union or other collective bargaining unit been certified as representing any of Seller's employees. Seller has no knowledge of any organizational effort currently being made or threatened by or on behalf of any labor union with respect to employees of the Station. During the past two years, Seller has not experienced any strikes, work stoppages, grievance proceedings, claims of unfair labor practices filed, or other labor difficulties of any nature. (c) Seller has complied with all laws relating to the employment of labor, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and those laws relating to wages, hours, collective bargaining, unemployment insurance, workers' compensation, equal employment opportunity and the payment and withholding of taxes. 3.14 Employee Benefit Plans. Seller maintains no employee benefit plan (as that term is defined in Section 3(3) of ERISA). 3.15 Litigation. Except as set forth in Section 3.15 of the Disclosure Schedule, Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree, and there is no litigation, action, suit, proceeding or investigation pending or, to the best of Seller's knowledge, threatened against Seller or the Station in any federal, state or local court, or before the FCC or any other administrative agency or arbitrator (including, without limitation, any proceeding which seeks the forfeiture of, or opposes the renewal of, any of the Licenses), or before any other tribunal duly authorized to resolve disputes, which would reasonably be expected to have any material adverse effect upon the Station Assets or which seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. In particular, but without limiting the generality of the foregoing, except as set forth in Section 3.15 of the Disclosure Schedule, there are no applications, complaints or proceedings pending or, to the best of Seller's knowledge, threatened before the Commission or any other governmental organization with respect to the business or operation of the Station which would (i) impair Seller's ability to perform its obligations under this Agreement, (ii) in any way adversely affect Buyer's ability to operate the Station as heretofore operated, or (iii) be expected to have any adverse effect upon the Station Assets, other than rule making or similar proceedings which affect the broadcast industry generally. 3.16 Compliance with Laws. Seller is in compliance with, and has not received any notice asserting any non-compliance with, any applicable statute, rule or regulation (federal, state or local) whether or not related to the business or operation of the Station, non-compliance with which would have a material adverse effect on the Station Assets. Seller is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or to any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Neither any shareholder of Seller or any entity which shares an officer, director, shareholder or partner with Seller, nor any parent or subsidiary corporation of Seller has had an adverse finding made or final action taken by any court or administrative body in a civil or criminal preceding relating to (1) a felony, (2) an antitrust or unfair competition claim, (3) criminal violations involving false statements or dishonesty, (4) misrepresentation to any governmental unit resulting in civil or criminal violations, or (5) employment discrimination, nor to the best of Seller's knowledge is any such proceeding threatened or in progress. 3.17 Insurance. Section 3.17 of the Disclosure Schedule contains a true and complete list of all Seller's insurance policies. All such policies are in full force and effect and Seller has received no notice of cancellation with respect thereto. True and complete copies of Seller's insurance policies have been provided to Buyer. 3.18 Instruments of Conveyance; Good Title. The instruments to be executed by Seller and delivered to Buyer at Closing, conveying the Station Assets to Buyer, will be in a form sufficient to transfer good and marketable title to the Station Assets free and clear of all liens, pledges, collateral assignments, security interests, capital or financing leases, easements, covenants, restrictions and encumbrances or other defects of title except the lien of any real estate or personal property taxes that will not become due until after the Closing Date and that will be prorated between Seller and Buyer pursuant to Section 2.3. 3.19 Absence of Certain Changes. Except as disclosed in Section 3.19 of the Disclosure Schedule, and except for those changes or actions expressly implemented by or at the written request of Buyer following the date hereof pursuant to the Time Brokerage Agreement, between the Balance Sheet Date and the Closing Date there has not been: (a) Any material adverse change in the Station Assets; (b) Any change in the manner in which Seller conducts its business and operations other than changes in the ordinary and usual course of business consistent with past practice; (c) Any amendment to the Certificate of Incorporation or Bylaws of Seller; (d) Any material contract or commitment, to which Seller is a party, entered into, modified or terminated, except in the ordinary and usual course of business; (e) Any creation or assumption of any mortgage, pledge or other lien or encumbrance upon any of the Station Assets; (f) Any sale, assignment, lease, transfer, or other disposition of any of the Station Assets, except in the ordinary and usual course of business; (g) The incurring of any material liabilities or obligations, except items incurred in the ordinary and usual course of business; (h) The write-off or determination to write off as uncollectible any accounts receivable or portion thereof, except for write-offs in the ordinary course of business consistent with past practice; (i) The cancellation of any debts or claims, or waiver of any rights, having an aggregate value in excess of $5,000; (j) The disposition, lapse or termination of any Intellectual Property; (k) The increase or promise to increase the rate of commissions, fixed salary or wages, draw, bonus or other compensation payable to any employee of Seller, except in the ordinary and usual course of business consistent with past practice; or (l) Any change in any method of accounting or accounting practice used by Seller. 3.20 Insolvency Proceedings. No insolvency proceedings of any character including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting Seller or the Station Assets are pending or, to Seller's knowledge, threatened, and Seller has made no assignment for the benefit of creditors, nor taken any action with a view to, or which would constitute the basis for, the institution of any such insolvency proceedings. 3.21 Location of Assets. The addresses of Seller's chief executive office and all of Seller's additional places of business, and of all places where any of the tangible personal property included in the Station Assets is now located, or has been located during the past six (6) months, are listed in Section 3.21 of the Disclosure Schedule. Except as set forth in Section 3.21 of the Disclosure Schedule, during the past five (5) years, Seller has not nor, to the best of Seller's knowledge, has any prior owner of the Station been known by or used any corporate, partnership, fictitious or other name in the conduct of the Station's business or in connection with the use or operation of the Station Assets. 3.22 Citizenship. Seller is not a "foreign person" as defined in Section 1445(f)(3) of the Internal Revenue Code. On the Closing Date, Seller will deliver to Buyer an affidavit to that effect, verified as true and sworn to under penalty of perjury by a duly authorized officer of Seller. The affidavit shall also set forth Seller's name, address, taxpayer identification number, and such additional information as may be required to exempt the Transaction from the withholding provisions of Section 1445 of the Internal Revenue Code. Buyer shall have the right to furnish copies of the affidavit to the Internal Revenue Service. 3.23 Tax Matters. All federal, state, county and local tax returns, reports and declarations of estimated tax or estimated tax deposit forms required to be filed by Seller in connection with its operations, personal property or payroll have been duly and timely filed; Seller has paid all taxes which have become due pursuant to such returns or pursuant to any assessment received by it, and has paid all installments of estimated taxes due; and all taxes, levies and other assessments which Seller is required by law to withhold or collect have been duly withheld and collected and have been paid over to the proper governmental authorities or are held by Seller for such payment. 3.24 Material Facts. No representation or warranty made by Seller in this Agreement and no statement made by Seller in (a) any certificate, exhibit, schedule, or other writing executed and delivered by Seller in connection herewith, (b) any other agreement, document or writing furnished in connection with the transactions herein contemplated and referred to herein or in the Disclosure Schedule attached hereto, or (c) in any document or other writing delivered to Buyer after the date hereof and on or prior to the Closing Date, by or on behalf of the Seller, knowingly contains or will knowingly contain any untrue statement of a material fact, or knowingly omits or will knowingly omit to state any material fact necessary in order to make the statements contained herein or therein not misleading. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Due Incorporation. Buyer is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, and as of the Closing Date shall be duly qualified to do business in and be in good standing in the State of New Jersey. 4.2 Authority; No Conflict. The execution and delivery of this Agreement, the Time Brokerage Agreement, the Escrow Agreement and other agreements and instruments contemplated herein or executed in connection herewith (collectively, the "Buyer Agreements") have been duly and validly authorized and approved by the board of directors of Buyer, and Buyer has the partnership power and authority to execute, deliver and perform the Buyer Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance hereof, and compliance by Buyer with the terms and provisions hereof, or with respect to the Buyer Agreements, will not (assuming receipt of all necessary approvals from the Commission) conflict with or result in a breach of any of the terms, conditions or provisions of (a) the Certificate of Limited Partnership or Agreement of Limited Partnership of Buyer, (b) any judgment, order, injunction, decree, regulation or ruling of any court or other governmental authority to which Buyer is subject, or (c) any material agreement, lease or contract, written or oral, to which Buyer is subject. This Agreement, the Escrow Agreement and the Time Brokerage constitute and as of the Closing Date all other Buyer Agreements will constitute the valid and binding obligations of Buyer with respect to the terms hereof. 4.3 Consents. No consent, approval, authorization or order of, or registration, qualification or filing with, any court, regulatory authority or other governmental body is required for the execution, delivery and performance by Buyer of this Agreement or the Escrow Agreement, other than the approval by the Commission of the Assignment Application as contemplated hereby. Except as set forth in Section 4.3 of the Disclosure Schedule and except for consents from parties to agreements with Seller, which consents are required to transfer the Station Assets to Buyer, no consent of any other party is required for the execution, delivery and performance by Buyer of the Buyer Agreements. 4.4 Litigation. There is no litigation, proceeding or investigation pending or, to the best of Buyer's knowledge, threatened against Buyer in any federal, state or local court, or before any administrative agency or arbitrator, or before any other tribunal duly authorized to resolve disputes, that would reasonably be expected to have any material adverse effect upon the ability of Buyer to perform its obligations hereunder, or that seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken pursuant to or in connection with this Agreement. 4.5 Compliance with Laws. Buyer is not in default with respect to any judgment, order, injunction or decree of any court, administrative agency or other governmental authority or of any other tribunal duly authorized to resolve disputes in any respect material to the transactions contemplated hereby. Buyer is not in violation of any law, regulation or governmental order, the violation of which would have a material adverse effect on Buyer's ability to perform its obligations pursuant to this Agreement. 4.6 Qualification. To the best of Buyer's knowledge, Buyer is legally, technically and financially qualified to be the assignee of the Licenses and the other Station Assets, and, prior to the Closing Date, Buyer will exercise its best efforts to refrain from doing any act which would disqualify Buyer from being the assignee of the Licenses and the other Station Assets. 4.7 Financing. Buyer believes in good faith that by the Closing Date it will have sufficient financing to consummate the transactions contemplated hereby. ARTICLE V COVENANTS OF SELLER Except to the extent that certain changes with respect to the business and operation of the Station are expressly implemented by or at the written request of Buyer pursuant to the Time Brokerage Agreement, Seller covenants and agrees that from the date hereof until the Closing Date: 5.1 Continued Operation of Station. Seller shall continue to operate the Station under the terms of the Licenses in the manner in which the Station has been operated heretofore, in the usual and ordinary course of business, in conformity with all material applicable laws, ordinances, regulations, rules and orders, and in a manner so as to preserve and foster the goodwill and business relationships of the Station and Seller, including, without limitation, relationships with advertisers, suppliers, customers, and employees. Seller shall file with the Commission and any other applicable governmental authority all applications and other documents required to be filed in connection with the continued operation of the Station. 5.2 Financial Obligations. Seller shall continue to conduct the financial operations of the Station, including its credit and collection policies, in the ordinary course of business with the same effort, to the same extent, and in the same manner, as in the prior conduct of the business of the Station; and shall continue to pay and satisfy all expenses, liabilities and obligations arising in the ordinary course of business in accordance with past practices and shall provide Buyer on or before the Closing Date with evidence reasonably satisfactory to the Buyer demonstrating the satisfaction of all expenses, liabilities and obligations of the Seller to persons or entities doing business with the Station. Seller shall not enter into or amend any contracts or commitments involving expenditures by Seller in an aggregate amount in excess of $5,000 without the prior written consent of Buyer. 5.3 Access. Seller shall provide Buyer, and representatives of Buyer, with access to the Station 24 hours per day and shall furnish such additional information concerning the Station and the Station Assets as Buyer from time to time may reasonably request. 5.4 Maintenance of Assets. Seller shall maintain the Personal Property and all other tangible assets in their present good operating condition, repair and order, reasonable wear and tear in ordinary usage excepted. Seller shall not waive or cancel any claims or rights of substantial value, transfer or otherwise dispose of any Personal Property, or permit to lapse or dispose of any right to the use of any Intellectual Property. 5.5 Notification of Developments. Seller shall notify Buyer of any problems or developments with respect to the Station Assets or operation of the Station; and provide Buyer with prompt written notice of any change in any of the information contained in the representations and warranties made herein or in the Disclosure Schedule or any other documents delivered in connection with this Agreement. 5.6 Updated Financial Statements. As soon as practicable but in any event within 21 days of the end of each month, Seller shall, at its own expense, deliver to Buyer an unaudited balance sheet and income statement of the Station (excluding revenues and expenses of Buyer pursuant to the Time Brokerage Agreement) for the month then ended. Such financial statements shall be prepared in accordance with generally accepted accounting principles, consistently applied and shall fairly represent the results of the operation of the Station for the period covered by such statement. 5.7 Encumbrances. Seller shall not suffer or permit the creation of any mortgage, conditional sales agreement, security interest, lease, lien, hypothecation, deed of trust or pledge, encumbrance, restriction, liability, charge, or imperfection of title with respect to the Station Assets. 5.8 Assignment of Assets. Without limiting Seller's obligations hereunder or under the Time Brokerage Agreement, Seller shall not sell, assign, lease or otherwise transfer or dispose of any Station Assets or modify, alter or terminate any other right relating to or included in the Station Assets, whether now owned or hereafter acquired, without the prior written approval of Buyer, except for retirements in the normal and usual course of business or in connection with the acquisition of similar property or assets, as provided for herein. 5.9 Commission Licenses and Authorizations. Seller shall not by any act or omission surrender, modify adversely, forfeit or fail to renew under regular terms the Licenses, cause the Commission or any other governmental authority to institute any proceeding for the revocation, suspension or modification of any such License, or fail to prosecute with due diligence any pending applications with respect to the Licenses at the Commission or any other applicable governmental authority. 5.10 Technical Equipment. Seller shall repair, maintain or replace, as necessary, all equipment transferred hereunder in accordance with the normal standards of maintenance applicable in the broadcast industry. 5.11 Employees. Seller shall not permit any increase in the rate of commissions, fixed salary or wages, draw or other compensation payable to any employees of Seller without the prior written consent of Buyer. Seller shall refrain from hiring, firing, releasing or transferring any employee of the Station without the prior written approval of Buyer and shall promptly notify Buyer upon Seller's becoming aware of the resignation or contemplated resignation of any employee. 5.12 Sale of Broadcast Time. Seller shall not enter into, extend or renew any Broadcast Agreement or Trade Agreement. 5.13 Contracts. (a) Seller shall not modify, amend, alter or terminate any of the Contracts or waive any default or breach thereunder without the prior approval of Buyer; (b) Seller shall not enter into any contract or agreement not in effect on the date hereof and listed in Sections 1.1(c), (e) or (f) of the Disclosure Schedule, except for contracts entered into in the ordinary course of business which do not involve consideration having an aggregate value in excess of $5,000 and which may be terminated on ninety (90) days' notice without premium or penalty; and (c) Seller shall promptly comply with Buyer's requests, between the date hereof and the Closing, to (i) enter into any contracts or agreements not in effect on the date hereof; (ii) modify, amend, alter or terminate any Contracts; or (iii) take any and all other action with respect to the Contracts or the Station Assets which Buyer deems necessary or appropriate for the operation of the Station pursuant to the Time Brokerage Agreement; provided that the requested action is not inconsistent with customary broadcasting practices in similar situations. 5.14 Taxes. Seller shall pay or cause to be paid or provided for when due all income, property, use, franchise, excise, social security, withholding, worker's compensation and unemployment insurance taxes and all other taxes of or relating to Seller, the Station Assets and the employees of Seller required to be paid to city, county, state, federal and other governmental units up to the Closing Date. 5.15 Commission Action. Seller shall provide to Buyer, promptly upon receipt thereof by Seller, a copy of (i) any notice from the FCC or any other governmental authority of the revocation, suspension, or limitation of the rights under, or of any proceeding for the revocation, suspension, or limitation of the rights under (or that such authority may in the future, as the result of failure to comply with laws or regulations or for any other reason, revoke, suspend or limit the rights under) any License, or any other license or permit held by Seller respecting the Station, and (ii) copies of all protests, complaints, challenges or other documents filed with the FCC by third parties concerning the Station and, promptly upon the filing or making thereof, copies of Seller's responses to such filings. Seller shall notify Buyer in writing immediately upon learning of the institution or written threat of any action against Seller involving the Station in any court, or any action against Seller before the FCC or any other governmental agency, and notify Buyer in writing promptly upon receipt of any administrative or court order relating to the Station Assets or the Station. 5.16 Insurance. Seller shall maintain at all times between the date hereof and the Closing Date, all policies listed in Section 3.17 of the Disclosure Schedule or else replace such policies with comparable policies. 5.17 Negotiations with Third Parties. Seller shall not, before Closing or the termination of this Agreement, enter into discussions with respect to any sale or offer of the Station, any Station Assets or any stock of Seller to any third party, nor shall Seller offer the Station, any Station Assets or any stock of Seller to any third party. 5.18 Third Party Consents. Seller shall use its best efforts to obtain the consents listed in Section 3.8 of the Disclosure Schedule. 5.19 Normal Operation. Seller shall operate the Station in the normal and usual manner, consistent with the rules, regulations, and policies of the Commission, and conduct the Station's business only in the ordinary course. ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER Buyer and Seller covenant and agree that between the date hereof and the Closing Date, they shall act in accordance with the following: 6.1 Assignment Application. As promptly as practicable after the date of this Agreement, and in no event later than five (5) business days after execution of this Agreement, Seller and Buyer shall join in and file an application on FCC Form 314 with the Commission requesting its consent to the assignment of the Licenses from Seller to Buyer (the "Assignment Application"). Seller and Buyer agree to prosecute the Assignment Application with all reasonable diligence and to use their best efforts to obtain prompt Commission grant of the Assignment Application filed at the Commission. 6.2 Performance. Buyer and Seller shall perform all acts required of them under this Agreement and the Time Brokerage Agreement and refrain from taking or omitting to take any action that would violate their representations and warranties hereunder or render same inaccurate as of the Closing Date. 6.3 Conditions. Buyer and Seller shall use all reasonable efforts to cause all of the conditions set forth in Articles VII and VIII of this Agreement to be fulfilled. If any event should occur, either within or without the control of any party hereto, which would prevent fulfillment of the conditions placed upon the obligations of any party hereto to consummate the transactions contemplated by this Agreement, the parties hereto shall use their best efforts to cure the event as expeditiously as possible. 6.4 Confidentiality. Buyer and Seller shall each keep confidential all information they obtain with respect to any other party hereto in connection with this Agreement and the negotiations preceding this Agreement, and will use such information solely in connection with the transactions contemplated by this Agreement. If the transactions contemplated hereby are not consummated for any reason, each party hereto shall return to the party so providing, without retaining a copy thereof, any schedules, documents or other written information obtained from the party so providing such information in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the foregoing, no party shall be required to keep confidential or return any information which (i) is known or available through other lawful sources, (ii) is or becomes publicly known through no fault of the receiving party or its agents, (iii) is required to be disclosed pursuant to an order or request of a judicial or governmental authority (provided the disclosing party is given reasonable prior notice), or (iv) is developed by the receiving party independently of the disclosure by the disclosing party. 6.5 Cooperation. Buyer and Seller shall cooperate fully and with each other in taking any actions to obtain the required consent of any governmental instrumentality or any third party necessary or helpful to accomplish the transactions contemplated by this Agreement; provided, however, that no party shall be required to take any action which would have a material adverse effect upon it or any entity affiliated with it. 6.6 Consents to Assignment. To the extent that any Contract, Broadcast Agreement, Trade Agreement, Real Estate Contract or other contract identified in the Disclosure Schedule that is to be assigned under this Agreement is not capable of being sold, assigned, transferred, delivered or subleased without the waiver or consent of any third person withholding same (including a government or governmental unit), or if such sale, assignment, transfer, delivery or sublease or attempted sale, transfer, delivery or sublease would constitute a breach thereof or a violation of any law or regulation, this Agreement and any assignment executed pursuant hereto shall not constitute a sale, assignment, transfer, delivery or sublease or an attempted sale, assignment, transfer, delivery or sublease thereof. In those cases where consents, assignments, releases and/or waivers have not been obtained at or prior to the Closing Date to the transfer and assignment to Buyer of such contracts, Buyer may in its sole discretion elect to have this Agreement and any assignments executed pursuant hereto, to the extent permitted by law, constitute an equitable assignment by Seller to Buyer of all of Seller's rights, benefits, title and interest in and to such contracts, and where necessary or appropriate, Buyer shall be deemed to be Seller's agent for the purpose of completing, fulfilling and discharging all of Seller's rights and liabilities arising after the Closing Date under such contracts. Seller shall use its reasonable best efforts to provide Buyer with the benefits of such contracts (including, without limitation, permitting Buyer to enforce any rights of Seller arising under such contracts), and Buyer shall, to the extent Buyer is provided with the benefits of such contracts, assume, perform and in due course pay and discharge all debts, obligations and liabilities of Seller under such contracts. The provisions of this Section shall not be construed to limit Seller's obligations under Section 5.18 or Buyer's rights under Section 7.4. 6.7 Bulk Sales Laws. Seller shall be responsible for compliance with the provisions of the "bulk sales" or similar laws of any state applicable to this transaction. Seller agrees to indemnify Buyer and hold it harmless against any and all claims, losses, damages, liabilities, costs and expenses incurred by Buyer or any affiliate as a result of any failure to comply with any "bulk sales" or similar laws. 6.8 Employee Matters. Until the Closing Date, all Station's employees (other than those who are actually placed on Buyer's payroll pursuant to the Time Brokerage Agreement) remain the employees of the Seller and Seller shall have full authority and control over such employees and their actions, and Buyer shall not assume the status of an employer or a joint employer of, or incur or be subject to any liability or obligation of an employer with respect to, any such employees unless and until actually hired by Buyer. Seller shall comply with the provisions of the Worker Adjustment and Retraining and Notification Act and similar laws, if applicable, and, except as specifically provided in the Time Brokerage Agreement, shall be solely responsible for any and all liabilities, penalties, fines, or other sanctions that may be assessed or otherwise due under such laws on account of this transaction and the dismissal or termination of any Station employees by Seller. Buyer may, after Closing, employ those of Seller's employees as Buyer may elect on terms and conditions determined by Buyer in Buyer's sole discretion. Except as specifically provided in the Time Brokerage Agreement, Seller shall remain solely responsible for all severance pay, accrued vacation time and sick leave of those of Seller's employees who do not enter into Buyer's employ after Closing. ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER The performance of the obligations of the Buyer hereunder is subject, at the election of the Buyer, to the following conditions precedent: 7.1 Commission Approvals. Notwithstanding anything herein to the contrary, the consummation of this Agreement is conditioned upon the Commission having granted the Assignment Application without any conditions and such grant having become a Final Order. All required governmental filings shall have been made, and all requisite governmental approvals for the consummation of the transactions contemplated hereby shall have been granted and become Final Orders. The Licenses shall be in unconditional full force and effect, shall be valid for the balance of the current license term applicable generally to radio stations licensed to communities located in the State of New Jersey, and shall be unimpaired by any acts or omissions of Seller's employees or agents, or Seller, and neither Seller nor Buyer shall have received any notice that any governmental authority may institute any proceedings for the revocation, suspension or modification of the Licenses. 7.2 Performance. The Station Assets shall have been transferred to Buyer by Seller free and clear of all liens, encumbrances and claims, and all of the terms, conditions and covenants to be complied with or performed by Seller on or before the Closing Date shall have been duly complied with and performed, and Buyer shall have received from Seller a certificate or certificates to such effect, from a senior officer of Seller, in form and substance reasonably satisfactory to Buyer. 7.3 Representations and Warranties. Except for changes expressly implemented by or at the written request of the Buyer under the Time Brokerage Agreement, each of the representations and warranties of Seller to Buyer shall be true, complete and correct as of the Closing Date with the same force and effect as if then made, and Buyer shall have received from Seller a certificate or certificates, to such effect, from a senior officer of Seller in form and substance reasonably satisfactory to Buyer. 7.4 Consents. Seller shall have received and delivered to Buyer all consents of third parties (including landlords' consents to the assignments of the leases for the studio and tower sites) specified in Section 3.8 of the Disclosure Schedule, such that Buyer will, after the Closing Date, enjoy all of the rights and privileges of Seller under the Assumed Contracts subject only to the present obligations of Seller hereunder. 7.5 Opinions of Counsel. Seller shall have delivered to Buyer an opinion of Haley, Bader & Potts general counsel to Seller, dated the Closing Date, in the form attached hereto as Exhibit C. In addition, Seller shall have delivered to Buyer a written opinion of Haley, Bader & Potts, Seller's FCC counsel, dated the Closing Date, in the form attached hereto as Exhibit D. 7.6 Covenant Not to Compete. Seller shall have obtained and delivered to Buyer, an executed original of the Non-Compete Agreement. 7.7 Release of Indebtedness. Granite Equities, Inc. shall have released all liens against the Station Assets and all claims against Seller. 7.8 Environmental Audit. Buyer shall have received within thirty (30) days from the date hereof, at Buyer's expense, a "Phase One" environmental site assessment of the real property subject to the Real Property Contracts (the "Environmental Site Assessment"). The Environmental Site Assessment shall be conducted by a qualified environmental engineer or consulting firm in accordance with Part X of the Federal National Mortgage Association's Delegated Underwriting and Servicing Guide. The Environmental Site Assessment shall show no environmental condition on or affecting such real property that would (i) impair the use or value of such real property for the continued operation of the Station as operated by Seller on the Closing Date, (ii) subject Buyer to any liability for fines, penalties, or cleanup or response costs if Buyer consummates this Agreement, or (iii) cause a reasonable purchaser to perform further investigation or testing before proceeding with the transfer of the Real Estate Contracts. The Environmental Site Assessment shall be deemed satisfactory to Buyer and this condition satisfied, if Buyer fails to notify Seller of such environmental condition on or affecting the real property within ten (10) business days after having received such Environmental Site Assessment, or Seller remedies any environmental condition on or affecting such real property prior to the Closing Date. 7.9 Occupancy Certificates. At Closing, Seller shall deliver to Buyer true and complete copies of any certificates of occupancy, certificates of land use compliance, or equivalent instruments ("Occupancy Certificates") issued by the appropriate governmental authority, that are required to permit the present use of the real property subject to the Real Property Contracts by Seller prior to Closing and by Buyer after Closing. No proceedings to amend, cancel, or revoke any such Occupancy Certificates shall be pending or threatened as of the Closing Date. If no Occupancy Certificate is required to continue the present use of such real property after Closing, then Seller shall deliver to Buyer a written opinion of Seller's counsel, dated the Closing Date, to that effect, which opinion shall explain why no occupancy certificate is required and shall include the citation of any applicable statute or regulation. 7.10 Litigation. No action or proceeding shall have been instituted or threatened against Buyer, any of Buyer's affiliates or Seller before any court or governmental agency or commission or any board of arbitration seeking to restrain or prohibit, or to obtain substantial damages against Buyer or any of Buyer's affiliates in respect of this Agreement or the consummation of the transactions contemplated hereby. 7.11 Closing Certificate. Seller shall have delivered to Buyer a Certificate of Seller's Secretary certifying as to the due adoption by its Board of Directors and stockholders of resolutions authorizing the transactions contemplated by this Agreement. 7.12 Title Insurance. Buyer shall have obtained, at Buyer's expense, a written commitment to issue a lessee's policy of title insurance naming Buyer as the insured, written by a responsible title insurance company authorized to write title insurance with respect to New Jersey real estate, which policy shall guarantee Seller's title in connection with the Real Estate Contracts to be in the condition called for by this Agreement and shall show no rights of occupancy or use by third parties, no gaps in the chain of title, no intervening liens and no violations of any applicable zoning or other ordinance, statute, rule or regulation. 7.13 Amendment of Lease. The lease pertaining to the transmitter site in the State of New Jersey shall have been amended in the form of Exhibit E attached hereto, executed by Seller and the landlord and duly recorded (or a memorandum) with the recorder's office in the jurisdiction where the property is located prior to the Closing Date. 7.14 Escrow Deposit. Seller shall have instructed the Escrow Agent to deliver to Buyer the Escrow Deposit. 7.15 Satisfaction of Expenses. Seller shall have provided to Buyer evidence reasonably satisfactory to Buyer demonstrating the satisfaction of all expenses, liabilities and obligations of the Seller to persons and entities doing business with the Station. ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER The performance of the obligations of Seller hereunder is subject, at the election of Seller, to the following conditions precedent: 8.1 Performance. All of the terms, conditions and covenants to be complied with or performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects, and Seller shall have received from Buyer a certificate or certificates to such effect, in form and substance reasonably satisfactory to Seller. 8.2 Representations and Warranties. The representations and warranties of Buyer to Seller shall be true, complete and correct in all material respects as of the Closing Date with the same force and effect as if then made, and Seller shall have received from Buyer a certificate or certificates to such effect from a senior officer of Buyer, in form and substance reasonably satisfactory to Seller. 8.3 Government Approvals. All required governmental filings shall have been made and all requisite governmental approvals for the consummation of the transactions contem- plated hereby shall have been granted. 8.4 Purchase Price. Buyer shall have delivered to Seller the Purchase Price. 8.5 Closing Certificate. Buyer shall have delivered to Seller a Certificate of the Buyer's Secretary certifying as to the due adoption by the Buyer's Board of Directors of resolutions authorizing the transactions contemplated by this Agreement. ARTICLE IX INDEMNIFICATION 9.1 Indemnification by Seller. From and after the Closing Date, Seller agrees to and shall indemnify, defend and hold Buyer harmless, and shall reimburse Buyer for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto) resulting from or arising out of any liabilities of any kind or nature, absolute or contingent, relating to or arising from (i) any breach, misrepresentation, or violation of any of Seller's representations, warranties, covenants, or other obligations contained in this Agreement; (ii) all liabilities of Seller not assumed by Buyer; and (iii) any claims by third parties against Buyer attributable to Seller's operation of the Station prior to Closing. Notwithstanding anything else in this Agreement, Buyer shall have no other recourse to Seller, its shareholders, officers, directors or any other party with respect to indemnification claims hereunder except (i) Buyer shall have the right to assert a claim for Seller's assets after the Closing Date in any action, suit or proceeding to recover any indemnity hereunder; provided, however, that Buyer shall have no right to claim Seller's assets pursuant to the foregoing clause in the event the enforcement of such claim would prevent Seller from meeting any third-party obligation of Seller. 9.2 Indemnification by Buyer. From and after the Closing Date, Buyer agrees to and shall indemnify, defend and hold Seller harmless, and shall reimburse Seller for and against any and all actions, losses, expenses, damages, liabilities, taxes, penalties or assessments, judgments and costs (including reasonable legal expenses related thereto), resulting from or arising out of any liabilities of any kind or nature, absolute or contingent, relating to or arising from the business and operation of the Station (i) prior to the Closing Date and which have been assumed by Buyer under the Time Brokerage Agreement and (ii) subsequent to the Closing Date. ARTICLE X MISCELLANEOUS 10.1 Damage and Failure of Transmissions. (a) Risk of Loss. The risk of loss or damage to the Station Assets shall be borne by Seller at all times prior to Closing. In the event of material loss or damage, Seller shall promptly notify Buyer thereof and use its best efforts to repair, replace or restore the lost or damaged property to its former condition as soon as possible. All insurance proceeds shall be applied to or reserved for any replacement, restoration or repair. If the cost of repairing, replacing or restoring any lost or damaged property is Five Thousand Dollars ($5,000) or less, and Seller has not repaired, replaced or restored such property prior to the Closing Date, the Closing shall occur as scheduled and Seller shall pay to Buyer the amount necessary to restore the lost or damaged property to its former condition. If the cost to repair, replace, or restore the lost or damaged property exceeds Five Thousand Dollars ($5,000), and Seller has not repaired, replaced or restored such property prior to the Closing Date, Buyer may, at its option: (1) elect to consummate the Closing in which event Seller shall pay to Buyer the amount necessary to restore the lost or damaged property to its former condition or against such obligation shall assign to Buyer all of Seller's rights under any applicable insurance policies plus the amount of the deductible; or (2) elect to postpone the Closing, with the prior consent of the Commission, if necessary, for such reasonable period of time (not to exceed ninety (90) days) as is necessary for Seller to repair, replace or restore the lost or damaged property to its former condition. If, after the expiration of that extension period the lost or damaged property has not been fully repaired, replaced or restored, Buyer may terminate this Agreement, in which event the Escrow Deposit shall be returned to Buyer and the parties shall be released and discharged from any further obligation hereunder. (b) Failure of Broadcast Transmissions. Seller shall give prompt written notice to Buyer if any of the following (a "Specified Event") shall occur: (i) the transmission of the regular broadcast programming of the Station in the normal and usual manner is interrupted or discontinued and the Station is unable to broadcast pursuant to its auxiliary power for more than four (4) hours; or (ii) the Station is operated at less than its licensed antenna height above average terrain or at less than ninety percent (90%) of its licensed effective radiated power for more than four (4) hours. If, prior to Closing, the Station is not operated at its licensed operating parameters for more than twenty-four (24) hours (or, in the event of force majeure or utility failure affecting generally the market served by the Station, forty-eight (48) hours, whether or not consecutive, during any period of thirty (30) consecutive days, or if there are three (3) or more Specified Events each lasting more than four (4) consecutive hours, then Buyer may, at its options, terminate this Agreement. In the event of termination of this Agreement by Buyer pursuant to this paragraph, the Escrow Deposit shall be returned to Buyer and the parties shall be released and discharged from any further obligation hereunder. (c) Resolution of Disagreements. If the parties are unable to agree upon the extent of any loss or damage, the cost to repair, replace or restore any lost or damaged property, the adequacy of any repair, replacement, or restoration of any lost or damaged property, or any other matter arising under this Section, the disagreement shall be referred to a qualified consulting communications engineer mutually accepted to Seller and Buyer who is a member of the Association of Federal Communications Consulting Engineers, whose decision shall be final, and whose fees and expenses shall be allocated between and paid by Seller and Buyer, respectively, to the extent that such party does not prevail on the disputed matters decided by the engineer. 10.2 Assignment. (a) This Agreement shall not be assigned or conveyed by either party hereto to any other person or entity without the prior written consent of the other parties hereto; provided, however, that Buyer may assign this Agreement without Seller's prior consent to one or more corporations or other entities controlling, controlled by, or under common control with Buyer. Subject to the foregoing, this Agreement shall be binding and shall inure to the benefit of the parties hereto, their successors and assigns. Notwithstanding anything to the contrary set forth herein, Buyer may assign and transfer to any entity providing financing for the transactions contemplated by this Agreement (or any refinancing of such financing) as security for such financing all of the interest, rights and remedies of Buyer with respect to this Agreement and the Escrow Agreement, and Seller shall expressly consent to such assignment. Any such assignment will be made for collateral security purposes only and will not release or discharge Buyer from any obligations it may have pursuant to this Agreement. Notwithstanding anything to the contrary set forth herein, Buyer may (i) authorize and empower such financing sources to assert, either directly or on behalf of Buyer, any claims Buyer may have against Seller under this Agreement and (ii) make, constitute and appoint one agent bank in respect of such financing (and all officers, employees and agents designated by such agent) as the true and lawful attorney and agent-in-fact of Buyer for the purpose of enabling the financing sources to assert and collect any such claims. 10.3 Survival of Representations. Except for the representations and warranties of Seller contained in Sections 3.7, 3.9, 3.10 and the first sentence of Section 3.5, which shall survive the Closing permanently, the representations and warranties contained in this Agreement shall survive the Closing for a period of one year. 10.4 Brokerage. Seller and Buyer warrant and represent to one another that, there has been no broker or agent in any way involved in the transactions contemplated hereby and that no one is or will be entitled to any fee or other compensation in the nature of a brokerage fee or finder's fee as a result of the Closing hereunder. 10.5 Expenses of the Parties. It is expressly understood and agreed that all expenses of preparing this Agreement and of preparing and prosecuting the Assignment Application with the Commission, and all other expenses, whether or not the transactions contemplated hereby are consummated, shall be borne solely by the party who shall have incurred the same and the other party shall have no liability in respect thereto, except as otherwise provided herein. All costs of transferring the Station Assets in accordance with this Agreement, including recordation, transfer and documentary taxes and fees, and any excise, sales or use taxes, shall be borne by Seller. Any filing or grant fees imposed by any governmental authority the consent of which is required for the transactions contemplated hereby shall be borne equally by Seller and Buyer. 10.6 Entire Agreement. This Agreement, together with any related Schedules or Exhibits, contains all the terms agreed upon by the parties with respect to the subject matter herein, and supersedes all prior agreements and understandings among the parties and may not be changed or terminated orally. No attempted change, termination or waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced. 10.7 Headings. The headings set forth in this Agreement have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any manner, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement. Unless otherwise specified herein, the section references contained herein refer to sections of this Agreement. 10.8 Governing Law. This Agreement shall be construed and enforced in accordance with the internal laws of the State of New York. 10.9 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of such shall constitute one and the same instrument. 10.10 Notices. Any notices or other communications shall be in writing and shall be considered to have been duly given when deposited into first class, certified mail, postage prepaid, return receipt requested, delivered personally (which shall include delivery by Federal Express or other recognized overnight courier service that issues a receipt or other confirmation of delivery) or delivered via facsimile machine; If to Seller: Mr. Frank D. Osborn Osborn Communications Corp. 130 Mason Street Greenwich, CT 06830 Fax: (203) 629-1749 Phone: (203) 629-0905 With a copy which shall not constitute notice to: Ted Bartley AMRESCO 1845 Woodall Rodgers Freeway Dallas, TX 75201 Fax: (214) 953-8325 Phone: (214) 953-8323 and to: Patricia H. Lyon, Esq. Young, French, Young & Lyon One Market 3950 Spear Street Tower San Francisco, CA 94105 Fax: (415) 243-8200 Phone: (415) 597-7849 and to: Michael H. Bader, Esq. Haley Bader & Potts P.L.C. 4350 North Fairfax Drive, Suite 900 Arlington, VA 22203 Fax: (703) 841-2345 Phone: (703) 841-0606 If to Buyer: Stephen F. Gormley Equity Communications, L.P. c/o M/C Partners 75 State Street Suite 2500 Boston, MA 02109 Fax: (617) 345-7201 Phone: (617) 345-7210 With a copy which shall not constitute notice to: Stephen O. Meredith, Esq. Edwards & Angell 101 Federal Street Boston, MA 02110 Fax: (617) 439-4170 Phone: (617) 951-2233 Any party may at any time change the place of receiving notice by giving notice of such change to the other as provided herein. 10.11 Specific Performance. Seller acknowledges that the Station is of a special, unique and extraordinary character and that damages are inadequate to compensate Buyer for Seller's breach of this Agreement. Accordingly, in the event of a breach under this Agreement by Seller, including, without limitation, a breach of Seller's representations, warranties, covenants and agreements under this Agreement, Buyer may seek a decree of specific performance requiring Seller to fulfill its obligations under this Agreement, and Seller agrees to waive its defense that an adequate remedy at law exists. 10.12 Arbitration. Other than with respect to Sections 2.3(b) 9.1 and 10.1(c) hereof, any dispute arising out of or related to this Agreement that Seller and Buyer are unable to resolve by themselves shall be settled by arbitration in New York, NY, by a panel of three arbitrators. In such event, Seller and Buyer shall each designate one disinterested arbitrator, and the two arbitrators so designated shall select the third arbitrator. The persons selected as arbitrators need not be professional arbitrators, but shall be persons with no less than ten year's experience relating to the acquisition of radio stations and persons such as lawyers, accountants, brokers, and bankers having such experience shall be acceptable. Before undertaking to resolve the dispute, each arbitrator shall be duly sworn faithfully and fairly to hear and examine the matters in controversy and to make a just award according to the best of his or her understanding. The arbitration hearing shall be conducted in accordance with the rules of the American Arbitration Association. The written decision of a majority of the arbitrators shall be final and binding on Seller and Buyer. The costs and expenses of the arbitration proceeding shall be borne equally by Seller and Buyer, provided, however, that each party shall bear the expense of its own counsel, experts, witnesses, and preparation of proofs. Judgment on the award, if it is not paid within thirty (30) days, may be entered in any court having jurisdiction over the matter. No action at law or suit in equity based upon any claim arising out of or related to this Agreement shall be instituted in any court by Seller or Buyer against the other except (i) an action to compel arbitration pursuant to this Section, (ii) an action to enforce the award of the arbitration panel rendered in accordance with this Section, or (iii) a suit for specific performance pursuant to Section 10.10. 10.13 Consent to Jurisdiction. Seller and Buyer hereby submit to the nonexclusive jurisdiction of the courts of the State of New York and the federal courts of the United States of America located in such state solely in respect of the interpretation and enforcement of the provisions hereof and of the documents referred to herein, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that they are not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that this Agreement or any of such documents may not be enforced in or by said courts or that the Station property is exempt or immune from execution, that the suit, action or proceeding is brought in an inconvenient forum, or that the venue of the suit, action or proceeding is improper. 10.14 Further Assurances. Seller and Buyer agree to execute all such documents and take all such actions after the Closing Date as any other party shall reasonably request in connection with carrying out and effectuating the intent and purpose hereof and all transactions and things contemplated by this Agreement, including, without limitation, the execution and delivery of any and all confirmatory and other documents in addition to those to be delivered on the Closing Date and all actions which may reasonably be necessary or desirable to complete the transactions contemplated hereby. 10.15 Amendments. At any time prior to the Closing, this Agreement may be amended with the written consent of the Seller and the Buyer. IN WITNESS WHEREOF, the parties hereto have executed or have caused this Agreement to be executed by a duly authorized officer on the day and year first above written. SELLER ATLANTIC CITY BROADCASTING CORP. By Name: Frank D. Osborn Title: President BUYER EQUITY COMMUNICATIONS, L.P. By: Equity Communications, Inc., its General Partner By Name: Stephen F. Gormley Title: Chairman The undersigned agree to execute and deliver the Non-Compete Agreement at the Closing. OSBORN COMMUNICATIONS CORP. By_____________________________________ Name: Frank D. Osborn Title: President ________________________________________ Frank D. Osborn Consent of Granite Equities, Inc. The undersigned, being the holder of all indebtedness of Seller under a Credit Agreement between Seller and National Westminster Bank USA dated as of March 30, 1994, hereby (i) consents to and approves Seller's execution of the foregoing Agreement; (ii) concurrently with the wiring of funds pursuant to Section 1.4 of this Agreement, agrees to release all liens on the Station Assets securing the aforementioned indebtedness and all claims against Seller on or before the Closing Date; and (iii) agrees not to assign or transfer any interest in any portion of the aforementioned indebtedness unless the transferee agrees in writing to be bound by the provisions of this Consent. GRANITE EQUITIES, INC. By AMRESCO Institutional, Inc., as Servicer and as duly authorized agent for Granite Equities, Inc. By:_______________________________________ Name: Title: EX-21 9 SUBSIDIARIES OF THE COMPANY OSBORN COMMUNICATIONS CORPORATION SUBSIDIARY LISTING 12/31/95 State of Name of Subsidiary Incorporation Parent Company OCC, Inc. Delaware Osborn Communications Corporation SNG Holdings, Inc. Delaware Osborn Communications Corporation Southeast Radio Holding Corp. Delaware Osborn Communications Corporation Osborn Entertainment Enterprises Corporation Delaware Osborn Communications Corporation Atlantic City Broadcasting Corp. Delaware Osborn Communications Corporation Breadbasket Broadcasting Corporation Delaware Osborn Communications Corporation Orange Communications, Inc. Delaware OCC, Inc. Yellow Brick Radio Corporation Delaware OCC, Inc. RKZ Television, Inc. Delaware OCC, Inc. Mountain Radio Corporation Delaware OCC, Inc. Ladner Communications Holding Corp. Delaware OCC, Inc. Jamboree in the Hills, Inc. Delaware Osborn Entertainment Enterprises Corp. Music Hall Club, Inc. Delaware Osborn Entertainment Enterprises Corp. Beatrice Broadcasting Corp. Delaware Ladner Communications Holding Corp. Waite Broadcasting Corp. Delaware Ladner Communications Holding Corp. Osborn Sound & Communications Corp. Delaware Ladner Communications Holding Corp. Currey Broadcasting Corporation Delaware Ladner Communications Holding Corp. Short Broadcasting Corporation Delaware SNG Holdings, Inc. Nelson Broadcasting Corporation Delaware SNG Holdings, Inc. Great American East, Inc. North Carolina SNG Holdings, Inc. Nelson Tower Corporation Delaware SNG Holdings, Inc. Asheville Broadcasting Corp. Delaware Southeast Radio Holding Corp. Daytona Beach Broadcasting Corp. Delaware Southeast Radio Holding Corp. Corkscrew Broadcasting Corp. Delaware Southeast Radio Holding Corp. Rainbow Broadcasting Corporation Delaware Southeast Radio Holding Corp.
EX-27 10 EXHIBIT 27 (FDS) FILED WITH FORM 10-K
5 12-MOS DEC-31-1995 DEC-31-1995 12,994,779 0 6,277,719 518,157 889,942 21,169,591 33,982,091 18,624,021 77,634,093 8,946,427 44,482,000 0 0 52,764 21,444,275 77,634,093 39,100,496 39,100,496 0 36,885,438 0 0 5,212,999 7,399,731 775,982 6,623,749 0 (3,921,061) 0 2,702,688 0.50 0.50 EX-99 11 VALUATION AND QUALIFYING ACCOUNTS OSBORN COMMUNICATIONS CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Additions Deductions --------------------- ------------ Balance at Operating Accounts Balance at beginning companies Charged written-off, end of of period acquired to income net period ---------- --------- --------- ----------- ---------- Deductions from accounts receivable: Year ended December 31, 1995 $370,317 - $489,097 (341,257) $518,157 Year ended December 31, 1994 276,153 - 475,082 (380,918) 370,317 Year ended December 31, 1993 271,818 - 447,905 (443,570) 276,153
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