Exhibit 10.05.05 ORIGINAL LEASE AGREEMENT --------------- This Agreement ("Agreement") is made as of the first day of February, 1997, by and between EDWARD G. ATSINGER III and STUART W. EPPERSON (collectively referred to herein as "Lessor") and Common Ground Broadcasting, Inc. ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property, more particularly described as set forth in Exhibit "A", which is attached hereto and made a part hereof (the "Real Property"); and, WHEREAS, Lessee desires to use said Real Property in operating its radio station WHK(AM), Cleveland, Ohio; and, WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its Improvements and other related broadcasting equipment (together comprising the "Installations"). Lessee is fully familiar with the physical condition of the Land and has received the same in good order and condition, and agrees that the Land complies in all respects with all requirements of this Agreement. Lessee shall use the Land exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on February 1, 1997 (the "Commencement Date"), and shall expire on January 31, 1998 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date Lessee shall pay a base rent of $33,600 per annum, in equal monthly installments of $2,800 (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) anniversary of the Commencement Date and each subsequent anniversary of the Commencement Date this Agreement remains in effect. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the year in which the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners and Clerical Workers, Los Angeles area [Base Year 1982- 84=100] ("CPI") as measured in February and published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for February of the year such Adjustment Date falls and the denominator of which shall be the CPI for February of the year in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the amount payable by Lessee hereunder shall not in any event be less than the rental paid during the immediately preceding one (1) year period and the annual adjustment, as set forth in this Section 4.3, shall not exceed ----------- five percent (5%) of the rental paid in the preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index number in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than Three Million Dollars ($3,000,000.00) for injuries to one person, Five Million Dollars ($5,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than Five Million Dollars ($5,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending moneys in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that the Improvements (including the radio tower(s) located on the Real Property) are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any mortgages and security agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such mortgages and security agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 12 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 13 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 14 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 15 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of Texas. SECTION 16 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE Common Ground Broadcasting, Inc. /s/ Edward G. Atsinger, III /s/ Eric H. Halvorson - ----------------------------- --------------------------------- EDWARD G. ATSINGER, III ERIC H. HALVORSON Trustee Vice-President /s/ Stuart W. Epperson - ----------------------------- STUART W. EPPERSON Trustee EX-10.05.06 6 ANTENNA/TOWER LEASE Exhibit 10.05.06 LEASE ----- THIS LEASE is made and entered into as of the 1st day of January, 1989, by and between SALEM BROADCASTING COMPANY, a California general partnership, hereinafter referred to as "Landlord" or "Lessor", and GOLDEN GATE BROADCASTING COMPANY, INC., a California corporation, hereinafter referred to as "Tenant" or "Lessee". In consideration of the following covenants, agreements, conditions and representations, the parties agree as follows: 1. Property Leased. Landlord hereby leases to Tenant and Tenant hereby --------------- rents from Landlord on the terms, covenants and conditions hereinafter set forth, those certain premises and appurtenances located in Hayward, California and described on Exhibit A attached hereto (the "premises" or the "leased premises"). 2. Term; Option to Extend. The term of this Lease is five (5) years, ---------------------- commencing on the date hereof and terminating five (5) years from that date. Tenant shall have the option, if Tenant is not at the time in default under this Lease, to extend the term of this Lease for up to two (2) successive periods of five (5) years each, and, except as set forth in Paragraph 4, below, on the same terms, covenants and conditions herein contained. Each option to extend the term shall be exercised only by Tenant's delivery to Landlord by United States mail on or before 90 days prior to the commencement of the renewal term of written notice of Tenant's election to extend as provided herein. 3. Use. --- (a) The premises shall be used to operate a radio station, including, but not limited to, operation of a directional antenna system including a transmitter for use in connection with the operation of a radio station, and for such uses as are incidental or customarily related thereto. The premises shall not be used for any other purpose without Tenant first obtaining the written consent of Landlord thereto. (b) Landlord agrees that in the event an inspection by any municipal or governmental authority results in a citation or order being issued requiring the correction of any condition existing on the leased premises at the time they were made available to Tenant, Landlord shall at its expense remedy said condition within a reasonable period of time; provided that Landlord shall have the right to dispute any such order and shall be required to correct said condition only after it has exhausted its rights to appeal or review of said order or citation. Tenant agrees that it will comply with all laws, ordinances, orders, rules, regulations or requirements of all governmental authorities which are applicable to its use and/or occupancy of the leased premises. Notwithstanding the foregoing, either Landlord or Tenant shall have the right to contest by appropriate proceedings the validity and/or applicability of any such laws, ordinances, orders, rules, regulations and/or requirements. 4. Rent. Tenant shall pay rent to Landlord during the term of this ---- Lease as follows; 4.1. During the first five (5) years of this Lease, the amount of Eleven Thousand Dollars ($11,000.00) per month. 4.2. During the first (5) year extended term of this Lease, a monthly amount equal to one (1%) of the appraised value of the leased premises as of the commencement of the extended term as determined by an appraiser mutually selected by Landlord and Tenant not later than fifteen (15) days after Tenant's delivery of the election to extend the term of the Lease under Section 2, above. The cost of the appraisal shall be paid by Tenant. 4.3 During the second five (5) year extended term of this Lease, a monthly amount equal to one (1%) of the appraised value of the leased premises as of the commencement of the extended term as determined by an appraiser mutually selected by Landlord and Tenant not later than fifteen (15) days after Tenant's delivery of the election to extend the term of the Lease under Section 2, above. The cost of the appraisal shall be paid by Tenant. 4.4 Rent shall be payable in lawful money of the United States to Landlord at 2310 Ponderosa Drive, Suite 29, Camarillo, California 93010 on the first day of each month. 5. Taxes and Assessments. Tenant shall pay all real property taxes, --------------------- governmental special assessments and land benefit charges levied against the real property leased to Tenant herein and which are applicable to the period beginning with the commencement of this Lease. Tenant shall pay before delinquency all general and special taxes, licenses, fees, charges or taxes imposed by any governmental entity by reason of the Lease, Tenant's occupation or use of the leased premises or Tenant's activities thereon. In addition, Tenant shall pay all taxes levied against the personal property of Tenant or improvements installed by Tenant becoming a part of the real property of every 2 description, maintained on and used by Tenant in connection with the leased premises. All of such charges, costs, and expenses shall constitute additional rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay rent. 6. Improvements. The term "improvements" as used herein means any ------------ improvement, addition or change to the leased premises, any alteration of the leased premises, or anything placed, installed or constructed in, on or upon the leased premises, whether or not characterized by law as a fixture, but does not include the Tenant's personal property. Tenant shall not make, or permit to be made any structural improvements or alterations, in, on, or to the leased premises or any part thereof without the prior written consent of Landlord, which consent shall not be unreasonably withheld; provided that the improvements shall not lessen the value of the leased premises. Any improvements made in, on, or to the leased premises shall be at the sole expense of Tenant and any additions to or alterations of said premises shall become at once a part of the realty and belong to Landlord. Tenant shall keep the premises and the property in which they are situated free from any liens arising out of any work performed on the leased premises, by or on behalf of Tenant, for material furnished to the leased premises, or for obligations incurred by Tenant. In making any alteration that Tenant has a right to make, Tenant shall not commence such improvement or alteration until three (3) days after Landlord has received notice from Tenant stating the date of commencement of the improvement or alteration so that Landlord can post and record any appropriate notice of nonresponsibility. All alterations shall be completed with due diligence. Subject to the provisions of Paragraph 16, below, if any installation, alteration or improvement is required by law by any governmental authority, Tenant shall at Tenant's cost and expense promptly make such installation, alteration or improvement. Provided Tenant is not in default or in breach of this Lease beyond the expiration of any applicable grace periods, Tenant may during the term of this Lease, and shall immediately upon the expiration of this Lease, remove from the leased premises all of Tenant's personal property and trade fixtures and such other property which Landlord may during the term of this Lease agree or acknowledge in writing are improvements belonging to Tenant. 3 Tenant may from time to time during the term of this Lease install trade fixtures of various kinds and descriptions for the purpose of carrying on, and used in connection with, any broadcasting business conducted on the leased premises, and upon any of such trade fixtures being so installed or placed on the leased premises by Tenant or any other person, the same shall remain at all times the property of Tenant or such other person and, at any time during the term of this Lease, and at the termination thereof, Tenant or such other person shall be entitled to remove any and all of such trade fixtures that shall belong to the person so removing the same, and Landlord shall have the right to require the Tenant at the expiration of the term to remove any or all of such trade fixtures; provided that all damage to the leased premises caused by such removal shall be fully repaired by Tenant at Tenant's sole expense. 7. Maintenance and Upkeep. By entry hereunder, Tenant accepts the ---------------------- premises as being in good and sanitary order, condition and repair. Tenant shall at Tenant's own cost and expense keep the entire property in a clean, neat, sanitary and sightly condition at all times and free from dirt, debris, accumulation of waste and fire hazards. Tenant shall upon the expiration or sooner termination of this Lease surrender to Landlord the leased premises and appurtenances thereto in a good, sanitary order, condition and repair, ordinary wear and tear excepted. 8. Repairs. Tenant shall at its sole cost and expense maintain the ------- leased premises in good condition and shall make all necessary repairs thereto. In the event that Landlord determines that a repair or replacement is needed and Tenant after notice does not make said repair or replacement within a reasonable period of time, Landlord shall notify Tenant that it considers said repair or replacement necessary and it is contemplating making said repair. Landlord may then, at its option, make such repair or replacement and charge the cost incurred to Tenant as additional rental. It is agreed that nothing in the foregoing shall relieve Tenant from full performance of its obligations and that the limitation referred to above is in addition to any other remedy available to Landlord. 9. Indemnification; Liability Insurance. Tenant shall save and hold ------------------------------------ harmless, indemnify and defend Landlord from any damage or liability arising out of or relating to any death, bodily injury, or property damage resulting from, or in connection with, the acts of, or the maintenance, use, or occupation of the leased premises by Tenant, Tenant's agents, servants, employees, contractors, or patrons. Tenant shall, at 4 Tenant's sole cost and expense, carry public liability insurance and property damage insurance in amounts reasonably required by Landlord. All such insurance shall be carried with insurance companies satisfactory to Landlord. Said insurance shall name Landlord as a co-insured or an additional insured. Tenant shall furnish, or cause to be furnished to Landlord, upon request, certificates of insurance from the insurance carrier stating that such insurance is in full force and effect, that the premiums thereon have been paid and that the insurance carrier will give Landlord at least ten (10) days prior written notice of any termination, cancellation, or modification of such insurance. 10. Fire Insurance. Through the term of this Lease, Tenant shall -------------- maintain at its sole cost and expense, fire and extended coverage insurance on the premises and the appurtenances being leased by Tenant, insuring the premises for not less than ninety percent (90%) of its replacement value. Landlord and Tenant shall be named as loss payees as their interest shall appear and, on Landlord's demand, Tenant shall also include the holder of any mortgage or deed of trust encumbering the fee as a loss payee to the extent of that mortgagee's interest. Tenant shall furnish, or cause to be furnished to Landlord, upon request, certificates of insurance from the insurance carrier stating that such insurance is in full force and effect, that the premiums have been paid and that the insurance carrier will give Landlord at least ten (10) days prior written notice of any termination, cancellation or modification of such insurance. Tenant may provide a certificate of insurance under its blanket insurance policies in satisfaction of this requirement. If Tenant fails or refuses to procure or maintain said fire or liability insurance as required by this Lease or fails or refuses to furnish Landlord with the required proof that the insurance has been procured and is in force and paid for, Landlord shall have the right, at Landlord's option upon five (5) days written notice, to procure and maintain such insurance. The premium paid by Landlord shall be treated as additional rent due and payable immediately. Landlord shall give prompt notice of the payment of such premiums, stating the amounts paid and the insurer or insurers, and interest shall run from the date of the notice. 11. Assignment and Subletting. Tenant shall not have the right to assign ------------------------- this Lease, or any part thereof, to any third person(s), firm(s) or corporation(s) without the prior written consent of Landlord. 5 12. Utilities. Tenant shall pay for all utilities furnished to or --------- delivered at the leased premises, including connection and installation charges and shall make payments directly to the utility company furnishing same. Tenant shall protect Landlord and save Landlord harmless from any liens arising out of the nonpayment of its utility charges. 13. Entry by Owner Inspection and Notices. Except as expressly provided ------------------------------------- to the contrary herein, Tenant shall permit Landlord and his agents to enter into and upon said premises upon first giving reasonable notice, reasonable notice being twenty-four (24) hours, for the purpose of inspecting the same or for the purpose of making repairs, alterations, or additions to any portion of said building to be made by Landlord upon Tenant's breach of its obligations to maintain and repair the premises, including the erection and maintenance of such scaffolding, canopies, fences and props as may be required, or for the purpose of posting notices of non-responsibility for alterations, additions, or repairs, or for the purpose of placing upon the property in which the said premises are located any usual or ordinary "for sale" signs, or to show during the last twelve (12) months of the term the premises to prospective future tenants, without any rebate of rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the premises occasioned thereby. Prior notice is not required in the event of an emergency situation. 14. Waivers of Damages. Tenant as a material part of the consideration ------------------ to be rendered to Landlord, hereby waives all claims against Landlord, except for Landlord's, its employees', contractors', invitees', agents' and servants' negligence or willful misconduct or breach of this Lease. 15. Destruction of Premises. In the event of a total or partial ----------------------- destruction of the leased premises during the term of this Lease, Tenant shall forthwith repair the same upon the receipt of insurance proceeds, provided such repairs can be made within one hundred twenty (120) days under the applicable laws and regulations. Landlord will cooperate with Tenant in such manner as is necessary in order that the insurance proceeds payable under the insurance obtained under Paragraph 10 are paid to Tenant as promptly as possible. Any such destruction shall not annul or void this Lease; however, rent to be paid by Tenant hereunder shall be equitably adjusted according to the amount and value of the undamaged premises remaining. If such repairs cannot be made within one hundred twenty (120) days, this Lease may be terminated at the option of Tenant. If the leased premises are not rebuilt as provided herein, the insurance 6 proceeds obtained under Paragraph 10 shall belong to Landlord, except that Tenant shall be entitled to that portion of the award, if any, attributable to the destruction of Tenant's trade fixtures and personal property which Tenant had the right to remove upon the termination of this Lease. 16. Remedies Upon Default. --------------------- (a) Landlord's Remedies. Except as otherwise provided herein, ------------------- should Tenant default in the performance of any covenant or provision herein with reference to the payment of rent or other payment of money, and such default continues for five (5) days after receipt by Tenant of written notice from Landlord of such default, or should Tenant default in the performance of any other covenant or provision herein, other than the payment of money, and such default, if curable, is not cured within thirty (30) days after service upon Tenant of a written notice thereof from Landlord, or if not curable within thirty (30) days, Tenant fails to commence a cure within thirty (30) days after service upon Tenant of a written notice thereof from Landlord and thereafter diligently pursues such cure to completion, Landlord may terminate Tenant's right of possession to the leased premises and may recover from Tenant all of the damages to which Landlord is entitled under the laws of the State of California. None of Landlord's rights herein specified in the event of a default by Tenant shall prejudice any other legal remedies available to Landlord other than those herein enumerated. (b) No Waiver. Efforts by Landlord to mitigate the damages caused --------- by Tenant's breach of this Lease shall not waive Landlord's right to recover damages under this paragraph. For the purpose of subparagraph (a) above, the following shall not constitute a termination of Tenant's right of possession: (1) Acts of maintenance or preservation or efforts to relet the property; and (2) Appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease. (c) Reentry. Upon a default of Tenant not cured within the time ------- specified in subparagraph (a), or if Tenant abandons the premises, Landlord shall have the right to reenter the leased premises and take possession thereof with or without terminating the Lease upon giving the notice of reentry as required by law. Upon such reentry, Landlord may (but is not 7 obligated to do so) relet the leased premises for the benefit of the Landlord and Tenant on such terms and conditions and at such rental as may then be reasonably available to Landlord. Such reletting shall not relieve Tenant from any of Tenant's obligations hereunder unless the Lease is terminated by Landlord by a written notice of termination served on Tenant. 17. Waste; Nuisance. Tenant shall not commit, or suffer to be committed, --------------- any waste upon the premises, nor cause, maintain or permit any nuisance in, on or about the premises. 18. Compliance with Law. ------------------- (a) Tenant shall, at Tenant's sole cost and expense, comply with all of the requirements of all Municipal, State and Federal authorities now in force, or which may hereafter be in force, pertaining to the said premises, and shall faithfully observe in the use of the premises all Municipal ordinances and State and Federal statutes now in force or which may hereafter be in force. The judgment of any court of competent jurisdiction, after appeals have been taken or waived, or the admission of Tenant in any action or proceeding against Tenant, whether Landlord is a party thereto or not, that Tenant has violated any such ordinance or statute in the use of the premises shall be conclusive of that fact as between Tenant and Landlord. (b) Subject to other provisions of this Lease, Tenant, upon prior notice to Landlord, shall be entitled to contest or have reviewed in good faith in the name of Landlord or Tenant, but at the expense of Tenant (except as otherwise provided in this Lease) by appropriate proceedings diligently conducted, the amount, validity or applicability, as the case may be, of any: (i) Law, ordinance, order, rule, regulation or requirement of any governmental authority applicable to the leased premises or to the use thereof or any such proposed law, ordinance, order, rule, regulation or requirement; (ii) Any tax or any proposed tax or other charge or amount levied or assessed against the leased premises by any governmental authority which under the terms of this Lease is payable by the Tenant; 8 (iii) Lien or encumbrance filed or asserted against the leased premises or any part thereof arising out of any claim asserted against the Tenant which might be or become a lien or encumbrance upon the leased premises or any part thereof, or (iv) Other expense or charge, which, during the term of this Lease, shall be levied, assessed, imposed, demanded or threatened to be assessed, demanded or imposed by any governmental authority or by any insurance carrier upon or with respect to or alleged by any person to have been incurred in connection with Tenant's possession, occupation, operation, alteration, maintenance, repair or use of the leased premises or the making of any additions thereto. The period of any such permitted contest shall be excluded in computing the period during which a default shall be deemed to exist, if such default would not have occurred except by such contest. If any mechanic's, laborer's or materialman's lien shall at any time be filed against the leased premises as a result of either Landlord's or Tenant's occupancy thereof, or which arises out of any claim asserted against the Landlord or Tenant, the party against who a claim exists giving rise to such lien shall, within thirty (30) days after notice of the filing thereof, cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction, or otherwise. If either party shall fail to cause such lien to be discharged during the period aforesaid, then, in addition to any other right or remedy, the other party may, but shall not be obligated to, discharge the same by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings. Any amount paid by Tenant and all costs and expenses incurred by Tenant in connection with any such claim shall be credited upon installments of rent payable by Tenant to Landlord hereunder. Interest at the rate of ten percent (10%) per annum from the making of any such payment or incurring of any such costs or expenses shall be added to such amount to be credited to Tenant by Landlord. Any amount paid by Landlord and in connection with any such mechanic's, laborer's and materialman's lien or arising out of a claim asserted against Tenant incurred by Landlord in connection therewith, together with interest thereon at the rate of ten percent (10%) per annum from the respective dates of Landlord's making of the payment or incurring of such costs and expenses shall constitute additional rent payable as additional rent by Tenant to Landlord on demand. 9 19. Attorneys' Fees. If either party employs an attorney or attorneys to --------------- determine or enforce the provisions hereof, the prevailing party (whether by negotiation, settlement or suit) shall be paid his reasonable attorneys' fees and expenses by the non-prevailing party. 20. Time. Time is of the essence of this Lease. ---- 21. Condemnation. If the leased premises, or any part thereof, are taken ------------ by condemnation, or incident to the exercise of the power of eminent domain, (hereinafter referred to as "condemnation") the following shall apply: (a) If the entire leased premises are taken or acquired by condemnation this Lease shall terminate. Such termination shall take effect as of the date taking becomes effective by passage of title to the leased premises to the condemning authority pursuant to court order, or by the physical taking of possession of the leased premises by the condemning authority, whichever is earlier. If only a portion of the leased premises is taken or acquired by or incident to condemnation and a part thereof remains which in Tenant's opinion can be used for the purpose specified in Paragraph 3 of this Lease without compromising Tenant's activity or usability of the premises, this Lease shall, except for the part actually taken, remain in full force and effect. (b) If only a portion of the leased premises is taken by condemnation and part thereof remains which can be used for the purposes specified in Paragraph 3 of this Lease, rent payable under this Lease shall be equitably adjusted according to the amount and value of the leased premises remaining for Tenant's use. Such adjustment in rent shall take effect on the date title to the condemned portion of the leased premises passes to the condemning authority pursuant to court order or on the date the condemning authority takes physical possession of the condemned leased property, whichever is earlier. (c) All compensation paid for the land and improvements taken, including severance damage, if any, shall belong to Landlord except that Tenant shall be entitled to any relocation award specifically for Tenant's benefit and such portion of the award attributable to Tenant's trade fixtures and personalty, if any. 10 (d) Landlord, under no circumstances, shall be or become liable for or on account of any damage to, loss of, or interference with Tenant's business occasioned by any condemnation or threat thereof. 22. Bankruptcy or Insolvency. It shall be a breach of this Lease and ------------------------ Landlord, at its option, upon giving written notice of termination to Tenant, may terminate this Lease for any of the following events: (a) Assignment of the Lease by operation of law; (b) The appointment of a receiver to take possession of all or substantially all of the assets of Tenant and the receiver is not discharged within thirty (30) days after his appointment. (c) A general assignment for benefit of creditors by Tenant; (d) The filing of a voluntary petition or arrangement in bankruptcy by Tenant; (e) The filing of an involuntary petition or arrangement in bankruptcy against Tenant and the same is not dismissed within sixty (60) days from the date of filing; and (f) Any other action taken or suffered by Tenant because of Tenant's insolvency. 23. Condition of property Upon Surrender. Upon the expiration of the term ------------------------------------ of this Lease, or upon its sooner termination, for any reason, Tenant shall make any restorations required pursuant to Paragraph 6, shall peacefully vacate the leased premises and deliver the same and all improvements (except for those which the Tenant has the right to remove) in the condition required by paragraphs 6, 7 and 8, and shall surrender to Landlord all keys and other items of similar nature pertaining to the leased premises. 24. Waiver of Subrogation. Landlord and Tenant each hereby waives all --------------------- rights of recovery, claim, action, or cause of action for any property, loss or damage of the leased premises, leasehold improvements, or personal property of either party by reason of fire, the elements, or any other cause(s) which is insured or would have been insured under the terms of the 11 insurance policies required hereunder. This paragraph shall apply so long as the insurance required under this Lease is no invalidated by this paragraph. Landlord and Tenant shall obtain such insurance which is not invalidated whenever possible. 25. Covenant of Quiet Enjoyment. Landlord covenants and agrees that --------------------------- Tenant, upon paying the rents reserved herein and observing and keeping the covenants, agreements and stipulations of this Lease on its part to be observed and kept, shall lawfully, peaceably and quietly hold, occupy and enjoy the leased premises during the term of this Lease and any extension thereof, without hindrance, eviction or molestation by Landlord or any person or persons claiming under Landlord or claiming by a title superior to that of Landlord. 26. Notices. All notices under this Lease shall be given by either ------- personal service or registered or certified mail, return receipt requested. Notices given by mail shall be addressed as follows: (a) Notice to be served upon Landlord shall be sent to Landlord addressed to: Salem Broadcasting Company 2310 Ponderosa Drive, Suite 29 Camarillo, California 93010 (b) Notice to be served upon tenant shall be sent to Tenant addressed to: Golden Gate Broadcasting Company, Inc. 2310 Ponderosa Drive, Suite 29 Camarillo, California 93010 All notices by mail shall be deemed served on receipt. Either party may change his address for notice purposes by giving notice of such changes as provided above. 27. Waiver. A waiver by a party hereto of any default by the other party ------ hereto in the performance of any of the covenants, terms or condition of this Lease shall not constitute or be deemed a waiver of any subsequent or other default. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. The rights and remedies of a party 12 under this Lease shall be cumulative and in addition to any rights given to it by law. The exercise of any right or remedy shall not impair a party's right to any other remedy. 28. Parties Bound and Benefitted. The covenants and conditions herein ---------------------------- contained shall (subject to the provision as to assignment) apply to and bind the heirs, executors, administrators, assigns and successors in interest of all of the parties hereto. 29. Governing Law. This Lease shall be governed by and subject to the ------------- Federal Communications Act, the rules and regulations of the FCC, and other federal laws as applicable; and the laws of the State of California, as to matters of local law and interpretation. 30. Amendments, Changes, or Additions to Statute. Whenever reference is -------------------------------------------- made in this Lease to any provision of law, such reference applies to all amendments, changes and additions now or hereinafter made to such law. 31. Captions. The captions of this Lease are not a portion of the -------- substantive terms hereof. 32. Miscellaneous. ------------- 32.1 This Lease contains the entire agreement between the parties respecting the Lease of the premises and all matters covered or mentioned herein. This Lease may not be altered, changed or amended except by an instrument in writing signed by both parties hereto. 32.2 The illegality, invalidity or unenforceability of any provision of this Lease shall in no way impair or invalidate any other provision of this Lease, and such remaining provisions shall remain in full force and effect. 32.3 As used in this Lease, the masculine, feminine or neuter gender, and the singular or plural number, shall each be deemed to include the other whenever the context so indicates. If there is more than one Tenant, the obligations hereunder imposed upon Tenant shall be joint and several. The paragraph headings of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof. 32.4 All exhibits attached to this Lease are hereby incorporated by this reference and made a part hereof. 13 IN WITNESS WHEREOF, the parties hereto have executed this Lease as to the date and year first above written. LANDLORD: By: /s/ Edward G. Atsinger III ----------------------------------------- Edward G. Atsinger III General Partner TENANT: GOLDEN GATE BROADCASTING COMPANY, INC. By: /s/ Eric H. Halvorson ------------------------------------------- Eric H. Halvorson Vice President 14 EXHIBIT A Transmitter Site DESCRIPTION: REAL PROPERTY IN THE CITY OF HAYWARD, COUNTY OF ALAMEDA, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTHERN LINE OF THE 67.85 ACRE PARCEL OF LAND DESCRIBED IN THE DEED FROM JOSE T. BAPTISTA TO M. B. BETTENCOURT AND TONY A. BETTENCOURT, DATED JANUARY 15, 1924, RECORDED JANUARY 16, 1924, IN BOOK 591 OF OFFICIAL RECORDS OF ALAMEDA COUNTY, PAGE 355, SERIES NO. T/88764, SAID LINE BEING ALSO THE SOUTHERN LINE OF THE PARCEL OF LAND DESIGNATED "BETTENCOURT" ON THE "RECORD OF SURVEY, WILLIAM JOHNSON PROPERTY", ETC., FILED AUGUST 14, 1952, IN BOOK 3 OF RECORD OF SURVEYS, PAGE 32, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY, DISTANT THEREON SOUTH 88(degrees) 31' 23" WEST 2969.87 FEET FROM THE WESTERN LINE OF CLAWITER ROAD, OR COUNTY ROAD NO. 1649, AS THE SAME EXISTED 50 FEET WIDE, PRIOR TO THE WIDENING THEREOF, ON APRIL 5, 1960; RUNNING THENCE NORTH 1(degree) 00' 06" WEST 723.21 FEET TO THE SOUTHERN LINE OF THE 65.85 ACRE PARCEL OF LAND, DESCRIBED IN THE DEED FROM JOHN JOHNSON TO AUGUST LEWIS JOHNSON, DATED DECEMBER 4, 1896, RECORDED AUGUST 13, 1897, IN BOOK 620 OF DEEDS, PAGE 117, ALAMEDA COUNTY RECORDS; THENCE ALONG THE LAST NAMED LINE, SOUTH 88(degrees) 59' 54" WEST 675 FEET; THENCE SOUTH 1(degree) 00' 06" EAST 646.68 FEET TO SAID SOUTHERN LINE OF THE 67.85 ACRE PARCEL, 591 or 355; AND THENCE ALONG THE LAST NAMED LINE, SOUTH 69(degrees) 12' 33" EAST 216.72 FEET TO AN ANGLE POINT THEREON, AND NORTH 88(degrees) 31' 23" EAST 473.78 FEET TO THE POINT OF BEGINNING. RESERVING THEREFROM, A NON-EXCLUSIVE EASEMENT FOR ALL PUBLIC UTILITY PURPOSES, IN, UNDER, OVER, ALONG AND ACROSS THE NORTHERN 10 FEET, RIGHT ANGLE MEASUREMENT THEREOF. ALSO RESERVING THEREFROM, A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS, OVER, ALONG AND ACROSS THE NORTHERN 60 FEET RIGHT ANGLE MEASUREMENT THEREOF. SAID EASEMENTS TO BE APPURTENANT TO AND FOR THE BENEFIT OF THE REMAINING LANDS OF THE GRANTOR. EX-10.05.07 7 ANTENNA/TOWER/STUDIO LEASE EXHIBIT 10.05.07 AGREEMENT BETWEEN EDWARD G. ATSINGER III AND STUART W. EPPERSON AND INLAND RADIO, INC. February 1, 1992 AGREEMENT made as of this first day of February, 1992, by and between EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and INLAND RADIO, INC., a California corporation ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the City of San Bernardino, in the County of San Bernardino and State of California, more particularly described as set forth in Exhibit A, which is attached hereto and made a part hereof (the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee certain portions of the Real Property, more particularly described as set forth in Exhibit B, which is attached hereto and made a part hereof (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. -1- (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its broadcasting tower and equipment (the "Installations") . Lessee is fully familiar with the physical condition of the Real Property and has received the same in good order and condition, and agrees that the Real Property complies in all respects with all requirements of this Agreement. Lessee shall use the Real Property exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those here in above specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. -2- (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors . (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, -3- materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on February 1, 1992 (the "Commencement Date") and shall expire on January 31, 2002 (the "Expiration Date") . If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 -4- Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date, a base rent of Thirty-Nine Thousand Six Hundred Dollars ($39,600.00) per annum, in equal monthly installments of Three Thousand Three Hundred Dollars ($3,300.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the -5- Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. -6- SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the -7- estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000.00), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement . (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect -8- thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection -9- with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ------------------------------ (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an -10- amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. -11- (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel -12- selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss -13- or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable . -14- SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises -15- relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the -16- foregoing representation and warranty in entering into this Agreement and in expanding monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the -17- terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will note exceed Acceptable Radio Frequency Radiation Standards. (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased -18- Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that its broadcasting tower is and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be -19- sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (1) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective -20- purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its -21- business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased -22- Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and -23- Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed -24- of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement -25- of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- USE OF REAL PROPERTY BY LESSOR ------------------------------ At all times during the Term of this Agreement Lessor shall have the exclusive right to place and operate, or to permit another tenant to place and operate, broadcasting equipment on the Leased Premises and on the Lessee's broadcasting tower, or to use the Real Property for any other lawful purpose, provided, such actions do not interfere with Lessee's operations. Lessor shall have no obligation to pay rent for the uses described above. Lessor shall hold Lessee harmless from and defend Lessee against any and all claims or liability arising out of or in any way connected to Lessor's use or occupancy of the Real Property. SECTION 12 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as -26- part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 13 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 14 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio tower located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. -27- SECTION 15 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 16 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 17 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. -28- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: INLAND RADIO, INC. /s/ Edward G. Atsinger By: /S/ Edward G. Atsinger - ------------------------------------- --------------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III President /s/ Stuart W. Epperson - -------------------------------------- STUART W. EPPERSON -29- EXHIBIT A --------- LOTS 3 TO 11, INCLUSIVE, BLOCK "B", AND LOTS 2 To 15, INCLUSIVE, BLOCK "C", TRACT NO. 2397 IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO. STATE OF CALIFORNIA. AS PER PLAT RECORDED IN BOOK 34 OF MAPS, PAGES 27 AND 30, RECORDS OF SAID COUNTY. TOGETHER WITH THOSE PORTIONS OF "J" STREET AND DE SIENNA DRIVE, CLOSED, ADJACENT TO SAID LOTS, AND WHICH ACCRUED TO SAID LOTS BY REASON OF THE CLOSING OF SAID STREETS BY RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, DATED JULY 15, 1940, ALSO THAT PORTION OF COLTON AVENUE IN RESOLUTION DATED MAY 4, 1976, IN BOOK 8922, PAGE 1050, OFFICIAL RECORDS, ADJOINING SAID PROPERTY AND WHAT WOULD PASS BY OPERATION OF LAW WITH A CONVEYANCE OF SAID PROPERTY. Exhibit B --------- The building commonly known as 992 Inland Center Drive, San Bernardino, CA 92408. Sufficient space on the Real Property for the Lessee's broadcasting tower, related guy wires and ground system, and any other of its Installations. The building commonly known as 990 Inland Center Drive, San Bernardino, CA 92408, is specifically excluded from the definition of Leased Premises. CERTIFICATE OF UNANIMOUS CONSENT OF INLAND RADIO, INC. The undersigned, being all of the members of the Board of Directors of Inland Radio, Inc., a California corporation ("Corporation"), do hereby consent to and adopt the following resolutions: RESOLVED that the Corporation is hereby authorized and directed to sell the real estate owned by it and located in San Bernardino, California to Edward G. Atsinger III and Stuart W. Epperson for the amount of $394,285, such amount to be paid by the assumption of the Corporation obligations to Thomas M. Jones and Sally Lenart in that amount; and RESOLVED that the Corporation is hereby authorized and directed to lease said real estate from Edward G. Atsinger III and Stuart W. Epperson pursuant to the terms of a lease in the form of and with the terms and conditions set forth in the Lease Agreement attached hereto and incorporated herein by reference; and RESOLVED that the officers of the Corporation are hereby directed to take any and all actions they deem necessary, advisable, convenient or proper to carry out the intent of these resolutions. IN WITNESS WHEREOF the undersigned have executed this certificate of unanimous consent as of the 1st day of February, 1992. /s/ Stuart W. Epperson ---------------------------------- Stuart W. Epperson /s/ Edward G. Atsinger III ---------------------------------- Edward G. Atsinger III EX-10.05.08 8 ANTENNA/TOWER LEASE Exhibit 10.05.08 AGREEMENT BETWEEN EDWARD G. ATSINGER III AND STUART W. EPPERSON AND INSPIRATION MEDIA, INC. February 1, 1992 AGREEMENT made as of. this first day of February, 1992, by and between EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and INSPIRATION MEDIA, INC., a Washington corporation ("Lessee") . WHEREAS, Lessor owns certain land (the "Land") and certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in King County, State of Washington, more particularly described as set forth in Exhibit A, which is attached hereto and made a part hereof (the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its broadcasting towers and equipment (the "Installations"). -1- Lessee is fully familiar with the physical condition of the Real Property and has received the same in good order and condition, and agrees that the Real Property complies in all respects with all requirements of this Agreement. Lessee shall use the Real Property exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. -2- (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. -3- SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on February 1, 1992 (the "Commencement Date") and shall expire on January 31, 2002 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: -4- (i) During the, first year beginning with the Commencement Date, a base rent of Thirty-One Thousand Two Hundred Dollars ($31,200.00) per annum, in equal monthly installments of Two Thousand Six Hundred Dollars ($2,600.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in -5- any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean -6- order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) -7- does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be -8- paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. -9- SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability -10- arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in Washington and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal -11- injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but -12- at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such -13- approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. -14- (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. -15- (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. -16- (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. -17- (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will note exceed Acceptable Radio Frequency Radiation Standards. (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and -18- validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that its broadcasting towers are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. -19- (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (1) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. -20- SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for -21- Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of -22- the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. -23- SECTION 7 --------- ASSIGNNENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, -24- Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement -25- of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- USE OF REAL PROPERTY BY LESSOR ------------------------------ At all times during the Term of this Agreement Lessor shall have the exclusive right to place and operate, or to permit another tenant to place and operate, broadcasting equipment on the Leased Premises and on the Lessee's broadcasting towers, or to use the Real Property for any other lawful purpose, provided, such actions do not interfere with Lessee's operations. Lessor shall have no obligation to pay rent for the uses described above. Lessor shall hold Lessee harmless from and defend Lessee against any and all claims or liability arising out of or in any way connected to Lessor's use or occupancy of the Real Property. SECTION 12 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as -26- part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 13 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 14 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. -27- SECTION 15 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 16 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of Washington. SECTION 17 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. -28- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: INSPIRATION MEDIA, INC. /s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III - ------------------------------- ---------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III President /s/ Stuart W. Epperson - ------------------------------- STUART W. EPPERSON -29- EXHIBIT A --------- THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER; AND WEST HALF OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER; ALL IN SECTION 31, TOWNSHIP 23 NORTH, RANGE 3 EAST, W.M, IN KING COUNTY, WASHINGTON; EXCEPT THE SOUTH 180 FEET OF THE WEST 400 FEET AND EXCEPT THE NORTH 195 FEET OF THE EAST 400 FEET; ALSO THE NORTH 1/2 OF THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF SECTION 6, TOWNSHIP 22 NORTH, RANGE 3 EAST, W.M, IN KING COUNTY, WASHINGTON; EXCEPT THE WEST 30 FEET; ALSO KNOWN AS LOT A AND PARCEL A OF LOT LINE ADJUSTMENT RECORDED UNDER AUDITOR'S FILE NO. 8502190649; TOGETHER WITH AN EASEMENT FOR INGRESS, EGRESS AND UTILITIES OVER THE EAST 30 FEET OF THE WEST HALF OF THE NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF. SECTION 6, TOWNSHIP 22 NORTH, RANGE 3 EAST, W.M, IN KING COUNTY, WASHINGTON; EXCEPT THAT PORTION LYING WITHIN SW 196TH ST.; TOGETHER WITH AN EASEMENT FOR INGRESS, EGRESS AND UTILITIES OVER THE WEST 30 FEET OF THE EAST HALF OF NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF SECTION 6, TOWNSHIP 22 NORTH, RANGE 3 EAST, W.M, IN KING COUNTY, WASHINGTON; EXCEPT THAT PORTION LYING WITHIN S.W. 196TH ST. EX-10.05.09 9 ANTENNA/TOWER LEASE Exhibit 10.05.09 LEASE AGREEMENT --------------- This Agreement ("Agreement") is made as of the twenty-second day of August, 1994, by and between EDWARD G. ATSINGER III and MONA J. ATSINGER, not individually but solely as Trustees of the ATSINGER FAMILY TRUST, and STUART W. EPPERSON, not individually but solely as Trustee of the STUART W. EPPERSON REVOCABLE LIVING TRUST, collectively referred to herein as "Lessor", and INSPIRATION MEDIA, INC. ("Lessee"), a Washington corporation. WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the County of Kitsap, State of Washington, more particularly described as set forth in Exhibit "A", which is attached hereto and made a part hereof (the "Real Property"); and, WHEREAS, Lessee uses said Real Property in operating its radio station KLFE-AM, Seattle, Washington; and, WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its Improvements and other related broadcasting equipment (together comprising the "Installations"). Lessee is fully familiar with the physical condition of the Land and has received the same in good order and condition, and agrees that the Land complies in all respects with all requirements of this Agreement. Lessee shall use the Land exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on August 22, 1994 (the "Commencement Date"), and shall expire on August 21, 2004 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date Lessee shall pay a base rent of TWENTY-FOUR THOUSAND DOLLARS ($24,000) per annum, in equal monthly installments of TWO THOUSAND DOLLARS ($2,000) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the ninth (9th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for an increase, if any, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics, as measured in February of each year; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for February of the year in which the Adjustment Date falls and the denominator of which shall be the CPI for February of the year in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending moneys in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that the Improvements (including the radio tower(s) located on the Real Property) are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT ------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any mortgages and security agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such mortgages and security agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 12 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 13 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 14 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 15 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 16 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE ATSINGER FAMILY TRUST INSPIRATION MEDIA, INC. /s/ Edward G. Atsinger, III /s/ Eric H. Halvorson - ------------------------------ ------------------------------ EDWARD G. ATSINGER, III ERIC H. HALVORSON Trustee Vice-President /s/ Mona J. Atsinger - ------------------------------ MONA J. ATSINGER Trustee STUART W. EPPERSON REVOCABLE LIVING TRUST /s/ Stuart W. Epperson - ------------------------------ STUART W. EPPERSON Trustee AGREEMENT --------- EXHIBIT A --------- The following described real estate, situated in the county of KITSAP State of Washington: That portion of Government Lot 5, Section 14, Township 25 North, Range 2 East, W.M., described as follows: Beginning at the Southwest corner of Government Lot 5, said Section, the True Point of Beginning; thence East 528 Feet; thence North 660 feet; thence East 132 feet; thence North 330 feet; thence West 451 feet; thence South 104.5 feet; thence West 209 feet to Section line; thence South 885.3 feet to the Point of Beginning; EXCEPT portion taken for road in Kitsap County SC No. 14124; AND EXCEPT County Road No. 214; Situate in the City of Bainbridge Island, Kitsap County, Washington. EX-10.05.10 10 ANTENNA/TOWER LEASE Exhibits 10.05.10 AGREEMENT BETWEEN ATSINGER FAMILY TRUST AND OASIS RADIO, INC. June 1, 1992 AGREEMENT made as of this first day of June, 1992, by and between EDWARD G. ATSINGER III AND MONA J. ATSINGER, not individually but solely as Trustees of the ATSINGER FAMILY TRUST ("Lessor"), and OASIS RADIO, INC., a California corporation ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located on Fifteenth Avenue, in the City of Rosamond, County of Kern, State of California, more particularly described as set forth in Exhibit A, which is attached hereto and made a part hereof (the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Land (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the -1- installation, repair, maintenance, operation, housing and removal of its Improvements and other related broadcasting equipment (together comprising the "Installations"). Lessee is fully familiar with the physical condition of the Land and has received the same in good order and condition, and agrees that the Land complies in all respects with all requirements of this Agreement. Lessee shall use the Land exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned -2- by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of -3- the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 ---------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on June 1, 1992 (the "Commencement Date") and shall expire on May 31, 2002 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: accounting, or to such other person or place as Lessor may -4- designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date, a base rent of Ten Thousand Eight Hundred Dollars ($10,800) per annum, in equal monthly installments of Nine Hundred Dollars ($900.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. -5- Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. -6- thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection -9- with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an -10- amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. -11- (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel -12- selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss -13- or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. -14- SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises -15- relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the -16- foregoing representation and warranty in entering into this Agreement and in expending monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the -17- terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will not exceed Acceptable Radio Frequency Radiation Standards. (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased -18- sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective -20- purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its -21- business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased -22- Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and -23- Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed -24- of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement -25- of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- USE OF IMPROVEMENTS BY LESSOR ----------------------------- At all times during the Term of this Agreement (a) Lessor shall have the exclusive right to unrestricted use of the space on the radio tower located on the Land not used by the Lessee, and (b) Lessor shall have the right to unrestricted use of approximately 300 square feet of the transmitter building located on the Land, as outlined on Exhibit B attached hereto. Lessor shall have no obligation to pay rent for the use described above and may use the allowed space for any lawful purpose which does not interfere with Lessee's operations. Lessor shall hold Lessee harmless from and defend Lessee against any and all claims or liability arising out of or in any way connected to Lessor's use or occupancy of the allowed space. SECTION 12 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon -26- the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 13 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 14 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio tower located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose -27- of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 15 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 16 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 17 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No -28- additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: ATSINGER FAMILY TRUST OASIS RADIO, INC. /s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III - ---------------------------------- --------------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III Trustee President /s/ Mona J. Atsinger - ---------------------------------- MONA J. ATSINGER Trustee -29- EXHIBIT A BLOCK 52, BEING A PORTION OF THE EAST HALF OF SECTION 21, TOWNSHIP 9 NORTH, RANGE 12 WEST, SAN BERNARDINO MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE MAP OF ROSAMOND TOWNSITE, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, RECORDED AUGUST 12, 1907, IN BOOK 195 PAGES 66 AND 67 OF DEEDS. EXHIBIT B [LOT DRAWING APPEARS HERE] CERTIFICATE OF UNANIMOUS CONSENT OF OASIS RADIO, INC. The undersigned, being all of the members of the Board of Directors of Oasis Radio, Inc., a California corporation ("Corporation"), do hereby consent to and adopt the following resolutions: RESOLVED that the Corporation is hereby authorized and directed to lease the real estate owned by the Atsinger Family Trust and located in Rosamond, California, pursuant to the terms of a lease in the form of and with the terms and conditions set forth in the Lease Agreement attached hereto and incorporated herein by reference; and RESOLVED that the officers of the Corporation are hereby directed to take any and all actions they deem necessary, advisable, convenient or proper to carry out the intent of these resolutions. IN WITNESS WHEREOF the undersigned have executed this certificate of unanimous consent as of the 1st day of June, 1992. /s/ Stuart W. Epperson ---------------------------------- Stuart W. Epperson /s/ Edward G. Atsinger III ---------------------------------- Edward G. Atsinger III EX-10.05.11.01 11 ANTENNA/TOWER LEASE Exhibit 10.05.11.01 LEASE AGREEMENT --------------- This Lease Agreement (hereinafter called "this Lease"), is made and entered into the 30th day of September, 1993, by and between WEAZ-FM , Inc., a Pennsylvania corporation (hereinafter called "Landlord"), and PENNSYLVANIA MEDIA ASSOCIATES, INC., a Pennsylvania corporation (hereinafter called "Tenant"). WITNESSETH: That Landlord is the owner of certain property located in Whitemarsh Township, Montgomery County, Pennsylvania, and more fully and particularly described in Exhibit A attached hereto, which is hereby incorporated herein (hereinafter sometimes called the "demised premises" or the "leased premises"); and Landlord has, pursuant to an Asset Purchase and Sale Agreement, dated September ___, 1993, between Landlord and Tenant, sold, transferred and conveyed to Tenant, inter alia, certain towers and antennas located on the demised ----- ---- premises and certain monitoring and control equipment presently housed in a building located on the demised premises. NOW THEREFORE, in consideration of the execution and delivery of this Lease, the mutual promises contained herein and the sum of One Dollar ($1.00) in hand each paid to the other, the -1- receipt and sufficiency of all of which is hereby acknowledged, the parties hereto do covenant and agree as follows: 1. Term. ---- (A) Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the leased premises, for a term of five (5) years, commencing on October 1, 1993, upon the terms, covenants and agreements contained herein. (B) Tenant shall have the right to extend the term of this Lease for three (3) successive periods of five (5) years each, by giving written notice to Landlord at least one hundred eighty (180) days prior to the expiration of the then current term. (C) Notwithstanding anything contained herein to the contrary, Tenant shall have the right to terminate this Lease at any time by: (1) giving not less than one hundred eighty (180) days prior written notice of termination to Landlord, (2) removing from the leased premises all towers, antennas, buildings, improvements, trade fixtures and equipment now on the demised premises or placed or installed in or upon the demised premises by Tenant on or before the effective of termination, and (3) quitting and surrendering the leased premises to Landlord on or before the effective date of such termination. (D) In the event that Tenant terminates this Lease pursuant to Section 1(C) hereof, all of Tenant's right, title and interest in and to the property shall terminate as of the effective date of such termination, specifically including but -2- not limited to Tenant's rights pursuant to the option granted by Landlord to Tenant pursuant to Section 18 hereof. Further, notwithstanding anything contained herein to the contrary, in the event that Tenant terminates this Lease pursuant to Section 1(C) hereof at any time during the third (3rd) through fifth (5th) years of the term of this Lease, then Landlord shall, within thirty (30) days following the effective date of such termination, reimburse Tenant for the actual costs incurred by Tenant with respect to its move from the demised premises; provided, however, that notwithstanding anything contained herein to -------- ------- the contrary, Landlord's liability to Tenant pursuant to this Section 1(D) shall in no event exceed the total sum of Five Hundred Thousand ($500,000.00) Dollars. 2. Rental. Tenant shall pay rent for the demised premises to Landlord, ------ commencing October 1, 1993, as follows: (A) During the first year of the term hereof, Tenant shall pay annual rent in the amount of Fifty Thousand ($50,000) Dollars, payable in equal monthly installments. (B) During the second year of the term hereof, Tenant shall pay annual rent in an amount equal to the sum of (i) Fifty Thousand ($50,000) Dollars, plus (ii) an amount equal to the product of (x) Fifty Thousand ($50,000) Dollars and (y) the percentage increase, if any, in the Consumer Price Index (as hereinafter defined) between October 1993 and October 1994, payable in equal monthly installments. -3- (C) During the third year of the term hereof, Tenant shall pay annual rent in an amount equal to the sum of (i) Fifty Five Thousand ($55,000) Dollars, plus (ii) an amount equal to the product of (x) Fifty Five Thousand ($55,000) Dollars and (y) the percentage increase, if any, in the Consumer Price Index between October 1993 and October 1995, payable in equal monthly installments. (D) During each subsequent year during the balance of the term hereof, Tenant shall pay annual rent in an amount equal to the sum of (i) the annual rent in effect during the preceding lease year, plus (ii) an amount equal to the product of (x) the annual rent in effect during the preceding lease year and (y) the percentage increase, if any, in the Consumer Price Index between October of the preceding calendar year and October of the current calendar year, payable in equal monthly installments. (E) In no event shall the annual rent for any lease year be less then the annual rent for the prior lease year. Thus, if there is a decrease in the Consumer Price Index during the relevant period of comparison, the annual rent for the ensuing lease year shall remain the same as the annual rent for the prior lease year. (F) For purposes of this Section 2, the "Consumer Price Index" means the Consumer Price Index for all Urban Consumers, Philadelphia-Wilmington- Trenton area, Consumer Prices for All Items (1982-84=100), determined and released by the Bureau of Labor Statistics of the United States Department of -4- Labor (hereinafter called the "Index"). If the base year selected by the United States Department of Labor shall be changed, then the resultant Index shall be readjusted so as to reflect the base initially established under this Section 2. If the Consumer Price Index shall no longer be published or cannot be readjusted, then Landlord shall designate another index generally recognized as authoritative, which shall then be substituted for the Consumer Price Index for purposes of this Agreement. (G) All monthly payments of rent are due in advance on or before the first day of each month during the term hereof. 3. Landlord's Remedies. ------------------- (A) The following are hereby defined as "Events of Default": (1) If Tenant shall default in the payment of any installment of rent, or of any other sum payable by Tenant to Landlord, on any day upon which the same is due to be paid, and if such default shall continue for five (5) days after Landlord shall have given to Tenant a written notice specifying such default; or (2) If Tenant shall do or permit anything to be done, whether by action or inaction, contrary to any covenant or agreement on the part of Tenant herein contained, or contrary to any of the covenants, agreements, terms, or provisions of this Lease, or shall fail in the keeping or performance of any of the covenants, agreements, terms, or provisions contained in this -5- Lease which on the part or behalf of Tenant are to be kept or performed, and Tenant shall fail to commence to take steps to remedy the same within thirty (30) days after Landlord shall have given to Tenant a written notice specifying the same, or having so commenced, shall thereafter fail to proceed diligently to remedy the same. (B) Upon the occurrence of any Event of Default, then regardless of and notwithstanding the fact that Landlord has or may have some other remedy under this Lease or by virtue hereof, or in law or in equity, Landlord may give to Tenant a notice (herein called the "second notice") of intention to end the term of this Lease, specifying a day not less than ten (10) days thereafter, and, upon the giving of the second notice, this Lease and the term and estate hereby granted shall expire and terminate upon the day so specified in the second notice as fully and completely and with the same force and effect as if the day so specified were the date hereinbefore fixed for the expiration of the term of this Lease, and all rights of Tenant under this Lease shall expire and terminate, but Tenant shall remain liable for damages as hereinafter provided. (C) Upon any termination or expiration of this Lease, Tenant shall peaceably quit and surrender the demised premises to Landlord, having removed all improvements and personal property now on the demised premises and/or placed or installed in or upon the demised premises by Tenant, and Landlord may without further notice enter upon, re-enter, possess, and repossess itself -6- thereof peaceably through summary proceedings, ejectment, or otherwise, and may dispossess and remove Tenant and all other persons and property from the demised premises and may have, hold, and enjoy the demised premises and the right to receive all rental and other income of and from the same. (D) It is covenanted and agreed by Tenant that, in the event of the expiration or termination of this Lease, or re-entry by Landlord under any of the provisions of this paragraph or pursuant to law, by reasons of default hereunder on the part of Tenant, Tenant will pay to Landlord, as damages, a sum equal to all of the rent which would have been payable by Tenant had this Lease not so terminated, or had Landlord not so re-entered the Premises, for the period ending such time as Tenant shall quit and surrender the demised premises to Landlord. (E) If Tenant shall fail to make any payment required to be made under this Lease or shall default in the performance of any other covenant, agreement, term, provision, or condition herein contained, Landlord, without being under any obligation to do so and without thereby waiving such default, may make such payment and/or remedy such other default for the account and at the expense of Tenant, immediately and without notice in the case of emergency, or in any other case, provided that Tenant shall fail to make such payment or remedy such default with all reasonable dispatch within ten (10) days (for payment defaults) or thirty (30) days (for performance defaults), after Landlord shall have notified Tenant in writing of such failure or default. -7- (F) Tenant will also pay to Landlord, upon demand, any and all reasonable expenses incurred by Landlord as a result of Tenant's failure to make any payment required under this Lease or default in performance of any other covenant, agreement, term, provision, or condition herein contained, including reasonable counsel fees involved in collection of any sum due Landlord hereunder, or enforcement of any right against Tenant under or in connection with this Lease or pursuant to law, including (without being limited to) any such cost, expense, and disbursement involved in instituting and prosecuting summary proceedings, as well as bills for any property, material, labor, or services provided, furnished, or rendered, or caused to be, by Landlord to Tenant, with respect to the Premises. (G) The failure of Landlord to insist upon the strict performance of any one of the covenants, agreements, terms, provisions, or conditions of this Lease or to exercise any right, remedy, or election herein contained or permitted by law shall not constitute or be construed as a waiver or relinquishment for the future of such covenant, agreement, term, provision, condition, right, remedy, or election, but the same shall continue and remain in full force and effect. 4. Use Provision. Subject to the rights of Landlord and/or its assigns ------------- as set forth herein, Tenant may use the demised premises in any lawful manner in connection with the operation of towers, antennas and monitoring and control -8- equipment for the operation of an AM radio station and may lease space on the existing towers to other communication companies. 5. Tenant's Obligations. Tenant will supply any apparatus, appliance, -------------------- or material and will cause any work to be done in and about the demised premises or the Building which may be required or ordered by any lawful authority during the term hereof or any extension thereof. Tenant has leased the demised premises in its "As Is", "Where Is" condition, without any warranties or representations by Landlord of any kind. 6. Repair and Maintenance. Tenant shall, at its sole cost and expense, ---------------------- keep the demised premises in good condition and repair, and Landlord shall have no responsibility of repair or maintenance with respect to the demised premises. 7. Towers, Antennas, Buildings, Improvements and Fixtures. All towers, ------------------------------------------------------ antennas, buildings, improvements, trade fixtures and equipment and other personal property of whatsoever nature now in or upon on the demised premises or hereafter placed or installed in or upon the demised premises by Tenant shall be and remain at all times Tenant's sole property, and Tenant shall have the right to remove the same at any time, and Tenant shall be required to remove the same upon the expiration or earlier termination of this Lease. 8. Indemnification and Hold Harmless. Tenant agrees to indemnify, --------------------------------- defend and hold Landlord harmless from and against any and all claims which may arise from, on, in, or about the demised premises, which such claims arise out of or are caused in whole -9- or in part by a defective, dangerous, or unsafe condition of the demised premises, or the equipment, fixtures, or appurtenances thereon and/or thereat which are required by law or the terms hereof to be maintained in good repair. 9. Condemnation. ------------ (A) If any taking in condemnation proceedings will not render the Premises unsatisfactory for Tenant's use, Tenant will restore the Premises to proper, tenantable condition forthwith, as to the land, and shall be entitled to use all condemnation proceedings for such restoration. If any taking will render the Premises unsatisfactory for Tenant's use, this Lease shall terminate, and all condemnation proceeds shall be payable to Landlord. Nothing herein shall prevent Tenant from pursuing its own claim directly against the condemning authority for loss of business, trade fixtures, moving costs or other items of loss. (B) For purposes of this paragraph, the term "condemnation proceedings" shall include conveyances and grants made in anticipation or in lieu of condemnation proceedings. 10. Subletting and Assignment. Tenant may not sublet the demised ------------------------- premises or assign this Lease at any time without the consent of Landlord, which consent may be granted or withheld in Landlord's sole discretion. In the event of any subletting or assignment, Tenant shall not be released from its liability hereunder absent an express release by Landlord. Notwithstanding the foregoing, (i) Tenant shall have the right to assign the Lease or sublease the demised premises or any part thereof to a -10- parent, subsidiary, affiliated, or controlled corporation of or to a surviving entity of a merger or consolidation of any of the foregoing, without the consent of Landlord, and (ii) in the event of a proposed sale of radio station WBEB(AM), Landlord shall not unreasonably withhold consent of the assignment of this Lease to the purchaser of the radio station and the release of Tenant of any further liability hereunder. 11. Tax Clause. ---------- (A) During the entire term of this Lease, Tenant covenants to pay, in addition to all other sums required to be paid by Tenant under the Lease, before delinquency, all real estate taxes levied or assessed against the demised premises for each year of the Lease term, and all installments for special assessments due during the Lease term with respect to the demised premises during the Lease term. (B) Tenant shall also pay, before delinquency, any and all taxes and assessments levied or assessed and becoming payable during the term against Tenant's personal property located upon the demised premises. (C) As between the parties hereto, Tenant shall have the duty of making and filing all statements or reports which may be required under applicable law in connection with any tax, charge, fee, rate, imposition or assessment referred to in either subparagraphs (A) or (B) hereof. -11- (D) Any payments due under the provisions of subparagraph (A) shall be prorated as of the commencement and the termination or expiration date of this Lease. 12. Liability Insurance. During the Leased term, Tenant shall keep ------------------- Landlord, and any other parties in interest designated by Landlord, insured against all statutory common law liabilities for damages on account of damage to property or injuries and loss of life sustained by any person or persons while on the demised premises in a policy or policies in the amount of not less than One Million Dollars ($1,000,000.00) for any single occurrence, and Tenant shall also indemnify, defend and save Landlord harmless from and against any such liability. Any such policies shall bear endorsements to the effect that and Landlord shall be notified not less than fifteen (15) days in advance of any such modification or cancellation thereof. Copies of such policies, so endorsed, or certificates evidencing the existence thereof, shall be promptly delivered to Landlord. Tenant shall have the right to avail itself of blanket policies of insurance which may include other properties of Tenant. 13. Net/Net/Net Lease. ----------------- (A) This Lease shall be deemed and construed to be a "net/net/net lease" and Tenant shall pay to Landlord, absolutely net throughout the term of this Lease, the rent and other sums payable hereunder, and under no circumstances or conditions, whether now existing or hereafter arising, or whether beyond the present contemplation of the parties, shall Landlord be expected -12- or required to make any payment of any kind whatsoever hereunder or be under any other obligations or liability with respect to the demised premises except as herein otherwise expressly set forth. (B) If Landlord is required to employ an attorney to collect any of the monies due Landlord or to enforce the performance by Tenant of the agreement, conditions, covenants, provisions, or stipulations of this Lease, then in such an event, Landlord's costs, expenses, and reasonable counsel fees shall be paid (if Landlord prevails) by Tenant to Landlord upon demand. (C) Except to the extent elsewhere provided in this Lease, no happening, event, occurrence, or situation during the term of this Lease, whether foreseen or unforeseen, and however extraordinary, shall relieve Tenant from its liability to pay the full rent and other charges under this Lease, or shall relieve Tenant from any of its other obligations under this Lease; and Tenant waives any rights now or hereafter conferred upon it by statute, proclamation, decree, or order, or otherwise, to quit or surrender the demised premises or this Lease, or any part thereof, or to any abatement, diminution, reduction, or suspension of rent on account of any such event, happening, occurrence, or situation. 14. Estoppel Certificate. -------------------- (A) Each party shall, at any time and from time to time upon not less than twenty (20) days' prior notice from the other party, or its successors or assigns, execute, acknowledge, -13- and deliver to the other party a statement setting forth the commencement date, the expiration date, and the rent, and further stating: (i) that this Lease is unmodified and in full force and effect (or, if there has been any modification, that the same is in full force and effect as modified and stating the modification); (ii) the date to which the rent has been paid in advance, if any; (iii) whether or not, to the knowledge of the party issuing the certificate, the other party is in default in performance of any of its obligations under this Lease and, if so, specifying each such default of which the party issuing the certificate may have knowledge; (iv) whether the party issuing the certificate has accepted possession of the demised premises; (v) whether the party issuing the certificate has made any claim against the other party under this Lease and, if so, the nature thereof and the dollar amount, if any, of such claim; (vi) whether there exist any known offsets or defenses against enforcement of any of the terms of this Lease upon the part of the party issuing the certificate to be performed, and, if so, specifying the same; and (vii) such further information with respect to this Lease or the demised premises as the other party reasonably request. (B) It is agreed that any such statement delivered pursuant hereto shall be binding upon the issuing party and may be relied upon by the other party by any prospective purchaser of the demised premises or any part thereof, by any mortgagee or prospective mortgagee thereof, by any lessor or prospective -14- lessor thereof, by any lessee or prospective lessee thereof, or by any prospective assignee or any mortgagee thereof. 15. Landlord's Liability; Indemnification by Tenant. ----------------------------------------------- (A) Landlord shall not be responsible for any damage or injury to any property, fixtures, merchandise, or decorations or to any person or persons at any time on the demised premises. (B) Landlord shall not in any way be responsible or liable in case of any accident or injury, including death, to any of Tenant's servants, employees, agents, or to any person or persons in or about the demised premises. (C) Tenant agrees that it will not hold Landlord in any way responsible or liable therefor and will further indemnify, defend and hold Landlord harmless from and against any and all claims, liabilities, penalties, damages, expenses, and judgments arising from injury to persons or property of any nature and also for any matter or thing growing out of the use and/or occupation of the demised premises. 16. Quiet Enjoyment. Landlord hereby warrants and covenants that it --------------- has the right to lease the demised premises to Tenant, and that it will do nothing to disturb Tenant's full right of possession and enjoyment thereof and the exercise of all Tenant's rights with respect thereto as provided by this Lease so long as Tenant is not in default hereunder. 17. Remodel Provisions. Any remodeling or alterations to the demised ------------------ premises which Tenant may deem necessary during the -15- term hereof shall be made at Tenant's expense, and Landlord hereby consents thereto. 18. Option to Purchase the Premises. Landlord hereby grants to Tenant ------------------------------- an option to purchase the leased premises, upon the terms and conditions set forth herein, for the purchase price of Two Million Two Hundred Fifty Thousand ($2,250,000) Dollars. The option herein granted may be exercised by Tenant, at any time during the first seven (7) years of the term of this Lease, provided that this Lease has not been sooner terminated and Tenant is not in default hereunder, by providing written notice to Landlord at any time within the first six and one-half (6 1/2) years of the term hereof. Within thirty (30) days after the giving of notice by Tenant exercising its option to purchase, Landlord shall, at Tenant's expense, furnish to Tenant an owner's policy of title insurance (or a binding commitment to issue such title insurance) in an amount equal to the purchase price issued by a title insurance company acceptable to Tenant, naming Tenant as the insured and guaranteeing Landlord's title to the Premises to be free from all liens, charges, or encumbrances, except (i) municipal and zoning ordinances; (ii) any taxes and assessments whether or not due and payable; (iii) any recorded easements, restrictions, or other matters existing as of the date of this Lease; and (iv) any liens, claims, or encumbrances arising by, through or under Tenant. Tenant shall be allowed ten (10) days in which to examine such evidence of title, and if the same does not show Landlord's title to be free from all liens, -16- charges, and encumbrances excepting those permitted by this paragraph, Landlord shall, within a reasonable time thereafter, cure such defects and clear title. The closing of the transaction shall, in all events, be held on a date within such seven (7) year period and the time of such closing is agreed to be of the essence. If the evidence of title furnished by Landlord discloses any defects in Landlord's title which cannot be cured, and the curing of which Tenant is unwilling to waive, Tenant may withdraw its exercise of this option to purchase, and its performance of the contract formed by such exercise shall be excused, and this Lease shall continue in full force and effect in accordance with its terms. At the closing, Landlord shall by special warranty deed convey to Tenant fee simple title to the Premises free and clear of all liens, charges, and encumbrances excepting those permitted by this paragraph. Upon delivery of such warranty deed, Tenant shall pay the purchase price to Landlord in cash or by certified check. All deed stamp and/or transfer taxes imposed in connection with such transfer shall be divided equally between Landlord and Tenant. Upon the closing, this Lease and all of the obligations arising from and after the closing shall terminate. Tenant shall have the right to assign this option to permitted assignees, as set forth in Section 10 hereof, and may assign its rights and obligations under this Section 18 to Edward G. Atsinger, Stuart W. Epperson, their spouses and children, or trusts created for the benefit of their spouses and children. Upon Tenant's request, the parties shall -17- record a summary of this option with the office for the recording of deeds in and for Montgomery County. 19. Addresses. All notices required under this Lease shall be deemed to --------- be properly served if delivered in writing personally or sent by certified mail with return receipt requested, to Landlord at 10 Presidential Boulevard, Bala Cynwyd, Pennsylvania 19004, Attention: President, and to Tenant at 4880 Santa Rosa Road, Suite 300, Camarillo, California 93012, Attention: President, or to any subsequent address which either party may designate for such purpose. Date of service of a notice served by a mail shall be the date on which such notice is deposited in a post office of the United States Postal Service. 20. Successors and Assigns. The provisions of this Lease shall bind and ---------------------- inure to the benefit of the parties hereto and their successors and assigns. 21. Entire Agreement. This instrument and its attachments contain the ---------------- entire agreement between the parties with respect to the subject matter hereof, and there are no covenants, express or implied, except as contained herein. No statement, promise, or inducement made by either party or agent of either party that is not contained in this written agreement shall be valid or binding. No waiver of any condition or covenant of this Lease by either party shall be deemed to imply or constitute a further waiver of the same or any other condition or covenant of said Lease. -18- IN WITNESS HEREOF, the parties have caused this Lease to be duly executed, in quadruplicate, as of the day and year first above written. LANDLORD: WEAZ-FM Radio, Inc., a Pennsylvania corporation BY: /s/ Jerry Lee ------------------------------- Jerry Lee, President ATTEST: [SIGNATURE APPEARS HERE] --------------------------- TENANT: PENNSYLVANIA MEDIA ASSOCIATES, INC., a Pennsylvania corporation BY: /s/ Eric H. Halvorson ------------------------------- Eric H. Halvorson Exec. V.P. -19- STATE OF Pennsylvania : : SS. COUNTY OF Philadelphia : On this 30th day of September, 1993, before me, an officer duly authorized in the County and State aforesaid to take acknowledgments, personally appeared ERIC H. HALVORSON, who is Executive Vice President of Pennsylvania Media Associates, Inc., a corporation existing under the laws of the Commonwealth of Pennsylvania, to me known to be the individual and Executive Vice President of said corporation described in and who executed the foregoing instrument, and that he acknowledged the execution thereof to be his free act and deed as such Executive Vice President thereunto duly authorized, and that the said instrument is the act and deed of said corporation. WITNESS my hand and official seal in the above County and State. /s/ Patrice Kelly ---------------------------------- NOTARY PUBLIC My Commission Expires: [SEAL OF NOTARY PUBLIC APPEARS HERE] ---------------------------------- STATE OF Pennsylvania : : SS. COUNTY OF Philadelphia : On this 30th day of September, 1993, before me, an officer duly authorized in the County and State aforesaid to take acknowledgments, personally appeared JERRY LEE, who is President of WEAZ-FM Radio, Inc., a corporation existing under the laws of the Commonwealth of Pennsylvania, to me known to be the individual and President of said corporation described in and who executed the foregoing instrument, and that he acknowledged the execution thereof to be his free act and deed as such President thereunto duly authorized, and that the said instrument is the act and deed of said corporation. WITNESS my hand and official seal in the above County and State. ---------------------------------- NOTARY PUBLIC My Commission Expires: ---------------------------------- EX-10.05.11.02 12 ANTENNA/TOWER/STUDIO LEASE EXHIBIT 10.05.11.02 LEASE AGREEMENT --------------- This Agreement ("Agreement") is made as of the fifth day of August, 1994, by and between EDWARD G. ATSINGER III and MONA J. ATSINGER, not individually but solely as Trustees of the ATSINGER FAMILY TRUST, and STUART W. EPPERSON, not individually but solely as Trustee of the STUART W. EPPERSON REVOCABLE LIVING TRUST, collectively referred to herein as "Lessor", and PENNSYLVANIA MEDIA ASSOCIATES, INC. ("Lessee"), a Pennsylvania corporation. WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the County of Montgomery, State of Pennsylvania, more particularly described as set forth in Exhibit "A", which is attached hereto and made a part hereof (the "Real Property"); and, WHEREAS, Lessee uses said Real Property in operating its radio station WZZD-AM, Philadelphia, Pennsylvania; and, WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its Improvements and other related broadcasting equipment (together comprising the "Installations"). Lessee is fully familiar with the physical condition of the Land and has received the same in good order and condition, and agrees that the Land complies in all respects with all requirements of this Agreement. Lessee shall use the Land exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on August 5, 1994 (the "Commencement Date"), and shall expire on August 4, 2004 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date Lessee shall pay a base rent of FORTY EIGHT THOUSAND DOLLARS ($48,000) per annum, in equal monthly installments of FOUR THOUSAND DOLLARS ($4,000) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the ninth (9th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for an increase, if any, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics, as measured in February of each year; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for February of the year in which the Adjustment Date falls and the denominator of which shall be the CPI for February of the year in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending moneys in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that the Improvements (including the radio tower(s) located on the Real Property) are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any mortgages and security agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such mortgages and security agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 12 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 13 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 14 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 15 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 16 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE ATSINGER FAMILY TRUST PENNSYLVANIA MEDIA ASSOCIATES, INC. /s/ EDWARD G. ATSINGER /s/ ERIC H. HALVORSON - --------------------------- ----------------------------- EDWARD G. ATSINGER, III ERIC H. HALVORSON Trustee Vice-President /s/ MONA J. ATSINGER - --------------------------- MONA J. ATSINGER Trustee STUART W. EPPERSON REVOCABLE LIVING TRUST /s/ STUART W. EPPERSON - --------------------------- STUART W. EPPERSON Trustee EX-10.05.12 13 ANTENNA/TOWER LEASE EXHIBIT 10.05.12 LEASE AGREEMENT --------------- This Agreement ("Agreement") is made as of the 1st day of September, 1997, by and between EDWARD G. ATSINGER III, not individually but solely as Trustee of the ATSINGER FAMILY TRUST ( "Lessor"), and RADIO 1210, INC. ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property, more particularly described as set forth in Exhibit "A", which is attached hereto and made a part hereof (the "Real Property"); and, WHEREAS, Lessee desires to use said Real Property in operating its radio station KPRZ(AM), SAN DIEGO, CALIFORNIA; and, WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its Improvements and other related broadcasting equipment (together comprising the "Installations"). Lessee is fully familiar with the physical condition of the Land and has received the same in good order and condition, and agrees that the Land complies in all respects with all requirements of this Agreement. Lessee shall use the Land exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on August 1, 1997 (the "Commencement Date"), and shall expire on December 31, 2002 (the "Expiration Date"). (b) {Intentionally omitted. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date Lessee shall pay a base rent of $45,596 per annum, in equal monthly installments of $3,799.67 (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first day of February following the Commencement Date and each subsequent anniversary of such date this Agreement remains in effect. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the year in which the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners and Clerical Workers, Los Angeles area [Base Year 1982-84=100] ("CPI") as measured in February and published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for February of the year such Adjustment Date falls and the denominator of which shall be the CPI for February of the year in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the amount payable by Lessee hereunder shall not in any event be less than the rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index number in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than Three Million Dollars ($3,000,000.00) for injuries to one person, Five Million Dollars ($5,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than Five Million Dollars ($5,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in Ohio and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending moneys in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that the Improvements (including the radio tower(s) located on the Real Property) are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any mortgages and security agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such mortgages and security agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 12 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 13 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 14 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 15 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 16 ---------- ENTIRE AGREEMENT This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE ATSINGER FAMILY TRUST RADIO 1210, INC. /s/ Edward G. Atsinger III /s/ Eric H. Halvorson - -------------------------------- ---------------------------- EDWARD G. ATSINGER, III ERIC H. HALVORSON Trustee Vice-President EX-10.05.13 14 ANTENNA/TOWER LEASE Exhibit 10.05.13 AGREEMENT BETWEEN EDWARD G. ATSINGER III AND STUART W. EPPERSON AND SALEM MEDIA CORPORATION February 1, 1992 AGREEMENT made as of this first day of February, 1992, by and between EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and SALEM MEDIA CORPORATION, a New York corporation ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in Cook County, Illinois, more particularly described as: Lot 3 in Hardee's Dundee Road Resubdivision of Lot 5 (except the south 33 feet thereof) and all of Lot 6 in Freedom Small Farms, being a Subdivision of parts of the north west 1/4 of the north west 1/4 and north 1/2 of the south west 1/4 of the north west 1/4 of Section 8, Township 42 North, Range 11 east of the Third Principal Meridian, in Cook County, Illinois (the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Land (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. -1- (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its broadcasting tower and equipment (the "Installations"). Lessee is fully familiar with the physical condition of the Real Property and has received the same in good order and condition, and agrees that the Real Property complies in all respects with all requirements of this Agreement. Lessee shall use the Real Property exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. -2- (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, -3- materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on February 1, 1992 (the "Commencement Date") and shall expire on January 31, 2002 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 -4- Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date, a base rent of Thirty-Six Thousand Dollars ($36,000.00) per annum, in equal monthly installments of Three Thousand Dollars ($3,000.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average (Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the -5- Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. -6- SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the -7- estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000.00), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect -8- thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection -9- with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an -10- amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in Illinois and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. -11- (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel -12- selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss -13- or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. -14- SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents-and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises -15- relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the -16- foregoing representation and warranty in entering into this Agreement and in expending monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the -17- terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (c) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will note exceed Acceptable Radio Frequency Radiation Standards. (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased -18- Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that its broadcasting tower is and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be -19- sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (1) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective -20- purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its -21- business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased -22- Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and -23- Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed -24- of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement -25- of rent, provided entrance to the Real Property shall not be -denied Lessee. SECTION 11 ---------- USE OF REAL PROPERTY BY LESSOR ------------------------------ At all times during the Term of this Agreement Lessor shall have the exclusive right to place and operate, or to permit another tenant to place and operate, broadcasting equipment on the Leased Premises and on the Lessee's broadcasting tower, or to use the Real Property for any other lawful purpose, provided, such actions do not interfere with Lessee's operations. Lessor shall have no obligation to pay rent for the uses described above. Lessor shall hold Lessee harmless from and defend Lessee against any and all claims or liability arising out of or in any way connected to Lessor's use or occupancy of the Real Property. SECTION 12 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as -26- part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor s assignment of its interest in and to this Lease. SECTION 13 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 14 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio tower located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. -27- SECTION 15 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 16 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of Illinois. SECTION 17 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. -28- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: SALEM MEDIA CORPORATION /s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III - ---------------------------- -------------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III President /s/ Stuart W. Epperson - ---------------------------- STUART W. EPPERSON -29- CERTIFICATE OF UNANIMOUS CONSENT OF SALEM MEDIA CORPORATION The undersigned, being all of the members of the Board of Directors of Salem Media Corporation, a New York corporation ("Corporation"), do hereby consent to and adopt the following resolutions: RESOLVED that the Corporation is hereby authorized and directed to sell the real estate owned by it and located in Chicago, Illinois to Edward G. Atsinger II and Stuart W. Epperson for the amount of $90,000, such amount to be paid in cash. RESOLVED that the Corporation is hereby authorized and directed to lease said real estate from Edward G. Atsinger II and Stuart W. Epperson pursuant to the terms of a lease in the form of and with the terms and conditions set forth in the Lease Agreement attached hereto and incorporated herein by reference; and RESOLVED that the officers of the Corporation are hereby directed to take any and all actions they deem necessary, advisable, convenient or proper to carry out the intent of these resolutions. IN WITNESS WHEREOF the undersigned have executed this certificate of unanimous consent as of the 1st day of February, 1992. /s/ Stuart W. Epperson ---------------------------- Stuart W. Epperson /s/ Edward G. Atsinger III ---------------------------- Edward G. Atsinger Ill EX-10.05.14 15 ANTENNA/TURNER/STUDIO LEASES Exhibit 10.05.14 AGREEMENT BETWEEN EDWARD G. ATSINGER III AND STUART W. EPPERSON AND SALEM MEDIA OF CALIFORNIA, INC. February 1, 1992 AGREEMENT made as of this first day of February, 1992, by and between EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and SALEM MEDIA OF CALIFORNIA, INC., a California corporation ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the City of Paramount, in the County of Los Angeles, State of California, more particularly described as set forth in Exhibit A, which is attached hereto and made a part hereof, and certain easements more particularly described as set forth in Exhibit B, which is attached hereto and made a part hereof (the "Easements") (together comprising the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee approximately 43,745 square feet of the Real Property, more particularly described as set forth in Exhibit C, which is attached hereto and made a part hereof, and the Easements (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: -1- SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its broadcasting towers and equipment (the "Installations"). Lessee is fully familiar with the physical condition of the Leased Premises and has received the same in good order and condition, and agrees that the Leased Premises complies in all respects with all requirements of this Agreement. Lessee shall use the Leased Premises exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. -2- (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which -3- may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on February 1, 1992 (the "Commencement Date") and shall expire on January 31, 2002 (the "Expiration Date") . If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the -4- commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date, a base rent of One Hundred Twenty Thousand Dollars ($120,000) per annum, in equal monthly installments of Ten Thousand Dollars ($10,000.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States -5- Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided -6- herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Leased Premises or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Leased Premises and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Leased Premises at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Leased Premises whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value -7- thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000.00), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, and except for taxes and assessments paid by the lessee under Section 8 of the lease agreement for the Real Property dated July 1, 1981 between John Brown Schools of California, Inc. and C. Robert Langslet & Son, Inc., Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, -8- confirmed or imposed on or in respect of or be a lien upon the Leased Premises or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Leased Premises or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Leased Premises, provided that (i) Lessee -9- shall first make all contested payments, under protest if it desires, (ii) neither the Leased Premises nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Leased Premises or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Leased Premises arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one -10- person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Leased Premises; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than -11- fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss -12- or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased -13- Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be -14- subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. -15- (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of -16- which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking -17- of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards") . Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will note exceed Acceptable Radio Frequency Radiation Standards. -18- (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that its broadcasting towers are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all -19- regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Leased Premises or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. -20- (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, -21- provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said -22- period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. -23- (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security -24- Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. -25- SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Leased Premises to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Leased Premises to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Leased Premises shall not be denied Lessee. SECTION 11 ---------- USE OF LEASED PREMISES BY LESSOR -------------------------------- At all times during the Term of this Agreement Lessor shall have the exclusive right to place and operate, or to permit another tenant to place and operate, broadcasting equipment on the Leased Premises and on the Lessee's broadcasting towers, or to use the Leased Premises for any other lawful purpose, provided, such actions do not interfere with Lessee's operations. Lessor shall have no obligation to pay rent for the uses described above. Lessor shall hold Lessee harmless from and defend Lessee against any and all claims or liability arising out of or in any way connected to Lessor's use or occupancy of the Leased Premises. -26- SECTION 12 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 13 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. -27- SECTION 14 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 15 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. -28- SECTION 16 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 17 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: SALEM MEDIA OF CALIFORNIA, INC. /s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III - ----------------------------- ----------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III President /s/ Stuart W. Epperson - ----------------------------- STUART W. EPPERSON -29- EXHIBIT A --------- PARCEL 2, IN THE CITY OF PARAMOUNT, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS SHOWN ON PARCEL MAP NO. 13658 FILED IN BOOK 137 PAGE 95 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXHIBIT B --------- LEGAL DESCRIPTION FOR RADIO STATION TOWER GUY WIRES AND ANCHORS EASEMENTS FOR GUY WIRES AND ANCHORS IN THE CITY OF PARAMOUNT, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: PARCEL `A': A 5.00 FOOT WIDE EASEMENT WITHIN PARCEL 3 OF PARCEL MAP NO. 16925, AS SHOWN ON A MAP FILED IN BOOK 187, PAGES 74 THROUGH 76, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE EASTERLY BOUNDARY OF SAID PARCEL 3, SAID POINT BEING THE NORTHERLY TERMINUS OF THAT CERTAIN COURSE IN SAID EASTERLY BOUNDARY SHOWN AS "N 3(degrees) 16' 51" W 122.07 FEET" ON SAID MAP; THENCE S 3(degrees) 16' 51" E 15.31 FEET ALONG SAID BOUNDARY TO THE TRUE POINT OF BEGINNING; THENCE LEAVING SAID EASTERLY BOUNDARY AND THROUGH A PORTION OF SAID PARCEL 3 S 68(degrees) 25; 58" W 92.87 FEET TO A POINT HEREINAFTER REFERRED TO AS POINT `A'. PARCEL `B': AN EASEMENT WITHIN PARCEL 3 OF PARCEL MAP NO. 16925, AS DESCRIBED IN PARCEL `A' HEREON, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT POINT `A' AS DESCRIBED IN PARCEL `A' HEREON; THENCE N 84(degrees) 34' 48" W 5.00 FEET; THENCE N 5(degrees) 25' 12" E 5.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE S 84(degrees) 34' 48" E 10.00 FEET; THENCE S 5(degrees) 25' 12" W 10.00 FEET; THENCE N 84(degrees) 34' 48" W 10.00 FEET; THENCE N 5(degrees) 25' 12" E 10.00 FEET TO THE TRUE POINT OF BEGINNING. THE SIDELINES OF SAID PARCELS `A' AND `B' SHALL BE PROLONGED OR FORESHORTENED SO AS TO TERMINATE AT SAID DESCRIBED BOUNDARIES AND/ OR INTERSECT WITH NO OVERLAP. CERTIFICATE OF UNANIMOUS CONSENT OF SALEM MEDIA OF CALIFORNIA, INC. The undersigned, being all of the members of the Board of Directors of Salem Media of California, Inc. a California corporation ("Corporation"), do hereby consent to and adopt the following resolutions: RESOLVED that the Corporation is hereby authorized and directed to sell the real estate owned by it and located at Long Beach, California to Edward G. Atsinger II and Stuart W. Epperson for the amount of $625,000, such amount to be paid in the form of cash in the amount of $588,903.94 and a Promissory Note in the amount of $36,096.06, such Promissory Note to be in the form and with the terms and conditions set forth in the Promissory Note attached hereto and incorporated herein by reference; and RESOLVED that the Corporation is hereby authorized and directed to sell the real estate owned by it and located at Paramount California to Edward G. Atsinger II and Stuart W. Epperson for the amount of $1,150,000, such amount to be paid in cash; and RESOLVED that the Corporation is hereby authorized and directed to lease said real estate from Edward G. Atsinger II and Stuart W. Epperson pursuant to the terms of leases in the form of and with the terms and conditions set forth in the Lease Agreements attached hereto and incorporated herein by reference; and RESOLVED that the officers of the Corporation are hereby directed to take any and all actions they deem necessary, advisable, convenient or proper to carry out the intent of these resolutions. IN WITNESS WHEREOF the undersigned have executed this certificate of unanimous consent as of the 1st day of February, 1992. /s/ Stuart W. Epperson ------------------------------- Stuart W. Epperson /s/ Edward G. Atsinger III ------------------------------- Edward G. Atsinger III EX-10.05.15 16 ANTENNA/TOWER LEASE EXHIBIT 10.05.15 LEASE AGREEMENT --------------- This Agreement ("Agreement") is made as of the 15th day of March, 1996 by and between EDWARD G. ATSINGER III, not individually but solely as Trustee of the ATSINGER FAMILY TRUST, and STUART W. EPPERSON, not individually but solely as Trustee of the STUART W. EPPERSON REVOCABLE LIVING TRUST, collectively referred to herein as "Lessor", and Salem Media of Colorado, Inc.("Lessee"), a Colorado corporation. WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise the real property located in the State of Colorado, County of Adams, more particularly described as set forth in Exhibit "A", which is attached hereto and made a part hereof (the "Real Property"); and, WHEREAS, Lessee uses said Real Property in operating its radio station KNUS-AM, Denver, Colorado (the "Station"); and, WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its Improvements and other related broadcasting equipment (together comprising the "Installations"). Lessee is fully familiar with the physical condition of the Land and has received the same in good order and condition, and agrees that the Land complies in all respects with all requirements of this Agreement. Lessee shall use the Land exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on March 15, 1996 (the "Commencement Date"), and shall expire on March 22, 2006 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date Lessee shall pay a base rent of EIGHTEEN THOUSAND DOLLARS ($18,000) per annum, in equal monthly installments of ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the ninth (9th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for an increase, if any, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics, as measured in February of each year; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for February of the year in which the Adjustment Date falls and the denominator of which shall be the CPI for February of the year in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending moneys in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that the Improvements (including the radio tower(s) located on the Real Property) are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any mortgages and security agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such mortgages and security agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 12 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 13 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 14 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 15 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 16 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR LESSEE ATSINGER FAMILY TRUST SALEM MEDIA OF COLORADO, INC. /s/ Edward G. Atsinger, III /s/ Eric H. Halvorson - ------------------------------- ------------------------------- EDWARD G. ATSINGER, III ERIC H. HALVORSON Trustee Vice-President STUART W. EPPERSON REVOCABLE LIVING TRUST /s/ Stuart W. Epperson - ------------------------------- STUART W. EPPERSON Trustee EX-10.05.16 17 ANTENNA/TOWER LEASE Exhibit 10.05.16 AGREEMENT BETWEEN EDWARD G. ATSINGER III AND STUART W. EPPERSON AND SALEM MEDIA OF OHIO, INC. February 1, 1992 AGREEMENT made as of this first day of February, 1992, by and between EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and SALEM MEDIA OF OHIO, INC., an Ohio corporation ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the County of Delaware, State of Ohio, more particularly described as set forth in Exhibit A, which is attached hereto and made a part hereof (the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its broadcasting tower and equipment (the "Installations"). -1- Lessee is fully familiar with the physical condition of the Real Property and has received the same in good order and condition, and agrees that the Real Property complies in all respects with all requirements of this Agreement. Lessee shall use the Real Property exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. -2- (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. -3- SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on February 1, 1992 (the "Commencement Date") and shall expire on January 31, 2002 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: -4- (i) During the first year beginning with the Commencement Date, a base rent of Thirty-Eight Thousand Four Hundred Dollars ($38,400.00) per annum, in equal monthly installments of Three Thousand Two Hundred Dollars ($3,200.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in -5- any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean -6- order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000.00), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, -7- and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be -8- paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. -9- SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability -10- arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in Ohio and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal -11- injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but -12- at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such -13- approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. -14- (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. -15- (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. -16- (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. -17- (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will not exceed Acceptable Radio Frequency Radiation Standards. (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and -18- validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that its broadcasting tower is and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. -19- (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (1) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. -20- SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for -21- Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of -22- the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. -23- SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, -24- Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement -25- of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- USE OF REAL PROPERTY BY LESSOR ------------------------------ At all times during the Term of this Agreement Lessor shall have the exclusive right to place and operate, or to permit another tenant to place and operate, broadcasting equipment on the Leased Premises and on the Lessee's broadcasting tower, or to use the Real Property for any other lawful purpose, provided, such actions do not interfere with Lessee's operations. Lessor shall have no obligation to pay rent for the uses described above. Lessor shall hold Lessee harmless from and defend Lessee against any and all claims or liability arising out of or in any way connected to Lessor's use or occupancy of the Real Property. SECTION 12 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's s interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as -26- part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 13 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 14 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio tower located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. -27- SECTION 15 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 16 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of Ohio. SECTION 17 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. -28- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: SALEM MEDIA OF OHIO, INC. /s/ EDWARD G. ATSINGER III By: /s/ EDWARD G. ATSINGER III - --------------------------------- ------------------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III President /s/ STUART W. EPPERSON - --------------------------------- STUART W. EPPERSON -29- EXHIBIT A Situate in the State of Ohio, County of Delaware, and being a part of Lot No. 5 in the Subdivision of Quarter Township 3, Range 18, United States Military Lands and being part of the tract of land known as Parcel No. 1 conveyed to Peoples Broadcasting Corporation as the same is shown of record in Deed Book 220, Page 14, Recorder's Office, Delaware County, Ohio and being more particularly described as follows: Beginning for reference at the intersection of the centerline of Powell Road with the original centerline of U.S. Route No. 23 and the southwesterly corner of the aforementioned Lot No. 5 and the northwesterly corner of Lot No. 6, said point also being the southwesterly corner of the aforementioned Parcel No. 1 said point being located N 89(degrees) 37' 45" W a distance of 1.57 feet from a point in the curved centerline of existing U.S. Route No. 23 at Sta. 75+53.54 (Del-23-1.22); Thence with the centerline of Powell Road and the southerly line of the aforementioned Lot No. 5 and the southerly line of the aforementioned Parcel No. 1 S 89(degrees) 37' 45" E a distance of 2057.09 feet to a railroad spike at the point of true beginning of the tract of land herein described; Thence N 00(degrees)" 22' 15" E a distance of 250.49 feet to an iron pin in a curve, passing an iron pin on line in the northerly right-of-way line of Powell Road at a distance of 20.00 feet; Thence with a curve to the right having a radius of 600 feet, a central angle of 190(degrees) 44' 08" and a length of 1997.38 feet, the chord to which bears N 44(degrees) 27' 29" E a distance of 1194.74 feet to an iron pin; Thence N 88" 12' 36" E a distance of 227.83 feet to an iron pin in the westerly line of the Penn Central Railroad; Thence with the westerly right-of-way line of the Penn Central Railroad S 1(degree) 47' 24" E a distance of 1075.00 feet to an iron pin at an angle point in said right-of-way line; Thence continuing with the right-of-way line of the Penn Central Railroad S 84(degrees)" 06' 15" W a distance of 210.70 feet to an iron pin in the northerly right-of-way line of Powell Road; Thence S 0(degrees)" 22' 15" W a distance of 20.00 feet to a railroad spike in the centerline of Powell Road and the southerly line of the aforementioned Lot No. 5 and the southerly line of the aforementioned Parcel No. 1; Thence with the centerline of Powell Road, the southerly line of the aforementioned Lot No. 5 and the southerly line of the aforementioned Parcel No. 1 N 89(degrees)" 37' 45" W a distance of 890.00 feet to the point of true beginning containing 33.698 acres more or less of which 0.408 acres more or less lies within the right-of-way line of Powell Road. EX-10.05.17.01 18 STUDIO LEASE EXHIBIT 10.05.17.01 AGREEMENT BETWEEN EDWARD G. ATSINGER III AND MONA J. ATSINGER AND STUART W. EPPERSON AND NANCY K. EPPERSON AND SALEM MEDIA OF OREGON, INC. February 1, 1992 AGREEMENT made as of this first day of February, 1992, by and between EDWARD G. ATSINGER III AND MONA J. ATSINGER AND STUART W. EPPERSON AND NANCY K. EPPERSON ("Lessor"), and SALEM MEDIA OF OREGON, INC., an Oregon corporation ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and a building thereon (the "Building"), which Land and Building together comprise certain real property described as Lot 1 and 2, Paradise Park Addition, in the City of Portland, County of Multnomah and State of Oregon (the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its broadcasting equipment (the "Installations"). Lessee is fully familiar with the physical condition of the Leased Premises -1- and has received the same in good order and condition, and agrees that the Leased Premises complies in all respects with all requirements of this Agreement. Lessee shall use the Leased Premises exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number -2- which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. -3- SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on February 1, 1992 (the "Commencement Date") and shall expire on January 31, 2002 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: -4- (i) During the first year beginning with the Commencement Date, a base rent of Fifty-Two Thousand Eight Hundred Dollars ($52,800.00) per annum, in equal monthly installments of Four Thousand Four Hundred Dollars ($4,400.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in -5- any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Leased Premises or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Leased Premises and the adjoining streets and ways in good and clean -6- order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Leased Premises at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Leased Premises whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Building or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Building, or reduce the fair market value thereof below its value immediately before such alteration or addition, or impair its usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) -7- does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Leased Premises or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Leased Premises or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be -8- paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Leased Premises, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Leased Premises nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Leased Premises or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. -9- SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Building against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Building and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from -10- claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in Oregon and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee' s option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or -11- resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee' s request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor' s expense. Lessee shall not enter into any settlement -12- of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee' s or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to -13- which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. -14- (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. -15- (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. -16- (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. -17- (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will not exceed Acceptable Radio Frequency Radiation Standards. (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and -18- validly authorized by all, necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) In case of any material damage to or destruction of the Leased Premises or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Building or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Building as nearly as possible to its value, condition and character immediately prior to such damage or destruction. (j) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may -19- be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (k) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee' s interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or -20- (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, -21- unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceedings and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction -22- that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements -23- placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the -24- interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Leased Premises to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Leased Premises to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Leased Premises shall not be denied Lessee. SECTION 11 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or -25- exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of the Lessor's assignment of its interest in and to this Lease. SECTION 12 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves that other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 13 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and the Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. -26- SECTION 14 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, as 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 15 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of Oregon. SECTION 16 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. -27- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written. LESSOR: LESSEE: SALEM MEDIA OF OREGON, INC. By: - ----------------------------- --------------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III President - ----------------------------- MONA J. ATSINGER /s/ Stuart W. Epperson - ----------------------------- STUART W. EPPERSON /s/ Nancy K. Epperson - ----------------------------- NANCY K. EPPERSON -28- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written. LESSOR: LESSEE: SALEM MEDIA OF OREGON, INC. /s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III - ----------------------------- --------------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III President /s/ Mona J. Atsinger - ----------------------------- MONA J. ATSINGER /s/ Stuart W. Epperson - ----------------------------- STUART W. EPPERSON /s/ Nancy K. Epperson - ----------------------------- NANCY K. EPPERSON -28- CERTIFICATE OF UNANIMOUS CONSENT OF SALEM MEDIA OF OREGON, INC. The undersigned, being all of the members of the Board of Directors of Salem Media of Oregon, Inc. an Oregon corporation ("Corporation"), do hereby consent to and adopt the following resolutions: RESOLVED that the Corporation is hereby authorized and directed to lease the real estate owned by Edward G. Atsinger III and Mona J. Atsinger and Stuart W. Epperson and Nancy K. Epperson and located in Portland, Oregon, pursuant to the terms of a lease in the form of and with the terms and conditions set forth in the Lease Agreement attached hereto and incorporated herein by reference; and RESOLVED that the officers of the Corporation are hereby directed to take any and all actions they deem necessary, advisable, convenient or proper to carry out the intent of these resolutions. IN WITNESS WHEREOF the undersigned have executed this certificate of unanimous consent as of the 1st day of February, 1992. /s/ Stuart W. Epperson --------------------------- Stuart W. Epperson /s/ Edward G. Atsinger III --------------------------- Edward G. Atsinger III EX-10.05.17.02 19 ANTENNA/TOWER LEASE EXHIBIT 10.05.17.02 AGREEMENT BETWEEN EDWARD G. ATSINGER III AND STUART W. EPPERSON AND SALEM MEDIA OF OREGON, INC. February 1, 1992 AGREEMENT made as of this first day of February, 1992, by and between EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and SALEM MEDIA OF OREGON, INC., an Oregon corporation ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the County of Washington, State of Oregon, more particularly described as set forth in Exhibit A, which is attached hereto and made a part hereof (the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Land (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its broadcasting towers and equipment (the "Installations"). -1- Lessee is fully familiar with the physical condition of the Real Property and has received the same in good order and condition, and agrees that the Real Property complies in all respects with all requirements of this Agreement. Lessee shall use the Real Property exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. -2- (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. -3- SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on February 1, 1992 (the "Commencement Date") and shall expire on January 31, 2002 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: -4- (i) During the first year beginning with the Commencement Date, a base rent of Twelve Thousand Dollars ($12,000.00) per annum, in equal monthly installments of One Thousand Dollars ($1,000.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the -5- immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or -6- appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000.00), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, -7- and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be -8- paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. -9- SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability -10- arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in Oregon and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal -11- injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but -12- at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such -13- approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. -14- (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. -15- (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. -16- (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. -17- (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will not exceed Acceptable Radio Frequency Radiation Standards. (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and -18- validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that its broadcasting towers are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. -19- (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (1) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. -20- SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for -21- Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of -22- the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. -23- SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, -24- Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement -25- of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- USE OF REAL PROPERTY BY LESSOR ------------------------------ At all times during the Term of this Agreement Lessor shall have the exclusive right to place and operate, or to permit another tenant to place and operate, broadcasting equipment on the Leased Premises and on the Lessee's broadcasting towers, or to use the Real Property for any other lawful purpose, provided, such actions do not interfere with Lessee's operations. Lessor shall have no obligation to pay rent for the uses described above. Lessor shall hold Lessee harmless from and defend Lessee against any and all claims or liability arising out of or in any way connected to Lessor's use or occupancy of the Real Property. SECTION 12 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as -26- part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 13 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 14 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio tower located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. -27- SECTION 15 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 16 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of Oregon. SECTION 17 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. -28- IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: SALEM MEDIA OF OREGON, INC. /s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III - ----------------------------- -------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III President /s/ Stuart W. Epperson - ----------------------------- STUART W. EPPERSON -29- EXHIBIT "A" All that real property situated in the County of Washington, State of Oregon, to wit: Beginning at the Southwest corner of the Southeast quarter of Section 13, Township 1 South, Range 1 West of the Willamette Meridian, and running thence North 1(degree) 21' East 557.2 feet to a pipe set on the South boundary of the tract conveyed to S.B. and Vivian Lawrence by deed recorded at page 360 of Book 115, Records of Deed for said County; thence with said South boundary,North 85(degrees) 20' East 940 feet to an iron pipe; thence South 1(degree) 21' West 654.2 feet to the South boundary of said Section and thence North 88(degrees) 42' West 935.2 feet to the place of beginning. CERTIFICATE OF UNANIMOUS CONSENT OF SALEM MEDIA OF OREGON, INC. The undersigned, being all of the members of the Board of Directors of Salem Media of Oregon, Inc., an Oregon corporation ("Corporation"), do hereby consent to and adopt the following resolutions: RESOLVED that the Corporation is hereby authorized and directed to sell the real estate owned by it and located in Washington County, Oregon to Edward G. Atsinger III and Stuart W. Epperson for the amount of $77,000, such amount to be paid in cash. RESOLVED that the Corporation is hereby authorized and directed to lease said real estate from Edward G. Atsinger III and Stuart W. Epperson pursuant to the terms of a lease in the form of and with the terms and conditions set forth in the Lease Agreement attached hereto and incorporated herein by reference; and RESOLVED that the officers of the Corporation are hereby directed to take any and all actions they deem necessary, advisable, convenient or proper to carry out the intent of these resolutions. IN WITNESS WHEREOF the undersigned have executed this certificate of unanimous consent as of the 1st day of February, 1992. /s/ Stuart W. Epperson ----------------------------------- Stuart W. Epperson /s/ Edward G. Atsinger III ----------------------------------- Edward G. Atsinger III EX-10.05.18 20 ANTENNA/TOWER LEASE Exhibit 10.05.18 AGREEMENT BETWEEN EDWARD G. ATSINGER III, not individually but solely as Trustee of the Atsinger Family Trust, AND STUART W. EPPERSON, not individually but solely as Trustee of the Stuart W. Epperson Revocable Living Trust AND SALEM MEDIA OF PENNSYLVANIA, INC. January 27, 1993 AGREEMENT made as of this twenty-seventh day of January, 1993, by and between EDWARD G. ATSINGER III, not individually but solely as Trustee of the Atsinger Family Trust, AND STUART W. EPPERSON, not individually but solely as Trustee of the Stuart W. Epperson Revocable Living Trust ("Lessor"), and SALEM MEDIA OF PENNSYLVANIA, INC., a Pennsylvania corporation ("Lessee"). WHEREAS, Lessor owns certain land (the "Land") and certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the Township of Reserve, County of Allegheny and Commonwealth of Pennsylvania, more particularly described as set forth in Exhibit A, which is attached hereto and made a part hereof (the "Real Property"); and WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. -1- (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its broadcasting towers and equipment (the "Installations"). Lessee is fully familiar with the physical condition of the Real Property and has received the same in good order and condition, and agrees that the Real Property complies in all respects with all requirements of this Agreement. Lessee shall use the Real Property exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. -2- (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, -3- materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on January 27, 1993 (the "Commencement Date") and shall expire on January 31, 2003 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 -4- Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date, a base rent of Twenty-Four Thousand Dollars ($24,000) per annum, in equal monthly installments of Two Thousand Dollars ($2,000.00) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the nineteenth (19th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the month in which the Commencement Date falls, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for the calendar month of the -5- Adjustment Date and the denominator of which shall be the CPI for the month in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. -6- SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the -7- estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect -8- thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection -9- with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an -10- amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in Pennsylvania and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. -11- (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor s or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel -12- selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss -13- or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld) , against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. -14- SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises -15- relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the -16- foregoing representation and warranty in entering into this Agreement and in expending monies in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the -17- terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). Lessor represents and warrants its equipment and property at the Leased Premises and the operation thereof do not and will not exceed Acceptable Radio Frequency Radiation Standards. (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased -18- Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that its broadcasting towers are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be -19- sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective -20- purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its -21- business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased -22- Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and -23- Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNNENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any Mortgages and Security Agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such Mortgages and Security Agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed -24- of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement -25- of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- USE OF REAL PROPERTY BY LESSOR ------------------------------ At all times during the Term of this Agreement Lessor shall have the exclusive right to place and operate, or to permit another tenant to place and operate, broadcasting equipment on the Leased Premises and on the Lessee's broadcasting towers, or to use the Real Property for any other lawful purpose, provided, such actions do not interfere with Lessee's operations. Lessor shall have no obligation to pay rent for the uses described above. Lessor shall hold Lessee harmless from and defend Lessee against any and all claims or liability arising out of or in any way connected to Lessor's use or occupancy of the Real Property. SECTION 12 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as -26- part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 13 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 14 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. -27- SECTION 15 ----------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 16 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the Commonwealth of Pennsylvania. SECTION 17 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. -28- IN WITNESS WHEREOF, .the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: SALEM MEDIA CORPORATION /s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III - --------------------------- ----------------------------- EDWARD G. ATSINGER III EDWARD G. ATSINGER III Trustee President Atsinger Family Trust /s/ Stuart W. Epperson - --------------------------- STUART W. EPPERSON TRUSTEE Stuart W. Epperson Revocable Living Trust -29- Exhibit "A" ALL that certain lot or piece of ground situate in the Township of Reserve, County of Allegheny and Commonwealth of Pennsylvania, bounded and described as follows, to-wit: BEGINNING at the point formed by the intersection of the Southerly line of land now or formerly of William H. Schneider and the Westerly line of Mount Troy Road (33 feet wide), formerly known as Troy Hill Road; thence along said Westerly line of Mount Troy Road, South 27 degrees 19' East, a distance of 247.90 feet to an iron pin; thence by a line in said Mount Troy Road, South 41 degrees 38' East, a distance of 161.00 feet to a point; thence by a line in said Mount Troy Road, South 52 East, a distance of 21.10 feet to an existing nail; thence along the Northwesterly line of land now or formerly of Ridgelawn Cemetery Company, South 57 degrees 18' West, a distance of 1032.695 feet to an iron pin; thence along the Easterly line of Lots Nos. 52, 53, 54, 55, 56, 57, 58, 59, 60 and 61 in the Feldman Plan of Lots (recorded in Plan Book Volume 24, pages 102 and 103), land now or formerly of Alice Melensky, and land now or formerly of Thelma M. Filmore, North 0 degrees 41' 36" West, a distance of 924.829 feet to an iron pin; and thence along the Southerly line of Lots Nos. 20 and 21 in the Sherling Manor Plan (recorded in Plan Book Volume 42, page 29) and the aforesaid land now or formerly of William H. Schneider, South 88 degrees 49' East, a distance of 643.00 feet to a nail at the place of beginning. EX-10.05.19 21 ANTENNA/TOWER LEASE EXHIBIT 10.05.19 ASSIGNMENT AND ASSUMPTION ------------------------- This Assignment and Assumption is made and entered into this 5th day of August, 1994 by and among COMMUNICOM CO. OF AMERICA, L.P., a Colorado limited partnership ("Assignor") and SALEM MEDIA OF TEXAS, a Texas corporation ("Assignee"). WITNESSETH: ---------- WHEREAS, under the Purchase Agreement dated as of March 30, 1994 (the "Agreement"), between Assignor and Assignee, Assignor is obligated to assign to Assignee all of its right, title and interest in and to certain contracts and obligations, and Assignee is obligated to assume such contracts and obligations. NOW THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Assignor hereby assigns, sells, transfers, sets over and delivers, as of August 6, 1994, unto Assignee all of Assignor's right, title and interest in and to the agreements set forth on Schedule I attached hereto and incorporated herein by reference, and Assignee hereby accepts such assignment. 2. Assignee, as of August 6, 1994, hereby assumes and agrees to perform, without duplication, the liabilities and obligations arising under the agreements assigned to Assignee under Paragraph I above to the extent such liabilities and obligations arise on and after August 6, 1994. Except as specifically set forth herein, Assignee shall not assume or in any manner be liable for any duties, responsibilities, obligations or liabilities of Assignor of any kind or nature whether express or implied, known or unknown, contingent or absolute. 3. All representations and warranties under the Agreement and relating to the agreements and obligations assigned and assumed hereunder shall survive, for the time specified in the Agreement, the execution and delivery of this Assignment and Assumption. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Assignment and Assumption as of the date first above written. COMMUNICOM CO. OF AMERICA, L.P. By: CCA, INC., General Partner By: /s/ Richard L. Kylberg --------------------------------- Richard L. Kylberg President SALEM MEDIA OF TEXAS, INC. By /s/ Eric H. Halvorson --------------------------------- Eric H. Halvorson Vice President SCHEDULE 1 KSLR Contracts - -------------- l. Agreement between Brad Burkhart Christian Media, Inc. and Seller dated January 12, 1993. 2. Service Agreement between CellularOne and Seller dated September 30, 1993. 3. Agreement between Metro Traffic Control, Inc. and Seller dated November 9, 1993. 4. License Agreement between Nordic Software, Inc. and Seller dated March 14, 1994. 5. Agreement between USA Radio Network and Seller dated May 1, 1993. 6. All cash and barter contracts for sale of advertising and programming. 7. Lease between E. Atsinger III and S. Epperson and Seller dated March 1, 1983. [Tower Lease] ASSIGNMENT OF LEASE AND ASSUMPTION OF OBLIGATIONS THIS ASSIGNMENT dated January 7, 1988 is between SALEM MEDIA OF TEXAS, INC., a Texas corporation, with an address of 2310 Ponderosa Drive, Suite 29, Camarillo, CA 93010 ("Assignor") and AMERICAN COMMUNICOM CORP. OF TEXAS, a Colorado corporation, with an address of Plaza 6000 Office Park, 6000 East Evans Avenue, Building One, Suite 400, Denver, Colorado 80222 ("Assignee"). For good and valuable consideration and pursuant to Section 11(a) of the Asset Purchase Agreement dated October 16, 1987 among Assignor, Assignee and the individuals named therein, Assignor hereby conveys, grants, transfers and assigns to Assignee, its successors and assigns, all of the right, title and interest of such Assignor in, to and under the Lease dated March 1, 1983 between Edward G. Atsinger III and Stuart W. Epperson, co-trustees, as landlord, and Assignor, as tenant, as amended to date, and attached hereto as Exhibit A and incorporated herein by this reference (the "Lease"). TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns, forever; and Assignor, for itself, its successors and assigns, covenants and agrees with Buyer, its successors and assigns, that Assignor will for three years from the date hereof, WARRANT AND DEFEND the same against all persons whomsoever. Assignee, for itself, its successors and assigns, hereby accepts this Assignment, and agrees to assume as of the date hereof all of the tenant's obligations under the Lease accruing from and after the date hereof, and agrees to indemnify, defend and hold harmless Assignor, its successors and assigns, from and against any damage, liability, loss, expense or deficiency which such Assignor may pay or suffer by reason of any claims or liabilities arising out of the obligations assumed by Assignee pursuant to this Assignment. Assignor, for itself, its successors and assigns hereby represents and warrants to Assignee, its successors and assigns, that: (i) Assignor is the lawful owner of and has good, valid and marketable title as lessee to the leasehold interest created by the Lease and to the interest above assigned in, to and under the Lease; (ii) Assignor's right, title and interest in, to and under the Lease is free and clear from all liens, encumbrances or adverse claims of any nature; (iii) the Lease is in full force and effect and Assignor is not in default thereunder and no event has occurred that with notice or the passage of time would constitute a default thereunder; (iv) Assignor has good right, full power and lawful authority to assign and transfer all of its right, title and interest in, to and under the Lease; (v) the Lease constitutes the legal, valid and binding obligations of the parties thereto, enforceable against such parties in accordance with their respective terms; (vi) there is no liability or obligation of Assignor as tenant with respect to the Lease which, pursuant to the terms thereof, is required to be paid or otherwise performed, or is required to have been paid or otherwise performed, as of the date hereof, which has not been paid or otherwise performed in full; (vii) Assignor has obtained each consent, approval and authorization and filed each document required to be obtained by Assignor from or filed by Assignor with any person or entity with respect to such assignment and transfer; and (viii) immediately after the assignment and transfer hereunder, Assignee will have good, valid and marketable title to the leasehold interest created by the Lease and Assignee's right, title and interest in, to and under the Lease will be free and clear of all liens, encumbrances or adverse claims of any nature. Assignor hereby assigns and transfers to Assignee, its successors and assigns, to the extent held by Assignor, all warranties of others relating to the Lease conveyed, transferred and assigned hereunder. EXECUTED by the parties on the day and year first above written. ASSIGNOR: SALEM MEDIA OF TEXAS, INC., a Texas corporation By: /s/ [SIGNATURE APPEAR HERE] --------------------------- Its: President --------------------------- -2- ASSIGNEE: AMERICAN COMMUNICOM CORP. OF TEXAS, a Colorado corporation By: /s/ John F. Mueller, Jr. -------------------------------- John F. Mueller, Jr., Vice President Its: V.P. & C.O.O. ------------------------------- THE STATE OF TEXAS ) ) ss. COUNTY OF BEXAR ) Before me Robert N. Lepine on this day personally appeared Edward G. Atsinger III, the President of SALEM MEDIA OF TEXAS, INC., known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purpose and consideration therein expressed. [Seal] Given under my hand and seal of office this 7th day of January A.D., 1988. /s/ Robert N. Lepine ------------------------------- Notary Public My commission expires 9-30-90 . ------------------------------ THE STATE OF TEXAS ) ) ss. COUNTY OF BEXAR ) Before me Robert N. Lepine on this day personally appeared John F. Mueller, Jr., the Vice President of AMERICAN COMMUNICOM CORP. OF TEXAS, known to me to be the person whose name is subscribed to the foregoing instrument and -3- acknowledged to me that he executed the same for the purpose and consideration therein expressed. [Seal] Given under my hand and seal of office this 7th day of January A.D., 1988. [SEAL APPEARS HERE] /s/ Robert N. Lepine ------------------------------- Notary Public My commission expires 9/30/90 --------------------------------- -4- EXHIBIT the to Assignment of Lease and Assumption of Obligations [attach copy of lease, the amendment dated October 1, 1987 and the new amendment dated of even date with closing] Exhibit A LEASE ----- THIS LEASE is made and entered into as of the 1st day of March, 1983, by and between EDWARD G. ATSINGER III and STUART W. EPPERSON, not individually but solely as co-Trustees of the Epperson-Atsinger 1983 Family Trust, hereinafter referred to as "Landlord", and SALEM MEDIA OF TEXAS, INC., a Texas corporation, hereinafter referred to as "Tenant", with reference to the following recitals of facts: RECITALS: --------- A. Landlord purchased the property on February 22, 1983. B. The parties desire to enter into this Lease which shall contain all of the rights and obligations of the parties to each other with respect to the subject property. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties agree as follows: 1. Property Leased. Landlord hereby leases to Tenant and Tenant hereby --------------- rents from Landlord on the terms, covenants and conditions hereinafter set forth, those certain premises and appurtenances located at 7025 Gonzales Road, San Antonio, Bexar County, Texas, being an approximately thirty-five and one-half (35.5) acre tract of land and more fully described on Exhibit A attached hereto (the "premises"). Tenant acknowledges that portions of the property are unimproved, and that Landlord shall have the right to lease such portions of the property for any lawful purpose and, if Landlord so desires, to subdivide portions of the property and sell such portions, as long as Landlord's other leasing activities do not interfere with the operation of Tenant's radio station, transmission equipment and the directional array ground system. Landlord agrees to indemnify Tenant for any damage or injury caused by other tenants to the radio station, transmitting equipment and directional array ground system and to promptly correct the same upon demand. 2. Term. The term of this Lease is twenty-four (24) years, commencing ---- on March 1, 1983, and terminating on February 28, 2007. 3. Use. The premises shall be used to operate a radio station, --- including but not limited to, use as a radio studio, operation of a directional antenna system including a transmitter for use by the radio station, and for such uses as are incidental or customarily related thereto. The premises shall not be used for any other purposes without Tenant first obtaining the written consent of Landlord thereto, which consent the Landlord agrees shall not be unreasonably or arbitrarily withheld or delayed. 4. Rent. Tenant shall pay rent to Landlord during the term of this ---- Lease as follows: 4.1 During the period March 1, 1983 through February 28, 1988, the amount of One Thousand Seven Hundred Fifty Dollars ($1,750.00) per month (the "Base Rent"). 4.2 During the period March 1, 1988 through February 28, 1993, a monthly amount equal to the greater of (i) Two Thousand Twelve and 50/100 Dollars ($2,012.50) or (ii) the Base Rent multiplied by a fraction, the numerator of which shall be the cost of living index figure (as hereinafter defined) for February, 1988, and the denominator of which -2- shall be the cost of living index figure for February, 1983 (the "Base Index"). 4.3 During the period March 1, 1993, through February 28, 1998, a monthly amount equal to the greater of (i) Two Thousand Two Hundred Seventy-five Dollars ($2,275.00) or (ii) the Base Rent multiplied by a fraction, the numerator of which shall be the cost of living index figure for February, 1993, and the denominator of which shall be the Base Index. 4.4 During the period March 1, 1998, through February 28, 2003, a monthly amount equal to the greater of (i) Two Thousand Five Hundred Thirty-seven and 50/100 Dollars ($2,537.50), or (ii) the Base Rent multiplied by a fraction, the numerator of which shall be the cost of living index figure for February, 1998, and the denominator of which shall be the Base Index. 4.5 During the period March 1, 2003, through February 28, 2007, a monthly amount equal to the greater of (i) Two Thousand Eight Hundred Dollars ($2,800.00) or (ii) the Base Rent multiplied by a fraction, the numerator of which shall be the cost of living index figure for February, 2003, and the denominator of which shall be the Base Index. 4.6 For purposes of this Lease, the "cost of living index figure" shall be the index number in the column for "all items" in the table entitled "Consumer Price Index-U.S. Cities Average," published by the Bureau of Labor Statistics of the United Stated Department of Labor in the "Monthly Labor Review." In the event that the Bureau of Labor Statistics shall change the base period (1967 equals 100), the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases -3- publishing the Consumer Price Index, or materially changes the method of its computation, Landlord and Tenant shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation of change by a responsible financial periodical of recognized authority to be then chosen by Landlord subject to reasonable consent of Tenant. 4.7 Rent shall be payable in lawful money of the United States to Landlord at 2310 Ponderosa Drive, Suite 29, Camarillo, California 93010, on the first day of each month. 5. Taxes and Assessments. Landlord shall pay all real property taxes, --------------------- governmental special assessments and land benefit charges levied against the real property leased to Tenant herein. Tenant shall pay before delinquency all general and special taxes, licenses, fees, charges or taxes imposed by any governmental entity by reason of the Lease, Tenant's occupation or use of the leased premises or Tenant's activities thereon. In addition, Tenant shall pay all taxes levied against the personal property of Tenant or improvements installed by Tenant becoming a part of the real property of every description, maintained on and used by Tenant in connection with the leased premises. All of such charges, costs, and expenses shall constitute additional rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay rent. 6. Improvements. The term "improvements" as used herein means any ------------ improvement, addition or change to the leased premises, any alteration of the leased premises, or anything placed, installed or constructed in, on or upon the leased premises, whether or not -4- characterized by law as a fixture, but does not include Tenant's personal property. Tenant shall not make, or permit to be made any structural improvements or alterations, in, on, or to the leased premises or any part thereof without the prior written consent of Landlord. Any improvements made in, on, or to the leased premises shall be at the sole expense of Tenant and any additions to or alterations of said premises shall become at once a part of the realty and belong to Landlord. Tenant shall keep the premises and the property in which they are situated free from any liens arising out of any work performed on the leased premises, by or on behalf of Tenant, for material furnished to the leased premises, or for obligations incurred by Tenant. In making any alteration that Tenant has a right to make, Tenant shall not commence such improvement or alteration until three (3) days after Landlord has received notice from Tenant stating the date of commencement of the improvement or alteration so that Landlord can post and record any appropriate notice of nonresponsibility. All alterations shall be completed with due diligence. If any installation, alteration or improvement is required by law by any governmental authority, Tenant shall at Tenant's cost and expense promptly make such installation, alteration or improvement. Provided Tenant is not in default or in breach of this Lease beyond the expiration of any applicable grace periods, Tenant may during the term of this Lease, and shall immediately upon the expiration of this Lease, remove from the leased premises all of Tenant's personal property and trade fixtures and such other property which Landlord may during the term of this Lease agree or acknowledge in writing are improvements belonging to Tenant. -5- 7. Maintenance and Upkeep. By entry hereunder, Tenant accepts the ---------------------- premises as being in good and sanitary order, condition and repair. Tenant shall at Tenant's own cost and expense keep the entire property, including the outside areas and landscaping, in a clean, neat, sanitary and sightly condition at all times and free from dirt, debris, accumulation of waste and fire hazards. Tenant shall upon the expiration or sooner termination of this Lease surrender to Landlord the leased premises and appurtenances thereto in a good, sanitary order, condition and repair, ordinary wear and tear excepted. 8. Repairs. Tenant shall at its sole cost and expense maintain the ------- leased premises in good condition and shall make all necessary repairs thereto, whether or not structural in nature. 9. Indemnification; Liability Insurance. Tenant shall save and hold ------------------------------------ harmless, indemnify and defend Landlord from any damage or liability arising out of or relating to any death, bodily injury, or property damage resulting from, or in connection with, the acts of, or the maintenance, use, or occupation of the leased premises by Tenant, Tenant's agents, servants, employees, contractors, or patrons. Tenant shall, at Tenant's sole cost and expense, carry public liability insurance with liability limits of not less than $1,000,000.00 for the injury or death of one person and not less than $2,000,000.00 for the injury or death of more than one person in any one accident and property damage insurance in an amount of not less than $300,000.00 liability. Tenant shall not be responsible for the negligence of the Landlord, or their agents, servants, employees, contractors, patrons or invitees. All such insurance shall be carried with insurance companies satisfactory to Landlord. Tenant may provide certification of insurance under its blanket insurance policies in -6- satisfaction of this requirement. Said insurance shall name Landlord as a co-insured or an additional insured. Tenant shall furnish, or cause to be furnished to Landlord, upon request, certificates of insurance from the insurance carrier stating that such insurance is in full force and effect, that the premiums thereon have been paid and that the insurance carrier will give Landlord at least ten (10) days prior written notice of any termination, cancellation, or modification of such insurance. 10. Fire Insurance. Through the term of this Lease, Tenant shall maintain -------------- at its sole cost and expense, fire and extended coverage insurance on the premises and the appurtenances being leased by Tenant, insuring the premises for not less than ninety percent (90%) of its replacement value. Landlord and Tenant shall be named as loss payees as their interests shall appear and, on Landlord's demand, Tenant shall also include the holder of any mortgage or deed of trust encumbering the fee as a loss payee to the extent of that mortgagee's interest. Tenant shall furnish, or cause to be furnished to Landlord, upon request, certificates of insurance from the insurance carrier stating that such insurance is in full force and effect, that the premiums have been paid and that the insurance carrier will give Landlord at least ten (10) days prior written notice of any termination, cancellation or modification of such insurance. Tenant may provide a certificate of insurance under its blanket insurance policies in satisfaction of this requirement. If Tenant fails or refused to procure or maintain said fire or liability insurance as required by this Lease or fails or refuses to furnish Landlord with the required proof that the insurance has been procured and is in force and paid for, Landlord shall have the right, at Landlord's option upon five (5) days written notice, to procure and -7- maintain such insurance. The premium paid by Landlord shall be treated as additional rent due and payable immediately. Landlord shall give prompt notice of the payment of such premiums, stating the amounts paid and the insurer or insurers, and interest shall run from the date of the notice. 11. Assignment and Subletting. Tenant shall not assign this Lease or ------------------------- any interest therein, and shall not sublet said premises or any part thereof, or any right or privilege appurtenant thereto, or allow any other person (the agents, contractors, permittees, invitees and employees of Tenant excepted) to occupy or use said premises, or any portion thereof, without the prior written consent of Landlord. In the event Landlord grants such consent, Tenant shall remain liable under the terms of this Lease. Landlord agrees that it shall not unreasonably withhold or delay its consent to an assignment of this Lease. The test of reasonableness for the withholding of Landlord's consent to the assignment of the Lease shall not necessarily be the same as the test applied by the FCC in deciding whether to approve the sale of Tenant's radio station. A consent to one assignment, subletting, occupation, or use by another person shall not be deemed to be a consent to any subsequent assignment, subletting, occupation, or use by another person. Any assignment or subletting without such consent of Landlord shall be void, and shall, at the option of Landlord, terminate this Lease. This Lease shall not, nor shall any interest of Tenant therein, be assignable by operation of law, without the written consent of Landlord. Tenant may, without Landlord's consent, have the right to assign this Lease to a corporation with which it may merge or consolidate or to a purchaser of substantially all of Tenant's assets, if the assignee executes an agreement assuming Tenant's obligations hereunder. -8- 12. Utilities. Tenant shall pay for all utilities furnished to or --------- delivered at the leased premises, including connection and installation charges and shall make payments directly to the utility company furnishing same. Tenant shall protect Landlord and save Landlord harmless from any liens arising out of the nonpayment of its utility charges. 13. Entry by Owner; Inspection and Notices. Except as expressly provided -------------------------------------- to the contrary herein, Tenant shall permit Landlord and its agents to enter into and upon said premises upon first giving reasonable notice, reasonable notice being twenty-four (24) hours, for the purpose of inspecting the same or for the purpose of making repairs, alterations, or additions to any portion of said building to be made by Landlord upon Tenant's breach of its obligations to maintain and repair the premises, including the erection and maintenance of such scaffolding, canopies, fences and props as may be required, or for the purpose of posting notices of non-responsibility for alterations, additions, or repairs, or for the purpose of placing upon the property in which the said premises are located any usual or ordinary "for sale" signs, or to show during the last twelve (12) months of the term the premises to prospective future tenants, without any rebate of rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the premises occasioned thereby. Prior notice is not required in the event of an emergency situation. Tenant shall permit Landlord, at any time within twelve (12) months prior to the expiration of the Lease, to place upon said premises any usual or ordinary "to rent" or "to lease" signs. 14. Waivers of Damages. Tenant as a material part of the consideration to ------------------ be rendered to Landlord, hereby waives all claims against -9- Landlord, except for Landlord's, its employees', contractors', invitees', agents and servants' gross negligence or willful misconduct. 15. Destruction of Premises. In the event of a total or partial destruction ----------------------- of the leased premises during the term of this Lease, Tenant shall forthwith repair the same upon the receipt of insurance proceeds, provided such repairs can be made within one hundred twenty (120) days under the applicable laws and regulations. Landlord will cooperate with Tenant in such manner as is necessary in order that the insurance proceeds payable under the insurance obtained under Paragraph 10 are paid to Tenant as promptly as possible. Any such destruction shall not annul or void this Lease; however, rent to be paid by Tenant hereunder shall be equitably adjusted according to the amount and value of the undamaged premises remaining. If such repairs cannot be made within one hundred twenty (120) days, this Lease may be terminated at the option of Tenant. If the leased premises are not rebuilt as provided herein, the insurance proceeds obtained under Paragraph 10 shall belong to Landlord, except that Tenant shall be entitled to that portion of the award, if any, attributable to the destruction of Tenant's trade fixtures and personal property which Tenant had the right to remove upon termination of this Lease. 16. Remedies Upon Default. --------------------- (a) Landlord's Remedies. Except as otherwise provided herein, should ------------------- Tenant default in the performance of any covenant or provision herein with reference to the payment of rent or other payment of money, and such default continues for five (5) days after receipt by Tenant of written notice from Landlord of such default, or should Tenant default in the performance of any other covenant or provision herein, -10- other than the payment of money, and such default, if curable, is not cured within fifteen (15) days after service upon Tenant of a written notice thereof from Landlord, or if not curable within fifteen (15) days, Tenant fails to commence a cure within fifteen (15) days after service upon Tenant of a written notice thereof from Landlord and thereafter diligently pursues such cure to completion, Landlord may terminate Tenant's right of possession to the leased premises and may recover from Tenant all of the damages to which Landlord is entitled under the laws of the State of Texas. None of Landlord's rights herein specified in the event of a default by Tenant shall prejudice any other legal remedies available to Landlord other than those herein enumerated. (b) No Waiver. Efforts by Landlord to mitigate the damages caused by --------- Tenant's breach of this Lease shall not waive Landlord's right to recover damages under this paragraph. For the purpose of subparagraph (a) above, the following shall not constitute a termination of Tenant's right of possession: (1) Acts of maintenance or preservation or efforts to relet the property; and (2) Appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease. (c) Reentry. Upon a default of Tenant not cured within the time specified ------- in subparagraph (a), or if Tenant abandons the premises, Landlord shall have the right to reenter the leased premises and take possession thereof with or without terminating the Lease upon giving the notice of reentry as required by law. Upon such reentry, Landlord may (but is not obligated to do so) relet the leased premises for the benefit of the Landlord and Tenant on such terms and conditions and at such rental as may then be reasonably available to Landlord. Such reletting shall not relieve Tenant from any of Tenant's obligations hereunder unless the Lease is terminated by Landlord by a written notice of termination served on Tenant. 17. Waste; Nuisance. Tenant shall not commit, or suffer to be committed, --------------- any waste upon the said premises, nor cause, maintain or permit any nuisance in, on or about the premises. 18. Compliance with Law. Tenant shall, at Tenant's sole cost and expense, ------------------- comply with all of the requirements of all Municipal, State and Federal authorities now in force, or which may hereafter be in force, pertaining to the said premises, and shall faithfully observe in the use of the premises all Municipal ordinances and State and Federal statutes now in force or which may hereafter be in force. The judgment of any court of competent jurisdiction, after appeals have been taken or waived, or the admission of Tenant in any action or proceeding against Tenant, whether Landlord is a party thereto or not, that Tenant has violated any such ordinance or statute in the use of the premises shall be conclusive of that fact as between Tenant and Landlord. 19. Attorneys' Fees. If either party employs an attorney or attorneys to --------------- determine or enforce the provisions hereof, the prevailing party (whether by negotiation, settlement or suit) shall be paid his reasonable attorneys' fees and expenses by the non-prevailing party. 20. Time. Time is of the essence of this Lease. ---- 21. Condemnation. If the leased premises, or any part thereof, are taken by ------------ condemnation, or incident to the exercise of the power of eminent domain, (hereinafter referred to as "condemnation") the following shall apply: -12- (a) Termination of Lease. If the entire leased premises are taken or -------------------- acquired by condemnation this Lease shall terminate. Such termination shall take effect as of the date taking becomes effective by passage of title to the leased premises to the condemning authority pursuant to court order, or by the physical taking of possession of the leased premises by the condemning authority, whichever is earlier. If only a portion of the leased premises is taken or acquired by or incident to condemnation and a part thereof remains which in Landlord's opinion can be used for the purpose specified in Paragraph 3 of this Lease without compromising Tenant's activity or usability of the premises, this Lease shall, except for the part actually taken, remain in full force and effect. (b) Adjustment in Rent. If only a portion of the leased premises is ------------------ taken by condemnation and a part thereof remains which can be used for the purposes specified in Paragraph 3 of this Lease, rent payable under this Lease shall be equitably adjusted according to the amount and value of the leased premises remaining for Tenant's use. Such adjustment in rent shall take effect on the date title to the condemned portion of the leased premises passes to the condemning authority pursuant to court order or on the date the condemning authority takes physical possession of the condemned leased property, whichever is earlier. (c) Condemnation Award. All compensation paid for the land and ------------------ improvements taken, including severance damage, if any, shall belong to Landlord except that Tenant shall be entitled to any relocation award specifically for Tenant's benefit and such portion of the award attributable to Tenant's trade fixtures and personalty, if any. -13- (d) Non-Liability of Landlord. Landlord, under no circumstances, ------------------------- shall be or become liable for or on account of any damage to, loss of, or interference with Tenant's business occasioned by any condemnation or threat thereof. 22. Bankruptcy or Insolvency. It shall be a breach of this Lease and ------------------------ Landlord, at its option, upon giving written notice of termination to Tenant, may terminate this Lease for any of the following events: (a) Assignment of the Lease by operation of law; (b) The appointment of a receiver to take possession of all or substantially all of the assets of Tenant and the receiver is not discharged within thirty (30) days after his appointment; (c) A general assignment for benefit of creditors by Tenant; (d) The filing of a voluntary petition or arrangement in bankruptcy by Tenant; (e) The filing of an involuntary petition or arrangement in bankruptcy against Tenant and the same is not dismissed within sixty (60) days from the date of filing; and (f) Any other action taken or suffered by Tenant because of Tenant's insolvency. 23. Use of Tower by Landlord. At all times during this Lease, ------------------------ Landlord shall have the right to use of the radio tower located on the leased premises beginning at and including the location of antenna equipment used for broadcasting the signal of KISS-FM and continuing downward therefrom for a distance of thirty (30) feet; Landlord shall have no obligation to pay rent for the use described above and may use the -14- allowed space for any lawful purpose which does not interfere with Tenant's operations. Landlord shall hold Tenant harmless from and defend Tenant against any and all claims or liability arising out of or in any way connected to Landlord's use or occupancy of the allowed space. 24. Condition of Property Upon Surrender. Upon the expiration of the ------------------------------------ term of this Lease, or upon its sooner termination, for any reason, Tenant shall make any restorations required pursuant to Paragraph 6, shall peacefully vacate the leased premises and deliver the same an all improvements (except for those which the Tenant has the right to remove) in the condition required by paragraphs 6, 7 and 8, and shall surrender to Landlord all keys and other items of similar nature pertaining to the leased premises. 25. Notices. All notices under this Lease shall be given by either ------- personal service or registered or certified mail, return receipt requested. Notices given by mail shall be addressed as follows: (a) Notice to be served upon Landlord shall be sent to Landlord addressed to: Edward G. Atsinger III Stuart W. Epperson 2310 Ponderosa Drive, Suite 29 Camarillo, CA 93010 (b) Notice to be served upon Tenant shall be sent to Tenant addressed to: 5430 Fredericksburg Road Suite 504 San Antonio, TX 78229 All notices by mail shall be deemed served 48 hours after deposit in the United States mail. Either party may change his address for notice purposes by giving notice of such change as provided above. -15- 26. Subordination of Lease. This Lease and the leasehold estate created hereby ---------------------- are and shall be, at the option and upon written declaration of Landlord, subordinate, and inferior to the lien of a first and second deed of trust, or any renewals, extensions, or replacements of said deed or deeds of trust, now or hereafter imposed by Landlord upon the leased premises or any part thereof. Landlord hereby expressly reserves the right, at its option and declaration, to place the lien of a first and second deed of trust on and against the leased premises, or any part thereof, superior in lien and effect to this Lease and the estate hereby created. The execution by Landlord and the recording in the office of the County Recorder's office in which the property is located of a declaration that this Lease and leasehold estate are subject, subordinate, and inferior to the lien of a first and/or second deed of trust placed or to be placed by Landlord upon or against the leased premises or any part thereof, shall, of and by itself, in favor of the trustee and beneficiary of said deed or deeds of trust, make this Lease subject, subordinate and inferior thereto. Tenant shall, with all reasonable diligence, after written request made to it by Landlord or the title company issuing a policy of title insurance insuring the effect of the lien of said deed or deeds of trust, execute and deliver to said title company an agreement or subordination, in accordance with the foregoing. In the event any proceedings are brought for the foreclosure of, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by Landlord or its successors or assigns covering the demised premises, the Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this Lease. -16- 27. Waiver. A waiver by Landlord of any default by Tenant in the ------ performance of any of the covenants, terms, or conditions of this Lease shall not constitute or be deemed a waiver of any subsequent or other default. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. The rights and remedies of Lessor under this Lease shall be cumulative and in addition to any rights given Landlord by law. The exercise of any right or remedy shall not impair Landlord's right to any other remedy. 28. Parties Bound and Benefited. The covenants and conditions herein --------------------------- contained shall (subject to the provision as to assignment) apply to and bind the heirs, executors, administrators, assigns and successors in interest of all of the parties hereto. 29. Governing Law. This Lease shall be governed by and subject to the ------------- Federal Communications Act, the rules and regulations of the FCC, and other federal laws as applicable; and the laws of the State of Texas, as to matters of local law and interpretation. 30. Amendments, Changes or Additions to Statute. Whenever reference is made ------------------------------------------- in this Lease to any provision of law, such reference applies to all amendments, changes and additions now or hereinafter made to such Law. 31. Captions. The captions of this Lease are not a portion of the -------- substantive terms hereof. 32. Estoppel Certificate. Tenant shall at any time and from time to time -------------------- upon not less than ten (10) days prior written notice from -17- Landlord execute, acknowledge and deliver to Landlord a statement (an "Estoppel Certificate") in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the dates to which the rent and other charges are paid in advance, if any, and (ii) acknowledging that there are not, if such be the case, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder and that Tenant has no right of offset, counterclaim or deduction alleged by Tenant. Any such Estoppel Certificate may be relied upon by any prospective purchaser or lender upon the security of the property of which the premises are a part. 33. Miscellaneous. ------------- 33.1 This Lease contains the entire agreement between the parties respecting the Lease of the premises and all matters covered or mentioned herein. This Lease may not be altered, changed or amended except by an instrument in writing signed by both parties hereto. 33.2 The illegality, invalidity or unenforceability of any provision of this Lease shall in no way impair or invalidate any other provision of this Lease, and such remaining provisions shall remain in full force and effect. 33.3 As used in this Lease, the masculine, feminine or neuter gender, and the singular or plural number, shall each be deemed to include the other whenever the context so indicates. If there is more than one Tenant, the obligations hereunder imposed upon Tenant shall be joint and several. The paragraph headings of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof. -18- 33.4 All exhibits attached to this Lease are hereby incorporated by this reference and made a part hereof. IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date and year first above written. LANDLORD: THE EPPERSON-ATSINGER 1983 FAMILY TRUST /s/ Edward G. Atsinger III ----------------------------------------- Edward G. Atsinger III, Co-Trustee /s/ Stuart W. Epperson ----------------------------------------- Stuart W. Epperson, Co-Trustee TENANT: SALEM MEDIA OF TEXAS, INC., a Texas Corporation /s/ Edward G. Atsinger III ----------------------------------------- President Ret. to: HOLME ROBERTS & OWEN ATTORNEYS AT LAW 1700 BROADWAY DENVER, COLORADO 80290 -19- EXHIBIT A --------- A 35.473 acre tract of land, being all of the remaining portion of that certain 38.17 acre tract of land described in deed from Howard W. Davis, and wife, Maidell Davis, to Hermitage Properties, Inc., dated February 17, 1969, recorded in Volume 6109 at Page 681 of the Deed Records of Bexar County, Texas, being out of the M.D. Oliver Survey No. 55, Abstract 559, County Block 5127, Bexar County, Texas, said 35.473 acre tract being more particularly described as follows: BEGINNING at a point on the present Northeast right-of-way line of U.S. Highway No. 87 (Gonzales Road), an iron pin set at the intersection of a cutback right-of-way line to F.M. Highway No. 1516, the Southeast corner of the herein described tract; THENCE Northwesterly along the present Northeast right-of-way line of U.S. Highway No. 87 (Gonzales Road), as follows: N. 68(degrees) 36' 42" W. - 178.35 feet to an iron pin set for angle point; N. 70(degrees) 38' 30" W. - 205.47 feet to an iron pin set for angle point; N. 72(degrees) 26' 37" W. - 219.94 feet to an iron pin set for angle point; and N. 75(degrees) 21' 00" W. - 547.05 feet to its intersection with the existing fence on the Northwest line of the said 38.17 acre tract, an iron pin found set, the Southwest corner of the herein described tract; THENCE N. 15(degrees) 13' 24" E. - 464.55 feet, N. 14(degrees) 50' 47" E. - 300.00 feet, N. 15(degrees) 08' 45" E. - 209.22 feet and N. 14(degrees) 45' 32" E. - 316.00 feet all along the existing fence on the Northwest line of the said 38.17 acre tract, to its Northwest corner, the Northwest corner of the herein described tract; THENCE S. 75(degrees) 23' 14" E. - 1178.74 feet along the existing fence on the Northeast line of the said 38.17 acre tract to its Northeast corner, an iron pin found set on the Northwest right-of-way line of F.M. Highway No. 1516, the Northeast corner of the herein described tract; THENCE S. 14(degrees) 10' 00" W. - 1295.51 feet along the Northwest right-of-way line of F.M. Highway No. 1516, to its intersection with a cutback right-of-way line to U.S. Highway No. 87 (Gonzales Road), an iron pin set; THENCE S. 62(degrees) 52' 48" W. - 66.05 feet along said cutback right-of-way line, to the POINT OF BEGINNING. easement; thence S. 62(degrees) 36' 00" East (ILLEGIBLE) west line of F. M. Highway 1516, the east corner of this easement; thence S. 14(degrees) 10' 00" West 20.55 feet along the west line of F. M. Highway 1516 to the place of beginning and containing 0.175 acre according to a survey on the ground November 2, 1982 for KISS Broadcasting, Inc. by Baker Surveying, Inc. AMENDMENT TO LEASE This Amendment to Lease is made and entered into as of the 1st day of October, 1987, by and between Edward G. Atsinger III and Stuart W. Epperson, not individually but solely as co-trustees of the Epperson-Atsinger 1983 Family Trust, hereinafter referred to as "Landlord", and Salem Media of Texas, Inc., a Texas corporation, hereinafter referred to as "Tenant", with reference to the following recitals of facts: R E C I T A L S - - - - - - - - A. The parties entered into a Lease Agreement as of March 1, 1983 (the "Lease Agreement"). B. The parties desire to make certain amendments to the Lease Agreement. NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties agree as follows: 1. Option to Extend Term. Paragraph 2 of the Lease Agreement is hereby --------------------- amended to read as follows: 2. Term; Option to Extend. The term of this Lease is twenty-four (24) ---------------------- years, commencing on March 1, 1983, and terminating on February 28, 2007. Tenant shall have the option, if Tenant is not at the time in default under this Lease, to extend the term of this Lease for up to two (2) successive periods of five (5) years each, with the termination dates of the renewal period(s) being February 28, 2012, and February 28, 2017, and, except as set forth in Paragraph 4, below, on the same terms, covenants and conditions herein contained. Each option to extend the term shall be exercised only by Tenant's delivery to Landlord by United States mail on or before 180 days prior to the commencement of the renewal term of written notice of Tenant's election to extend as provided herein. 2. Rent During Option Terms. Paragraph 4 of the Lease Agreement is hereby ------------------------ amended by inserting the following new Subparagraphs 4.6 and 4.7, and by renumbering the current Subparagraphs 4.6 and 4.7 as Subparagraphs 4.8 and 4.9: 4.6 During the period March 1, 2007, through February 28, 2012 (if Tenant elects to extend the term of this Lease), a monthly amount equal to the greater of (i) Three Thousand Sixty-two and 50/100 Dollars ($3,062.50) or (ii) the Base Rent multiplied by a fraction, the numerator of which shall be the cost of living index figure for February, 2007, and the denominator of which shall be the Base Index. 4.7 During the period March 1, 2012, through February 28, 2017 (if Tenant elects to extend the term of this Lease), a monthly amount equal to the greater of (i) Three Thousand Three Hundred Twenty-five Dollars ($3,325.00) or (ii) the Base Rent multiplied by a fraction, the numerator of which shall be the cost of living index figure for February, 2012, and the denominator of which shall be the Base Index. 3. Assignment and Subletting. Paragraph 11 of the Lease shall be deleted ------------------------- and a new Paragraph 11 substituted which shall read as follows: 11. Assignment and Subletting. ------------------------- (a) Tenant shall have the right to assign this Sublease to a firm or corporation controlled by its shareholders without the prior consent of the Landlord; provided, however, that Tenant shall remain liable for the performance of all the covenants and conditions herein contained in the event of any uncured default on the part of the assignee. For purposes of this subsection (a), the shareholders of Tenant shall be deemed in control of a firm or a corporation if their ownership interests, when combined, constitute more than fifty percent (50) of the voting rights of the firm or corporation. (b) Tenant shall have the right to assign this Sublease to the assignee of all of the FCC authorizations (the "license") for KSLR-AM, after approval by the FCC of the assignment or transfer of said license. Tenant shall provide Landlord at least sixty (60) days' written notice of its intent to assign its rights hereunder and shall provide Landlord with written confirmation of the assignment. Upon assignment of this Lease to the successor licensee, Tenant shall have no further liability under this Lease except for any uncured defaults which arose prior to the assignment. (c) Except as provided in subsections (a) and (b), above, Tenant shall not have the right to assign this Lease, or any part hereof, to any third person(s), firm(s) or corporation(s) without the prior written consent of Landlord, which consent shall not be unreasonably withheld. 4. Landlord's Option to Relocate. A new Paragraph 34 shall be added to ----------------------------- the Lease Agreement which shall read as follows: 34. Landlord's Right to Relocate. Landlord shall have the right to ---------------------------- relocate Tenant's radio station and related equipment and thereafter terminate this Lease if, prior to such termination, Landlord has provided Tenant with another site for operation of the station which provides a total coverage area equal to or better than is presently available at the premises. Landlord's rights hereunder are further conditioned upon any relocation being done without disruption of Tenant's ability to broadcast. Landlord shall provide Tenant with a lease at the new site on the same terms and conditions as the remaining term of this Lease. All expenses associated with this relocation will be paid in full by Landlord, including without limitation all costs of installation, supervision, proofs of performance, and all reasonable costs incurred by attorneys, engineers, and other parties consulted by Tenant in connection with the relocation. 5. No Other Amendments. Except as specifically set forth herein, all ------------------- other terms and conditions of the Lease Agreement shall remain in full force and effect. IN WITNESS WHEREOF the undersigned have executed this Agreement as of the day, month and year first-above written. LANDLORD: THE EPPERSON-ATSINGER 1983 FAMILY TRUST /s/ Stuart W. Epperson ------------------------------------ Stuart W. Epperson, Co-Trustee /s/ Edward G. Atsinger III ------------------------------------ Edward G. Atsinger III, Co-Trustee TENANT: SALEM MEDIA OF TEXAS, INC., a Texas corporation By: /s/ Edward G. Atsinger --------------------------------- President SECOND AMENDMENT TO LEASE THIS AMENDMENT TO LEASE is made and entered into as of the 7th day of January, 1987, by and between Edward G. Atsinger III and Stuart W. Epperson, not individually but solely as co-trustees of the Epperson-Atsinger 1983 Family Trust, hereinafter referred to as "Landlord," and Salem Media of Texas, Inc., a Texas corporation, hereinafter referred to as "Tenant," with reference to the following recitals of facts: RECITALS -------- A. The parties entered into a Lease Agreement as of March 1, 1983, as amended by Amendment to Lease as of October 1, 1987 (the "Lease Agreement"). B. The parties desire to make certain amendments to the Lease Agreement. NOW, THEREFORE, for good and valuable consideration, the parties agree as follows: 1. Subordination of Lease. Section 26 of the Lease Agreement is ---------------------- hereby amended by adding at the end of said Section the following sentence: "Notwithstanding the foregoing, no subordination or attornment pursuant to the provisions of this Section 26 shall be effective unless, prior to the date any party desiring such subordination or attornment obtains title to the leased premises or any part thereof, such party has acknowledged by written notice to Tenant that this Lease and Tenant's rights hereunder shall continue undisturbed while Tenant is not in default hereunder; except that such party shall not be (i) liable for any act or omission of any prior Landlord or (ii) subject to any offsets or defenses which Tenant might have against any prior Landlord or (iii) bound by any amounts which Tenant might have paid as rent to any Landlord for a period ending beyond the end of the month following the month in which such party acquired title to the leased premises or any part thereof." 2. No Other Amendments. Except as specifically set forth herein, all other ------------------- terms and conditions of the Lease Agreement shall remain in full force and effect. 3. Lease Agreement. A true and correct copy of the Lease Agreement is --------------- attached hereto as Exhibit A. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day, month and year first above written. LANDLORD: THE EPPERSON-ATSINGER 1983 FAMILY TRUST /s/ Stuart W. Epperson ---------------------------------- Stuart W. Epperson, Co-Trustee /s/ Edward G. Atsinger III ---------------------------------- Edward G. Atsinger III, Co-Trustee 2 TENANT: SALEM MEDIA OF TEXAS, INC., a Texas corporation By: /s/ Edward G. Atsinger III ----------------------------- President THE STATE OF NORTH CAROLINA ) )ss. COUNTY OF Forsyth ) -------- Before me Linda R. Lynch on this day personally appeared, Stuart W. -------------- Epperson, co-trustee of the Epperson-Atsinger 1983 Family Trust, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purpose and consideration therein expressed. [Seal] Given under my hand and seal of office this 5th day of January A.D., 1988. --- Linda R. Lynch ------------------------------------ Notary Public My commission expires April 20,1988 . --------------------------------- [NOTARY SEAL APPEARS HERE] 3 THE STATE OF TEXAS ) ) ss. COUNTY OF BEXAR ) Before me Robert N. Lepine on this day personally appeared, Edward G. Atsinger III, co-trustee of the Epperson-Atsinger 1983 Family Trust, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purpose and consideration therein expressed. [Seal] Given under my hand and seal of office this 7 day of January A.D., 1988. /s/ Robert N. Lepine ------------------------------- Notary Public My commission expires 9-30-90 . ----------------------------------------- THE STATE OF TEXAS ) ) ss. COUNTY OF BEXAR ) Before me Robert N. Lepine on this day personally appeared Edward G. Atsinger III, the President of Salem Media of Texas, Inc., known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purpose and consideration therein expressed. [Seal] Given under my hand and seal of office this 7 day of January A.D., 1988. /s/ Robert N. Lepine ------------------------------- Notary Public My commission expires 9-30-90 . ----------------------------------------- 4 EX-10.05.20 22 ANTENNA/TOWER LEASE EXHIBIT 10.05.20 LEASE AGREEMENT --------------- This Agreement ("Agreement") is made as of the fourth day of March, 1995, by and between EDWARD G. ATSINGER III and MONA J. ATSINGER, not individually but solely as Trustees of the ATSINGER FAMILY TRUST, and STUART W. EPPERSON, not individually but solely as Trustee of the STUART W. EPPERSON REVOCABLE LIVING TRUST, collectively referred to herein as "Lessor", and SOUTH TEXAS BROADCASTING, INC. ("Lessee"), a Texas corporation. WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the County of Harris, State of Texas, more particularly described as set forth in Exhibit "A", which is attached hereto and made a part hereof (the "Real Property"); and, WHEREAS, Lessee uses said Real Property in operating its radio station KENR-AM, Houston, Texas; and, WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its Improvements and other related broadcasting equipment (together comprising the "Installations"). Lessee is fully familiar with the physical condition of the Land and has received the same in good order and condition, and agrees that the Land complies in all respects with all requirements of this Agreement. Lessee shall use the Land exclusively for purposes associated with the operation of a radio station. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on March 4, 1995 (the "Commencement Date"), and shall expire on March 3, 2005 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date Lessee shall pay a base rent of THIRTY THOUSAND DOLLARS ($30,000) per annum, in equal monthly installments of TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500) (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date (hereinafter defined) the monthly rent shall be computed according to subparagraph (ii) below. (ii) The term "Adjustment Date" shall mean the first (1st) through the ninth (9th) anniversaries of the Commencement Date. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for an increase, if any, in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100] ("CPI") published by the United States Department of Labor, Bureau of Labor Statistics, as measured in February of each year; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for February of the year in which the Adjustment Date falls and the denominator of which shall be the CPI for February of the year in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the monthly amount payable by Lessee hereunder shall not in any event be less than the monthly rental paid during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index numbers in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be then chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending moneys in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that the Improvements (including the radio tower(s) located on the Real Property) are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT ---------- Lessee shall not assign this Agreement nor sublet any portion of the Leased Premises without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee shall remain primarily liable under this Agreement. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any mortgages and security agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such mortgages and security agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 12 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 13 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 14 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 15 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 16 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE ATSINGER FAMILY TRUST SOUTH TEXAS BROADCASTING, INC. /s/ EDWARD G. ATSINGER, III /s/ ERIC H. HALVORSON - ----------------------------------- -------------------------------------- EDWARD G. ATSINGER, III ERIC H. HALVORSON Trustee Vice-President /s/ MONA J. ATSINGER ___________________________________ MONA J. ATSINGER Trustee STUART W. EPPERSON REVOCABLE LIVING TRUST /s/ STUART W. EPPERSON - ----------------------------------- STUART W. EPPERSON Trustee EXHIBIT A --------- REAL PROPERTY ------------- 49.09 acres consisting of Tract #1(1.04 acres), Tract #2 (9.41 acres) and Tract #3 (38.64 acres) out of the H. Simmons Survey, A-745 and the E. Richey Survey, A-1424, Harris County, Texas. Tract One --------- The surface only of 1.04 acres of land, more or less, lying and being situated partly in the E. Richey Survey, Abstract 1424 and partly in the H. Simmons Survey, Abstract 745, Harris County, Texas, and being a portion of that tract designated as private road, in a partition of the Mrs. Mary Tautenhahn 121.68 acre tract out of the said E. Richey Survey and the said H. Simmons Survey; said 1.04 acres of land, more or less, being more particularly described by metes and bounds as follows: BEGINNING at a 1" iron pipe from which a 12" Sweet Gum X bears N 87(degrees) 45' W 35.5 feet and a 5" Pine X bears N 27(degrees) 15' E 30.0 feet and which 1" pipe marks the northwesterly, corner of C. C. McLean Survey and the northeasterly corner of the said Richey Survey, as fenced and generally recognized; THENCE S 33(degrees) 11' 28" E along a fence and the westerly boundary of the said McLean Survey and the easterly boundary of the said Richey Survey 697.69 feet to a 3/4" iron pipe from which a 8" Post Oak X bears N 62(degrees) 40' W 23.3 feet and a 12" Post Oak X bears S 2(degrees) 00' W 58.2 feet; THENCE S 56(degrees) 55' 32" W 60.00 feet, to a 3/4" iron pipe marking the southeasterly corner of Share 3 of the aforementioned Mrs. Mary Tautenhahn partition; THENCE N 33(degrees) 11' 28" W parallel to and 60.0 feet at right angles from the easterly line of the said Richey Survey and the westerly line of the said McLean Survey, at 697.69 feet cross the northerly boundary of the said Richey Survey and the southerly boundary of the said Simmons Survey, in all 757.69 feet to a 3/4" iron pipe which marks the northeasterly corner of the said Share 3 and an angle point in the southerly line of Share 2 of the said partition; THENCE N 56(degrees) 55' 32" E parallel to and 60.0 feet at right angles from the southerly boundary of the said H. Simmons Survey and the northerly boundary of the said McLean Survey and the northerly boundary of the McLean Survey 60.00 feet to a point; THENCE S 33(degrees) 11' 28" E 60.00 feet to the point or place of beginning and containing as aforesaid 1.04 acres of land, more or less. Tract Two - --------- The surface only of 9.41 acres of land, more or less, lying and being situated in the H. Simmons Survey, Abstract 745, Harris County, Texas, and being a portion of that tract of land designated as Share 2 of a partition of the Mrs. Mary Tautenhahn 121.68 acre tract out of the E. Richey Survey, Abstract 1424, and the H. Simmons Survey, Abstract 745, Harris County, Texas; said 9.41 acres of land, more or less, being more particularly described by metes and bounds as follows: BEGINNING at a 3/4" iron pipe from which a 4" Pine X bears N 2(degrees) 45' E 38.0 feet and a 14" Post Oak X bears N 74(degrees) 05' W 35.6 feet, said pipe being located in the westerly line of the said H. Simmons Survey and the easterly line of the John Schnell Survey as fenced and generally recognized and being N 33(degrees) 17' 29" w 505.26 feet from the southwesterly corner of the said Simmons Survey and marking the northwesterly corner of Share 3 of the aforementioned partition and the southwesterly corner of Share 2 of the said partition; THENCE N 56(degrees) 55' 32" E 1778.59 feet to a 5/8" iron rod for corner from which a 24" Post Oak X bears N 89(degrees) 00' W 60.2 feet and a 24" Pin Oak X bears 5 29(degrees) 00' W 50.5 feet; THENCE S 33(degrees) 11' 28" E 445.26 feet to a point, same being located N 33(degrees) 11' 28" W 60.00 feet from the northwesterly corner of the C. C. McLean Survey and the northeasterly corner of the E. Richey Survey as fenced and generally recognized; THENCE S 57(degrees) 01' 28" W parallel to and 60.0 feet at right angles from the southerly line of the said Simmons Survey and the northerly line of the E. Richey Survey 60.00 feet to a 3/4" iron pipe for corner, same being the northeasterly corner of the aforementioned Share 3; THENCE S 71(degrees) 26' 32" W along the dividing line between the said Share 2 and Share 3 a distance of 1776.23 feet to the point of beginning and containing 9.41 acres of land, more or less; Tract Three - ----------- The surface only of 38.64 acres of land, more or less, lying and being situated partly in the E. Richey Survey, Abstract 1424 and partly in the H. Simmons Survey, Abstract 745, Harris County, Texas, and being all of that tract of land designated as Share 3 of a partition of the Mrs. Mary Tautenhahn 121.68 acre tract out of the said E. Richey Survey and the said H. Simmons Survey; said 38.64 acres of land, more or less, being more particularly described by metes and bounds as follows: BEGINNING at a 3/4" iron pipe from which a 10" Pine X bears N 56(degrees) 00' E 41.00 feet and a 16" Post Oak X bears N 18(degrees) 00' E 47.00 feet, said pipe being in. the westerly boundary of the said E. Richey Survey and the easterly boundary of the said John Schnell Survey, Abstract 742, and being located N 33 (degrees) 17'. 28" W 736.8 feet from the southeasterly corner of the said Schnell Survey which is also a re-entrant corner of the said Richey Survey as fenced and generally recognized; THENCE N 33(degrees) 17' 28" W along a fence marking the westerly line of the said Richey Survey and the easterly line of the said Schnell Survey at 697.69 feet pass the northwesterly corner of the said Richey Survey and the southwesterly corner of the said H. Simmons Survey, and continuing along the westerly line of the said Simmons Survey a total distance of 1202.95 feet to a 3/4" iron pipe for corner from which a 4" Pipe X bears N 2(degrees) 45' E 38.0 feet and a 14" Post Oak X bears N 74(degrees) 05' W 35.6 feet, said pipe also marking the southwesterly corner of Share 2 of the aforementioned partition; THENCE N 71(degrees) 26' 32" E along the dividing line between Shares 2 and 3 a distance of 1776.23 feet to a 3/4" iron pipe for corner, said pipe being located N 33(degrees) 11' 28" W 60.0 feet from a point in the southerly line of the said Simmons Survey which is S 57(degrees) 01' 28" W 60.0 feet from the northeasterly corner of the said Richey Survey; THENCE S 33(degrees) 11' 28" E at 60.0 feet cross the southerly line of the said Simmons Survey and the northerly line of the said Richey Survey and continuing parallel to and 60.0 feet at right angles from the easterly line of the said Richey Survey and the westerly line of the C. C. McLean Survey, Abstract 1415, a distance of 757.69 feet to a 3/4" iron pipe for corner; THENCE S 56(degrees) 55' 32" w along the southerly line of the said Share 3 a distance of 1716.50 feet to the point or place of beginning and containing as aforesaid 38.64 acres of land, more or less. EASEMENTS AND RESTRICTIONS OF RECORD: (a) Thirty (30) foot pipe line easement granted to Houston Pipe Line Company as reflected by instrument recorded in Volume 5249, page 521, Deed Records of Harris County, Texas. (b) Pipe line easement granted to Houston Pipe Line Company as reflected by instrument recorded in Volume 2408, page 577, Deed Records of Harris County, Texas. (c) Terms, conditions, and stipulations contained in Oil and Gas Lease from J. G. Ehrhardt, et al, to H. M. Harrell, recorded in Volume 334, page 104, Contract Records of Harris County, Texas, as amended by instrument recorded in Volume 338, page 686, Contract Records of Harris County, Texas, and as further supplemented or amended by Pooling Agreement recorded in Volume 399, page 263, Contract Records of Harris County, Texas. (d) All prior reservations of minerals in and under the above described property. (e) Lease dated September 15, 1983, as filed for record under Harris County Clerk's File No. J-679462, between Lake Huron Broadcasting Corporation, as Lessor, and the United States of America, as Lessee. AGREEMENT --------- EXHIBIT A --------- EASEMENTS AND RESTRICTIONS OF RECORD: (a) Thirty (30) foot pipe line easement granted to Houston Pipe Line Company as reflected by instrument recorded in Volume 5249, page 521, Deed Records of Harris County, Texas. (b) Pipe line easement granted to Houston Pipe Line Company as reflected by instrument recorded in Volume 2408, page 577, Deed Records of Harris County, Texas. (c) Terms, conditions, and stipulations contained in Oil and Gas Lease from J. G. Ehrhardt, et al, to H. M. Harrell, recorded in Volume 334, page 104, Contract Records of Harris County, Texas, as amended by instrument recorded in Volume 338, page 686, Contract Records of Harris County, Texas, and as further supplemented or amended by Pooling Agreement recorded in Volume 399, page 263, Contract Records of Harris County, Texas. (d) All prior reservations of minerals in and under the above described property. (e) Lease dated September 15, 1983, as filed for record under Harris County Clerk's File No. J-679462, between Lake Huron Broadcasting Corporation, as Lessor, and the United States of America, as Lessee. EX-10.05.21 23 ANTENNA/TOWER LEASE Exhibit 10.05.21 LEASE AGREEMENT --------------- This Agreement ("Agreement") is made as of October 1, 1996, by and between the ATSINGER FAMILY TRUST the STUART W. EPPERSON REVOCABLE LIVING TRUST, collectively referred to herein as "Lessor", and VISTA BROADCASTING, INC. ("Lessee"), a California corporation. WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain improvements thereon (the "Improvements"), which Land and Improvements together comprise certain real property located in the County of Placer, State of California, more particularly described as set forth in Exhibit "A", which is attached hereto and made a part hereof (the "Real Property"); and, WHEREAS, Lessee uses said Real Property in operating its radio station KFIA-AM, Carmichael, California; and, WHEREAS, the parties are desirous of making a mutually suitable and satisfactory agreement whereby Lessor will lease to Lessee the Real Property (constituting the "Leased Premises") on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the following covenants, agreements, conditions and representations, the parties hereto agree as follows: SECTION 1 --------- USE OF THE LEASED PREMISES -------------------------- (a) Lessor, in consideration of the rents to be paid and covenants herein contained, hereby leases to Lessee the Leased Premises. (b) Lessee may use the Leased Premises for the operation of its radio station, and, in connection therewith, for the installation, repair, maintenance, operation, housing and removal of its Improvements and other related broadcasting equipment (together comprising the "Installations"). Lessee is fully familiar with the physical condition of the Land and has received the same in good order and condition, and agrees that the Land complies in all respects with all requirements of this Agreement. Lessee shall use the Land exclusively for purposes associated with the operation of a radio station. Notwithstanding the foregoing, Lessor retains all rights to lease and sub-lease space in, on or about the Leased Premises and the Installations. (c) Lessee shall have the right from time to time to substitute Installations of similar kind and character for those hereinabove specified, provided such changes shall be approved in advance by Lessor, and Lessor shall not unreasonably delay or withhold its approval. In the event Lessee submits any such changes for Lessor's approval and Lessor does not respond within thirty (30) days after Lessor's receipt thereof, then such changes shall be deemed approved by Lessor, so long as such changes otherwise comply with this Agreement, five (5) days after Lessor's receipt of notice that it has not responded. (d) Lessee shall have access to the Leased Premises twenty-four (24) hours per day, seven (7) days per week, for the purpose of installing, maintaining and repairing its Installations, provided that the contractors performing such work are reasonably acceptable to Lessor. (e) Lessor shall not be responsible for repairs or maintenance to the Installations, except for repairs occasioned by the negligence of Lessor, its agents, employees or contractors. (f) During the Term (as hereinafter defined), Lessor and Lessee shall each provide the other with a telephone number which, if called will ring at a location that is staffed by their respective agents twenty-four (24) hours each and every day, seven (7) days each and every week; and Lessor and Lessee shall notify each other promptly in the event of any change in such telephone number. (g) Lessee shall not use or permit the Leased Premises to be used by any dangerous, toxic, noxious or offensive trade or business, or for any unlawful purpose. (h) Lessee shall not directly or indirectly create or permit to be created or to remain, and will discharge any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Real Property or any part thereof or Lessee's interest therein other than (i) this Agreement, (ii) any lien, including a mortgage on the leasehold interest of Lessee, which may be approved by the Lessor in writing, which approval shall not be unreasonably withheld, (iii) liens for impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for non-payment, or being contested as permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due, provided that adequate provision for the payment thereof shall have been made. SECTION 2 --------- TERM AND RENT ------------- (a) The term of this Lease (the "Term") shall commence on October 1, 1996 (the "Commencement Date"), and shall expire on September 30, 2006 (the "Expiration Date"). If the Term has been extended as provided in subparagraph (b), below, the Expiration Date shall be the last day of the Term as so extended. (b) Lessee shall have the option, if Lessee is not at the time in default under this Agreement, to extend the Term of this Agreement for up to two (2) successive periods of five (5) years each (the "Extended Terms"), and, except as set forth in subparagraph (c), below, on the same terms, covenants and conditions herein contained. The word "Term" as used in this Agreement shall be deemed to include the Extended Terms when and if the Agreement is extended. Each option to extend the Term shall be exercised only by Lessee's delivery to Lessor by United States mail on or before ninety (90) days prior to the commencement of the renewal term of written notice of Lessee's election to extend as provided herein. (c) Lessee agrees to pay rent to Lessor from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: (i) During the first year beginning with the Commencement Date Lessee shall pay a base rent of $78,960 per annum, in equal monthly installments of $6,580 (the "Base Rent") in advance on the first day of each month; and thereafter on each and every Adjustment Date, as hereinafter defined, the monthly rent shall be computed according to subparagraph (ii) below. (ii) For purposes of this Agreement, the Adjustment Date shall be the first day of February of each calendar year of this Agreement. During the one (1) year period beginning with each Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the year in which the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners and Clerical Workers, Los Angeles area [Base Year 1982-84=100] ("CPI") as measured in February and published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for February of the year such Adjustment Date falls and the denominator of which shall be the CPI for February of the year in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the amount payable by Lessee hereunder shall not in any event be less than the rental paid during the immediately preceding one (1) year period and the annual adjustment, as set forth in this Section 4.3, shall not ----------- exceed five percent (5%) of the rental paid in the preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index number in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be chosen by Lessor subject to reasonable consent of Lessee. (d) Rent and all other sums payable to Lessor hereunder shall be paid without notice, demand, counterclaim, set-off, deduction or defense and without abatement, suspension, deferment, diminution or reduction. Except as expressly provided herein, Lessee waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Agreement or the Real Property or any part thereof, or to any abatement, suspension, deferment, diminution or reduction of rent or any other sum payable by Lessee hereunder. SECTION 3 --------- CHARGES AND UTILITIES --------------------- (a) Lessee, at its sole expense, shall keep the Real Property and the adjoining streets and ways in good and clean order and condition and will promptly make all necessary or appropriate repairs, replacements and renewals thereof, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals shall be equal in quality and class to the original work. Lessee waives any right created by any law now or hereafter in force to make repairs to the Real Property at Lessor's expense. Lessee, at its sole expense, shall do or cause others to do every act necessary or appropriate for the preservation and safety of the Real Property whether or not the Lessor shall be required by any legal requirement to take such action or be liable for failure to do so. (b) If not at the time in default under this Agreement, Lessee, at its sole expense, may make reasonable alterations of and additions to the Improvements or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Improvements, or reduce the fair market value thereof below their value immediately before such alteration or addition, or impair their usefulness, (ii) is effected with due diligence, in a good and workmanlike manner and in compliance with all legal requirements and insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in case the estimated cost of such alteration or addition exceeds Ten Thousand Dollars ($10,000), under the supervision of an architect or engineer satisfactory to Lessor and in accordance with plans, specifications and cost estimates approved by Lessor, and (v) does not interfere with Lessor's rights of use under this Agreement. (c) Subject to subparagraph (d), below, relating to contests, Lessee shall pay all taxes, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term hereof), ground rents, water, sewer or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interest and penalties thereof), which at any time during or in respect of the Term hereof may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon the Real Property or any part thereof or any rent therefrom or any estate, right or interest therein, or any occupancy, use or possession of or activity conducted on the Real Property or any part thereof, other than any income or excess profits tax imposed upon the Lessor's general income or revenues, but excluding any income or excess profits or franchise taxes of Lessor determined on the basis of general income or revenue or any interest or penalties in respect thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days after written request, official receipts of the appropriate taxing authority or other proof satisfactory to Lessor evidencing such payment. If by law any such amount may be paid in installments, Lessee shall be obligated to pay only those installments as they become due from time to time before any interest, penalty, fine or cost may be added thereto; and any such amount relating to the fiscal period of the taxing authority, part of which is included within the Term and a part of which extends beyond the Term shall, if Lessee shall not be in default under this Agreement, be apportioned between Lessee and Lessor as of the expiration of the Term of this Agreement. (d) Lessee, at its sole expense, may contest, after prior written notice to Lessor, by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any tax, lien or other imposition on the Real Property, provided that (i) Lessee shall first make all contested payments, under protest if it desires, (ii) neither the Real Property nor any part thereof or interest therein nor any such rents or other sums would be in any danger of being sold, forfeited, lost or interfered with, and (iii) Lessee shall have furnished such security, if any, as may be required in the proceedings or reasonably requested by Lessor. (e) Lessee shall pay or cause to be paid all charges for all public or private utility services and all sprinkler systems and protective services at any time rendered to or in connection with the Real Property or any part thereof, will comply with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. SECTION 4 --------- INSURANCE AND INDEMNIFICATION ----------------------------- (a) Lessee shall, at its sole cost and expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about the Real Property arising out of any act or omission of Lessee or any officer, employee, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than One Million Dollars ($1,000,000.00) for injuries to one person, One Million Dollars ($1,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than One Million Dollars ($1,000,000.00); (ii) insurance with respect to the Improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the Improvements and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about the Real Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in California and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. (b) Lessee shall indemnify Lessor and hold Lessor harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessee on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising out of Lessor's or its agents', employees', invitees' or contractors' negligent acts or omissions. (c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. (d) Lessor shall indemnify Lessee and hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or after the Term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the request of Lessor on or about the Leased Premises, (v) any other activity undertaken by or at the request of Lessor pursuant to or in connection with this Agreement, or (vi) the presence of any individuals on the Leased Premises as a result of Lessor's request or this Agreement; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. (e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and, expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. (f) Nothing in this Agreement shall be construed so as to authorize or permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases the other to the extent of its insurance coverage for any loss or damage caused by fire or any of the extended coverage casualties, even if such fire or other casualty shall be brought about by the fault or negligence of the other party or persons for whose acts said party is liable. SECTION 5 --------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- (a) Lessor represents and warrants that: (i) The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (ii) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to the Leased Premises, and as of the date of this Agreement, no notice of any kind relating thereto (which would adversely affect the transactions contemplated by this Agreement) has been issued by public authorities having jurisdiction over the Leased Premises. (iii) No person or party other than Lessor has a right to use the Leased Premises for any purpose which would affect Lessee's right to use the Leased Premises as contemplated hereunder. (iv) Lessor has not received written notice of pending or contemplated condemnation proceedings affecting the Leased Premises or any part thereof. (v) To the best of Lessor's knowledge, there is no action, suit or proceeding pending or threatened against or affecting the Leased Premises or any portion thereof and Lessor has not received notice written or otherwise of any litigation affecting or concerning the Leased Premises relating to or arising out of its ownership, management, use or operation. Lessor shall give to Lessee prompt notice of institution of any such proceeding or litigation. (vi) To the best of Lessor's knowledge, there are presently no proceedings for overdue real estate taxes assessed against the Leased Premises for any fiscal period. (vii) Lessor shall promptly advise Lessee in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or to the maintenance, operation or use thereof. (viii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessor (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (ix) Subject to liens and encumbrances of record, Lessor owns good and marketable title in fee simple to the Real Property on which the Leased Premises are located, and Lessor acknowledges that Lessee is relying upon the foregoing representation and warranty in entering into this Agreement and in expending moneys in connection herewith. Lessor shall not encumber or permit any encumbrances, liens or restrictions on Lessee's Installations, except with the prior written approval of Lessee. (b) Each party shall comply in all material respects with all local, state and federal laws, statutes, ordinances, rules, regulations, orders and decrees that it knows to be applicable in connection with its activities and operations at the Leased Premises, and Lessor shall require the same representation and warranty from all additional users of the facilities at the Leased Premises. (c) The parties agree that, during the Term of this Agreement neither party shall intentionally do anything at the Leased Premises which will interfere with or adversely affect the operations of the other party. (d) In the event that during the Term of this Agreement there shall be an actual condemnation or foreclosure and taking of all of the Leased Premises, or a portion thereof such that it renders the premises unsuitable for broadcasting, this Agreement may be terminated by written notice from either party to the other and thereafter each of the parties shall be relieved of any future liability to the other under this Agreement, except as to obligations accrued and not yet discharged at the date of termination. Following any condemnation or foreclosing order, Lessee may continue to use the property for operations under the terms of this Agreement until Lessee finds and begins to utilize new facilities or until prevented by the condemning or foreclosing authority from utilizing the Leased Premises, whichever occurs first. (e) Lessee represents and warrants that its Installations to be located on or about the Leased Premises, together with the existence of the equipment of Lessor, and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). (f) Lessee covenants that it will not at any time during the Term of this Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at or around the Leased Premises. (g) Lessee shall promptly advise Lessor in writing of any written notice received from any governmental authority to comply with the terms, provisions and requirements of any local, state and federal laws, ordinances, directives, orders, regulations, and requirements which apply to any portion of the Leased Premises or to any adjacent street or other public area or the maintenance, operation or use thereof. (h) Lessee represents and warrants that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee (none of which actions have been modified or rescinded and all of which actions are in full force and effect). This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (i) Lessee warrants unto Lessor that the Improvements (including the radio tower(s) located on the Real Property) are and will remain in material compliance at all times during the Term and any Extension Term with all federal, state, county, municipal, local, administrative and other governmental laws, statutes, ordinances, codes, rules, regulations and orders pertaining thereto, including, without limitation, to the extent applicable, all zoning laws and building codes and all regulations of the Federal Aviation Administration ("FAA") and the Federal Communications Commission ("FCC"). (j) In case of any material damage to or destruction of the Real Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any damage to or destruction of the Improvements or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Improvements as nearly as possible to their value, condition and character immediately prior to such damage or destruction. (k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by Lessee of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of the Real Property or any part thereof. (l) Lessor will execute, acknowledge and deliver to the Lessee or any mortgagee, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) whether or not, to the knowledge of Lessor, there are then existing any defaults under this Agreement (and if so, specifying the same). Any such certificate may be relied upon by any prospective purchaser transferee or mortgagee of Lessee's interest under this Agreement. SECTION 6 --------- EVENTS OF DEFAULT ----------------- (a) Any of the following events shall constitute a default on the part of Lessee: (i) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided, however, that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (ii) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion; or (iii) Lessee is finally and without further right of appeal or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all or substantially all of its business or assets on the ground of its insolvency, or has a trustee appointed for it after a petition has been filed for Lessee's reorganization under the Bankruptcy Act of the United States, or any future law of the United States having the same general purpose, or if Lessee shall make an assignment for the benefit of its creditors, or if Lessee's interest hereunder shall be levied upon or attached, which levy or attachment shall not be removed within twenty (20) days from the date thereof. (b) If an event of default on the part of Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessee has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, but Lessee shall remain liable for the payment of rent during the full period which would otherwise constitute the balance of the Term of this Agreement; and without prejudice to any other right or remedy which it may have hereunder or by law, and notwithstanding any waiver of any prior breach of condition or event of default hereunder, Lessor may re-enter the Leased Premises either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Premises by appropriate suit, action or proceeding and remove its effects and hold the Leased Premises as if this Agreement had not been made. (c) The failure of Lessor to cure any default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided, however, that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. (d) If an event of default on the part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the Term of this Agreement shall end, unless such default shall be cured within said period, or, if the default is such that more than thirty (30) days is required for its cure, unless Lessor has commenced such cure within said period. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Premises to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. SECTION 7 --------- ASSIGNMENT & SUBLETTING ----------------------- Lessee shall not assign this Agreement without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding any assignment, Lessee shall remain primarily liable under this Agreement. Under no circumstances shall Lessee enter into any agreement to lease or sublease any space in, on or about the Leased Premises or the Installations, which rights are specifically reserved to Lessor. SECTION 8 --------- SUBORDINATION, NONDISTURBANCE AND ATTORNMENT -------------------------------------------- This Agreement shall not be a lien against the Leased Premises in respect to any mortgages and security agreements placed or hereafter to be placed by Lessor upon the Leased Premises. The recording of such mortgages and security agreements shall have preference and precedence and be superior and prior in lien to this Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in the Leased Premises an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. SECTION 9 --------- NON-LIABILITY OF LESSOR ----------------------- Lessor shall not be liable for any damages or injury which may be sustained by Lessee or any other person by reason of the failure, breakage, leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical, air conditioning or any other equipment; or by reason of the elements; or resulting from the carelessness, negligence or improper conduct of Lessee, its agents, employees, contractors, invitees, assignees or successors; or attributable to any interference with or the interruption of or failure of any services, beyond the control of Lessor, to be supplied by Lessor. SECTION 10 ---------- QUIET ENJOYMENT --------------- (a) Lessor agrees that it shall not enforce any unreasonable rules or regulations which would unduly prejudice the conduct of Lessee's business, or which would prevent full and free access to the Leased Premises by Lessee, as herein provided. (b) Lessor reserves and shall at all times have the right to re-enter the Real Property to inspect the same, to supply any service to be provided by Lessor to Lessee hereunder, and to show the Real Property to prospective purchasers, mortgagees, or lessees, to post notices of non-responsibility, without abatement of rent, provided entrance to the Real Property shall not be denied Lessee. SECTION 11 ---------- SALE OF LEASED PREMISES BY LESSOR --------------------------------- Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in whole or in part, Lessor's interest in this Lease and (b) may sell all or part of the Real Property. In the event of any sale or exchange of the Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and is hereby relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission relating to the Leased Premises occurring after the consummation of such sale or exchange and assignment, but only upon the condition that, as part of such sale or exchange, Lessor will cause the grantee to agree in writing to assume to carry out any and all of the covenants and obligations of Lessor under this Lease occurring after the consummation of Lessor's assignment of its interest in and to this Lease. SECTION 12 ---------- BROKERAGE --------- The parties acknowledge and agree that this Agreement has not been brought about as a result of the services of any real estate broker, firm or corporation, and each indemnifies and saves the other harmless from any and all claims from any person(s) claiming to have rendered real estate services in connection with this Agreement. SECTION 13 ---------- SURRENDER OF PREMISES --------------------- Upon the expiration of the Term hereof, Lessee shall surrender the Leased Premises, and, at Lessor's option, all interest of the Lessee in and to the Improvements (including the radio towers located on the Land), to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. SECTION 14 ---------- NOTICES ------- All notices, demands, and requests required or permitted to be given hereunder shall be in writing and sent certified mail, return receipt requested, and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. SECTION 15 ---------- BINDING NATURE -------------- The provisions of this Agreement shall apply to, bind and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. The terms of this Agreement and any disputes arising therefrom, shall be governed by the laws of the State of California. SECTION 16 ---------- ENTIRE AGREEMENT ---------------- This Agreement contains the entire understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE ATSINGER FAMILY TRUST VISTA BROADCASTING, INC. /s/ Edward G. Atsinger /s/ Eric H. Halvorson - ------------------------------- ------------------------------------ EDWARD G. ATSINGER, III ERIC H. HALVORSON Trustee Vice-President /s/ Mona J. Atsinger - ------------------------------- MONA J. ATSINGER Trustee (By Edward G. Atsinger III, Attorney in Fact) STUART W. EPPERSON REVOCABLE LIVING TRUST /s/ Stuart W. Epperson - ------------------------------- STUART W. EPPERSON Trustee EX-10.06.01 24 ASSET PURCHASE AGREEMENT EXHIBIT 10.06.01 EXECUTION COPY -------------- ASSET PURCHASE AGREEMENT ------------------------ This ASSET PURCHASE AGREEMENT (this "Agreement"), made as of the 5TH day of June, 1996, is by and between Radio 94 of Phoenix Limited Partnership, a Maryland limited partnership ("Seller"), and Salem Media of Arizona, Inc., an Arizona corporation ("Buyer"). RECITALS -------- Seller is the licensee of and operates radio broadcast station KOOL(AM), Phoenix, Arizona (the "Station"), pursuant to licenses issued by the Federal Communications Commission (the "FCC"). Seller and Buyer have agreed, subject to the prior approval of the FCC, that Seller will sell and Buyer will acquire certain of the assets associated solely with the operation of the Station on the terms and subject to the conditions set forth in this Agreement. Therefore, the parties agree as follows: ARTICLE 1 ASSETS TO BE CONVEYED --------------------- 1.1. CLOSING. Subject to Section 17.1 hereof and except as otherwise mutually agreed upon by Seller and Buyer, the closing of this transaction (the "Closing") shall take place on a date designated by Seller within five (5) business days after the last of the conditions specified in Sections 11.2 and 12.2 hereof has been fulfilled (or waived by the party entitled to waive such condition). The Closing shall be held at 10:00 a.m. in the offices of Leventhal, Senter & Lerman, 2000 K Street, N.W., Washington, D.C., or at such place as the parties may otherwise agree. 1.2. STATION ASSETS. At the Closing, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase from Seller, certain assets held by Seller and used solely in the operation of the Station (but excluding the assets specified in Section 1.3), as follows: (a) all of Seller's rights in and to the licenses, permits and other authorizations issued to Seller by any governmental authority and associated solely with the operation of the Station, including the Station Licenses listed in Schedule -------- 2 1.2(a), together with any additions thereto (including renewals or ------ modifications of such licenses, permits and authorizations and applications therefor) between the date hereof and the Closing Date; (b) all of Seller's right, title and interest in and to the leasehold interests and easements associated solely with the operation of the Station (the "Leases"), as listed in Schedule -------- 1.2(b); and ------ (c) the tangible personal property owned, leased or held by Seller and associated solely with the operation of the Station, specifically limited to items listed in Schedule 1.2(c), including --------------- any warranties in effect relating thereto; and (d) all of Seller's rights under and interest in any contracts entered into or acquired by Seller between the date hereof and the Closing Date that Seller offers to assign to Buyer and which are accepted in writing by Buyer (the "Contracts"); and (e) true and complete copies of all of the files, logs, ledgers, reports of engineers and other consultants or independent contractors, pertaining to the Station Assets. The assets to be transferred to Buyer hereunder are hereinafter collectively referred to as the "Station Assets." The Station Assets shall be transferred to Buyer free and clear of any debts, liens, or encumbrances of any kind or nature except as to any obligation or liability of Seller that Buyer may expressly agree in writing to assume and except for Permitted Liens. 1.3. EXCLUDED ASSETS. The Station Assets shall not include the following: (a) Seller's books and records as pertain to the corporate organization, existence or capitalization of Seller, and duplicate copies of such records as are necessary to enable Seller to file tax returns and reports. Seller's files, records, books of account, computer programs and software relating to the operation of the Station except as set forth in Section 1.2(e) hereof, including, without limitation, payable records, receivable records, invoices, statements, traffic material, programming information and studies, news and advertising studies and consultants' reports, ratings reports, marketing and demographic data, sales correspondence, lists of advertisers, promotional materials, credit and sales reports, budgets, financial reports and projections, sales, operating and business plans; and (b) all cash, cash equivalents, accounts receivable (which shall be collected by Seller) and any assets of any kind or description used in connection 3 with the Station that are also used or held for use in connection with Radio Station KOOL-FM, Phoenix, Arizona and the call letters "KOOL"; and (c) all insurance policies, except for any rights that may be assigned pursuant to Article 20 hereof; and (d) all pension, profit sharing or cash or deferred (Section 401 (k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and all employment contracts or any rights or obligations relating thereto. (e) all commitments, contracts and agreements not specifically assigned to and assumed by Buyer pursuant to Section 1.2(d), above. ARTICLE 2 PURCHASE PRICE -------------- 2.1. PURCHASE PRICE. The total consideration to be paid by Buyer for the Station Assets (the "Purchase Price ") shall be Six Million Five Hundred Thousand Dollars ($6,500,000), as adjusted pursuant to Section 5.2. 2.2. PAYMENT OF PURCHASE PRICE. The Purchase Price will be payable as follows: (a) Upon the execution of this Agreement, Buyer shall deposit the amount of Four Hundred Thousand Dollars ($400,000) (the "Escrow Deposit") with Escrow Agent to be held pursuant to the terms and conditions of the Escrow Agreement, as set forth on Exhibit A. At the Closing, the Escrow Deposit shall be paid by Escrow Agent to Seller. If Closing does not occur, the Escrow Deposit shall either be delivered to Seller or returned to Buyer in accordance with this Agreement. All interest earned on the Escrow Deposit shall be paid by Escrow Agent to Buyer. (b) Six Million One Hundred Thousand Dollars ($6,100,000) shall be paid on the Closing Date by wire transfer of immediately available federal funds to a bank or other financial institution designated by Seller at least two (2) days prior to the Closing Date. 2.3. ALLOCATION. Buyer shall prepare an initial draft of IRS Form 8594. Buyer shall forward such form to Seller for its approval, which shall not be unreasonably withheld, and Buyer and Seller shall each file the IRS Form 8594 finally agreed upon by the parties with their respective federal income tax return for the tax year in which the Closing occurs. 4 ARTICLE 3 ASSUMPTION OF OBLIGATIONS ------------------------- 3.1. ASSUMPTION OF OBLIGATIONS. Subject to the provisions of this Article 3 and Article 5 of this Agreement, Buyer shall assume and undertake to pay, satisfy or discharge: (a) the liabilities, obligations and commitments of Seller arising or accruing after the Closing Date under the Leases listed in Schedule 1.2(b); and (b) the liabilities, obligations and commitments of --------------- Seller arising or accruing after the Closing Date under other leases and any Contracts entered into between the date of this Agreement and the Closing Date which Buyer expressly agrees in writing to assume. 3.2. LIMITATION. Except as set forth in Section 3.1 hereof, Buyer expressly does not, and shall not, assume or be deemed to assume, under this Agreement or otherwise by reason of the transactions contemplated hereby, any liabilities, obligations or commitments of Seller of any nature whatsoever. ARTICLE 4 REQUIRED CONSENTS ----------------- 4.1. FCC APPLICATION. The assignment of the Station Licenses as contemplated by this Agreement is subject to the prior consent and approval of the FCC. No later than five (5) business days after the date of this Agreement, Buyer and Seller shall file the FCC Application. Seller and Buyer shall thereafter prosecute the FCC Application with all reasonable diligence and otherwise use their best efforts to obtain the grant of the FCC Application as expeditiously as practicable and shall diligently oppose any objections to, appeals from or petitions to reconsider such approval of the FCC, to the end that the FCC Consent and a Final Order with respect thereto may be obtained as soon as practicable; provided, however, that neither Seller nor Buyer shall have any obligation to satisfy any complainant or the FCC by taking any steps which would have a material adverse effect upon Seller or Buyer or upon any affiliated entity, but neither the expense nor inconvenience to a party of defending against a complainant or an inquiry by the FCC shall be considered a material adverse effect on such party. If the FCC Application has been designated for hearing by the FCC, either Buyer or Seller may elect to terminate this Agreement pursuant to Article 17 hereof. Buyer and Seller covenant that neither of them shall knowingly take any action that such party knows or has reason to know would materially and adversely affect or materially delay issuance of the FCC Consent or materially and adversely affect or materially delay the FCC Consent becoming a Final Order, unless such action is requested by the FCC or its staff or is required by the FCC's rules or policies. Should Buyer or Seller become aware of any facts which could reasonably be expected to materially and adversely affect or materially delay the FCC Consent from becoming a Final 5 Order, or which would result in the imposition of a Material Adverse Condition, such party shall promptly notify the other party thereof in writing and both parties shall cooperate to take all steps necessary or desirable to resolve the matter expeditiously and to obtain the FCC Consent and the Final Order without the imposition of a Material Adverse Condition so long as such steps would not have a material adverse effect upon Seller or Buyer or any affiliated entity. 4.2. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of this Agreement, the parties shall prepare and file with the appropriate governmental authorities any other requests for approval or waiver that are required from such governmental authorities in connection with the transactions contemplated hereby and shall diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such requests for approval or waiver and all proceedings necessary to secure such approvals and waivers. ARTICLE 5 PRORATIONS ---------- 5.1. PRORATION OF EXPENSES. All expenses arising from the conduct of the operation of the Station shall be prorated between Buyer and Seller as of the Effective Time in accordance with GAAP. Such prorations shall be based upon the principle that Seller shall be responsible for all liabilities and obligations incurred or accruing in connection with the operation of the Station until the Effective Time, and Buyer shall be responsible for such liabilities and obligations incurred by Buyer thereafter. Such prorations shall include, without limitation, all ad valorem, real estate and other property taxes, business and license fees, utility expenses, rents and similar prepaid and deferred items, except taxes arising by reason of the transfer of the Station Assets as contemplated hereby, which shall be paid in accordance with Section 14.2. To the extent not known, real estate taxes shall be apportioned on the basis of taxes assessed for the preceding year, with a reapportionment as soon as the new tax rate and valuation can be ascertained. All income derived from the sale of advertising time on the Station prior to the Closing shall be for the benefit of and shall be collected by Seller. 5.2. PAYMENT OF PRORATION ITEMS. Three (3) business days prior to Closing, Seller shall deliver to Buyer a preliminary list of all items to be prorated pursuant to Section 5.1 (the "Preliminary Proration Schedule"), and, to the extent feasible, such prorations shall be credited against or added to the Purchase Price at Closing. To the extent that all prorations and adjustments are not resolved at Closing, Seller shall deliver to Buyer a schedule of such additional prorations and adjustments (the "Proration Schedule") no later than forty-five (45) days after the Closing Date. The Proration Schedule shall be conclusive and binding upon Buyer unless Buyer provides Seller with written notice of objection (the "Notice of Disagreement") within twenty (20) days after Buyer's receipt of the Proration Schedule, which notice shall state 6 the prorations of expenses proposed by Buyer (the "Buyer's Proration Amount"). Seller shall have twenty (20) days from receipt of a Notice of Disagreement to accept or reject Buyer's Proration Amount. If Seller rejects Buyer's Proration Amount, and the amount in dispute exceeds five thousand dollars ($5,000), the dispute shall be submitted within ten (10) days to the Phoenix, Arizona office of Deloitte & Touche (the "Referee") for resolution, such resolution to be made within twenty (20) days after submission to the Referee and to be final, conclusive and binding on Seller and Buyer. The cost and expenses of the Referee shall be proportionately allocated between Buyer and Seller based on the percentage of the disputed amount allocated by the Referee to Buyer and Seller, respectively, but each party shall bear its own legal and other expenses, if any. If the amount in dispute is equal to or less than five thousand dollars ($5,000), such amount shall be divided equally between Buyer and Seller. Payment by Buyer or Seller, as the case may be, of the proration amounts determined pursuant to this Section 5.2 shall be due ten (10) days after the last to occur of (i) Buyer's acceptance of the Proration Schedule or failure to give Seller a timely Notice of Disagreement; (ii) Seller's acceptance of Buyer's Proration Amount or failure to reject Buyer's Proration Amount within ten (10) days of receipt of a Notice of Disagreement; (iii) Seller's rejection of Buyer's Proration Amount in the event the amount in dispute equals or is less than five thousand dollars ($5,000); and (iv) notice to Seller and Buyer of the resolution of the disputed amount by the Referee in the event that the amount in dispute exceeds five thousand dollars ($5,000). Any payment required by Seller to Buyer or by Buyer to Seller, as the case may be, under this Section 5.2 shall be paid by wire transfer of immediately available federal funds to the account of the payee with a financial institution in the United States as designated by Seller in the Proration Schedule or by Buyer in the Notice of Disagreement (or by separate notice in the event that Buyer does not send a Notice of Disagreement). If either Buyer or Seller fails to pay when due any amount under this Section 5.2, interest on such amount will accrue from the date payment was due to the date such payment is made at a per annum rate equal to the Prime Rate plus two percent (2%), and such interest shall be payable upon demand. 5.3 Nothing in this Article 5 shall in any way limit Buyer or Seller from seeking any remedy from the other party for breach of any provision of this Agreement or indemnification pursuant to Article 16. ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer represents and warrants to Seller as follows: 6.1. ORGANIZATION AND STANDING. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Arizona. 7 6.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has all necessary power and authority to enter into and perform under this Agreement and the transactions contemplated hereby, and Buyer's execution, delivery and performance of this Agreement has been duly and validly authorized by all necessary action on its part. This Agreement has been duly executed and delivered by Buyer and constitutes its valid and binding obligation, enforceable in accordance with its terms, except as limited by laws affecting creditors' rights or equitable principles generally. 6.3. FCC QUALIFICATIONS. There are no facts which, under the Communications Act of 1934, as amended, or the existing rules and regulations of the FCC, would disqualify Buyer as assignee of the Station Licenses, and Buyer is able to certify on FCC Form 314 to its financial qualifications. 6.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as set forth in Article 4 with respect to FCC and other governmental consents or as disclosed on Schedule 6.4, the execution, delivery and ------------ performance of this Agreement and the consummation of the transactions contemplated hereby by Buyer: (a) do and will not require the consent of any third party; (b) do and will not violate any provisions of Buyer's articles of incorporation or bylaws; (c) do and will not violate any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which any Buyer is a party; and (d) do and will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under any agreement, instrument, license or permit to which Buyer is now subject. 6.5. ABSENCE OF LITIGATION. There is no claim, litigation, proceeding or investigation pending or, to the best of Buyer's knowledge, threatened against Buyer which seeks to enjoin or prohibit, or which otherwise questions the validity of, any action taken or to be taken in connection with this Agreement. 6.6. FINANCIAL QUALIFICATION. Buyer is financially qualified to meet all terms, conditions and undertakings contemplated by this Agreement. ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Seller represents and warrants to Buyer as follows: 7.1. ORGANIZATION AND STANDING. Seller is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Maryland, and has all 8 necessary power and authority to own, lease and operate the Station Assets and to carry on the business of the Station as now being conducted and as proposed to be conducted by Seller between the date hereof and the Closing Date. 7.2. AUTHORIZATION AND BINDING OBLIGATION. Seller has all necessary power and authority to enter into and perform this Agreement and the transactions contemplated hereby, and Seller's execution, delivery and performance of this Agreement has been duly and validly authorized by all necessary action on its part. This Agreement has been duly executed and delivered by Seller and constitutes its valid and binding obligation, enforceable in accordance with its terms, except as limited by laws affecting the enforcement of creditors' rights or equitable principles generally. 7.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as set forth in Article 4 with respect to FCC and other governmental consents and except as set forth on Schedule 7.3, the execution, delivery and ------------- performance of this Agreement and the consummation of the transactions contemplated hereby by Seller (a) do not and will not require the consent of any third party; (b) do not and will not violate any provisions of Seller's limited partnership agreement (c) do not and will not violate any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority to which Seller is a party or by which it or the Station Assets are bound; (d) do not and will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination of or result in a breach of the terms, conditions or provisions of, or constitute a default under any Lease, agreement, instrument, license or permit to which either Seller or the Station Assets are now subject; and (e) do not and will not result in the creation of any lien, charge or encumbrance on any of the Station Assets. 7.4. FCC AUTHORIZATIONS. (a) Schedule 1.2(a) contains a true and complete list of the Station --------------- Licenses, including their expiration dates. Seller has delivered to Buyer true and complete copies of the Station Licenses, including any and all amendments and other modifications thereto. The Station Licenses and other licenses, permits and authorizations listed in Schedule 1.2(a) are (i) validly held by --------------- Seller, and are in full force and effect, and except as disclosed in Schedule -------- 1.2(a), to Seller's knowledge none is subject to any restriction or condition - ------- which would limit in any respect the full operation of the Station as now operated and (ii) constitute all the licenses and authorizations issued by the FCC to Seller that are utilized solely in connection with the current operation of the Station. Seller has no knowledge of any condition imposed by the FCC as part of any Station License which is neither set forth on the face thereof as issued by the FCC nor contained in the FCC's rules applicable generally to stations of the type, nature, class or location of the Station. Except as disclosed on Schedule 1.2(a), the Station is being operated at full 9 authorized power, in material compliance with the terms and conditions of the Station Licenses applicable to it and in material compliance with all rules and regulations of the FCC. Seller has no reason to believe that the FCC will not renew the Station Licenses in the ordinary course. (b) Except as disclosed in Schedule 1.2(a), there are no applications, --------------- complaints or proceedings pending or, to the best of Seller's knowledge, threatened before the FCC relating to the operation of the Station or that may result in the revocation, modification, non-renewal or suspension of any of the Station Licenses, the denial of any pending application or the imposition of any fines, forfeitures, or other administrative actions by the FCC with respect to the Station or its operation other than proceedings affecting the broadcasting industry generally. Except as disclosed in Schedule 1.2(a), Seller is not --------------- subject to any outstanding judgment or order of the FCC relating to the Station. To Seller's knowledge, the Station is being operated in all material respects in accordance with the terms and conditions of the Station Licenses, the underlying construction permits, the Communications Act of 1934, as amended, and all rules, regulations and policies of the FCC. (c) 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 FCC, would disqualify Seller as the assignor of the Station Licenses. (d) Seller has complied in all material respects with all requirements to file reports, applications and other documents with the FCC with respect to the Station, and all such reports, applications and documents are complete and correct in all material respects. The "Public Inspection File" of the Station is complete and in substantial and material compliance with Section 73.3526 of the Rules and Regulations. 7.5. CONDITION OF LEASED REAL PROPERTY. Schedule 1.2(b) contains descriptions of all of Seller's leasehold --------------- interests with respect to real property associated solely with Seller's operation of the Station (the "Real Property"). All of the Real Property is in good condition and repair consistent with its current use and available for use in the operations of the Station. The improvements on the Real Property owned or leased by Seller are in good working condition and repair and adequate for their intended use. Seller has not received any notice of any appropriation, condemnation or like proceeding, or of any violation of any applicable zoning law, regulation or other law, order, regulation or requirement affecting such Real Property or improvements thereon, or of the need for any material repair, remedy, construction, alteration or installation with respect to the Real 10 Property or improvements thereon, or any change in the means or methods of conducting operations thereon. The Leases listed on Schedule 1.2(b) constitute valid and binding obligations ---------------- of Seller and, to Seller's knowledge, of all other parties thereto, and are in full force and effect as of the date hereof. Except as disclosed on Schedule -------- 1.2(b), Seller is not in default under any of the Leases and to Seller's - ------- knowledge, the other parties to such Leases are not in default thereunder. Seller has not received or given written notice of any default thereunder from or to any of the other parties thereto. Except as disclosed on Schedule 1.2(b), --------------- Seller has all requisite power and authority to assign its rights under the Leases 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 affect the validity, enforceability or continuity of any such Leases. 7.6. TITLE TO AND CONDITION OF PERSONAL PROPERTY. Schedule 1.2(c), ---------------- contains a list of the principal items (and a summary description of the other items) of tangible personal property owned, leased or held by Seller and associated solely with the operation of the Station ("Personal Property") which is complete and correct in all material respects. Except as described in Schedule 1.2(c), Seller has good and marketable title to all Personal Property - ---------------- free and clear of all Liens (except for Permitted Liens) including the right to transfer same. Except as described in Schedule 1.2(c), to Seller's knowledge all ---------------- of the items of tangible personal property and facilities included in the Station Assets are in good operating condition and repair (reasonable wear and tear excepted), are insurable at standard rates, have been properly maintained in accordance with industry standards, are performing satisfactorily and in accordance with standards of good engineering practice, comply in all material respects with applicable rules and regulations of the FCC and the terms of the Station Licenses and are available for immediate use in the operation of the Station. Seller has no knowledge of any defect in the condition or operation of any item of Personal Property which is reasonably likely to have a material adverse effect on the operation of the Station. 7.7. CONTRACTS. The Contracts, if any, will constitute valid and binding obligations of Seller and, to Seller's knowledge, of all other parties thereto, will be in full force and effect as of the Closing Date. Seller will not be in default under any of the Contracts and to Seller's knowledge, the other parties to such Contracts will not be in default thereunder. Should there be any Contracts, Seller will have all requisite power and authority to assign its rights under the Contracts to Buyer in accordance with this Agreement, and such assignment will not affect the validity, enforceability or continuity of any such Contracts. 7.8. LITIGATION. Seller is not subject to any judgment, award, order, writ, injunction, arbitration decision or decree affecting the Station. Except as disclosed on Schedule 7.8, there is no claim, litigation, proceeding ------------ or investigation pending or, to the best of Seller's 11 knowledge, threatened against the Station in any federal, state or local court, or before any administrative agency, arbitrator or other tribunal authorized to resolve disputes. Except as disclosed on Schedule 7.8, there is no claim, ------------ litigation, proceeding or investigation pending or, to the best of Seller's knowledge, threatened against Seller, which might have a material adverse effect upon the assets or condition of the Station or which seeks to enjoin or prohibit, or otherwise questions the validity of, any action taken or to be taken in connection with this Agreement. To the actual knowledge of Seller, there is no basis for any such claim, investigation, action, suit or proceeding which would, individually or in the aggregate if adversely determined, have a material adverse effect on the Station Assets or the operation of the Station. 7.9. COMPLIANCE WITH LAWS. To Seller's knowledge, Seller has operated and is operating in material compliance with all laws, regulations and governmental orders applicable to the operation of the Station, and its present use of the Station Assets does not violate any such laws, regulations or orders in any material respect. Seller has not received any notice asserting any noncompliance with any applicable statute, role or regulation, in connection with the operation of the Station. 7.10. ENVIRONMENTAL MATTERS; OSHA. Except to the extent disclosed in the Phase I Environmental Site Assessment Update, Pinnacle Peak AM Tower Site, 3701 East Pinnacle Peak Road, Phoenix, AZ, prepared for Compass Radio Group, Inc. by Dames & Moore, dated September 1, 1995, a copy of which has been provided to Buyer, to Seller's actual knowledge, during the period of Seller's ownership of the Station: (a) No Hazardous Materials (i) are or have been used, treated, stored, disposed of, released, spilled, generated, manufactured, transported or otherwise handled on the Real Property, (ii) have been spilled, released or disposed of on property adjacent to the Real Property, or (iii) have otherwise come to be located on or under the Real Property; (b) the Real Property and all operations on the Real Property are in material compliance with all Environmental Laws; (c) Seller has obtained all environmental, health and safety permits necessary for the operation of the Station, and all such permits are in full force and effect, and Seller is in compliance with the terms and conditions of all such permits; (d) there are no underground storage tanks, whether in use or closed, on or under the Real Property, and no PCB is present on the Real Property or used in the Personal Property; and (e) Seller is in material compliance with OSHA Laws. Seller has not received any notice, and is not aware, of any administrative or judicial investigations, proceedings or actions with respect to violations, alleged or proven, of Environmental Laws by Seller or any tenants of Seller. The term "actual knowledge," as used in this Section 7.10, shall mean the knowledge and awareness of Seller's principals, after inquiry of the Station's general manager and chief engineer. 12 7.11 FILING OF TAX RETURNS. Seller has filed all Federal, State and local tax returns which are required to be filed, and has paid all taxes and all assessments to the extent that such taxes and assessments have become due. 7.12 ABSENCE OF INSOLVENCY. No insolvency proceeding of any character including without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Seller or any of the Station Assets, are pending or, to the best knowledge of Seller, 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. 7.13 INSURANCE. There is now in full force and effect with reputable insurance companies fire and extended coverage insurance with respect to all material tangible Station Assets and public liability insurance, all in commercially reasonable amounts. ARTICLE 8 COVENANTS OF BUYER ------------------ 8.1. NOTIFICATION. Buyer shall notify Seller of any material litigation, arbitration or administrative proceeding pending or, to its knowledge, threatened against Buyer which challenges the transactions contemplated hereby, including any challenges to the FCC Application, and shall use reasonable efforts to remove any such impediment to the transactions contemplated by this Agreement. 8.2. NO INCONSISTENT ACTION. Buyer shall not take any action materially inconsistent with its obligations under this Agreement or that would hinder or delay the consummation of the transactions contemplated by this Agreement. 8.3. RIGHT OF FIRST REFUSAL. At the Closing, Buyer shall execute and deliver, the Right of First Refusal Agreement in the form of Exhibit B. --------- 8.4. NON-COMPETITION AGREEMENT. At the Closing, Buyer shall execute and deliver to Seller the Non-competition Agreement in the form of Exhibit C. --------- 8.5. REQUEST FOR CALL SIGN CHANGE. Prior to Closing, Buyer shall file an application with the FCC requesting a change to the call sign of the Station to be effective upon the consummation of the transactions contemplated hereby. 13 ARTICLE 9 COVENANTS OF SELLER ------------------- 9.1. INTERIM OPERATION. Between the date of this Agreement and the Closing Date, except as expressly permitted by this Agreement or with the prior written consent of Buyer: (a) Seller shall conduct the technical operation of the Station solely in the ordinary and normal course of operation consistent with past practice, including continuation of the current broadcast hours of the Station and the carriage of programming during such hours, except that Seller shall be permitted to take steps which encourage the Station's listeners to listen to the Station's programming on Station KOOL-FM; (b) Seller shall not sell, assign, lease or otherwise transfer or dispose of any of the Station Assets, except where no longer used or useful in the operation of the Station; (c) Seller shall not create, assume or permit to exist any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon the Station Assets, except for those in existence on the date of this Agreement, all of which will be removed on or prior to the Closing Date unless they are to be assumed by Buyer in accordance with Section 3.1 of this Agreement; (d) Seller shall operate the Station in material compliance with the FCC's rules and regulations and the Station Licenses and with all other applicable laws, regulations, rules and orders; (e) Seller shall comply in all material respects with the Leases; (f) Seller shall promptly notify Buyer of any material default by, or claim of default against, any party under any of the Leases which are material, individually or in the aggregate, to the operation of the Station, and any event or condition which, with notice or lapse of time or both, would constitute an event of default under such Leases; and (g) Seller shall maintain insurance policies on the Station and the Station Assets. 9.2. NOTIFICATION. Seller shall notify Buyer of any litigation, arbitration or administrative proceeding pending or, to its knowledge, threatened against Seller which 14 challenges the transactions contemplated hereby, including any challenges to the FCC Application, and shall use its reasonable efforts to take such steps as may be necessary to remove any such impediment to the transactions contemplated by this Agreement. 9.3. THIRD-PARTY CONSENTS. Seller shall use commercially reasonable efforts to obtain the consent of any third party necessary for the assignment to Buyer of any Lease or Contract to be assigned hereunder; provided, however, that -------- ------- Seller shall have no obligation to pay consideration to any third-party to obtain such consent, except as specifically provided in such Lease or Contract. 9.4. CLOSING COVENANT. On the Closing Date, Seller shall transfer, convey, assign and deliver to Buyer the Station Assets as provided in Article 1 of this Agreement. 9.5. PAYMENT OF INDEBTEDNESS; FINANCING STATEMENTS. Seller shall secure the release of all liens or encumbrances on the Station Assets that secure the payment of any indebtedness and shall deliver to Buyer at the Closing releases or terminations under the Uniform Commercial Code and any other applicable federal, state or local statutes or regulations of any financing or similar statements filed against any Station Assets in (a) the jurisdictions in which the Station Assets are and have been located since such Station Assets were acquired by Seller, and (b) any other location specified or required by applicable federal, state or local statutes or regulations. 9.6. NO INCONSISTENT ACTION. Seller shall not take any action which is materially inconsistent with its obligations under this Agreement or that would hinder or delay the consummation of the transactions contemplated by this Agreement. 9.7. ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and its representatives may make reasonable investigation of the Station Assets and Seller shall give to Buyer and it engineers, and other representatives reasonable access during normal business hours throughout the period prior to the Closing to Seller's personnel that may provide information relating to the Station Assets; provided that (i) Buyer shall give Seller reasonable advance notice of each date on which Buyer or any such other person or entity desires such access, (ii) each person shall, if requested by Seller, be accompanied by an officer or other representative of Seller; (iii) the investigations at the offices of Seller shall be reasonable in number and frequency, and (iv) all investigations shall be conducted in such a manner as not to physically damage any property or constitute a disruption of the operation of the Station or Seller. Seller shall furnish to Buyer during such period all documents and copies of documents and information concerning the Station Assets as Buyer may reasonably request. 15 9.8. FCC REPORTS. Seller shall continue to file, on a current basis until the Closing Date, all reports and documents required to be filed with the FCC with respect to the Station Assets. ARTICLE 10 JOINT COVENANTS --------------- 10.1. CONDITIONS. If any event should occur between the date hereof and the Closing, either within or without the control of any party hereto, which would prevent fulfillment of the conditions upon the obligations of any party to consummate the transactions contemplated by this Agreement, the parties shall use their reasonable efforts to cure the event as expeditiously as possible. 10.2. BEST EFFORTS. Between the date of this Agreement and the Closing, each party shall use its best efforts to cause the fulfillment at the earliest practicable date of all of the conditions to the obligations of the other party to consummate the sale and purchase under this Agreement. 10.3. CONTROL OF STATION. Between the date of this Agreement and the Closing, Buyer shall not, directly or indirectly, control, supervise or direct the operations of the Station. Such operations shall be the sole responsibility of Seller and, subject to the provisions of Article 9, shall be in its complete discretion. ARTICLE 11 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE --------------------------------------------------- The obligations of Buyer hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 11.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) All representations and warranties of Seller made in this Agreement shall be true and complete in all material respects on and as of the Closing Date as if made on and as of that date. (b) All of the terms, covenants and conditions to be complied with and performed by Seller on or prior to Closing Date shall have been complied with or performed. 16 11.2. GOVERNMENTAL CONSENTS. The conditions specified in Article 4 of this Agreement shall have been satisfied, and the FCC Consent shall have become a Final Order without any Material Adverse Condition. 11.3. GOVERNMENTAL AUTHORIZATIONS. Seller shall be the lawful holder of the Station Licenses and all other material licenses, permits and other authorizations listed in Schedule 1.2(a), and there shall not have been any --------------- modification of any of such licenses, permits and other authorizations which would have an adverse effect on the operation of the Station. No proceeding shall be pending which seeks or the effect of which reasonably could be to revoke, cancel, fail to renew, suspend or modify adversely any of the Station Licenses or any other licenses, permits or other authorizations relating to the Station. 11.4. THIRD-PARTY CONSENTS. Seller shall have obtained and shall have delivered to Buyer all third-party consents that may be required for assignment of the Leases and Contracts, without any condition adverse to Buyer, or shall have made arrangements for Buyer to receive the benefits of such Leases and Contracts. 11.5. ADVERSE PROCEEDINGS. No suit, action, claim or governmental proceeding shall be pending against, and no order, decree or judgment of any court, agency or other governmental authority shall have been rendered against, any party hereto that would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms. 11.6. DELIVERIES. Seller shall have made or stand willing to make all the deliveries required under Section 13.1. 11.7. OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from Seller's FCC counsel an opinion, dated the Closing Date, in the form of Exhibit D hereto. ARTICLE 12 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE ---------------------------------------------------- The obligations of Seller hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 12.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) All representations and warranties made by Buyer in this Agreement shall be true and complete in all material respects on and as of the Closing Date as if made on and as of that date. 17 (b) All the terms, covenants and conditions to be complied with and performed by Buyer under this Agreement on or prior to the Closing Date shall have been complied with or performed in all material respects. 12.2. GOVERNMENTAL CONSENTS. The conditions specified in Article 4 of this Agreement shall have been satisfied, and the FCC Consent shall have become a Final Order. 12.3. ADVERSE PROCEEDINGS. No suit, action, claim or governmental proceeding shall be pending against, and no order, decree or judgment of any court, agency or other governmental authority shall have been rendered against any party hereto that would render it unlawful, as of the Closing Date, to effect the transactions contemplated by this Agreement in accordance with its terms. 12.4. DELIVERIES. Buyer shall have made or stand willing to make all the deliveries required under Section 13.2. ARTICLE 13 DOCUMENTS TO BE DELIVERED AT THE CLOSING ---------------------------------------- 13.1. DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller shall deliver to Buyer the following: (a) a certificate signed by an officer of Seller's general partner, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, certifying to the fulfillment of the conditions set forth in Sections 11.1 through 11.5 hereof; (b) instruments of conveyance and transfer, in form and substance reasonably satisfactory to counsel to Buyer, effecting the sale, transfer, assignment and conveyance of the Station Assets to Buyer, including, but not limited to, the following: (i) assignment of the Station Licenses; (ii) bill of sale for all Personal Property; (iii) assignment of the Leases and Contracts; and (c) resolutions of the boards of directors and shareholders of Seller's 18 general partner, authorizing the execution, delivery and performance of this Agreement, certified by the secretary of the Seller's general partner; and (d) executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Station Assets as security for payment of loans and other obligations and of any other Liens; and (e) such other documents as may reasonably be requested by Buyer's counsel. 13.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall deliver to Seller the following: (a) a certificate signed by an officer of Buyer, dated the Closing Date, in form and substance reasonably satisfactory to Seller, certifying to the fulfillment of the conditions specified in Sections 12.1 through 12.3 hereof; (b) immediately available wire-transferred federal funds as provided in Section 2.1; (c) instruments, in form and substance reasonably satisfactory to Seller and its counsel, pursuant to which Buyer assumes obligations, liabilities and commitments as provided in Article 3; (d) the Right of First Refusal and Non-competition Agreements in the form of Exhibits B and C; ---------- - (e) a copy of the application filed with the FCC requesting a change to the call sign of the Station to be effective upon the consummation of the transactions contemplated hereby and the FCC's grant thereof; and, (f) such other documents as may reasonably be requested by Seller's counsel. ARTICLE 14 FEES AND EXPENSES; TRANSFER TAXES --------------------------------- 14.1. GOVERNMENTAL FILING OR GRANT FEES. Any filing or grant fees imposed by any governmental authority, the consent of which is required for the transactions contemplated hereby, including all filing fees incurred pursuant to Article 4, shall be borne equally by Buyer and Seller. 19 14.2. TRANSFER TAXES. Any taxes arising by reason of the transfer of the Station Assets as contemplated hereby shall be borne by Buyer. 14.3. EXPENSES. Each party hereto shall be solely responsible for and shall pay all costs and expenses incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement. ARTICLE 15 BROKER'S COMMISSION OR FINDER'S FEE ----------------------------------- 15.1. BUYER'S REPRESENTATION AND AGREEMENT TO INDEMNIFY. Buyer represents and warrants to Seller that neither it nor any person or entity acting on its behalf has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity, nor has it or any person or entity acting on its behalf taken any action on which a claim for any such payment could be based. Buyer further agrees to indemnify and hold Seller harmless from and against any and all claims, losses, liabilities and expenses (including reasonable attorneys' fees) arising out of a claim by any person or entity based on any such arrangement or agreement made or alleged to have been made by Buyer. 15.2. SELLER'S REPRESENTATION AND AGREEMENT TO INDEMNIFY. Seller represents and warrants to Buyer that, except for its agreement with Kalil & Co., Inc., neither it nor any person or entity acting on its behalf has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity, nor have they or any person or entity acting on its behalf taken any action on which a claim for any such payment could be based. Seller further agrees that it shall be solely responsible for the payment of any fee due to Kalil & Co., Inc. Seller further agrees to indemnify and hold Buyer harmless from and against any and all claims, losses, liabilities and expenses (including reasonable attorneys' fees) arising out of a claim by any person or entity based on any such arrangement or agreement made or alleged to have been made by Seller. ARTICLE 16 INDEMNIFICATION --------------- 16.1. INDEMNIFICATION BY SELLER. Notwithstanding the Closing, Seller hereby agrees to indemnify, defend and hold Buyer harmless against and with respect to, and shall reimburse Buyer for: (a) Any and all losses, direct or indirect, liabilities, or damages resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant or obligation by 20 Seller contained herein or in any certificate, document or instrument delivered to Buyer hereunder; (b) Any and all obligations of Seller arising prior to the Effective Time and which are not assumed by Buyer pursuant to the terms of this Agreement; (c) Any and all losses, liabilities or damages resulting from the operation or ownership of the Station prior to the Effective Time, including but not limited to any and all liabilities arising under the Station Licenses or the Leases or the Contracts which relate to events occurring prior to the Effective Time; (d) Any and all losses, liabilities or damages resulting from the litigation listed on Schedule 7.7; ------------ (e) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity, subject to the notice and opportunity to remedy requirements of Section 16.3 hereof; and (f) Interest at the Prime Rate on any reimbursable expense or loss incurred by Buyer from the date of payment, in the case of a reimbursable expense, and from the date of incurrence, in the case of any other losses, until the date of reimbursement by Seller. 16.2. INDEMNIFICATION BY BUYER. Notwithstanding the Closing, Buyer hereby agrees to indemnify and hold the Seller harmless against and with respect to, and shall reimburse the Seller for: (a) Any and all losses, direct or indirect, liabilities, or damages resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenant or obligation by Buyer contained herein or in any certificate, document or instrument delivered to Seller hereunder; (b) Any and all obligations of Seller arising after the Effective Time and which are assumed by Buyer pursuant to the terms of this Agreement; (c) Any and all losses, liabilities or damages resulting from the operation or ownership of the Station by Buyer on and after the Effective Time, including but not limited to any and all liabilities arising under the Station Licenses, the Leases or the Contracts assigned to Buyer which relate to events occurring after the Effective Time; 21 (d) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity, subject to the notice and opportunity to remedy requirements of Section 16.3 hereof; and (e) Interest at the Prime Rate on any reimbursable expense or loss incurred by Seller from the date of payment, in the case of a reimbursable expense, and from the date of incurrence, in the case of any other losses, until the date of reimbursement by Buyer. 16.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification shall be as follows: (a) The party seeking indemnification under this Article 16 (the "Claimant") shall give notice to the party from whom indemnification is sought (the "Indemnitor") of any claim, whether solely between the parties or brought by a third party, specifying (i) the factual basis for the claim, and (ii) the amount of the claim. If the claim relates to an action, suit or proceeding filed by a third party against Claimant, notice shall be given by Claimant within fifteen (15) business days after written notice of the action, suit or proceeding was given to Claimant. In all other circumstances, notice shall be given by Claimant within thirty (30) business days after Claimant becomes, or should have become, aware of the facts giving rise to the claim. Notwithstanding the foregoing, Claimant's failure to give Indemnitor timely notice shall not preclude Claimant from seeking indemnification from Indemnitor except to the extent that Claimant's failure has materially prejudiced Indemnitor's ability to defend the claim or litigation. (b) With respect to claims between the parties, following receipt of notice from the Claimant of a claim, the Indemnitor shall have thirty (30) business days to make any investigation of the claim that the Indemnitor deems necessary or desirable. For the purposes of this investigation, the Claimant agrees to make available to the Indemnitor and/or its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnitor cannot agree as to the validity and amount of the claim within the 30-day period (or any mutually agreed upon extension thereof), the Claimant may pay, compromise, or defend such a claim without prejudice to any rights it may have hereunder. (c) With respect to any claim by a third party as to which the Claimant is entitled to indemnification hereunder, the Indemnitor shall have the right at its own expense to participate in or assume control of the defense of the claim with counsel of Indemnitor's choice, provided, that once the defense thereof is assumed by the Indemnitor, the Indemnitor shall keep the Claimant advised of all developments in the defense thereof, and any related litigation, and the Claimant shall cooperate fully with the Indemnitor, subject to reimbursement for actual 22 out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnitor. If the Indemnitor elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of the claim as its own expense. If the Indemnitor does not elect to assume control or otherwise participate in the defense of any third party claim, Claimant may, but shall have no obligation to, defend or settle such claim or litigation in such manner as it deems appropriate, and in any event Indemnitor shall be bound by the results obtained by the Claimant with respect to the claim (by default or otherwise) and shall promptly reimburse Claimant for the amount of all expenses (including the amount of any judgment rendered), legal or otherwise, incurred in connection with such claim or litigation. The Indemnitor shall be subrogated to all rights of the Claimant against any third party with respect to any claim for which indemnity was paid. 16.4. LIMITATIONS. (a) Neither Seller nor Buyer shall have any obligation to the other party for any matter described in Section 16.1 or Section 16.2, as the case may be, except upon compliance by the other party with the provisions of this Article 16, particularly Section 16.3. Neither party shall be required to indemnify the other party under this Article 16 for any breach of any representation or warranty contained in this Agreement unless written notice of a claim under this Article 16 was received by the party within the pertinent survival period specified in Article 18 of this Agreement. (b) No party shall be entitled to indemnification hereunder unless and until the amount for which indemnification is owing exceeds Twenty-Five Thousand Dollars ($25,000) in the aggregate for all such matters; provided, however, that -------- ------- the foregoing exclusion shall not apply to any individual occurrence pursuant to which the amount for which indemnification is owing exceeds Ten Thousand Dollars ($10,000). Subject to the foregoing proviso, if such amount exceeds Twenty-Five ------- Thousand Dollars ($25,000), the Indemnitor shall be liable to the Claimant for just that portion in excess of Twenty-Five Thousand Dollars ($25,000). (c) The provision of Section 16.4(b) hereof shall not be applicable to any indemnification of Buyer pursuant to Section 21.10 hereof. 23 ARTICLE 17 TERMINATION RIGHTS ------------------ 17.1. TERMINATION. (a) This Agreement may be terminated by either Buyer or Seller, if the party seeking to terminate is not in material default or breach of this Agreement, upon written notice to the other upon the occurrence of any of the following: (i) if, on or prior to the Closing Date, the other party defaults in any material respect in the observance or in the due and timely performance of any of its covenants or agreements contained herein, or any representation or warranty hereunder is inaccurate in any material respect and such inaccuracy is materially adverse to the party giving notice, and such default or inaccuracy, if curable, has not been cured within ten (10) days from receipt of written notice of default from the non-defaulting party; (ii) if the FCC denies the FCC Application or any part thereof or designates any part of it for a trial-type hearing, provided that the party which is the subject of the hearing (or whose alleged actions or omissions resulted in the designation for hearing) may not elect to terminate under this subsection (a)(ii); (iii) if there shall be in effect any judgment, final decree or order that would prevent or make unlawful the Closing; or (iv) if the Closing has not occurred within nine (9) months of the date of the FCC Application is accepted for filing. (b) This Agreement may be terminated by Buyer, upon written notice to Seller, (i) if Buyer elects to terminate pursuant to Article 20 hereof; or (ii) if the broadcast transmission of any of the Station from its main broadcasting antenna at full authorized power is interrupted or impaired for a period of more than forty-eight (48) consecutive hours or for an aggregate of seventy-two (72) hours in any seven (7) day period. 17.2. LIABILITY; RETURN OF ESCROW DEPOSIT. The termination of this Agreement under Section 17.1 hereof shall not relieve any party of any liability for breach of this Agreement 24 prior to the date of termination, but if neither party is in breach or default of its representations, warranties, covenants or agreements hereunder, neither party shall have any further liability hereunder. If either Buyer or Seller shall terminate this Agreement pursuant to Section 17.1 hereof and Buyer shall not be in material breach of its representations, warranties, covenants or other agreements hereunder, the parties shall instruct the Escrow Agent to remit the Escrow Deposit, together with all interest earned thereon, to Buyer. 17.3. TERMINATION NOTICE. Each notice given by a party pursuant to Section 17.1 to terminate this Agreement shall specify the Subsection (and clause or clauses thereof) of Section 17.1 pursuant to which such notice is given. ARTICLE 18 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS ------------------------ The representations, warranties, covenants, indemnities and agreements contained in this Agreement or in any certificate, document or instrument delivered pursuant to this Agreement are and will be deemed and construed to be continuing representations, warranties, covenants, indemnities and agreements and shall survive the Closing for a period of nine (9) months after the Closing Date. No claim may be brought under this Agreement or any other certificate, document or instrument delivered pursuant to this Agreement unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the applicable survival period. In the event such a notice is given, the right to indemnification with respect thereto shall survive the applicable survival period until such claim is finally resolved and any obligations thereto are fully satisfied. Any investigation by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any representation, warranty, covenant or agreement contained herein. ARTICLE 19 REMEDIES UPON DEFAULT --------------------- 19.1. DEFAULT BY SELLER. Seller recognizes that, in the event Seller defaults in the performance of its obligations under this Agreement, monetary damages alone will not be adequate. Buyer shall therefore be entitled in such event, in lieu of bringing suit at law or equity for money or other damages (including return of the Escrow Deposit and the interest earned thereon as well as costs and expenses incurred by Buyer in the preparation and negotiation of this Agreement and in contemplation of the Closing hereunder) or for indemnification under Article 16 hereof, to obtain specific performance of the terms of this Agreement. In any action to enforce the provisions of this Agreement, Seller shall waive the defense that there is an adequate remedy at law or equity and agree that Buyer shall have the right to obtain specific performance 25 of the terms of this Agreement without being required to prove actual damages, post bond or furnish other security. In addition, Buyer shall be entitled to obtain from Seller court costs and reasonable attorneys' fees incurred by it in enforcing its rights hereunder, plus interest at the Prime Rate on the amount of any judgment obtained against Seller from the date of default until the date of payment of the judgment. As a condition to seeking specific performance, Buyer shall not be required to have tendered the Purchase Price specified in Section 2.1 of this Agreement, but shall be ready, willing and able to do so. 19.2. DEFAULT BY BUYER. If the transactions contemplated by this Agreement are not consummated as a result of Buyer's wrongful failure to close hereunder, and Seller is not also in material breach hereunder, Seller shall be entitled to payment of Five Hundred Thousand Dollars ($500,000) as liquidated damages in full settlement of any damages of any nature or kind that Seller may suffer or allege to suffer as the result thereof. It is understood and agreed that the amount of liquidated damages represents Buyer's and Seller's reasonable estimate of actual damages and does not constitute a penalty. Recovery of liquidated damages under this Section 19.2 shall be the sole and exclusive remedy of Seller against Buyer for breach of or failure to consummate this Agreement and shall be applicable regardless of the actual amount of damages sustained. In addition, Seller shall be entitled to obtain from Buyer court costs and reasonable attorneys' fees incurred by it in enforcing its rights hereunder, plus interest at the Prime Rate on the amount of any judgment obtained against Buyer from the date of default until the date of payment of the judgment. As a condition to obtaining liquidated damages, Seller shall not be required to have tendered the Station Assets but shall be required to demonstrate that it is willing and able to do so and to perform its other closing obligations in all material respects. ARTICLE 20 RISK OF LOSS ------------ The risk of loss or damage to the Station Assets prior to the Effective Time shall be upon Seller. Seller shall repair, replace and restore any damaged or lost Station Asset to its prior condition as soon as possible and in no event later than the Effective Time; provided, however, that Seller shall have no ----------------- obligation to repair, replace or restore a damaged or lost Station Asset that is obsolete if no replacement asset is necessary or useful for the continued operation of the Station consistent with past practice. If Seller is unable or fails to restore or replace a lost or damaged Station Asset prior to the Closing and the cost of such restoration or replacement would exceed $75,000, Buyer may elect (a) to terminate this Agreement pursuant to Article 17 hereof, (b) to consummate the transactions contemplated by this Agreement on the Closing Date, in which event Seller shall assign to Buyer at Closing Seller's rights under any insurance policy or pay over to Buyer all proceeds of insurance covering such Station Asset's damage, destruction or loss, or (c) delay the Closing Date until a date within fifteen (15) days after Seller gives written notice to Buyer of completion of the restoration or replacement of such Station Asset. If Seller is 26 unable or fails to restore or replace any lost or damaged Station Asset prior to the Closing Date and the cost of such restoration or replacement would be $75,000 or less the Purchase Price shall be reduced in an amount equal to the reasonable cost to restore or replace said Station Asset or a reasonable reserve shall be placed in escrow pending cure or repair. If the delay in the Closing Date under this Article 20 would cause the Closing to fall at any time after the period permitted by the FCC Consent, Seller and Buyer shall file an appropriate request with the FCC for an extension of time within which to complete the Closing. ARTICLE 21 OTHER PROVISIONS ---------------- 21.1. PUBLICITY. Except as required by applicable law or with the other party's express written consent, no party to this Agreement nor any affiliate of any party shall issue any press release or similar public statement regarding the Transactions contemplated by this Agreement. 21.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Neither Buyer nor Seller may assign this Agreement without the prior written consent of the other parties hereto except that Buyer may assign its rights (but not its obligations) under this Agreement to an Affiliate of Buyer. 21.3. ENTIRE AGREEMENT. This Agreement and the exhibits and schedules hereto embody the entire agreement and understanding of the parties hereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein. No amendment, waiver of compliance with any provision or condition hereof, or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment, change, extension or discharge is sought. 21.4. HEADINGS. The headings set forth in this Agreement are for convenience only and will not control or affect the meaning or construction of the provisions of this Agreement. 21.5. COMPUTATION OF TIME. If after making computations of time provided for in this Agreement, a time for action or notice falls on Saturday, Sunday or a Federal holiday, then such time shall be extended to the next business day. 27 21.6. GOVERNING LAW. The construction and performance of this Agreement shall be governed by the laws of the State of Arizona without regard to its principles of conflict of law. 21.7. NOTICES. Any notice, demand or request required or permitted to be given under the provisions of this Agreement shall be in writing, addressed to the following addresses, or to such other address as any party may request in writing. If to Seller: Radio 94 of Phoenix Limited Partnership 920 Dain Plaza 60 South Sixth Street Minneapolis, MN 55402 Attn: L. Steven Goldstein With a copy to: Leventhal, Senter & Lerman 2000 K Street, N.W. Suite 600 Washington, D.C. 20006-1809 Attention: Steven A. Lerman, Esq. If to Buyer: Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Attention: Jonathan L. Block, Esq. Any such notice, demand or request shall be deemed to have been duly delivered and received (i) on the date of personal delivery, or (ii) on the date of receipt, if mailed by registered or certified mail, postage prepaid and return receipt requested, or (iii) on the date of a signed receipt, if sent by an overnight delivery service, but only if sent in the same manner to all persons entitled to receive notice or a copy. 21.8. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. 28 21.9. FURTHER ASSURANCES. Seller shall at any time and from time to time after the Closing execute and deliver to Buyer such further conveyances, assignments and other written assurances as Buyer may reasonably request in order to vest and confirm in Buyer (or its assignees) the title and rights to and in all of the Station Assets to be and intended to be transferred, assigned and conveyed hereunder. 21.10. BULK SALES. Buyer hereby waives compliance by Seller with the provisions of the Bulk Sales Act and similar laws of any state or jurisdiction, if applicable. Seller shall, in accordance with Article 16, indemnify and hold Buyer harmless from and against any and all claims made against Buyer by reason of such non-compliance. 21.11. SEVERABILITY. Any provision of this Agreement which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto hereby waive any provision of law now or hereafter in effect which renders any provision hereof unenforceable in any respect. 21.12. COOPERATION IN ARRANGING EXCHANGE(S). Buyer may elect to exchange the Station Assets for other property of a like-kind in a simultaneous tax-deferred exchange which would qualify as a tax-deferred like-kind exchange under Section 1031 of the Internal Revenue Code (the "Like-kind Exchange"). If Buyer elects to so exchange the Station Assets, Buyer may at any time prior to the Closing assign its rights under this Agreement to one or more "qualified intermediaries," as defined in Treasury Regulation (S) 1.103 l(k) - 1 (g)(4), subject to all of Seller's rights under this Agreement. Seller agrees to reasonably cooperate with Buyer and such intermediary(ies) in arranging and effecting the Like-kind Exchange and shall execute such additional documents as may be reasonably necessary in order to effect the Like-kind Exchange, provided that Seller shall have no obligations under this Section 21.12 unless (a) Buyer gives notice to Seller of its decision to proceed with a Like-kind Exchange not later than ten (10) business days prior to the Closing Date, (b) Buyer agrees to indemnify and reimburse Seller for any and all costs and expenses (including reasonable fees and expenses of counsel) incurred by Seller in cooperating with Buyer; (c) such Like-kind Exchange will not, in Seller's judgment, materially adversely affect Seller, (d) such Like-kind Exchange will not result in any delay of the Closing, and (e) such Like-kind Exchange will not expose Seller to any additional liability or obligation. 29 ARTICLE 22 DEFINITIONS ----------- Unless otherwise stated in this Agreement, the following terms when used herein shall have the meanings assigned to them below (such meanings to be equally applicable to both the singular and plural forms of the terms defined). "Affiliate" shall mean any person or entity that is controlling, controlled by or under common control with the named person or entity. "Agreement" shall mean this Asset Purchase Agreement, including the exhibits and schedules hereto . "Buyer" shall have the meaning set forth in the preamble to this Agreement. "Buyer's Proration Amount" shall have the meaning set forth in Section 5.3. "Business Day," whether or not capitalized, shall mean every day of the week excluding Saturdays, Sundays and Federal holidays. "Claimant" shall have the meaning set forth in Section 16.3(a). "Closing" shall have the meaning set forth in Section 1.1. "Closing Date" shall mean the date on which the Closing is completed. "Contracts" shall have the meaning set forth in Section 1.2(d). "Effective Time" shall mean 12:01 a.m., Washington, D.C. time, on the Closing Date. "Environmental Laws" shall mean the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Clean Air Act and the Toxic Substance Control Act, each as amended, and any other applicable federal, state and local laws, statutes, rules or regulations concerning the treating, producing, handling, storing, releasing, spilling, leaking, pumping, pouting, emitting or dumping of Hazardous Materials. "Escrow Agent" shall mean Kalil & Co., Inc. 30 "Escrow Agreement" shall mean the agreement between Seller, Buyer and Escrow Agent, substantially in the form of Exhibit A to this Agreement. --------- "FCC" shall mean the Federal Communications Commission. "FCC Application" shall mean the application or applications that Seller and Buyer must file with the FCC requesting its consent to the assignment of the Station Licenses. "FCC Consent" shall mean the action by the FCC granting the FCC Application. "Final Order" shall mean action by the FCC (i) which has not been vacated, reversed, stayed, set aside, annulled or suspended, (ii) with respect to which no timely appeal, request for stay or petition for rehearing, reconsideration or review by any party or by the FCC on its own motion, is pending, and (iii) as to which the time for filing any such appeal, request, petition, or similar document or for the reconsideration or review by the FCC on its own motion under the Communications Act of 1934, as amended, and the rules and regulations of the Commission, has expired. "GAAP" shall mean generally accepted accounting principles, consistently applied. "Hazardous Materials" shall mean toxic materials, hazardous wastes, hazardous substances, pollutants or contaminants, asbestos or asbestos-related products, PCB's, petroleum, crude oil or any fraction or distillate thereof (as such terms are defined in any applicable federal, state or local laws, ordinances, rules and regulations, and including any other terms which are or may be used in any applicable environmental laws to define prohibited or regulated substances). "Indemnitor" shall have the meaning set forth in Section 16.3(a). "Leases" shall have the meaning set forth in Section 1.2(b). "Liens" shall mean any mortgage, deed of trust, pledge, hypothecation, security interest, encumbrance, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any written or oral agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction. "Material Adverse Condition" shall mean a condition which would materially restrict, limit, or otherwise materially adversely affect or materially impair the right of Buyer to the ownership or operation of the Station Assets; provided, however, that any condition which 31 requires that the Station be operated in accordance with a condition similar to those contained in the Station Licenses shall not be deemed a Material Adverse Condition. "Non-Competition Agreement" shall mean the Non-Competition Agreement substantially in the form of Exhibit C to this Agreement. --------- "Notice of Disagreement" shall have the meaning set forth in Section 5.3. "OSHA Laws" shall mean the Occupational Safety and Health Act of 1970, as amended, and all other federal, state or local laws or ordinances, including orders, rules, and regulations thereunder, regulating or otherwise affecting health and safety of the workplace. "Permitted Liens" shall mean any statutory lien which secures a payment not yet due that arises, and is customarily discharged, in the ordinary course of Seller's business; any easement, right-of-way or similar imperfection in the Seller's title to its assets or properties that, individually and in the aggregate, are not material in character or amount and do not and are not reasonably expected to materially impair the value or materially interfere with the use of any asset or property of the Seller material to the operation of its business as it has been and is now conducted. "Personal Property" shall have the meaning set forth in Section 7.6. "Preliminary Proration Schedule" shall have the meaning set forth in Section 5.3. "Prime Rate" shall mean a per annum rate equal to the "prime rate" as published in the Money Rates column of the Eastern Edition of The Wall Street --------------- Journal (or the average of such rates if more than one rate is indicated). - ------- "Proration Schedule" shall have the meaning set forth in Section 5.3. "Purchase Price" shall have the meaning set forth in Section 2.1. "Real Property" shall have the meaning set forth in Section 7.5. "Referee" shall have the meaning set forth in Section 5.2. "Right of First Refusal Agreement" shall mean the Right of First Refusal Agreement substantially in the form of Exhibit B to this Agreement. --------- "Seller" shall have the meaning set forth in the preamble to this Agreement. 32 "Station" shall mean radio broadcast Station KOOL(AM), Phoenix, Arizona; "Station Assets" shall have the meaning set forth in Section 1.2. "Station Licenses" shall mean the licenses, permits and other authorizations, including any temporary waiver or special temporary authorization, issued by the FCC to Seller in connection with the operation of the Station and are used solely in the operation of the Station. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. RADIO 94 OF PHOENIX LIMITED PARTNERSHIP By: Colfax Communications, Inc., Its General Partner By: /s/ Joseph O. Bunting, III ------------------------------------------------- Name: Joseph O. Bunting, III ----------------------------------------------- Title: Vice President ---------------------------------------------- SALEM MEDIA OF ARIZONA, INC. By: /s/ Eric H. Halvorson ------------------------------------------------- Name: Eric H. Halvorson Title: Executive Vice President EXHIBIT A --------- FORM OF ESCROW AGREEMENT ------------------------ ESCROW AGREEMENT This ESCROW AGREEMENT is made as of the __ day of June, 1996, by and among Radio 94 of Phoenix Limited Partnership, a Maryland limited partnership ("Seller"), Salem Media of Arizona, Inc., an Arizona corporation ("Buyer"), and Kalil & Co., Inc., an Arizona corporation ("Escrow Agent"). RECITALS -------- Seller and Buyer have entered into an Asset Purchase Agreement (the "Purchase Agreement"), made as of the ___ day of ___________,1996, which provides for the sale and acquisition of certain of the assets associated solely with the operation of radio broadcast station KOOL(AM), Phoenix, Arizona (the "Station"). Pursuant to the Purchase Agreement, Buyer has delivered the sum of Four Hundred Thousand Dollars ($400,000) ("Escrow Deposit") to Escrow Agent, who has agreed to act as escrow agent with respect to the Escrow Deposit and all interest earned thereon pursuant to the terms of this Escrow Agreement. NOW, THEREFORE, the parties agree as follows: 1. DUTY TO HOLD ESCROW DEPOSIT. Escrow Agent shall hold the Escrow Deposit ------------------------------ until receipt of either (a) a joint notice from Seller and Buyer in accordance - with Paragraph 3(a), (b) a notice and demand from Seller as provided in - Paragraph 3(b), (c) a notice and demand from Buyer as provided in Paragraph - 3(c), or (d) joint instructions from Buyer and Seller otherwise - 2 directing Escrow Agent of the manner in which to dispose of the Escrow Deposit and any interest earned thereon. 2. INVESTMENT OF ESCROW DEPOSIT. Escrow Agent shall invest and reinvest the ----------------------------- Escrow Deposit and any interest earned thereon in an interest bearing federally insured money market account or in short-term U.S. Treasury obligations or the equivalent thereof. Notwithstanding anything in this Agreement to the contrary, interest and any other earnings on the Escrow Deposit shall be distributed by the Escrow Agent to Buyer from time to time upon the request of Buyer. 3. DISPOSITION OF ESCROW DEPOSIT. The Escrow Deposit shall be paid to Buyer ------------------------------ or Seller or distributed as follows: (a) Upon receipt by Escrow Agent of a joint notice from Buyer and Seller stating that the Closing under the Purchase Agreement has occurred, Escrow Agent shall immediately pay the Escrow Deposit in immediately available funds without deduction, set-off, or counterclaim to Seller and shall pay all interest earned thereon not previously distributed in immediately available funds without deduction, set-off or counterclaim to Buyer. (b) Upon receipt by Escrow Agent of a notice from Seller stating that Seller is entitled to the Escrow Deposit and following the failure of Buyer to make a timely protest (in accordance with Paragraph 4 hereof) after receipt of notice from Escrow Agent pursuant to Paragraph 4 hereof, Escrow Agent shall pay the Escrow Deposit in immediately available funds without deduction, set-off or counterclaim to Seller, free and clear of any and all claims thereto 3 by Buyer. If Seller provides any notice hereunder, Seller shall concurrently provide a copy of such notice to Buyer. (c) Upon receipt by Escrow Agent of a notice from Buyer stating that Buyer is entitled to the Escrow Deposit and following the failure of Seller to make a timely protest (in accordance with Paragraph 4 hereto) after receipt of notice from Escrow Agent pursuant to Paragraph 4 hereof, Escrow Agent shall pay the Escrow Deposit and all interest earned thereon not previously distributed in immediately available funds without deduction, set-off or counterclaim to Buyer, free and clear of any claim thereto by Seller. If Buyer provides any notice hereunder, Buyer shall concurrently provide a copy of such notice to Seller. 4. DISAGREEMENT BETWEEN BUYER AND SELLER. If either Buyer or Seller (for --------------------------------------- purposes of this paragraph referred to as the "Demanding Party") gives notice to Escrow Agent as provided in Paragraph 3(b) or 3(c) hereof and makes demand upon Escrow Agent for payment of the Escrow Deposit, Escrow Agent shall, within seven (7) business days of receipt of such demand, serve upon Buyer or Seller, as the case may be (the "Notified Party"), a copy of the Demanding Party's notice. Unless the Notified Party protests the payment of the Escrow Deposit in writing delivered to Escrow Agent within seven (7) business days after the receipt by the Notified Party of the Demanding Party's notice from the Escrow Agent, Escrow Agent shall thereupon make payment to the Demanding Party as required by such demand in accordance with Paragraph 3(b) or 3(c) hereof. If the Notified Party timely and duly protests, 4 the Escrow Agent shall hold the Escrow Deposit until the disagreement is resolved as provided in Paragraph 5(f) below. 5. LIMITATIONS ON LIABILITY OF ESCROW AGENT. ---------------------------------------- (a) The duties and obligations of Escrow Agent shall be determined solely by the express provisions of this Escrow Agreement and no implied duties or obligations shall be read into this Escrow Agreement against Escrow Agent. Escrow Agent shall be under no obligation to refer to the Purchase Agreement or any other documents between or among the parties related in any way to this Escrow Agreement, except as specifically provided herein. (b) Escrow Agent shall not be liable to anyone for any damages, losses or expenses for any act done or step taken or omitted by Escrow Agent in good faith, provided, however, that Escrow Agent shall be liable for damages, losses and expenses arising out of its willful default, gross negligence or bad faith under this Escrow Agreement. (c) Escrow Agent shall be entitled to rely upon, and shall be protected in acting in reasonable reliance upon, any writing furnished to Escrow Agent by any party in accordance with the terms hereof, which Escrow Agent believes in good faith to be genuine and valid and to have been signed by the proper party. (d) Escrow Agent may obtain advice of its counsel with respect to any questions relating to its duties or responsibilities hereunder and shall not be liable for any action taken or omitted in good faith on such advice of such counsel. 5 (e) Without limiting the foregoing, Escrow Agent shall not in any event be liable, and Seller and Buyer shall jointly and severally indemnify and hold harmless Escrow Agent, in connection with Escrow Agent's investment or reinvestment of the Escrow Deposit in good faith, including without limitation any delays (not resulting from its gross negligence or willful default) in the investment or reinvestment of the Escrow Deposit, or any loss of income incident to any such delays. (f) If any disagreement between the parties to this Escrow Agreement occurs which results in adverse claims and demands being made in connection with or against the Escrow Deposit, or any interest earned thereon, Escrow Agent shall refuse to comply with the claims or demands of any party until such disagreement is finally resolved by mutual agreement of the parties or by a court of competent jurisdiction (including expiration of all available appeal remedies), and, in so doing, Escrow Agent shall not be or become liable to any party. Alternatively, in the event of any dispute or disagreement between Buyer and Seller sufficient in the sole discretion of Escrow Agent to justify its doing so, Escrow Agent shall be entitled to tender into the registry or custody of any court of competent jurisdiction the Escrow Deposit and to initiate such legal proceedings as it deems appropriate, including without limitation, an interpleader action, for determination of the respective rights, titles and interests of Seller and Buyer therein. Upon such tender, Escrow Agent shall be entitled to receive from Seller and Buyer its reasonable attorney fees and expenses and shall be forthwith released and discharged from all further duties, liabilities and obligations under this Escrow Agreement. 6 (g) Buyer and Seller jointly and severally agree to indemnify Escrow Agent against all legal fees, costs and other expenses reasonably incurred by Escrow Agent in connection with or as a result of any disagreement among or between the parties hereto or the performance by Escrow Agent of its duties hereunder, including, without limitation, any litigation arising from this Escrow Agreement or involving the subject matter hereof; except, as provided in Paragraph 5(b) hereof. Except as otherwise provided in this Escrow Agreement, Buyer and Seller shall each pay one-half of the reasonable expenses incurred by Escrow Agent under this Escrow Agreement. (h) Any action claimed to be required to be taken by Escrow Agent hereunder and not otherwise specifically set forth herein shall require the agreement of Buyer, Seller, and Escrow Agent. (i) Except as stated herein, Escrow Agent does not have any interest in the Escrow Deposit held hereunder, but is serving as escrow holder only. 6. RESIGNATION OF ESCROW AGENT. If Escrow Agent desires to resign as Escrow --------------------------- Agent, it shall provide thirty (30) days notice (a "Resignation Notice") of its intention to so resign to Buyer and to Seller. Notwithstanding the foregoing, if following the resignation of Escrow Agent there would be no replacement escrow agent hereunder, Escrow Agent's resignation shall not be effective until Buyer and Seller shall have mutually agreed to the appointment of a replacement escrow agent and such appointment shall have been accepted in writing. In the event that no replacement escrow agent has been appointed by Buyer and Seller 7 within sixty (60) days of the Resignation Notice, Escrow Agent shall be permitted to select a reputable replacement escrow agent. 7. AMENDMENTS. No modification or amendment to this Escrow Agreement, or ----------- waiver of compliance with any provision or condition hereof, shall be valid unless reduced to writing and signed by all of the parties hereto. 8. EFFECT OF THIS ESCROW AGREEMENT. This Escrow Agreement sets forth the -------------------------------- entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior or contemporaneous agreements, arrangements and understandings relating to the subject matter hereof. This Escrow Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns and legal representatives. The paragraph headings of this Escrow Agreement are for convenience of reference only and do not form a part hereof and do not in any way modify, interpret or construe the intentions of the parties. This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of Arizona without regard to its principles of conflicts of laws, and the state and federal courts of Arizona shall have exclusive jurisdiction over any controversy or claim arising out of or relating to this Agreement. 9. NOTICES. Any notice, report, demand, waiver, or protest required, -------- permitted or contemplated hereunder shall be in writing and shall be personally delivered, transmitted by telecopy or mailed, postage prepaid, certified or registered mail, or delivered by a nationally 8 recognized express courier service, charges prepaid, to the following addresses (or such other addresses as the parties may specify from time to time): To Seller: Radio 94 of Phoenix Limited Partnership 920 Dain Plaza 60 South 6th Street Minneapolis, MN 55402 Attention: L. Steven Goldstein With a copy (which shall not constitute notice) to: Leventhal, Senter & Lerman 2000 K Street, N.W. Suite 600 Washington, D.C. 20006 Attention: Steven A. Lerman, Esq. To Buyer: Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, CA 93012 Attention: Jonathan L. Block, Esq. To Escrow Agent: Kalil & Co., Inc. 3444 N. Country Club, Suite 200 Tucson, AZ 85716 Attention: Mr. Frank Kalil and shall be deemed to have been duly delivered and received (i) on the date of personal delivery, if delivered by hand or (ii) on the date of receipt if transmitted by telecopy or mailed by registered or certified mail, postage prepaid and return receipt requested; or (iii) on the date 9 of a signed receipt, if sent by an overnight delivery service, but only if sent in the same manner to all persons entitled to receive notice or a copy. 10. COUNTERPARTS. This Escrow Agreement may be executed in one or more ------------- counterparts, and by the different parties hereto on separate counterparts, each of which shall be deemed an original but all of which shall constitute one and the same Agreement. IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the date first above written. RADIO 94 OF PHOENIX LIMITED PARTNERSHIP By: Colfax Communications, Inc. Its General Partner By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- SALEM MEDIA OF ARIZONA, INC. By: ---------------------------------- Name: Eric H. Halvorson Title: Executive Vice President 10 KALIL & CO., INC. By: ----------------------------- Name: --------------------------- Title: -------------------------- EXHIBIT B --------- FORM OF RIGHT OF FIRST REFUSAL AGREEMENT ---------------------------------------- RIGHT OF FIRST REFUSAL AGREEMENT -------------------------------- This RIGHT OF FIRST REFUSAL AGREEMENT (this "Agreement"), made as of the __ day of ___ 1996, is by and between Radio 94 of Phoenix Limited Partnership, a Maryland limited partnership ("Radio 94"), and Salem Media of Arizona, Inc., an Arizona corporation, _______ corporation ("Salem"). RECITALS -------- Radio 94 is the licensee of and operates radio broadcast station KOOL(AM), Phoenix, Arizona (the "Station"), pursuant to licenses issued by the Federal Communications Commission (the "FCC"). Radio 94 and Salem have entered into an Asset Purchase Agreement, made as of the __ day of ___ 1996 (the "Purchase Agreement"), pursuant to which Radio 94 and Salem have agreed that Radio 94 will sell and Salem will acquire certain of the assets associated solely with the operation of the Station on the terms and subject to the conditions set forth in the Purchase Agreement. As a condition of the Purchase Agreement, Salem has agreed to grant Radio 94 a right of first refusal to acquire the Station. Therefore, the parties agree as follows: 1. SALE OF THE STATION. Following the acquisition of the Station by Salem ------------------- pursuant to the Purchase Agreement, if at any time, Salem or its shareholders receives from a third party a bona fide offer to purchase the station or to acquire control of Salem, as hereinafter defined, which offer Salem or its shareholders are prepared to accept (the "Offer"), Salem shall promptly notify Radio 94 of the Offer in writing, specifying all of the terms and conditions of the Offer (or, in the event of an offer to transfer control of Salem's parent company, Salem Communications Corporation ("SCC"), an amount to be allocated to the Station by SCC based upon terms set forth in the Offer, or, at Radio 94's election and expense, an independent appraisal conducted by an independent appraiser selected by Radio 94, which selection shall be subject to SCC's prior approval which shall not be unreasonably withheld, may be requested to determine the fair market value of the Station, based upon the value of the Station in relation to the terms of the Offer) and providing Radio 94 with a complete copy of the Offer. Radio 94 shall have thirty (30) days after receipt of such notification within which to obtain such appraisal. Radio 94 shall have ten (10) business days after receipt of such notification or, if applicable, ten (10) business days after receipt of the appraisal within which to elect to purchase the Station on the same financial terms and conditions described in the Offer or in the event of an offer to transfer control of SCC to agree to SCC's allocation or to agree to be subject to the results of the independent appraisal. If Radio 94 notifies Salem in writing within this period that it does not wish to 2 purchase the Station, or if Radio 94 fails to notify Salem within this period that it wishes to purchase the Station, Salem or its shareholders shall be permitted for a period of the following forty-five (45) days to enter into a definitive contract to sell the Station on substantially the same terms and conditions of, and to the party submitting, the Offer disclosed to Radio 94. If the terms and conditions of the offer as initially disclosed to Radio 94 are proposed to be changed in a material manner within such forty-five (45) day period, the revised terms and conditions shall be disclosed in writing to Radio 94, which shall have ten (10) business days following receipt of the changes to elect to exercise its right to purchase the Station on such revised terms and conditions in the manner set forth in this paragraph. If Salem or its shareholders do not enter into a definitive contract with the offeror to sell the Station on the terms initially disclosed to Radio 94 within the permitted forty-five (45) day period, or within ten (10) days following Radio 94's decision not to purchase the Station on the revised terms and conditions or its failure to notify Salem within the applicable period, then Radio 94's right of first refusal shall be reinstated. A sale is any transaction which involves an assignment of the broadcast license requiring prior FCC approval by the filing of an FCC application on current FCC Form 314 or the equivalent thereof, as defined under the FCC Rules. A transfer of control is any transaction requiring prior FCC approval by the filing of an FCC application on current FCC Form 315 or the equivalent thereof, as defined under the FCC Rules; provided however that control of the Station shall not be deemed to have been transferred in the event that the stock of SCC becomes publicly traded and Edward G. Atsinger III and Smart W. Epperson collectively maintain not less than a 25% voting interest in SCC. 2. TERM. This Agreement shall be in effect during the time period during ---- which Salem, or an entity controlling, controlled by or under common control with Salem, is the licensee of the Station (the "Term"). This Agreement shall terminate on the first occurrence of either (a) following Radio 94's failure to exercise its right of first refusal hereunder, the assignment of the Station's license or transfer of control of the licensee of the Station to any person or entity not controlling, controlled by or under common control with Salem, or (b) the date on which Radio 94 no longer owns any radio station licensed to a community located within a seventy-five (75) mile radius of Phoenix, Arizona. 3. NOTICES. Any notice required or permitted to be given under the provisions ------- of this Agreement shall be in writing, addressed to the following addresses, or to such other address as any party may request in writing. 3 If to Radio 94: Radio 94 of Phoenix Limited Partnership 920 Dain Plaza 60 South Sixth Street Minneapolis, MN 55402 Attn: L. Steven Goldstein With a copy to: Leventhal, Senter & Lerman 2000 K Street, N.W. Suite 600 Washington, D.C. 20006-1809 Attention: Steven A. Lerman, Esq. If to Salem: Salem Media of Arizona, Inc. c/o Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Attention: Jonathan L. Block, Esq. Any such notice shall be deemed to have been duly delivered and received (i) on the date of personal delivery, or (ii) on the date of receipt, if mailed by registered or certified mail, postage prepaid and return receipt requested, or (iii) on the date of a signed receipt, if sent by an overnight delivery service, but only if sent in the same manner to all persons entitled to receive notice or a copy. 4. ASSIGNABILITY. This Agreement and the rights and obligations of the -------------- parties hereunder shall not be assigned by either party without the express written consent of the other party; provided, however, that either party may assign its rights without such consent to an entity controlling, controlled by or under common control with such party. 5. GOVERNING LAW. The construction and performance of this Agreement shall be --------------- governed by the laws of the State of Arizona without regard to its principles of conflict of law. 4 6. COUNTERPARTS. This Agreement may be executed in one or more ------------- counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. RADIO 94 OF PHOENIX LIMITED PARTNERSHIP By: Colfax Communications, Inc., Its General Partner By: ------------------------------- Name: ----------------------------- Title: ---------------------------- SALEM MEDIA OF ARIZONA, INC. By: ------------------------------- Name: Eric H. Halvorson Title: Executive Vice President EXHIBIT C --------- FORM OF NON-COMPETITION AGREEMENT --------------------------------- COVENANT NOT TO COMPETE ----------------------- This Covenant Not to Compete (the "Agreement") is made as of the ___ day of ______, 1996, by and between Salem Communications Corporation ("SCC"), Salem Media of Arizona, Inc. ("Buyer") and Radio 94 of Phoenix Limited Partnership, a Maryland limited partnership ("Seller"). RECITALS -------- Seller has been the licensee of radio station KOOL(AM), Phoenix, Arizona (the "Station"). SCC is the parent corporation of Buyer. Concurrently with the execution of this Agreement, Buyer acquired certain of the assets of the Station pursuant to an Asset Purchase Agreement made as of the __ day of ____, 1996, between Buyer and Seller (the "Asset Purchase Agreement"). Pursuant to Section 8.4 of the Asset Purchase Agreement, and as a material inducement to Seller to enter into the Asset Purchase Agreement and consummate the transactions contemplated therein, Buyer and SCC have agreed to enter into this Agreement on the terms and conditions set forth herein. Therefore, in consideration of the covenants and agreements contained herein and in the Asset Purchase Agreement, the parties agree as follows: 1. Recitals. The foregoing recitals are affirmed by the --------- parties as true and correct and are incorporated by reference in this Agreement. 2. Agreement Not to Compete. Buyer and SCC agree that for a ------------------------- period ending on the earlier of: (1) ten (10) years from the Closing (as defined in Section 1.1 of the Asset Purchase Agreement); or (2) the date on which Seller no longer owns any radio station licensed to a community located within a seventy-five (75) mile radius of Phoenix, Arizona, neither Buyer nor SCC shall broadcast over the facilities of the Station any of the following formats: Adult Album Alternative ("AAA"), Adult Contemporary, Alternative, Alternative AC, Beautiful Music, Big Band, Black, Classic Rock, Classical, Contemporary Hit/Top 40, Country, Disco, Jazz, Middle-of-the-Road ("MOR"), New Age, News, News/Talk, Nostalgia, Oldies, Progressive, Reggae, Rock/AOR, Spanish, Sports, Talk, or Urban Contemporary. -2- Notwithstanding anything herein to the contrary, nothing in this Agreement shall prohibit or prevent SCC or Buyer from broadcasting in a Religious, Religious Talk (defined as a format in which more than 50% of the broadcast day is devoted to talk programming emphasizing religious and cultural issues) or Contemporary Christian Music format or any format derived from those formats. 3. Enforceability. Each party acknowledges and agrees as follows: --------------- 3.1 The covenant set forth in Paragraph 2 above is reasonably necessary for the protection of the interests of Seller, is reasonable as to duration, scope and geographic area and is not unreasonably restrictive upon the rights of Buyer or SCC; 3.2 Buyer and SCC specifically recognize and acknowledge that the covenant set forth in Paragraph 2 above, and the rights and privileges granted to Seller are of a special, unique, unusual and extraordinary character which gives them a peculiar value, the loss of which cannot adequately be compensated for by means of an award of damages to Seller in an action at law, and that the breach by Buyer or SCC of this Agreement will cause Seller irreparable and continuing injury and damage, which will substantially outweigh any conceivable injury which Buyer or SCC might incur as a result of being restrained from engaging in conduct that materially breaches this Agreement. Accordingly, Seller shall be entitled, as a matter of right, without further notice in addition to any other rights and remedies Seller may have, to obtain injunctive and other equitable relief to prevent the violation of any of the provisions of this Agreement by Buyer or SCC. Buyer and SCC agree that Seller shall not be required to file any bond in connection with any such request for injunctive or other equitable relief; 3.3 The amount of payment by Buyer for the Station Assets (as defined in the Asset Purchase Agreement) or the lack of an express dollar valuation for the covenants contained in this Agreement shall not define, limit or evidence the amount of damages, if any, to which Seller may be entitled as a result of the breach by Buyer or SCC of any of the provisions of this Agreement; and 3.4 Notwithstanding Paragraph 3.1 above, should any court determine that any of the covenants in Paragraph 2 above are unreasonable as to duration, scope and/or geographic areas, such covenants shall be reformed to the minimum extent required to be enforceable and, as so reformed, shall remain in full force and effect as provided herein with respect to such duration, scope and territory as a court of competent jurisdiction determines to be reasonable under applicable law. -3- 4. Indemnification. Buyer and SCC agree to indemnify, defend and ----------------- hold Seller harmless against, and in respect of, all liabilities, losses, claims, costs or damages (including reasonable legal fees incurred in connection with any of the foregoing and in seeking indemnification) resulting from or arising out of any failure by Buyer or SCC to perform any of their obligations, covenants or agreements hereunder. 5. Attorneys' Fees. If any legal action or other proceeding is ---------------- brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorney's' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. 6. Notices. Any notice required or permitted to be given under the -------- provisions of this Agreement shall be in writing, addressed to the following addresses, or to such other address as any party may request in writing. If to Radio 94: Radio 94 of Phoenix Limited Partnership 920 Dain Plaza 60 South Sixth Street Minneapolis, MN 55402 Attn: L. Steven Goldstein With a copy to: Leventhal, Senter & Lerman 2000 K Street, N.W. Suite 600 Washington, D.C. 20006-1809 Attention: Steven A. Lerman, Esq. If to Buyer or SCC: Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Attention: Jonathan L. Block, Esq. -4- 7. Binding Effect: Governing Law. This Agreement will be binding upon ------------------------------ and inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns. This Agreement and the rights and obligations of the parties hereunder shall not be assigned by either party without the express written consent of the other party; provided, however, that either party may assign its rights without such consent to an entity controlling, controlled by or under common control with such party. This Agreement shall apply in all respects to the Station regardless of whether the licensee of the Station is Salem or any entity controlling, controlled by or under common control with Salem or SCC. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Arizona. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date hereof. SALEM COMMUNICATIONS CORPORATION By: ------------------------------------ Name: Eric H. Halvorson Title: Executive Vice President SALEM MEDIA OF ARIZONA, INC. By: ------------------------------------ Name: Eric H. Halvorson Title: Executive Vice President -5- RADIO 94 OF PHOENIX LIMITED PARTNERSHIP By: Colfax Communications, Inc., its General Partner By: ------------------------------------------- Name: ----------------------------------------- Title: ---------------------------------------- EXHIBIT D --------- FORM OF OPINION OF SELLER'S FCC COUNSEL --------------------------------------- ___________,1996 Salem Media of Arizona, Inc. c/o Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Ladies and Gentlemen: We have acted as counsel to Radio 94 of Phoenix Limited Partnership, a Maryland limited partnership ("Seller"), in connection with the negotiation, preparation, execution and delivery of that certain Asset Purchase Agreement by and between you and Seller dated as of _______ __, 1996 (the "Agreement"). We are furnishing this opinion to you pursuant to Section 11.7 of the Agreement. Capitalized terms used but not defined in this letter shall have the meaning assigned to them in the Agreement. In connection with this opinion, we have assumed the genuineness of signatures on documents, the conformity to the originals of all copies examined by or submitted to us as photocopies or conformed copies, and the authenticity of the originals of such latter documents. As to questions of fact in connection with this opinion, we have relied upon an examination of our own files and records and examination of the public records of the Federal Communications Commission (the "FCC') available as of _______ __, 1996. We have also relied upon representations made by Seller to the FCC as we have deemed necessary. As used herein, the term "to our knowledge" shall mean to the actual knowledge of attorneys in our firm who have substantial responsibility for Sellers legal matters handled by our firm without further investigation other than as described in this paragraph. You should be aware that records of the FCC that are public as a matter of Salem Media of Arizona, Inc. ______ __,1996 PAGE -2- law may not be publicly available as a matter of fact. Furthermore, there may be records of matters pending at the FCC that are not available for inspection by the public as a matter of law. This opinion is limited to matters arising under the Communications Act of 1934, as amended (the "Act"), and the rules and regulations of the FCC. Based on the foregoing and subject to the foregoing and to the further limitations set forth hereinafter, we are of the opinion that: 1. Seller holds the FCC Licenses listed on Annex A hereto. To our knowledge, such FCC Licenses are in full force and effect, and none of the FCC Licenses is subject to any condition other than (i) conditions generally applicable to stations of this type by virtue of the Act and the FCC's rules or (ii) conditions contained on the form by which the Commission evidences the grant of such licenses or routinely added to such forms. We have no knowledge, but for purposes of this sentence we have not reviewed the files of the FCC, of any other license issued by the FCC to Seller with respect to the Station. 2. The FCC Consent has been granted and has become a Final Order. 3. To our knowledge: (a) there is no unsatisfied adverse FCC order, decree or ruling outstanding against Seller relating to the Station; (b) there is no proceeding, complaint or investigation against Seller relating to the Station pending or threatened before the FCC (including any pending judicial review of such an action by the FCC) except for proceedings affecting the broadcast radio industry generally to which Seller is not a specific party; and Salem Media of Arizona, Inc. _____ __,1996 PAGE -3- (c) Annex A includes all applications of Seller on behalf of the Station or with respect to the FCC Licenses now pending before the FCC. This opinion is delivered solely to you and is solely for your benefit in connection with the above transaction. This opinion may not be quoted or relied upon for any purpose by any person other than the addressee hereof. Very truly yours, LEVENTHAL, SENTER & LERMAN By: -------------------------- A Partner SCHEDULE 1.2(A) - GOVERNMENTAL LICENSES --------------------------------------- (All licenses expire 10/1/97) KOOL(AM) Main Station License Emergency Broadcast System Authorization WLD-961 Aural STL License WLE-696 Aural STL License KA-35291 Remote Pickup Mobile SCHEDULE 1.2,(B) - LEASED REAL PROPERTY --------------------------------------- 1. Ground Lease dated January 11, 1991 by and between Johnaquille J. Hegel and Adams Radio of Phoenix, Inc., as assigned to Compass Radio of Phoenix, Inc., as assigned to Par Broadcasting, Inc., as assigned to Radio 94 of Phoenix Limited Partnership (AM Tower Site - Pinnacle Peak). 2. Ground Lease dated October 4, 1995 by and between Johnaquille J. Hegel and Compass Radio of Phoenix, Inc., as assigned to Par Broadcasting, Inc., as assigned to Radio 94 of Phoenix Limited Partnership (AM Tower Site - Pinnacle Peak). 3. Lease Agreement dated September 12, 1988 by and between Shamrock Broadcasting, Inc. and Adams Radio of Phoenix, Inc., as assigned to Compass Radio of Phoenix, Inc., as assigned to Par Broadcasting, Inc., as assigned to Radio 94 of Phoenix Limited Partnership (AM STL Tower - Shaw Butte). 4. Agreement of Sublease dated March 29, 1996 by and between Compass Radio of Phoenix, as assigned to Par Broadcasting, Inc., as assigned to Radio 94 of Phoenix Limited Partnership, and CRC Broadcasting Co. (Sublease for AM Tower Site). SCHEDULE 1.2(C) - TANGIBLE PERSONAL PROPERTY -------------------------------------------- [see list attached hereto] SCHEDULE 1.2(c) PERSONAL PROPERTY EQUIPMENT DESCRIPTION AMOUNT / SO. FT. --------------------- ----------------
TRANSMISSION EQUIPMENT - ---------------------- Transmitter, Harris SX-5B Solid State AM 1 Exciter, Harris STX-1 AM stereo 1 Harris 4 tower directional phasor, antenna tuning units, TX lines 1 and conduit Audio processing system CRLAM Stereo (main) 1 CRL AM stereo Matrix processor SMP-900 1 CRL AM stereo Matrix processor SMP-950 1 CRL SGC-800 Stereo 4 Band AGC 1 Broadcast Electronics BE AS-10AM stereo modulation monitor 1 Moseley MRC-1620 transmitter remote control unit 1 Potomac Instruments tower lights monitor 1 STL Receiver. Moseley PCL-505C 2 Transfer switch. Moseley STL Receiver 1 Modem, Hayes 2400 Baud 1 Antenna Monitor, Potomac Instruments AM-9 4 Tower 1 Stereo Demod/AM stereo audio, Belar FMS-1 1 Tower / Antenna - --------------- Towers, Utility model 380-256-ft Guyed w/ground systems 4 Furniture, Fixtures & Equipment - ------------------------------- Desk 1 Chair, Desk 1 Shelving unit, 8x6 metal storage 1 Bench, homemade wood test 1 Test Equipment - -------------- Operating inpedence bridge, Delta OIB-1 1 Potomac Instrument FIM-41 AM Field Strength Meter 1 Multimeter, Simpson 260 1 BUILDINGS - --------- 32x32 cinder block 1/asphalt shingles and wood truss roof 1,024 Improvements to Buildings & Land - -------------------------------- 6-ft high chain link fencing W 1-ft barb wire 930 Perimeter fence around entire AM tower site 1
1 SCHEDULE 1.2(C) PERSONAL PROPERTY EQUIPMENT DESCRIPTION AMOUNT / SQ. FT. --------------------- ----------------
MICROWAVE & ELECTRONICS - ----------------------- Antenna, Anixter/Mark P48GRN 4-ft Grid Dish-Horizontal 1 STL TX, Moseley PCL-505C 1 Antenna, 6-ft STL 950MHZ Grid Dish-Horizontal 1 Spare Parts Kit, Harris SX-5B 1 Spare Parts, 1-Lot 1 Air Conditioning Units, Carrier 5-Ton (Model 40QB060310) 2
2 SCHEDULE 1.2(C) - TANGIBLE PERSONAL PROPERTY -------------------------------------------- The Tangible Personal Property shall include the following assets and the assets on the list attached hereto: Audio Console Pacific Recorders BMX-14 CD Players, Denon DN-950FA 386SX-16 PC, Automatic Transmitter Control System (connected to Moseley 1620) APC BackUPS 250, for Moseley 1620 and PCController Audio DA's, Videoquip 210 Reel to Reel Recorder Otari 5050B Monitoramp, Crown D-75 Stereo Otari, Remote Control Head for 5050B Microphone Electrovoice EV-RE-20 Loudspeakers JFL 4311 Monitor Cassette Deck, Tascam 112 SCHEDULE 1.2(D) - CONTRACTS --------------------------- None SCHEDULE 6.4 - BUYER'S CONSENTS ------------------------------- [to be completed by Buyer] SCHEDULE 7.3 - SELLER'S CONSENTS -------------------------------- Consent under Loan Agreement dated as of December 27, 1995, as amended by the First Amendment to Loan Agreement dated as of April 2, 1996, by and among Classical Acquisition Limited Partnership, Radio 100 of Maryland Limited Partnership, Radio 100 Limited Partnership, Radio 570 Limited Partnership, and Radio 94 of phoenix Limited Partnership, as the Borrowers, Society National Bank, as Managing Agent, the First National Bank of Boston, as Co-Managing Agent, and the Financial Institutions listed therein. SCHEDULE 7.7 - SELLER'S LITIGATION ---------------------------------- None EX-10.06.02 25 ASSET PURCHASE AGREEMENT EXHIBIT 10.06.02 ASSET PURCHASE AGREEMENT ------------------------ AGREEMENT (the "Agreement") dated as of September 3, 1996 by and among CARON BROADCASTING, INC., an Ohio corporation ("Buyer"), and MORTENSON BROADCASTING COMPANY OF CANTON, LLC, a Kentucky limited liability company ("MBC- Canton"), and MORTENSON BROADCASTING COMPANY OF AKRON, LLC, Kentucky limited liability company ("MBC-Akron") (MBC-CANTON and MBC-AKRON are hereinafter sometimes referred to collectively as "Sellers"). RECITALS: --------- 1. MBC-Canton and MBC-Akron own and operate radio stations WTOF-FM, Canton, Ohio and WHLO-AM, Akron, Ohio, respectively (the "Stations"), and hold the licenses and authorizations issued by the FCC for the operation of the Stations. 2. Buyer desires to acquire substantially all the assets of the Stations, and Sellers are willing to convey such assets to Buyer. 3. The acquisition of the Stations is subject to prior approval of the FCC. NOW THEREFORE, in consideration of the mutual covenants contained herein, Sellers and Buyer hereby agree as follows: ARTICLE 1 --------- TERMINOLOGY ----------- 1.1 ACT. The Communications Act of 1934, as amended. --- 1.2 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in ------------------- Section 2.3. - ----------- 1.3 BUSINESS DAY. Any calendar day, excluding Saturdays and ------------- Sundays, on which federally chartered banks in the city of Akron, Ohio, are regularly open for business. 1 1.4 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3(b), ----------------------------- -------------- the threshold dollar amount for the aggregate of claims, liabilities, damages, losses, costs and expenses that must be incurred by Buyer before Sellers shall be obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be Ten Thousand Dollars ($10,000). 1.5 CLOSING. The closing with respect to the transactions -------- contemplated by this Agreement. 1.6 CLOSING DATE. The date determined as the Closing Date as ------------- provided in Section 8.1. 1.7 DOCUMENTS. This Agreement and all Exhibits and Schedules ---------- hereto, and each other agreement, certificate, or instrument delivered pursuant to or in connection with this Agreement, including amendments thereto that are expressly permitted under the terms of this Agreement. 1.8 EARNEST MONEY. Such term shall have the meaning defined in -------------- Section 2.4. - ----------- 1.9 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning ------------------------- defined in Section 5.11. ------------ 1.10 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response ------------------- Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as amended, and any other applicable federal, state and local laws, statutes, rules or regulations concerning the treating, producing, handling, storing, releasing, spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials. 1.11 ESCROW AGENT. Jerrold Miller, Esq. ------------- 1.12 ESCROW AGREEMENT. The Escrow Agreement in the form attached ------------------ as Exhibit A which Sellers, Buyer and the Escrow Agent have entered into --------- concurrently with the execution of this Agreement relating to the deposit, holding, investment and disbursement of the Earnest Money. 1.13 EXCLUDED ASSETS. Such term shall have the meaning defined in --------------- Section 2.2. - ----------- 1.14 FCC. Federal Communications Commission. ---- 1.15 FCC LICENSES. The licenses, permits and authorizations of the ------------- FCC for the operation of the Stations as listed on Schedule 3.8. ------------- 2 1.16 FCC ORDER. An order or decisions of the FCC granting its ---------- consent to the assignment of the FCC Licenses to Buyer. 1.17 FINAL ACTION. An action of the FCC that has not been reversed, ------------- stayed, enjoined, set aside, annulled or suspended; with respect to which no timely petition for reconsideration or administrative or judicial appeal or sua --- sponte action of the FCC with comparable effect is pending and as to which the - ------ time for filing any such petition or appeal (administrative or judicial) or for the taking of any such sua sponte action of the FCC has expired. ---------- 1.18 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes, -------------------- hazardous substances, pollutants or contaminants, asbestos or asbestos-related products, polychlorinated biphenyls, petroleum, crude oil or any fraction or distillate thereof (as such terms are defined in any applicable federal, state or local laws, ordinances, rules and regulations, and including any other terms which are or may be used in any applicable environmental laws to define prohibited or regulated substances). 1.19 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or ------------------ -------------- 9.4(a) against which any claim or liability may be asserted by a third party - ------ which would give rise to a claim for indemnification under the provisions of this Agreement by such party. 1.20 INDEMNIFYING PARTY. The party to the Agreement (not the ------------------- Indemnified Party) that, in the event of a claim or liability asserted by a third party against the Indemnified Party which would give rise to a claim for indemnification under the provisions of this Agreement, may at its own expense, and upon written notice to the Indemnified Party, compromise or defend such claim. 1.21 LMA. The Local Programming and Marketing Agreement entered into ---- on this date by Buyer and Sellers. 1.22 LIEN. Any mortgage, deed of trust, pledge, hypothecation, ----- security interest, encumbrance, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any written or oral agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction. 1.23 MATERIAL ADVERSE CONDITION. A condition which would materially --------------------------- restrict, limit, increase the cost or burden of or otherwise adversely affect or materially impair the right of Buyer to the ownership, use, control, enjoyment or operation of the Stations or the proceeds therefrom; provided, however, that any condition which requires that the Stations be operated in accordance with a condition similar to those contained in the present FCC licenses issued for operation of the Stations, shall not be deemed a Material Adverse Condition. 3 1.24 OSHA LAWS. The Occupational Safety and Health Act of 1970, as ---------- amended, and all other federal, state or local laws or ordinances, including orders, rules and regulations thereunder, regulating or otherwise affecting health and safety of the workplace. 1.25 PERMITTED LIEN. Any statutory lien which secures a payment not --------------- yet due that arises, and is customarily discharged, in the ordinary course of Seller's business; any easement, right-of-way or similar imperfection in the Sellers' title to their assets or properties that, individually and in the aggregate, are not material in character or amount and do not and are not reasonably expected to materially impair the value or materially interfere with the use of any asset or property of the Sellers material to the operation of their business as it has been and is now conducted. 1.26 PURCHASE PRICE. The consideration to be paid by Buyer to --------------- Sellers for purchase of the Sale Assets in the amount of Eight Million Dollars ($8,000,000). 1.27 REAL PROPERTY. Such term shall have the meaning defined in -------------- Section 3.7. 1.28 RULES AND REGULATIONS. The rules of the FCC as set forth in ---------------------- Volume 47 of the Code of Federal Regulations, as well as such other policies of the Commission, whether contained in the Code of Federal Regulations or not, that apply to the Stations. 1.29 SALE ASSETS. All of the tangible and intangible assets to be ------------ transferred by Sellers to Buyer as set forth in Section 2.1. ----------- 1.30 STATION AGREEMENTS. The agreements, commitments, contracts ------------------- and other items described in Section 2.1(d) which relate to operation of the -------------- Stations. 1.31 SELLERS' THRESHOLD LIMITATION. As provided in Section 9.4(b), ------------------------------ -------------- the threshold dollar amount for the aggregate of claims, liabilities, damages, losses, costs and expenses that must be incurred by Seller before Buyer shall be obligated to indemnify Sellers. The Sellers' Threshold Limitation shall be Ten Thousand Dollars ($10,000). 1.32 SURVIVAL PERIOD. The term following the Closing Date during ---------------- which all representations, warranties, covenants and agreements of the parties under this Agreement shall survive. The term shall be twelve (12) months. 1.33 TANGIBLE PERSONAL PROPERTY. The personal property described in --------------------------- Section 2.1(a). - -------------- 1.34 TRADE AGREEMENTS. All contracts for sale of time on the ----------------- Stations for other than monetary consideration. 4 ARTICLE II ---------- PURCHASE AND SALE ----------------- 2.1 SALE ASSETS. On the Closing Date, Sellers will sell, transfer, ------------ assign and convey to Buyer, and Buyer will purchase from Sellers, free and clear of all Liens (except Permitted Liens), all of Sellers' right, title and interest, legal and equitable, in and to all tangible and intangible assets (except Excluded Assets) used or useful in the operation of the Stations as they have been and are now operated, including the following: (a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies, -------------------------- furniture, fixtures, music library and other tangible personal property now or hereafter owned by Sellers and used and/or useful in the operation of the Stations as they have been and are now operated, including but not limited to the items listed on Schedule 3.6, together with such modifications, ------------ replacements, improvements and additional items, and subject to such deletions therefrom, made or acquired between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement. (b) REAL PROPERTY. Sellers' interests in the Real Property and any -------------- other real estate or interests therein acquired by Sellers between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement. (c) LICENSES AND PERMITS. The FCC Licenses and all other assignable --------------------- or transferable governmental permits, licenses and authorizations (and any renewals, extensions, amendments or modifications thereof) now held by Sellers or hereafter obtained by Sellers between the date hereof and the Closing Date, to the extent such other permits, licenses and authorizations pertain to or are used in the operation of the Stations. (d) STATION AGREEMENTS. All agreements, leases, advertising ------------------ contracts, Trade Agreements (including all non-cash receivables therefrom), orders and other commitments which Sellers are a party to or bound by which are listed on Schedule 3.9 as agreements which Buyer is electing to assume; any ------------ renewals, extensions, amendments or modifications of those agreements being assumed which are made in the ordinary course of Sellers' operation of the Stations and in accordance with the terms and provisions of this Agreement; and any additional such agreements, contracts, leases, commitments or orders (and any renewals, extensions, amendments or modifications thereof) made or entered into between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement and which Buyer elects to assume in writing. (e) RECORDS. True and complete copies of all of the books, records, -------- accounts, files, logs, ledgers, reports of engineers and other consultants or independent contractors, pertaining to or used in the operation of the Stations. (f) INTELLECTUAL PROPERTY. All trade names, trademarks, service ---------------------- marks, symbols, logos, copyrights and any other proprietary material or trade right used 5 primarily in the operation of the Stations, and all registrations, applications and licenses for any of the foregoing, including, without limitation, those set forth on Schedule 3.10, the call letters WHLO and WTOF and jingles and slogans -------------- pertaining to the Stations; and any additional such items acquired or used primarily in connection with the operation of the Stations between the date hereof and the Closing Date. (g) MISCELLANEOUS ASSETS. Any other tangible or intangible assets, --------------------- properties or rights of any kind or nature not otherwise described above in this Section 2.1 and now or hereafter owned or used by Sellers in the operation of - ----------- the Stations, including but not limited to all goodwill of the Stations. 2.2 EXCLUDED ASSETS. Notwithstanding any provision of this ---------------- Agreement to the contrary, Sellers shall not transfer, convey or assign to Buyer, but shall retain all of their right, title and interest in and to, the following assets owned or held by them on the Closing Date ("Excluded Assets"): (a) Any and all cash, cash equivalents, cash deposits to secure contract obligations, all inter-company receivables from any affiliate of Sellers and all other accounts receivable (other than non-cash receivables under Trade Agreements), bank deposits and securities held by Sellers in respect of the Stations at the Closing Date. (b) Any and all claims of Sellers with respect to transactions prior to the Closing including, without limitation, claims for tax refunds and refunds of fees paid to the FCC. (c) All prepaid expenses. (d) All contracts of insurance and claims against insurers. (e) All employee benefit plans and the assets thereof and all employment contracts. (f) All contracts that are terminated in accordance with the terms and provisions of this Agreement or have expired prior to the Closing Date in the ordinary course of business; and all loans and loan agreements. (g) All tangible personal property disposed of or consumed between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement. (h) Sellers' corporate records except to the extent such records pertain to or are used in the operation of the Stations, in which case Seller shall deliver accurate copies thereof to Buyer. 6 (i) All commitments, contracts and agreements not specifically assumed by Buyer pursuant to Section 2.1(d), above. --------------- 2.3 ASSUMPTION OF LIABILITIES. -------------------------- (a) At the Closing, Buyer shall assume and agree to perform, without duplication of Sellers' performance, the following liabilities and obligations of Sellers (the "Assumed Obligations"): (i) The obligation under any Trade Agreements to provide advertising on the Stations on and after the Closing Date. (iii) Liabilities and obligations arising under the Station Agreements assumed by and transferred to Buyer in accordance with this Agreement, but only to the extent such liabilities and obligations relate to any period of time after the Closing Date. (b) Except for the Assumed Obligations and except as expressly provided in the LMA, Buyer shall not assume or in any manner be liable for any duties, responsibilities, obligations or liabilities of Sellers of any kind or nature, whether express or implied, known or unknown, contingent or absolute, including, without limitation, any liabilities to or in connection with Seller's employees whether arising in connection with the transaction contemplated hereunder or otherwise. 2.4 EARNEST MONEY. -------------- (a) Concurrently with the execution of this Agreement, Buyer has deposited with the Escrow Agent under the Escrow Agreement, in immediately available funds, the sum of One Hundred Thousand Dollars ($100,000) (which amount is hereinafter referred to as the "Earnest Money"). The Escrow Agent shall hold the Earnest Money under the terms of the Escrow Agreement in trust for the benefit of the parties hereto. Interest and other earnings on the Earnest Money shall be distributed by the Escrow Agent to Buyer from time to time upon the request of Buyer. (b) If Closing does not occur, the Earnest Money shall be delivered to Sellers or returned to Buyer in accordance with Section 10.2, and if ------------- Closing does occur, the Earnest Money shall be applied to payment of the Purchase Price at Closing as provided in Section 2.6. ----------- 2.5 PAYMENT OF PURCHASE PRICE. -------------------------- (a) The Purchase Price shall be paid by Buyer as follows: (i) At the Closing, the Earnest Money shall, subject to execution and delivery of the closing documents described in Section 8.2, become ----------- the property of 7 Sellers and shall, pursuant to the Escrow Agreement, be disbursed to Sellers by cashier's check or wire transfer of immediately available funds. (ii) The amount of the Purchase Price, less the amount of the Earnest Money disbursed to Seller, shall be paid to Seller at Closing by wire transfer of immediately available funds. 2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and --------------------------------- Sellers shall use good faith efforts to agree to an allocation of the Purchase Price. Buyer and Sellers shall use such allocation, if agreed upon, for all reporting purposes in connection with federal, state and local income and, to the extent permitted under applicable law, franchise taxes. Buyer and Sellers agree to report such allocation to the Internal Revenue Service in the form required by Treasury Regulation 1.1060-1T. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Sellers hereby jointly and severally represent and warrant to Buyer as follows: 3.1 ORGANIZATION AND GOOD STANDING. Each Seller is a limited ------------------------------- liability company, validly existing and in good standing under the laws of the State of Kentucky, and is qualified to do business and in good standing under the laws of the State of Ohio and all other jurisdictions where the failure to be qualified to do business and in good standing would have a material adverse effect on the Stations. Sellers have all requisite power to own, operate and lease their properties and carry on their business as they are now being conducted and as the same will be conducted until the Closing. 3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and ---------------------------------------------- delivery of, and the performance of their obligations under, this Agreement and each of the other Documents by Sellers, and the consummation by Sellers of the transactions contemplated hereby and thereby, have been duly authorized and approved by all necessary action on the part of Sellers' members. Sellers have the power and authority to execute, deliver and perform their obligations under this Agreement and each of the other Documents and to consummate the transactions hereby and thereby contemplated. This Agreement and each of the other Documents have been, or at or prior to the Closing will be, duly executed by Sellers. This Agreement constitutes (and each of the other Documents, when so executed and delivered, will constitute) legal and valid obligations of Sellers enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights or remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 8 3.3 ABSENCE OF CONFLICTS. The execution and delivery of, and the --------------------- performance of its obligations under, this Agreement and each of the other Documents by Sellers, and the consummation by Sellers of the transactions contemplated hereby and thereby: (a) do not violate in any material respect, with or without the giving of notice or the passage of time or both (or result in the creation of any Lien other than a Permitted Lien on any of the Sale Assets under), any provision of law, rule or regulation or any order, judgment, injunction, decree or ruling applicable to Sellers; (b) except as set forth on Schedule 3.3, do not conflict with or ------------ result in a breach or termination of, or constitute a default or give rise to a right of termination or acceleration under the articles of incorporation or bylaws of Sellers or pursuant to any lease, agreement, commitment or other instrument which Sellers are a party to or bound by or by which any of the Sale Assets may be bound, or result in the creation or any Lien other than a Permitted Lien upon any of the Sale Assets. 3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except as ---------------------------------------------------- set forth on Schedule 3.4 and Schedule 3.9, the execution and delivery of, and ------------ ------------ the performance of their obligations under, this Agreement and each of the other Documents by Sellers, and the consummation by Sellers of the transactions contemplated hereby and thereby, do not require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration of filing with, any court or public agency or other authority, or the consent of any person under any agreement, arrangement or commitment of a nature which Sellers are a party to or bound or by which the Sale Assets are bound by or subject to, the failure of which to obtain would have a material adverse effect on the Sale Assets or the operation of the Stations. 3.5 SALE ASSETS. The Sale Assets include all of the assets, ------------ properties and rights of every type and description, real, personal and mixed, tangible and intangible, that are used to a material extent in the conduct of the business of owning and operating the Stations in the manner in which that business has been and is now conducted, with the exception of the Excluded Assets. 3.6 TANGIBLE PERSONAL PROPERTY. Except for office equipment, --------------------------- supplies and other incidental items which in the aggregate are not of material value, the list of Tangible Personal Property set forth on Schedule 3.6 is, in ------------ all material respects, a complete and correct list of all of the items of tangible personal property (other than Excluded Assets) used to a material extent in the operation of the Stations in the manner in which they have been and are now operated. Except as set forth on Schedule 3.6: ------------ (a) Sellers have or at closing will have good and valid title to all of the items of Tangible Personal Property free and clear of all Liens except Permitted Liens, and including the right to transfer same. 9 (b) The Tangible Personal Property has been maintained in accordance with industry practices and is in good operating condition subject to ordinary wear and tear. (c) The Tangible Personal Property complies with applicable rules and regulations of the FCC and the terms of the FCC Licenses. (d) Sellers have no knowledge of any defect in the condition or operation of any item of the Tangible Personal Property which is reasonably likely to have a material adverse effect on the operation of the Stations. 3.7 REAL PROPERTY. -------------- (a) The real property described on Schedule 3.7 constitutes a ------------ complete and correct summary description in all material respects of all of the interests in real estate (other than Sellers' studio lease) used to any extent in the operation of the Stations in the manner in which they have been and are now operated. Such real estate (other than Sellers' studio lease), together with all improvements affixed thereto, is herein defined as the "Real Property." (b) Sellers do not owe any money to any architect, contractor, subcontractor or materialman for labor or materials performed, rendered or supplied to or in connection with the Real Property within the past four (4) months which shall not be paid in full on or before Closing. Except as set forth on Schedule 3.7, there is no work being done at or materials being ------------ supplied to the Real Property at the date hereof other than routine maintenance projects having an aggregate cost through completion thereof of no more than Ten Thousand Dollars ($10,000). (c) The present use of the Real Property is in compliance with all applicable zoning codes in effect as of the date hereof, and Sellers have not received any notices of uncorrected violations of the applicable housing, building, safety or fire ordinances. The Real Property is served by electricity and water in capacities adequate for the present use of the Real Property and improvements thereon. Except as set forth on Section 3.7, Sellers have not made ----------- any other agreement for the sale or lease of, or given any other person an option to purchase or lease or a right of first refusal to purchase or lease, all or any part of the Real Property, and except as set forth on Schedule 3.7, ------------ Sellers have not subjected the Real Property to any liens (other than Permitted Liens), easements, rights, duties, obligations, convenants, conditions, restrictions, limitations or agreements not of record. (d) No portion of the Real Property or improvements thereon is the subject of any condemnation or eminent domain proceeding presently instituted or, to Sellers' actual knowledge, pending, and Sellers have not received notice from any condemning authority that such proceedings are threatened. 10 3.8 FCC LICENSES. Seller are the holders of the FCC Licenses listed ------------- on Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i) ------------ are valid, in good standing and in full force and effect and constitute all of the licenses, permits and authorizations required by the Act, the Rules and Regulations or the FCC for, or used in, the operation of the Stations as now operated, and (ii) constitute all the licenses and authorizations issued by the FCC to Sellers for or in connection with the current operation of the Stations. Sellers have no knowledge of any condition imposed by the FCC as part of any FCC License which is neither set forth on the face thereof as issued by the FCC nor contained in the rules and regulations of the FCC applicable generally to stations of the type, nature, class or location of the Stations. Except as disclosed on Schedule 3.8, the Stations are being operated at full authorized ------------ power in accordance with the terms and conditions of the FCC Licenses applicable to them and in accordance with the Rules and Regulations. Except as set forth on Schedule 3.8, no proceedings are pending or, to the knowledge of the Sellers, ------------ are threatened which may result in the revocation, modification, non-renewal or suspension of any of the FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any fines, forfeitures or other administrative actions by the FCC with respect to the Stations or their operation, other than proceedings affecting the radio broadcasting industry in general. Sellers have complied in all material respects with all requirements to file reports, applications and other documents with the FCC with respect to the Stations, and all such reports, applications and documents are complete and correct in all material respects. Sellers have no knowledge of any matters (i) which could reasonably be expected to result in the suspension or revocation of or the refusal to renew any of the FCC Licenses or the imposition of any fines or forfeitures by the FCC, or (ii) against Sellers which could reasonably be expected to result in the FCC's refusal to grant approval of the assignment to Buyer of the FCC Licenses or the imposition of any Material Adverse Condition in connection with approval of such assignment. There are not any unsatisfied or otherwise outstanding citations issued by the FCC with respect to the Stations or their operation. Complete and accurate copies of all FCC Licenses are attached as a part of Schedule 3.8. The ------------ "Public Inspection File" of each of the Stations is complete and in substantial and material compliance with Section 73.3526 of the Rules and Regulations. 3.9 STATION AGREEMENTS. ------------------- (a) Schedule 3.9 under the heading "Trade Agreements" sets ------------ forth an accurate summary description of all Trade Agreements. (b) Schedule 3.9 under the heading "Other Station Agreements" ------------ sets forth an accurate and complete list of all other agreements, contracts, arrangements or commitments in effect as of the date hereof, including all amendments, modifications and supplements thereto, (i) which Sellers are a party to or bound by or (ii) which the Stations or their assets or properties are bound by, except (A) the employee benefit plans described in Section 3.14, (B) ------------ employment contracts and manuals, (C) each contract (other than Trade Agreements) for the sale of time on the Stations (Sellers warrant that all 11 such contracts are cancelable on thirty (30) days or less notice), and (D) contracts which are cancelable by Sellers or its assignee without breach or penalty on not more than sixty (60) days notice. Complete and correct copies of all such agreements, contracts, arrangement, or commitments that are in writing (other than as set forth in (A), (B), (C) and (D) of the preceding sentence), including all amendments, modifications and supplements thereto, have been delivered to Buyer. (c) Except as set forth in the Schedules, and with respect to all Station Agreements being assumed by Buyer, (i) all Station Agreements are legal, valid and enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors/ rights generally, and subject, as to enforceability, to general principles of equity regardless of whether enforcement is sought in any proceeding at law or in equity; (ii) neither Sellers nor, to the knowledge of Sellers, any other party thereto, is in material breach of or in material default under any Station Agreements; (iii) to the knowledge of Sellers, there has not occurred any event which, after the giving of notice or the lapse of time or both, would constitute a material default under, or result in the material breach of, any Station Agreements which are, individually or in the aggregate, material to the operation of the Stations; and (iv) Sellers hold the right to enforce and receive the benefits under all of the Station Agreements, free and clear of all Liens (other than Permitted Liens) but subject to the terms and provision of each such agreement. (d) Schedule 3.9 indicates, for each Station Agreement listed ------------ thereon which is being assumed by Buyer, whether consent or approval by any party thereto is required thereunder for consummation of the transactions contemplated hereby. 3.10 INTELLECTUAL PROPERTY. Schedule 3.10 contains an accurate and ---------------------- ------------- complete description of the Intellectual Property in all material respects. Except as disclosed in Schedule 3.10: ------------- (a) To Sellers' knowledge, Sellers own, free and clear of conflicting claims or restrictions, all right and interest in, and right and authority to use in the operation of the Stations as presently conducted, all of the Intellectual Property, if any, which is material to the operation of the Stations; and (b) There are no outstanding or, to the knowledge of Sellers, threatened judicial or adversary proceedings with respect to any of the Intellectual Property. 3.11 FINANCIAL STATEMENTS. Sellers have delivered to Buyer certain --------------------- financial information respecting the Stations, a copy of which is attached hereto as Schedule 3.11, as follows: ------------- (a) Audited financial statements for the Stations as of December 31, 1995; 12 (b) Unaudited monthly Income Statements for the Stations for the months of July through December, 1995 and January through June, 1996. The financial information described above and set forth on Schedule 3.11 ------------- accurately reflects the books and records of the Stations and fairly summarizes, in all material respects, the results of operations of the Stations for the periods indicated. Since July 1, 1996 and through the date of this Agreement, there has been no material adverse change in the Stations' results of operation from that shown on the Income Statements set forth on Schedule 3.11, and the ------------- operations and businesses of the Stations have been conducted in all material respects in the ordinary course. 3.12 LITIGATION. There are no claims, investigations or ----------- administrative, arbitration or other proceedings pending or, to the actual knowledge of Sellers, threatened against Sellers which would, individually or in the aggregate if adversely determined, have an adverse effect on the Sale Assets or the operation of the Stations, or which would give any third party the right to enjoin the transactions contemplated by this Agreement. To the actual knowledge of Sellers, there is no basis for any such claim, investigation, action, suit or proceeding which would, individually or in the aggregate if adversely determined, have an adverse effect on the Sale Assets or operation of the Stations. There are no existing or, to the actual knowledge of Sellers, pending orders, judgments or decrees of any court or governmental agency affecting Sellers, the Stations or any of the Sale Assets. 3.13 LABOR MATTERS. -------------- (a) Attached hereto as part of Schedule 3.13 is a list of the ------------- names of all persons who are employed by Sellers at the Stations, their job titles, and the original date of hire. Seller is not a party to any collective bargaining agreement, and there is no collective bargaining agreement that determines the terms and conditions of employment of any employees of Sellers. (b) Except as disclosed on Schedule 3.13: ------------- (i) There is no labor strike, dispute, slow-down or stoppage pending or, to the knowledge of Sellers, threatened against the Stations; (ii) There are neither pending nor, to the actual knowledge of Sellers threatened, any suits, actions, administrative proceedings, union organizing activities, arbitrations, grievances or other proceedings between Sellers and any employees of the Stations or any union representing such employees; and there are no existing labor or employment or other controversies or grievances involving employees of the Stations which have had or are reasonably likely to have a material adverse effect on the operation of the Stations; (iii) With respect to the Stations, (A) Sellers are in compliance in all material respects with all laws, rules and regulations relating to the employment of 13 labor and all employment contractual obligations, including those relating to wages, hours, collective bargaining, affirmative action, discrimination, sexual harassment, wrongful discharge and the withholding and payment of taxes and contributions; (B) Sellers have withheld all amounts required by law or agreement to be withheld from the wages or salaries of their employees; and (C) Sellers are not liable to any present or former employees or any governmental authority for damages, arrears of wages or any tax or penalty for failure to comply with the foregoing; (iv) Buyer's consummation of the transactions contemplated by this Agreement in accordance with the terms hereof shall not, as a result of or in connection with the transactions contemplated hereby, impose upon Buyer the obligation to pay any severance or termination pay under any agreement, plan or arrangement binding upon Sellers. 3.14 EMPLOYEE BENEFIT PLANS. Buyer's consummation of the ----------------------- transactions contemplated by this Agreement in accordance with the terms hereof shall not, as a result of or in connection with the transactions contemplated hereby, impose upon Buyer any obligation under any benefit plan, contract or arrangement (regardless of whether they are written or unwritten and funded or unfunded) covering employees or former employees of Sellers in connection with their employment by Sellers. For purposes of the Agreement, "benefit plans" shall include without limitation employee benefit plans within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, vacation benefits, employment and severance contracts, stock option plans, bonus programs and plans of deferred compensation. 3.15 COMPLIANCE WITH LAW. The operation of the Stations complies in -------------------- all material respects with the applicable rules and regulations of the FCC and all federal, state, local or other laws, statutes, ordinances, regulations, and any applicable order, writ, injunction or decree of any court, commission, board, agency or other instrumentality. 3.16 ENVIRONMENTAL MATTERS; OSHA. ---------------------------- (a) Sellers have obtained all environmental, health and safety permits necessary or required for either the operation of the Stations or the ownership of the Real Property, and all such permits are in full force and effect and Sellers are in compliance with all terms and conditions of such permits. (b) There is no proceeding pending or, to Sellers' actual knowledge, threatened which may result in the reversal, rescission, termination, modification or suspension of any environmental or health or safety permits necessary for the operation of the Stations or the ownership of the Real Property. (c) With respect to the Stations and the ownership of the Real Property, Sellers are in compliance in all material respects with the provisions of Environmental Laws. 14 (d) During Sellers' occupancy of the Real Property, Sellers have not, and to Sellers' actual knowledge, no other person or entity has caused or permitted materials to be generated, released, stored, treated, recycled, disposed of on, under or at such parcels, which materials, if known to be present, would require clean up, removal or other remedial or responsive action under Environmental Laws (other than normal office, cleaning and maintenance supplies in reasonable quantities used and /or stored appropriately in the buildings or improvements on the Real Property). Sellers have, to their actual knowledge, not caused the migration of any materials from the Real Property onto or under any property adjacent to the Real Property which materials, if known to be present, would require cleanup, removal or other remedial or responsive action under Environmental Laws. To Sellers' actual knowledge, there are no underground storage tanks and no polychlorinated biphenyls or friable asbestos on such property. (e) Sellers are not subject to any judgment, decree, order or citation with respect to the Stations or the Real Property related to or arising out of Environmental Laws, and Sellers have not received notice that they have been named or listed as a potentially responsible party by any person or governmental body or agency in any matter arising under Environmental Laws. (f) Sellers have not discharged or disposed of any petroleum product or solid waste on the Real Property, or on the property adjacent to the Real Property owned by third parties, which may form the basis for any present or future claim based upon the Environmental Laws in existence on the date hereof or as of the Closing, or any demand or action seeking clean-up of any site, location, body of water, surface or subsurface, under any Environmental Laws or otherwise, or which may subject the owner of the Real Property to claims by third parties (except to the extent third party liability can be established) for damages. (g) No portion of the Real Property has ever been used by Sellers (or, to Sellers' actual knowledge, by any previous occupant of the Real Property) in material violation of Environmental Laws, as a landfill, dump site or used for any other use which involves the disposal or storage of solid waste on-site in any manner which may materially affect the value of the Real Property. (h) No pesticides, herbicides, fertilizers or other materials have been used on, applied to or disposed of by Sellers on the Real Property in material violation of any Environmental Laws (other than normal office, cleaning and maintenance supplies in reasonable quantities used and/or stored appropriately in the buildings or improvements on the Real Property). (i) With respect to the Stations or the Real Property, Sellers have disposed of all waste in full compliance with all Environmental Laws and there is no existing condition that may form the basis of any present or future claim, demand or action seeking clean up of any facility, site, location or body of water, surface or subsurface, for 15 which the Buyer could be liable or responsible solely as a result of the disposal of Sellers' waste at such site. (j) Sellers are in material compliance with all OSHA Laws. 3.17 FILING OF TAX RETURNS. Sellers have filed all Federal, State ---------------------- and local tax returns which are required to be filed, and have paid all taxes and all assessments to the extent that such taxes and assessments have become due. 3.18 ABSENCE OF INSOLVENCY. No insolvency proceedings of any ---------------------- character including without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Sellers or any of the Sale Assets, are pending or, to the best knowledge of Sellers, threatened, and Sellers have 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. 3.19 BROKER'S OR FINDER'S FEES. No agent, broker, investment banker -------------------------- or other person or firm acting on behalf of or under the authority of Sellers or any affiliate of Sellers is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with the transactions contemplated by this Agreement. 3.20 INSURANCE. There is now in full force and effect with reputable ---------- insurance companies fire and extended coverage insurance with respect to all material tangible Sale Assets and public liability insurance, all in reasonable commercial amounts. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer represents and warrants to Sellers as follows: 4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly ------------------------------- organized, validly existing and in good standing under the laws of the State of Ohio. Buyer has all requisite corporate power to own, operate and lease its properties and carry on its business as it is now being conducted and as the same will be conducted following the Closing. 4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Buyer's execution ---------------------------------------------- and delivery of, and the performance of its obligations under, this Agreement and each of the other Documents, and the consummation by Buyer of the transactions contemplated hereby and thereby, have been duly authorized and approved by all necessary corporate action on the part of Buyer. This Agreement and each of the other Documents to be executed by Buyer have been, or at or prior to the Closing will be, duly executed by Buyer. The Documents, when executed and delivered by the parties hereto, will 16 constitute the valid and legally binding agreement of Buyer, enforceable against Buyer in accordance with their terms, except as may be limited by bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors' rights generally, and except as may be limited by general principles of equity (regardless of whether such enforceability is sought in a proceeding in equity or at law). 4.3 ABSENCE OF CONFLICTS. Buyer's execution and delivery of, and the --------------------- performance of its obligations under, this Agreement and each of the other Documents and the consummation by Buyer of the transaction contemplated hereby and thereby: (a) Do not (with or without the giving of notice or the passage of time or both) violate (or result in the creation of any claim, lien, charge or encumbrance on any of the assets or properties of Buyer under) any provision of law, rule or regulation or any order, judgment, injunction, decree or ruling applicable to Buyer in any manner which would have a material adverse effect on the assets, business, operation or financial condition or results of operations of Buyer; (b) Do not (with or without the giving of notice or the passage of time or both) conflict with or result in a breach or termination of, or constitute a default or give rise to a right of termination or acceleration under, the articles of incorporation or bylaws of Buyer or any lease, agreement, commitment or other instrument which Buyer is a party to or bound by or by which any of its assets or properties may be bound. 4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for ---------------------------------------------------- the required consent of the FCC, Buyer's execution and delivery of, and the performance of its obligations under, this Agreement and each of the other Documents and the consummation by Buyer of the transaction contemplated hereby and thereby, do not require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration or filing with, any court or public agency or other authority, or the consent of any person under any agreement, arrangement or commitment of any nature which Buyer is a party to or bound by, the failure of which to obtain would have a material adverse effect on the assets, business, operation or financial condition or results of operations of Buyer. 4.5 QUALIFICATION. -------------- (a) Buyer has no knowledge after due inquiry of any facts concerning Buyer or any other person with an attributable interest in Buyer (as such term is defined under the Rules and Regulations) which, under present law (including the Act) and the Rules and Regulations, would (i) disqualify Buyer from being the holder of the FCC Licenses, the owner of the Sale Assets or the operator of the Stations upon consummation of the transactions contemplated by this Agreement, or (ii) raise a substantial and material question of fact (within the meaning of Section 309(e) of the Act) respecting Buyer's qualifications. 17 (b) Without limiting the foregoing Subsection (a), Buyer shall -------------- make the affirmative certifications provided in Section III of FCC Form 314 at the time of filing of such form with the FCC as contemplated by Section 5.2. ----------- 4.6 LITIGATION. There are no legal, administrative, arbitration or ----------- other proceedings or governmental investigations pending or, to the knowledge of Buyer, threatened against Buyer that would give any third party the right to enjoin the transactions contemplated by this Agreement. 4.7 BROKER'S OR FINDER'S FEES. No agent, broker, investment banker, -------------------------- or other person or firm acting on behalf of or under the authority or Buyer or any affiliate of Buyer is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with transactions contemplated by this Agreement. ARTICLE V TRANSACTIONS PRIOR TO THE CLOSING DATE -------------------------------------- 5.1 CONDUCT OF THE STATIONS' BUSINESS PRIOR TO THE CLOSING DATE. ------------------------------------------------------------ Sellers covenant and agree with Buyer that between the date hereof and the Closing Date, unless the Buyer otherwise agrees in writing (which agreement shall not be unreasonably withheld), Sellers shall: (a) Subject to the LMA, operate the Stations in the ordinary course consistent in all material respects with past practice; (b) Use reasonable commercial efforts to maintain insurance upon all of the tangible Sale Assets in such amounts and of such kind comparable to that in effect on the date hereof with respect to such Sale Assets and with respect to the operation of the Stations, with insurers of substantially the same or better financial condition; (c) Subject to the LMA, operate the Stations and otherwise conduct their business in accordance with the terms or conditions of their FCC Licenses, the Rules and Regulations, the Act and all other rules and regulations, statutes, ordinances and orders of all governmental authorities having jurisdiction over any aspect of the operation of the Stations, except where the failure to so operate the Stations would not have a material adverse effect on the Sale Assets or the operation of the Stations or on the ability of Sellers to consummate the transactions contemplated hereby; (d) Maintain the books and records of the Stations in Seller's customary manner on a basis consistent with prior years; 18 (e) Comply in all material respects with all Station Agreements now or hereafter existing which are material, individually or in the aggregate, to the operation or financial condition of the Stations; (f) Promptly notify Buyer of any material default by, or claim of default against, any party under any Station Agreements which are material, individually or in the aggregate, to the operation or financial condition of the Stations, and any event or condition which, with notice or lapse of time or both, would constitute an event of default under such Station Agreements; (g) Not mortgage, pledge or subject to any Lien (except in the ordinary course of business) any of the Sale Assets; (h) Not sell, lease or otherwise dispose of, nor agree to sell, lease or otherwise dispose of, any of the Sale Assets, except for dispositions in the ordinary course of business; (i) Not acquire or lease any goods or services or enter into, amend or terminate any license, lease of real or personal property or any other Station Agreement, other than in the ordinary course of business; (j) Subject to the LMA, not introduce any material change with respect to the operation of the Stations including, without limitation, any material changes in the broadcast hours of the Stations or any other material change in the Stations' programming policies, except such changes as in the sole discretion of Seller, exercised in good faith after consultation with Buyer, are required by the public interest; (k) Not voluntarily agree to enter into any collective bargaining agreement applicable to any employees of the Stations or otherwise recognize any union as the bargaining representative of any such employees; and not enter into any collective bargaining agreement applicable to any employees of the Stations which provides that it shall be binding upon any "successor" employer of such employees; or (l) Not enter into any new Trade Agreements other than in the ordinary course of business. (m) Notify Buyer of any material litigation pending or threatened against Stations or Sellers or any material damage to or destruction of any assets included or to be included in the Sale Assets; 5.2 GOVERNMENTAL CONSENTS. Sellers and Buyer shall file with the ---------------------- FCC, within five (5) business days after the execution of this Agreement, such applications and other documents in the name of Sellers or Buyer, as appropriate, as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall take all commercially reasonable steps necessary to prosecute such filings with diligence and shall diligently 19 oppose any objections to, appeals from or petitions to reconsider such approval of the FCC, to the end that the FCC Order and a Final Action with respect thereto may be obtained as soon as practicable; provided, however, that in the event the application for assignment of the FCC Licenses has been designated for hearing, either Buyer or Sellers may elect to terminate this Agreement pursuant to Section 10.1(c). Buyer shall not knowingly take, and Sellers covenant --------------- that Sellers shall not knowingly take, any action that party knows or has reason to know would materially and adversely affect or materially delay issuance of the FCC Order or materially and adversely affect or materially delay its becoming a Final Action without a Material Adverse Condition, unless such action is requested or required by the FCC, its staff or the Rules and Regulations. Should Buyer or Sellers become aware of any facts which could reasonably be expected to materially and adversely affect or materially delay issuance of the FCC Order without a Material Adverse Condition (including but not limited to, in the case of Buyer, any facts which would reasonably be expected to disqualify Buyer from controlling the Stations), such party shall promptly notify the other party thereof in writing and both parties shall cooperate to take all steps necessary or desirable to resolve the matter expeditiously and to obtain the FCC's approval of matters pending before it. 5.3 OTHER CONSENTS. Sellers shall use their reasonable best efforts --------------- to obtain the consent or waivers to the transactions contemplated by this Agreement required under any assumed Station Agreements; provided that Sellers shall not be required to pay or grant any material consideration in order to obtain any such consent or waiver. 5.4 TAX RETURNS AND PAYMENTS. ------------------------- (a) All tax returns, estimates, and reports required to be filed by Sellers prior to the Closing Date or relating to periods prior to the Closing Date will be timely filed with the appropriate governmental agencies unless valid extensions therefor shall have been obtained. (b) All taxes pertaining to ownership of the Sale Assets or operation of the Stations prior to the Closing Date will be timely paid; provided that Sellers shall not be required to pay any such tax so long as the validity thereof shall be contested in good faith by appropriate proceedings and Sellers shall have set aside adequate reserves with respect to any such tax. 5.5 UPDATING OF INFORMATION. Between the date of this Agreement and ------------------------ the Closing Date, Sellers will supplement or amend all schedules, exhibits, and other written information provided hereunder, with respect to any matter hereafter arising that, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such schedule, exhibit, or other written information. 5.6 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer --------------------------------- and its representatives may make such reasonable investigation of the assets and business of the Stations as it may desire; and Sellers shall give to Buyer, its counsel, accountants, 20 engineers and other representatives reasonable access during normal business hours throughout the period prior to the Closing to personnel and all of the assets, books, records and files of or pertaining to the Stations, provided that Buyer shall give Sellers reasonable advance notice of each date on which Buyer or any such other person or entity desires such access. Sellers shall furnish to Buyer during such period all documents and copies of documents and information concerning the business and affairs of Sellers and the Stations as Buyer may reasonably request. 5.7 CONFIDENTIALITY; PRESS RELEASE. All information, data and ------------------------------- materials furnished or to be furnished to either party with respect to the other party in connection with this transaction or pursuant to this Agreement are confidential. Each party agrees that prior to Closing (a) it shall not disclose or otherwise make available, at any time, any such information, data or material to any person who does not have a confidential relationship with such party; (b) it shall protect such information, data and material with a high degree of care to prevent the disclosure thereof; and (c) if, for any reason, this transaction is not consummated, all information, data or material concerning the other party obtained by such party, and all copies thereof, will be returned to the other party. After Closing, neither party will disclose or otherwise make available to any person any of such information, data or material concerning the other party, except as may be necessary or appropriate in connection with the operation of the Stations by Buyer. Each party shall use its reasonable efforts to prevent the violation of any of the foregoing confidentiality provisions by its respective representatives. Notwithstanding the foregoing, nothing contained herein shall prohibit Buyer or Sellers from: (a) using such information, data and materials in connection with any action or proceeding brought or any claim asserted by Buyer or Sellers in respect of any breach by the other of any representation, warranty or covenant made in or pursuant to this Agreement; or (b) supplying or filing such information, data or materials to or with the FCC or any other valid governmental or court authority to the extent reasonably necessary to obtain any consent, waiver, amendment, modification, approval, authorization, permit or license which may be necessary to effectuate this Agreement, and to consummate the transaction contemplated herein. In the event that either party determines in good faith that a press release or other public announcement is desirable under any circumstances, the parties shall consult with each other to determine the appropriate timing, form and content of such release or announcement and thereafter may make such release or announcement. 5.8 REASONABLE BEST EFFORTS. Subject to the terms and conditions of ------------------------ this Agreement, each of the parties hereto will use its reasonable best efforts to take all action and to do all things necessary, proper or advisable to satisfy any condition to the parties' obligations hereunder in its power to satisfy and to consummate and make effective as soon as practicable the transactions contemplated by this Agreement. 21 5.9 FCC REPORTS. Sellers shall continue to file, on a current basis ------------ until the Closing Date, all reports and documents required to be filed with the FCC with respect to the Stations. Sellers shall provide Buyer with copies of all such filings within five business days of the filing with the FCC. 5.10 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing, ----------------------------------- Sellers shall obtain executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Sale Assets and properties as security for payment of loans and other obligations or judgments and of any other Liens on the Sale Assets. At the closing, Sellers shall transfer and convey to Buyer all of the Sale Assets free and clear of all Liens except Permitted Liens. 5.11 ENVIRONMENTAL ASSESSMENT. Not later than forty-five (45) days ------------------------- after execution of this Agreement, Buyer shall obtain a Phase I environmental assessment of the Real Property by an environmental engineer selected by Buyer (the "Environmental Assessment"). Buyer shall commission and pay the cost of such Environmental Assessment and shall provide a copy to Seller. The Environmental Assessment shall be subject to the confidentiality provisions of Section 5.7. If after appropriate inquiry into the previous ownership of and - ----------- uses of the Real Property consistent with good commercial or customary practice, the engineer concludes that environmental conditions exist on, under or affecting such properties that would constitute a violation of breach of Sellers' representations and warranties contained in Section 3.16 of this ------------ Agreement or cause the condition contained in Section 6.9 to not be satisfied, ------------ then notwithstanding any other provisions of this Agreement to the contrary but subject to the following sentence, Sellers' shall at its sole cost and expense (up to a maximum amount of $50,000 for each separate parcel of Real Property), remove, correct or remedy any condition or conditions which constitute a violation or breach of Sellers' representations and warranties contained in Section 3.16 prior to the Closing Date and provide to Buyer at Closing a - ------------ certificate from an environmental abatement firm reasonably acceptable to Buyer that such removal, correction or remedy has been completed so that Sellers' representations and warranties contained in Section 3.16 will be true as of the ------------ Closing Date and the condition contained in Section 6.9 will be satisfied as of ----------- the Closing Date. In the event the cost of removal, correction or remedy of the environmental conditions exceeds Fifty Thousand Dollars ($50,000), Buyer may elect to proceed with the Closing but shall not be obligated to close under any circumstances which would require Buyer to assume ownership of the Stations under conditions where there exist any uncured violations of warranties, representations or covenants with respect to environmental matters. In the event Buyer does elect to close the transaction, Buyer shall have no further recourse against Sellers with respect to the removal, correction or remedy of such environmental conditions. 5.12 ACCOUNTS RECEIVABLE. For a period of ninety (90) days -------------------- commencing October 1, 1996, Buyer, as agent for Sellers, agrees to use reasonable efforts in accordance with normal business practices (but not including resorting to litigation or threat thereof) to collect on behalf of Sellers all accounts receivable of the Stations 22 accrued as of September 30, 1996. All payments received from account debtors shall be applied on a "first in, first out" basis, except to the extent an account is disputed by the account debtor as properly due, in which case Sellers and Buyer shall reasonably agree on an appropriate allocation of the payment. The full amount of such payments collected in each semi-monthly period shall be remitted and delivered to Seller on the fifteenth (15/th/) and last business days of the months of October, November and December, 1996. Immediately following such ninety (90) day period, Buyer shall furnish Sellers with all files concerning any uncollected accounts receivable, and Buyer shall have no further responsibilities hereunder except to remit promptly to Sellers any amounts subsequently received by it on account of such receivables. ARTICLE VI ---------- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE ----------------------------- Buyer's obligation to close the transaction contemplated by this Agreement is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, unless waived by Buyer in writing: 6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE. ---------------------------------------------------------------- (a) The representations and warranties of Sellers contained in this Agreement or in any other Document shall be complete and correct in all material respects on the date hereof and at the Closing Date with same effect as though made at such time except for changes that are not materially adverse to the Stations or the Sale Assets taken as a whole, and except as follows: (i) as to Section 3.16(a) - (i) the accuracy or inaccuracy --------------------- of this representation as of the date of this Agreement or as of the Closing Date shall not be a condition to Closing if (A) the breach is cured or the item is removed on or before Closing, all costs associated with such cure, removal, clean up or other action have been paid in full (or reserved for) by Sellers and all required certificates of removal or completion or other certificates demonstrating that all required action under Section 5.11 has been completed ------------ have been received from applicable regulatory authorities, or (B) to the extent removal, clean up or other action cannot be completed and/or governmental or regulatory certificates obtained prior to Closing (which Closing may be delayed by Sellers by not more than thirty (30) days if Sellers reasonably determine that any necessary action can be completed during such delay period), a portion of the Purchase Price equal to the estimated costs of completion and/or certification (to be determined by an independent consulting engineer) is escrowed under an agreement negotiated in good faith by the parties and the amount so escrowed is used to pay all costs of completion; provided, however, that in no event shall Buyer be required to consummate the Agreement if the removal, clean up or other action would likely result in a disruption of Buyer's ability to broadcast at substantially full power for material periods of time. 23 (ii) as to Section 3.16(j), the accuracy or inaccuracy of --------------- this representation shall not be a condition to Closing if the noncompliance is cured on or before Closing or if the Sellers remain liable for the noncompliance after the Closing; and (iii) as to Sections 3.6 and 3.7, the accuracy or -------------------- inaccuracy of the representations(s) shall not be a condition to Closing if the amount to cure or repair the matter is reasonably estimated at less than $50,000 in the aggregate and the Purchase Price is reduced accordingly (if the amount can be accurately determined) or a reasonable reserve is placed into escrow pending cure or repair or Buyer and Sellers make other arrangements which are reasonable under the circumstances. In addition, Sellers may elect to delay Closing for a period not to exceed thirty (30) days if Sellers reasonably determine that any action necessary to cure or repair can be completed during such delay period; provided that the reduction or escrow described in the preceding sentence shall apply to the extent any cure or repair is not completed within such delay period. (b) Sellers shall have delivered to Buyer on the Closing Date a certificate that (i) the condition specified in Section 6.1(a) is satisfied as -------------- of the Closing Date, and (ii) except as set forth in such certificate (none of which exceptions shall be materially adverse to the Stations, the Sale Assets or Sellers' ability to consummate the transaction contemplated hereby), the condition specified in Section 6.2 is satisfied as of the Closing Date, and ----------- further except that as to Section 6.2, non-satisfaction of the condition(s) ----------- shall not be a condition to Closing if the amount to cure or repair the matter is reasonably estimated at less than $50,000 in the aggregate and the Purchase Price is reduced accordingly (if the amount can be accurately determined) or a reasonable reserve is placed into escrow pending cure or repair or Buyer and Sellers make other arrangements which are reasonable under the circumstances. In addition, Sellers may elect to delay Closing for a period not to exceed thirty (30) days if Sellers reasonably determine that any action necessary to cure or repair can be completed during such delay period; provided that the reduction or escrow described in the preceding sentence shall apply to the extent any cure or repair is not completed within such delay period. 6.2 PERFORMANCE OF AGREEMENTS. Sellers shall have performed in all -------------------------- material respects all of their covenants, agreements and obligations required by this Agreement and each of the other Documents to be performed or complied with by them prior to or upon the Closing Date. 6.3 FCC AND OTHER CONSENTS. ----------------------- (a) The FCC Order shall have been issued by the FCC and shall have become a Final Action without any Material Adverse Condition. (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body relating thereto or in connection therewith specifies and 24 requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall have been satisfied by Sellers. (c) All other authorizations, consents, approvals and clearances of federal, state or local governmental agencies required to permit the consummation by Buyer of the transactions contemplated by this Agreement shall have been obtained; all statutory and regulatory requirements for such consummation shall have been fulfilled; and no such authorizations, consents, approvals or clearances shall contain any conditions that individually or in the aggregate would have a material adverse effect on the operations of the Stations. 6.4 ADVERSE PROCEEDINGS. Neither Buyer nor any affiliate of Buyer ------------------- shall be subject to any ruling, decree, order or injunction restraining, imposing material limitations on or prohibiting (i) the consummation of the transactions contemplated hereby or (ii) its participation in the operation, management, ownership or control of the Stations; and no litigation, proceeding or other action seeking to obtain any such ruling, decree, order or injunction shall be pending or shall have been threatened in writing. No governmental authority having jurisdiction shall have notified any party to this Agreement that consummation of the transaction contemplated hereby would constitute a violation of the laws of the United States or of any state or political subdivision or that it intends to commence proceedings to restrain such consummation or to force divestiture, unless such governmental authority shall have withdrawn such notice. No governmental authority having jurisdiction shall have commenced any such proceeding. 6.5 OPINION OF SELLERS' FCC COUNSEL. Buyer shall have received from -------------------------------- Sellers' FCC counsel an opinion, dated the Closing Date, in form and substance reasonably satisfactory to Buyer's FCC counsel, to the effect that: (a) The FCC Licenses listed in Schedule 3.8 are valid, in good ------------ standing and in full force and effect and include all licenses, permits and authorizations which are necessary under the Rules and Regulations for Sellers to operate the Stations in the manner in which the Stations are currently being operated. (b) To counsel's knowledge, no condition has been imposed by the FCC as part of any FCC License which is not set forth on the face thereof as issued by the FCC or contained in the Rules and Regulations applicable generally to stations of the type, nature, class or location of the Stations. (c) No proceedings are pending or, to counsel's knowledge, are threatened which may result in the revocation, modification, non-renewal of, suspension of, or the imposition of a Material Adverse Condition upon, any of the FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any fines, forfeitures or other administrative actions by the FCC with respect to the Stations or their operation, other than proceedings affecting the radio broadcasting industry in general. 25 In rendering such opinion, counsel shall be entitled to rely upon Sellers' representations and warranties in this Agreement and to limit its inquiry to its files and such FCC files and records as are available to it as of 10:00 o'clock A.M. Eastern time the business day immediately preceding the Closing Date. Counsel may state that, as to any factual matters embodied in, or forming a basis for any legal opinion expressed in, such opinion, counsel's knowledge is based solely on such inquiry. 6.6 OTHER CONSENTS. Sellers shall have obtained in writing and --------------- provided to Buyer on or before the Closing Date, without any condition materially adverse to Buyer or the Stations, the consents or waivers to the transactions contemplated by this Agreement required under those Station Agreements which Buyer has elected to assume. 6.7 DELIVERY OF CLOSING DOCUMENTS. Sellers shall have delivered or ------------------------------ caused to be delivered to Buyer on the Closing Date each of the Documents required to be delivered pursuant to Section 8.2. ----------- 6.8 NO CESSATION OF BROADCASTING. ---------------------------- (a) Between the date hereof and the Closing Date, neither of the Stations shall have for a period of more than ten (10) days in the aggregate (i) ceased broadcasting on its authorized frequency, (ii) lost substantially all of its normal broadcasting capability or (iii) been broadcasting at a power level of 50% or less of its FCC authorized level. Sellers shall promptly notify Buyer of the occurrence of any one or more of the foregoing events or conditions, and the non-fulfillment of the condition precedent set forth in this Subsection caused by the occurrence of the events specified in Sellers' notice shall be deemed waived by Buyer unless, within fifteen (15) days after Buyer's receipt of Sellers' written notice, Buyer notifies Sellers in writing to the contrary. (b) In addition, during the five (5) days immediately preceding the Closing Date, each of the Stations shall have been operating continuously with substantially all of its normal broadcasting capability except for cessation or reductions for insignificant periods of time resulting from occurrences (such as lightning strikes) over which Sellers have no control. Sellers shall have the right to delay Closing for a period not to exceed thirty (30) days if Sellers reasonably determine that any action to restore the Stations to substantially all of their normal broadcasting capability can be completed during such delay period. (c) Notwithstanding the foregoing, the loss or damage to Sellers' transmission facilities shall not be a condition precedent to Buyer's obligation to close if such loss or damage arose by reason of the act or omission of Buyer in its capacity as the programmer of the Stations under the LMA. 6.9 ENVIRONMENTAL CONDITIONS. The Environmental Assessment obtained ------------------------- by Buyer pursuant to Section 5.11 hereof shall not have disclosed any material ------------ violation of 26 any Environmental Law at the Real Property which is not removed or cured by Sellers prior to Closing. 6.10 TITLE INSURANCE COMMITMENT. Title to the Real Property shall be --------------------------- in fee simple, good and marketable and insurable at regular rates by any title insurance company, selected by Buyer and licensed in the State of Ohio, pursuant to the standard stipulations and conditions of owner's title insurance policies prescribed by applicable Ohio regulatory authorities, free and clear of all liens and encumbrances except Permitted Encumbrances, as hereinafter defined. For purposes hereof, "Permitted Encumbrances" shall mean (i) easements, restrictions, and other similar matters which will not adversely affect the use of the Real Property in the ordinary course of business; (ii) liens for taxes not due and payable or, that are being contested in good faith by appropriate proceedings; (iii) mechanics, materialmen's, carriers', warehousemen's, landlords' or other similar liens in the ordinary course of business for sums not yet due or being contested in good faith by appropriate proceedings; (iv) deposits or pledges to secure the performance of bids, tenders, contracts (other than for borrowed money), leases, statutory obligations, surety or appeal bonds or other deposits or pledges for purposes of a like general nature made or given in the ordinary course of business: and (v) liens or mortgages that will be released at Closing; (vi) zoning ordinances and regulations, including statutes and ordinances relating to the liens of streets and to other municipal improvements, which will not adversely affect the use of the Real Property in the ordinary course of business. 6.11 SURVEY. Within ten (10) business days after execution of this ------- Agreement, Sellers shall provide Buyer with the originals or readable copies of any surveys of the Real Property in Sellers' possession. All costs associated with updating such survey or preparing new surveys shall be paid by Buyer. ARTICLE VII CONDITIONS PRECEDENT OF THE OBLIGATION OF SELLERS TO CLOSE ------------------------------ The obligation of Sellers to close the transaction contemplated by this Agreement is subject to the satisfaction, on or prior to the closing Date, of each of the following conditions, unless waived by Sellers in writing: 7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. ------------------------------------------- (a) The representations and warranties of Buyer contained in this Agreement shall be complete and correct in all material respects on the date hereof and at the Closing Date with the same effect as though made at such time except for changes that are not materially adverse to Sellers. (b) Buyer shall have delivered to Sellers on the Closing Date a certificate that (i) the condition specified in Section 7.1(a) is satisfied as -------------- of the Closing Date, and (ii) 27 except as set forth in such certificate (none of which exceptions shall be materially adverse to Buyer's ability to consummate the transaction contemplated hereby), the conditions specified in Section 7.2 are satisfied as of the ----------- Closing Date. 7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all -------------------------- material respects all of its covenants, agreements and obligations required by this Agreement and each of the other Documents to be performed or complied with by it prior to or upon the Closing Date. 7.3. FCC AND OTHER CONSENTS. ----------------------- (a) The FCC Order shall have been issued by the FCC and shall have become effective under the rules of the FCC. (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body relating thereto or in connection therewith specifies and requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall have been satisfied by Buyer. (c) All other authorizations, consents, approvals and clearances of all Federal, state and local governmental agencies required to permit the consummation by Sellers of the transactions contemplated by this Agreement shall have been obtained; all statutory and regulatory requirements for such consummation shall have been fulfilled; and no such authorizations, consents, approvals or clearances shall contain any conditions that individually or in the aggregate would have any material adverse effect on Sellers. 7.4 ADVERSE PROCEEDINGS. Sellers shall not be subject to any ruling, -------------------- decree, order or injunction restraining, imposing material limitations on or prohibiting the consummation of the transactions contemplated hereby. No governmental authority having jurisdiction shall have notified any party to this Agreement that consummation of the transactions contemplated hereby would constitute a violation of the laws of the United States or of any state or political subdivision or that it intends to commence proceedings to restrain such consummation or to force divestiture, unless such governmental authority shall have withdrawn such notice. No governmental authority having jurisdiction shall have commenced any such proceeding. 7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall ------------------------------------------------- have delivered or caused to be delivered to Sellers on the Closing Date each of the documents required to be delivered pursuant to Section 8.3, and Sellers ----------- shall have received payment of the Purchase Price with the form of payment set forth in Section 2.6. ----------- 28 ARTICLE VIII CLOSING ------- 8.1 TIME AND PLACE. The Closing shall take place at the offices of --------------- Buyer's counsel in Cleveland, Ohio or at such other place as the parties agree, at 10:00 A.M. Eastern Time on the date (the "Closing Date") that is the later of (i) the fifth Business Day after the Applicable Date or (ii) the date as soon as practicable following satisfaction or waiver of the conditions precedent hereunder; provided, however, that in no event shall the Closing take place -------- ------- prior to January 2, 1997; and provided further, that Buyer may elect to postpone -------- ------- Closing to a date not later than July 2, 1997. The Applicable Date shall be the date on which the FCC Order shall have become a Final Action without any Material Adverse Condition. 8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing, --------------------------------------------- Sellers shall deliver or cause to be delivered to Buyer the following: (a) Certified resolutions of Sellers' members approving the execution and delivery of this Agreement and each of the other documents and authorizing the consummation of the transactions contemplated hereby and thereby. (b) The certificate required by Section 6.1(b). -------------- (c) A bill of sale and other instruments of transfer and conveyance transferring to Buyer the Tangible Personal Property. (d) Executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Sale Assets as security for payment of loans and other obligations and of any other Liens (other than Permitted Liens). (e) Warranty deeds and any other required instruments of transfer and conveyance transferring to Buyer the Real Property. (f) Executed mortgage satisfactions and any other documents required by the title insurance company under Section 6.10 as a condition to ------------ issuing the title insurance policy in the form required by Section 6.10. ------------ (g) An instrument or instruments assigning to Buyer all right, title and interest of Sellers in and to all Station Agreements being assumed by Buyer. (h) An instrument or instruments assigning to Buyer all right, title and interest of Sellers in the FCC Licenses, all pending applications relating to the Stations before the FCC, and any remaining Sale Assets not otherwise conveyed. 29 (i) The opinion of Sellers' FCC counsel, dated the Closing Date, to the effect set forth in Section 6.5. ------------ (j) Such additional information and materials as Buyer shall have reasonably requested, including without limitation, evidence that all consents and approvals required as a condition to Buyer's obligation to close hereunder have been obtained. 8.3 DOCUMENTS TO BE DELIVERED TO SELLERS BY BUYER. At the Closing, ---------------------------------------------- Buyer shall deliver or cause to be delivered to Sellers the following: (a) Certified resolutions of Buyer's Board of Directors approving the execution and delivery of this Agreement and each of the other Documents and authorizing the consummation of the transaction contemplated hereby and thereby. (b) The Purchase Price with the form of payment set forth in Section 2.5. - ------------ (c) The agreement of Buyer assuming the obligations under any Station Agreements being assumed by Buyer. (d) The certificate required under Section 7.1(b). -------------- (e) Such additional information and materials as Sellers shall have reasonably requested. 30 ARTICLE IX ---------- SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ------------------------------------------- INDEMNIFICATION --------------- 9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations, ------------------------------------------ warranties, covenants and agreements contained in this Agreement or in any other Document shall survive the Closing for the Survival Period and the Closing shall not be deemed a waiver by either party of the representations, warranties, covenants or agreements of the other party contained herein or in any other Document. No claim may be brought under this Agreement or any other Document unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the Survival Period. In the event such a notice is so given, the right to indemnification with respect thereto under this Article shall survive the Survival Period until such claim is finally resolved and any obligations with respect thereto are fully satisfied. Notwithstanding the foregoing, the provisions for survival and the making of claims shall not apply to the agreements whereby Buyer assumes the obligations under Subsection 8.3(c), each of which agreements shall be governed by its own ----------------- terms. 9.2 INDEMNIFICATION IN GENERAL. Buyer and Sellers agree that the --------------------------- rights to indemnification and to be held harmless set forth in this Agreement shall, as between the parties hereto and their respective successors and assigns, be exclusive of all rights to indemnification and to be held harmless that such party (or its successors or assigns) would otherwise have by statute, common law or otherwise. 9.3 INDEMNIFICATION BY SELLERS. --------------------------- (a) Subject to the provisions of Subsection (b) below and Section -------------- ------- 10.2 below, Sellers shall indemnify and hold harmless Buyer and any officer, - ---- director, agent, employee and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: (i) Any breach or non-performance by Sellers of any of their representations, warranties, covenants or agreements set forth in this Agreement or any other Documents; or (ii) The ownership or operation by Sellers of the Stations or the Sale Assets on or prior to the Closing Date, except as relates to operation of the Stations by Buyer under the LMA; (iii) All other liabilities and obligations of Sellers other than the Assumed Obligations; and 31 (iv) Noncompliance by Sellers with the provisions of the Bulk Sales Act, if applicable, in connection with the transaction contemplated hereby. (b) Notwithstanding anything contained herein to the contrary, if Closing occurs, Sellers shall not be obligated to indemnify Buyer pursuant to Subsection (a) above (i) for any amounts in excess of the Purchase Price in the - -------------- aggregate, or (ii) unless and until the aggregate amount of such claims, liabilities, damages, losses, costs and expenses exceeds Buyer's Threshold Limitation, in which case Buyer shall then be entitled to indemnification of the entire aggregate amount, provided that any amounts owed by Sellers to Buyer under Subsection (a) (iv) above shall not be counted in determining whether ------------------- Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to recover any such payment without regard to such limitation. 9.4 INDEMNIFICATION BY BUYER. ------------------------- (a) Subject to the provisions of Subsection (b) below and -------------- Section 10.2 below, Buyer shall indemnify and hold harmless Sellers and any - ------------ officer, director, agent, employee and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: (i) Any breach or non-performance by Buyer of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other Document; or (ii) The ownership or operation of the Stations after the Closing Date; or (iii) All other liabilities or obligations of Buyer. (b) Notwithstanding anything contained herein to the contrary, if Closing occurs, Buyer shall not be obligated to indemnify Sellers pursuant to Subsection (a) above unless and until the aggregate amount of such claims, - -------------- liabilities, damages, losses, costs and expenses exceeds Sellers' Threshold Limitation, in which case Sellers shall then be entitled to indemnification of the entire aggregate amount. 9.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified --------------------------- Party may be entitled to indemnification hereunder with respect to any asserted claim of, or obligation or liability to, any third party, such party shall notify the Indemnifying Party thereof, describing the matters involved in reasonable detail, and the Indemnifying Party shall be entitled to assume the defense thereof upon written notice to the Indemnified Party with counsel reasonably satisfactory to the Indemnified Party; provided, that once the defense thereof is assumed by the Indemnifying Party, the Indemnifying Party shall keep the Indemnified Party advised of all developments in the defense thereof and any related litigation, and the Indemnified Party shall be entitled at all times to participate in the 32 defense thereof at its own expense. If the Indemnifying Party fails to notify the Indemnified Party of its election to defend or contest its obligation to indemnify under this Article IX, the Indemnified Party may pay, compromise, or ---------- defend such a claim without prejudice to any right it may have hereunder. ARTICLE X --------- TERMINATION; LIQUIDATED DAMAGES ------------------------------- 10.1 TERMINATION. If Closing shall not have previously occurred, ------------ this Agreement shall terminate upon the earliest of: (a) the giving of written notice from Sellers to Buyer, or from Buyer to Sellers, if: (i) Sellers give such termination notice and are not at such time in material default hereunder, or Buyer gives such termination notice and Buyer is not at such time in material default hereunder; and (ii) Either: (A) any of the representations or warranties contained herein of Buyer (if such termination notice is given by Sellers), or of Sellers (if such termination notice is given by Buyer), are inaccurate in any respect and materially adverse to the party giving such termination notice unless the inaccuracy has been induced by or is the result of actions or omissions of the party giving such termination notice; or (B) Any material obligation to be performed by Buyer (if such termination notice is given by Sellers) or by Sellers (if such termination notice is given by Buyer) is not timely performed in any material respect unless the lack of timely performance has been induced by or is the result of actions or omissions of the party giving such termination notice; or (C) Any condition (other than those referred to in foregoing Clauses (A) and (B)) to the obligation to close the transaction ----------- --- contemplated herein of the party giving such termination notice has not been timely satisfied; and any such inaccuracy, failure to perform or non-satisfaction of a condition neither has been cured nor satisfied within twenty (20) days after written notice thereof from the party giving such termination notice nor waived in writing by the party giving such termination notice. 33 (b) Written notice from Sellers to Buyer, or from Buyer to Sellers, at any time after July 2, 1997 provided that termination shall not occur upon the giving of such termination notice by Sellers if Sellers are at such time in material default hereunder or upon the giving of such termination notice by Buyer if Buyer is at such time in material default hereunder. (c) Written notice from Sellers to Buyer, or from Buyer to Seller, at any time following a determination by the FCC that the application for consent to assignment of the FCC Licenses has been designated for hearing; provided that the party which is the subject of the hearing (or whose alleged actions or omissions resulted in the designation for hearing) may not elect to terminate under this subsection (c). (d) The written election by Buyer under Article XI. ---------- 10.2 OBLIGATIONS UPON TERMINATION. ---------------------------- (a) In the event this Agreement is terminated pursuant to Section 10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach - ---------------------- --- hereunder shall be limited as provided in Subsections (c) and (e), below and the ----------------------- aggregate liability for Sellers for breach hereunder shall be limited as provided in Subsections (d) and (e), below. In the event this Agreement is ----------------------- terminated for any other reason, neither party shall have any liability hereunder. (b) Upon termination of this Agreement, Buyer shall be entitled to the return of the Earnest Money from the Escrow Agent under the Escrow Agreement (i) if such termination is effected by Buyer's giving of valid written notice to Sellers pursuant to Subsections 10.1(a), (b) (c) or (d) , or (ii) if ----------------------------------- such termination is effected by Sellers' giving of valid written notice to Buyer pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is ---------------------------------------------- entitled to the return of the Earnest Money, Sellers shall cooperate with Buyer in taking such action as is required under the Escrow Agreement in order to effect such return from the Escrow Agent. (c) If this Agreement is terminated by Sellers' giving of valid written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer -------------------------------- agrees that Sellers shall be entitled to receive upon such termination, as liquidated damages and not as a penalty, (i) the Earnest Money, and (ii) the additional sum of Three Hundred Thousand Dollars ($300,000) from Buyer (the sum of such amounts is hereafter referred to as the "Liquidated Damages Amount"). SELLERS' RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLERS' SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT OCCUR. BUYER AND SELLERS EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGES AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF 34 PROOF OF LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER. (d) Notwithstanding any provision of this Agreement to the contrary, but subject to the provisions of the following sentences, if this Agreement is terminated by Buyer's giving of written notice to Sellers pursuant to Subsection 10.1(a), Buyer shall not be entitled to damages or indemnification ------------------ from Sellers. Subject to the following sentence, if Sellers attempt to terminate this Agreement under circumstances where they are not entitled to do so, or if Sellers, by their own action, cause a breach of warranty or fail to satisfy a condition (including without limitation a refusal to consummate the transaction after Buyer has satisfied all conditions to Sellers' obligation to close and Buyer has demonstrated its willingness and ability to close on the terms set forth in this Agreement and Buyer is not in default hereunder) with the intent of creating a situation whereby Buyer elects to terminate under Section 10.1(a) --------------- and Buyer does so elect to terminate, the monetary damages, if any, to which Buyer shall be entitled shall be limited to direct and actual damages and shall in no event exceed Four Hundred Thousand Dollars ($400,000) in the aggregate. If a circumstance described in the preceding sentence should arise and if Buyer establishes that the action of Sellers described therein was taken intentionally in order to allow Sellers to sell or enter into negotiations to sell the Stations to another party, the damages to which Buyer shall be entitled shall not be limited to direct and actual damages. (e) In any dispute between Buyer and Sellers as to which party is entitled to all or a portion of the Earnest Money, the prevailing party shall receive, in addition to that portion of the Earnest Money to which it is entitled, an amount equal to interest on that portion at the rate of 10% per annum, calculated from the date the prevailing party's demand for all or a portion of the Earnest Money is received by the Escrow Agent. 10.3 TERMINATION NOTICE. Each notice given by a party pursuant to ------------------- Section 10.1 to terminate this Agreement shall specify the Subsection (and - ------------ clause or clauses thereof) of Section 10.1 pursuant to which such notice is ------------ given. ARTICLE XI ---------- CASUALTY -------- Upon the occurrence of any casualty loss, damage or destruction material to the operation of either of the Stations prior to the Closing, Sellers shall promptly give Buyer written notice setting forth in detail the extent of such loss, damage or destruction and the cause thereof if known. Sellers shall use their reasonable efforts to promptly commence and thereafter to diligently proceed to repair or replace any such lost, damaged or destroyed property. In the event that such repair or replacement is not fully completed prior to the Closing Date, Buyer may elect to postpone the Closing until Sellers' repairs have been fully completed or to consummate the transactions contemplated hereby on the 35 Closing Date, in which event Sellers shall assign to Buyer the portion of the insurance proceeds (less all reasonable costs and expenses, including without limitation attorney's fees, expenses and court costs incurred by Sellers to collect such amounts), if any, not previously expended by Sellers to repair or replace the damaged or destroyed property (such assignment of proceeds to take place regardless of whether the parties close on the scheduled or deferred Closing Date) and Buyer shall accept the damaged Sale Assets in their damaged condition. In the event the loss, damage or destruction causes or will cause either Station to be off the air for more than seven (7) consecutive days or fifteen (15) total days, whether or not consecutive, then Buyer may elect either (i) to consummate the transactions contemplated hereby on the Closing Date, in which event Sellers shall assign to Buyer the portion of the insurance proceeds (less all reasonable costs and expenses, including without limitation attorney's fees, expenses and court costs, incurred by Sellers to collect such amounts), if any, not previously expended by Sellers to repair or replace the damaged or destroyed property, and Buyer shall accept the damaged Sale Assets in their damaged condition, or (ii) to terminate this Agreement. ARTICLE XII ----------- CONTROL OF STATIONS ------------------- Between the date of this Agreement and the Closing Date and subject only to the provisions of the LMA, Buyer shall not control, manage or supervise the operation of the Stations or the conduct of their business, all of which shall remain the sole responsibility and under the control of Sellers, subject to Sellers' compliance with this Agreement. ARTICLE XIII ------------ MISCELLANEOUS ------------- 13.1 FURTHER ACTIONS. From time to time before, at and after the ---------------- Closing, each party, at its expense and without further consideration, will execute and deliver such documents to the other party as the other party may reasonably request in order more effectively to consummate the transactions contemplated hereby. 13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a ------------------------------ period of forty-eight (48) months, Buyer shall provide Sellers, Sellers' counsel, accountants and other representatives with reasonable access during normal business hours to the books, records, property, personnel, contracts, commitments and documents of the Stations pertaining to transactions occurring prior to the Closing Date when requested by Sellers, and Buyer shall retain such books and records for the normal document retention period of Buyer. At the request and expense of Sellers, Buyer shall deliver copies of any such books and records to Sellers. 36 13.3 PAYMENT OF EXPENSES. -------------------- (a) Any fees assessed by the FCC in connection with the filings contemplated by Section 5.2(a) or consummation of the transactions contemplated -------------- hereby shall be shared equally between Sellers and Buyer. (b) All title insurance premiums and costs shall be paid by Buyer. (c) All state or local sales or use, stamp or transfer, grant and other similar taxes payable in connection with consummation of the transactions contemplated hereby shall be paid by the party primarily liable under applicable law to pay such tax. (d) Except as otherwise expressly provided in this Agreement, each of the parties shall bear its own expenses, including the fees of any attorneys and accountants engaged by such party, in connection with this Agreement and the consummation of the transactions contemplated herein. 13.4 SPECIFIC PERFORMANCE. Sellers acknowledge that the Stations --------------------- are of a special, unique, and extraordinary character, and that any breach of this Agreement by Sellers should not be compensated for by damages. Accordingly, if Sellers shall breach their obligations under this Agreement, Buyer shall be entitled, in lieu of its remedies in Section 10.2(d), to --------------- enforcement of this Agreement (subject to obtaining any required approval of the FCC) by decree of specific performance or injunctive relief requiring Sellers to fulfill their obligations under this Agreement. In any action by Buyer to equitably enforce the provisions of this Agreement, Sellers shall waive the defense that there is an adequate remedy at law or equity and agrees that (i) Buyer shall have the right to obtain specific performance of the terms of this Agreement without being required to prove actual damages, post bond or furnish other security, and (ii) Buyer shall be entitled to recover reasonable attorney's fees and costs incurred in connection with Buyer's successful obtaining of specific performance.. 13.5 NOTICES. All notices, demands or other communications given ------- hereunder shall be in writing and shall be sufficiently given if delivered by courier or sent by registered or certified mail, first class, postage prepaid, or by telex, cable, telegram, facsimile or similar written means of communication, addressed as follows: (a) if to Seller, to: Mortenson Broadcasting Company 3191 Nicholasville Road Suite 600 Lexington, KY 40503-3318 Facsimile No.: (606) 245-1600 Attention: Jack M. Mortenson President 37 Copy to: William Rigsby, Esq. 201 West Short St., Suite 820 Lexington, KY 40507 Facsimile No.: (606) 233-4642 (b) if to Buyer, to: Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, CA 93012 Facsimile No.: (805) 482-7290 Attention: Eric H. Halvorson Executive Vice President Chief Operating Officer or such other address with respect to any party hereto as such party may from time to time notify (as provided above) to the other party hereto. Any such notice, demand or communication shall be deemed to have been given (i) if so mailed, as of the close of the third business day following the date mailed, and (ii) if personally delivered or otherwise sent as provided above, on the date received. 13.6 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits ----------------- hereto, and the other Documents constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede any prior negotiations, agreements, understandings or arrangements between the parties with respect to the subject matter hereof. 13.7 BINDING EFFECT; BENEFITS. Except as otherwise provided herein, ------------------------- this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors or assigns. Except to the extent specified herein, nothing in this Agreement, express or implied, shall confer on any person other than the parties hereto and their respective successors or assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 13.8 ASSIGNMENT. This Agreement and any rights hereunder shall not ----------- be assignable by either party hereto without the prior written consent of the other party; provided, however, that Buyer may, at its own expense, without Sellers' prior written consent, assign its rights and obligations to acquire the Real Property to Edward G. Atsinger III and Stuart W. Epperson, or trusts created for their benefit and/or the benefit of their spouses and their issue so long as (i) no delay results in the Closing Date (ii) no 38 extra expense results to Sellers, and (iii) Buyer remains liable for indemnification of Sellers in respect of all Assumed Obligations in respect of the Real Property. 13.9 GOVERNING LAW. This Agreement shall in all respects be -------------- governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. 13.10 BULK SALES. Buyer hereby waives compliance by Sellers with the ----------- provisions of the Bulk Sales Act and similar laws of any state or jurisdiction, if applicable. Sellers shall, in accordance with Article IX, indemnify and hold ---------- Buyer harmless from and against any and all claims made against Buyer by reason of such non-compliance. 13.11 AMENDMENTS AND WAIVERS. No term or provision of this Agreement ----------------------- may be amended, waived, discharged or terminated orally but only by an instrument in writing signed by the party against whom the enforcement of such amendment, waiver, discharge or termination is sought. Any waiver shall be effective only in accordance with its express terms and conditions. 13.12 SEVERABILITY. Any provision of this Agreement which is ------------- unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto hereby waive any provision of law now or hereafter in effect which renders any provision hereof unenforceable in any respect. 13.13 HEADINGS. The captions in this Agreement are for convenience --------- of reference only and shall not define or limit any of the terms or provisions hereof. 13.14 COUNTERPARTS. This Agreement may be executed in any number of ------------- counterparts, and by either party on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13.15 REFERENCES. All references in this Agreement to Articles and ----------- Sections are to Articles and Sections contained in this Agreement unless a different document is expressly specified. 13.16 SCHEDULES AND EXHIBITS. Unless otherwise specified herein, ----------------------- each Schedule and Exhibit referred to in this Agreement is attached hereto, and each such Schedule and Exhibit is hereby incorporated by reference and made a part hereof as if fully set forth herein. 39 13.17 SECTION 1031 ASSET EXCHANGE. ---------------------------- (a) The parties acknowledge that each may desire to effectuate a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code (the "Code"), which may include a non-simultaneous exchange, with respect to the sale and acquisition of the Sale Assets. The parties agree to cooperate with the other in connection therewith, provided each party participating in such an exchange agrees to hold the other free and harmless of, and indemnify the other from, any liabilities, claims, costs, damages, expenses and fees (including attorneys' fees) which may arise out of said party's participation in a tax- deferred exchange, including without limitation any claims by the Internal Revenue Service. (b) Sellers may identify and acquire additional assets (the "Exchange Assets") in lieu of the Purchase Price and exchange such Exchange Assets for the Sale Assets in lieu of the Purchase Price. Therefore, Sellers may elect prior to the Closing Date to effect the acquisition of such Exchange Assets connected with the transfer and conveyance of the Sale Assets hereunder as part of an exchange under Section 1031 of the Code, in lieu of receiving the Purchase Price hereunder. If Sellers so elect, they shall provide written notice to Buyer of their election prior to the closing Date, and thereafter (i) shall at any time at or prior to closing assign their rights under this Agreement to a "qualified intermediary" as defined in Treas. Reg. Section 1.1031 (k)-1(g) (4), subject to all of Sellers' rights and obligations hereunder and (ii) shall promptly provide written notice of such assignment to all parties hereto. Buyer shall cooperate with all reasonable requests of Sellers and the "qualified intermediary" in arranging and effecting this exchange as one which qualifies under Section 1031 of the Code. Without limiting the generality of the foregoing, if Sellers have given notice of their intention to effect the acquisition of the Exchange Assets as part of a tax-deferred exchange, Buyer will (i) promptly provide Sellers with written acknowledgment of such notice and (ii) at Closing, pay the Purchase Price to the "qualified intermediary" rather than to Sellers (which payment shall discharge the obligation of Buyer to make payment for the Sale Assets). Sellers shall indemnify and hold harmless Buyer from and against all costs, taxes and expenses arising from Seller's election to effect the acquisition of the Exchange Assets as part of a tax-deferred exchange rather than a purchase thereof, other than such costs, taxes and expenses arising from the Buyer's failure to perform its obligations hereunder with respect to such exchange. Nothing in this Section 13.7 shall in any way alter or ------------ modify any of Sellers' representations, warranties or covenants made in this Agreement nor affect, diminish or nullify in any respects Sellers' covenants to indemnify Buyer under this Agreement. 40 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written. CARON BROADCASTING, INC. By: /s/ Eric H. Halvorson --------------------- Eric H. Halvorson Executive Vice President MORTENSON BROADCASTING COMPANY OF CANTON, LLC By: /s/ Jack M. Mortenson --------------------- Jack M. Mortenson President MORTENSON BROADCASTING COMPANY OF AKRON, LLC By: /s/ Jack M. Mortenson --------------------- Jack M. Mortenson President 41 LIST OF SCHEDULES TO ASSET PURCHASE AGREEMENT --------------------------------------------- SCHEDULE 3.3 Conflicts SCHEDULE 3.4 List of required consents of any court, public agency, authority or any person to the consummation of the transactions contemplated by Asset Purchase Agreement. SCHEDULE 3.6 List of Tangible Personal Property. SCHEDULE 3.7 Description of Real Property SCHEDULE 3.8 List of FCC Licenses. SCHEDULE 3.9 List of Trade Agreements and other Station Agreements. SCHEDULE 3.10 List of Intellectual Property SCHEDULE 3.11 Financial Statements SCHEDULE 3.13 Employee Information 42 SCHEDULE 3.3 ------------ CONFLICTS Sellers have outstanding loan obligations to First National Bank of Ohio. All loans and related liens will be repaid and released at Closing. 43 SCHEDULE 3.4 ------------ CONSENTS The acquisition of the Stations is subject to prior approval of the FCC. The consent of S&S Realty Investments is required to assign the studio lease for property located at 2780 S. Arlington Road, Akron, Ohio. See Schedule 3.3. ------------ 44 SCHEDULE 3.6 ------------ TANGIBLE PERSONAL PROPERTY See attached 45 EX-10.06.03.01 26 ASSET PURCHASE AGREEMENT EXHIBIT 10.06.03.01 ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT is dated March 28, 1996, by and between American Radio Systems Corporation, a Delaware corporation ("Buyer"), and Common Ground Broadcasting, Inc., an Oregon corporation ("Seller"). PREMISES: A. Seller is the licensee of and operates radio station KDBX(FM), Banks, Oregon (the "Station") and pursuant to licenses issued by the Federal Communications Commission (the "FCC"). B. Seller desires to sell, and Buyer wishes to buy, substantially all of Seller's assets used or useful in the operation of the Station and the broadcast business made possible thereby for the price and on the terms and conditions hereafter set forth. AGREEMENTS: In consideration of the above premises and the covenants and agreements contained herein, Buyer and Seller agree as follows: Section 1 DEFINED TERMS The following terms shall have the following meanings in this Agreement: 1.1 "Accounts Receivable" means the rights of Seller to payment for services rendered (including sale of time or talent on the Station for cash) by Seller prior to the Closing Date as reflected on the billing records of Seller relating to the Station. 1 1.2 "Assets" means the tangible and intangible assets owned by Seller in connection with the conduct of the business or operations of the Station, which assets are being sold, transferred, or otherwise conveyed to Buyer hereunder, and which are specified in detail in Section 2.1. 1.3 "Back Bay" shall mean Back Bay Broadcasters, Inc., a Delaware corporation, and shall include its successors and assigns. 1.4 "Back Bay Agreement" shall mean the Agreement, dated March 15, 1994, by and between American and Back Bay, as from time to time amended. 1.5 "Assumed Contracts" means (i) all agreements listed in Schedule 3.6, and (ii) any agreements entered into by Seller in the ordinary course of business between the date hereof and the Closing Date which Buyer agrees in writing to assume. 1.6 "Closing" means the consummation of the transaction contemplated by this Agreement in accordance with the provisions of Section 8. 1.7 "Closing Date" means the date of the Closing specified in Section 8.1. 1.8 "Consents" means all of the consents, permits or approvals of government authorities and other third parties necessary to transfer the Assets to Buyer or otherwise to consummate the transaction contemplated hereby, including without limitation the consents of the parties to those agreements designated in Schedule 3.6 with an asterisk. 1.9 "Escrow Deposit" shall mean the sum of Five Hundred Thousand Dollars ($500,000) held by Media Venture Partners as Escrow Agent pursuant to an Escrow Agreement of even date, by and among Buyer, Seller, and Escrow Agent in the form of Schedule 1.9 hereto. 1.10 "Excluded Assets" shall mean those assets described or set forth in Section 2.2 herein and on Schedule 2.2 hereto. 1.11 "FCC Consent" means action by the FCC granting its consent to the assignment of the FCC Licenses to Buyer as contemplated by this Agreement. 2 1.12 "FCC Licenses" means all of the licenses, permits and other authorizations issued by the FCC to Seller in connection with the conduct of the business or operations of the Station. 1.13 "Final Order" means a written action, order or public notice issued by the FCC, setting forth the FCC Consent and (a) which has not been reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with respect to which (i) no requests have been filed for administrative or judicial review, reconsideration, appeal or stay, and the time for filing any such requests and for the FCC to review the action on its own motion has expired, or (ii) in the event of review, reconsideration or appeal that does not result in the FCC consent being reversed, stayed, enjoined, set aside, annulled or suspended, the time for further review, reconsideration or appeal has expired. 1.14 "Licenses" means all of the licenses, permits and other authorizations, including the FCC Licenses, issued by the FCC, the Federal Aviation Administration ("FAA"), and any other federal, state or local governmental authorities to Seller in connection with the conduct of the business or operations of the Station. 1.15 "Personal Property" means all of the machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, spare parts, and other tangible personal property which are owned by Seller and which are set forth on Schedule 3.5, plus such additions thereto and deletions therefrom arising in the ordinary course of business between the date hereof and the Closing Date. 1.16 "Purchase Price" means the purchase price specified in Section 2.3. 3 SECTION 2 SALE AND PURCHASE OF ASSETS 2.1 Agreement to Sell and Buy. Subject to the terms and conditions set forth ------------------------- in this Agreement, Seller hereby agrees to transfer and deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of the Assets, free and clear of any claims, liabilities, mortgages, liens, pledges, conditions, charges, or encumbrances of any nature whatsoever (except for those permitted in accordance with Section 2.5, 3.5 or 3.6 below), more specifically described as follows: (a) The Personal Property; (b) The Licenses; (c) The Assumed Contracts; (d) All trademarks, trade names, service marks and all other information and similar intangible assets relating to the Station, including those listed in Schedule 3.8 hereto; (e) All of the Seller's proprietary information, which relate to the Station, including without limitation, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints, and schematics, including filings with the FCC which relate to the Station, if any; (f) All choses in action and rights under warranties of Seller relating to the Station or the Assets, if any; (g) All books and records relating exclusively to the business or operations of the Station, including executed copies of the Assumed Contracts, and all records required by the FCC to be kept, subject to the right of Seller to 4 have such books and records made available to Seller for a reasonable period, not to exceed three (3) years; and (h) All intangible assets of Seller relating to the Station not specifically described above. 2.2 Excluded Assets. The Assets shall exclude the following assets: --------------- (a) Seller's cash on hand as of the Closing Date and all other cash in any of Seller's bank or savings accounts; any and all insurance policies, letters of credit, or other similar items and any cash surrender value in regard thereto; and any stocks, bonds, certificates of deposit and similar investments. (b) Seller's Accounts Receivable (c) Any agreements other than the Assumed Contracts; (d) All books and records of Seller, subject to the right of Buyer to have access and to copy for a period of three (3) years from the Closing Date, and Seller's corporate records and other books and records related to internal corporate matters and financial relationships with Seller's lenders; (e) Any and all claims of Seller with respect to transactions prior to the Closing Date, including without limitation any claims, rights and interest in and to any refunds of federal, state or local franchise, income or other taxes or fees of any nature whatsoever; (f) Any pension, profit-sharing or employee benefit plans, and any employment or collective bargaining agreement. 2.3 Purchase Price. The Purchase Price shall be Fourteen Million -------------- Dollars - ($14,000,000). The Purchase Price shall be (i) adjusted to reflect any adjustments or prorations made and agreed to at Closing as provided in Section 2.4 hereof, and (ii) shall be increased by the amount of payments, if any, made prior to Closing by Seller to Combined Communications, Inc. pursuant to the Assumed Contract relating to Combined Communications, Inc. described in Schedule 3.6. 5 2.4 Adjustments and Prorations. All revenues arising from the Station up -------------------------- until midnight on the Closing Date, and all expenses arising from the Station up until midnight on the Closing Date, including business and license fees (including any retroactive adjustments thereof), utility charges, real and personal property taxes and assessments levied against the Assets, property and equipment rentals, applicable copyright or other fees, sales and service charges, taxes (except for taxes arising from the transfer of the Assets hereunder), and similar prepaid and deferred items, shall be prorated between Buyer and Seller in accordance with the principle that Seller shall receive all revenues, and all refunds to Seller and deposits of Seller held by third parties, and shall be responsible for all expenses, costs and liabilities allocable to the conduct of the business or operations of the Station for the period prior to the Closing Date, and Buyer shall receive all revenues and shall be responsible for all expenses, costs and obligations allocable to the conduct of the business or operations of the Station on the Closing Date and for the period thereafter. Notwithstanding the foregoing, there shall be no adjustment for, and Seller shall remain solely liable with respect to, any Contracts not included in the Assumed Contracts, or any other obligation or liability not being assumed by Buyer in accordance with Section 2.5. A. Any adjustments or prorations will, insofar as feasible, be determined and paid on the Closing Date, with final settlement and payment being made in accordance with the procedures set forth in Section 2.4B. B. Within sixty (60) days after the Closing Date, Buyer shall deliver to Seller a certificate (the "Closing Certificate"), signed by a senior officer of Buyer after due inquiry by such officer but without any personal liability to such officer, providing a compilation of the adjustments and prorations to be made pursuant to this Section 2.4, including any adjustments and prorations made at Closing, together with a copy of any working papers relating to such Closing Certificate and such other supporting evidence as 6 Seller may reasonably request. If Seller shall conclude that the Closing Certificate does not accurately reflect the adjustments and prorations to be made pursuant to this Section 2.4, Seller shall, within thirty (30) days after its receipt of the Closing Certificate, provide to Buyer its written statement of any discrepancies believed to exist. Joseph L. Winn on behalf of Buyer, and Dirk Gastaldo on behalf of Seller, or their respective designees, shall attempt jointly to resolve the discrepancies within fifteen (15) days after receipt of Seller's discrepancy statement, which resolution, if achieved, shall be binding upon all parties to this Agreement and not subject to dispute or review. If such representatives cannot resolve the discrepancy to their mutual satisfaction within such fifteen (15) day period, Buyer and Seller shall, within the following ten (10) days, jointly designate a nationally known independent public accounting firm to be retained to review the Closing Certificate together with Seller's discrepancy statement and any other relevant documents. The cost of retaining such independent public accounting firm shall be borne equally by Buyer and Seller. Such firm shall report its conclusions as to adjustments pursuant to this Section 2.4, which report shall be conclusive on all parties to this Agreement and not subject to dispute or review. If, after adjustment as appropriate with respect to the amount of the aforesaid adjustments paid or credited at the Closing, Buyer is determined to owe an amount to Seller, Buyer shall pay such amount to Seller, and if Seller is determined to owe an amount to Buyer, Seller shall pay such amount thereof to Buyer, in each case within ten (10) days of such determination. 2.5 Assumption of Liabilities and Obligations. As of the Closing Date, Buyer ----------------------------------------- shall pay, discharge and perform (i) all of the obligations and liabilities of Seller under the Licenses and the Assumed Contracts insofar as they relate to the time period on and after the Closing Date, and arising out of events occurring on or after the Closing Date, (ii) all obligations and liabilities arising out of events occurring on or after the Closing Date related to Buyer's ownership of the Assets or its conduct of the business or operations of the Station on or after the Closing Date, and (iii) all obligations and liabilities for which 7 Buyer receives a proration adjustment hereunder. All other obligations and liabilities of Seller, including (i) any obligations under any agreement not included in the Assumed Contracts, (ii) any obligations under the Assumed Contracts relating to the time period prior to the Closing Date, (iii) any claims or pending litigation or proceedings relating to the operation of the Station prior to the Closing Date, and (iv) any liabilities or obligations to Seller's employee (including obligations for accrued vacation or sick pay and severance pay), shall remain and be the obligations and liabilities solely of Seller. SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Seller represents and warrants to Buyer as follows: 3.1 Organization, Standing and Authority. Seller is a corporation duly ------------------------------------ formed, validly existing and in good standing under the laws of the State of Oregon and is duly qualified to conduct its business in the state of Oregon, which is the only jurisdiction where the conduct of the business or operations of the Station requires such qualification. Seller has all requisite corporate power and authority (i) to own, lease, and use the Assets as presently owned, leased, and used, and (ii) to conduct the business or operations of the Station as presently conducted. Seller has all requisite corporate power and authority to execute and deliver this Agreement and the documents contemplated hereby, and to perform and comply with all of the terms, covenants and conditions to be performed and complied with by Seller, hereunder and thereunder. Seller is not a participant in any joint venture or partnership with any other person or entity with respect to any part of the Station's operations or the Assets. 3.2 Authorization and Binding Obligation. The execution, delivery, and ------------------------------------ performance of this Agreement by Seller have been duly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and 8 delivered by Seller and constitutes the legal, valid, and binding obligation of Seller, enforceable against Seller in accordance with its terms except as the enforceability hereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally, or by court-applied equitable remedies. 3.3 Absence of Conflicting Agreements. Subject to obtaining the Consents, --------------------------------- the execution, delivery, and performance of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (i) does not require the consent of any third party; (ii) will not conflict with any provision of the Articles of Incorporation and By-Laws of Seller; (iii) will not conflict with, result in a breach of, or constitute a default under, any law, judgment, order, ordinance, decree, rule, regulation or ruling of any court or governmental instrumentality, which is applicable to either Seller; (iv) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, license or permit to which either Seller is a party or by which either may be bound; or (v) will not create any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon the Assets. 3.4 Licenses. Schedule 3.4 includes a true and complete list of the -------- Licenses. Seller has delivered to Buyer true and complete copies of the Licenses (including any and all amendments and other modifications thereto). As described in Schedule 3.4, the Licenses were validly issued with the Seller designated thereon being the authorized legal holder thereof. The Licenses comprise all of the licenses, permits and other authorizations required from any governmental or regulatory authority for the lawful conduct of the business or operations of the Station as presently operated. Seller has no reason to believe that the Licenses will not be renewed by the FCC or other granting authority in the ordinary course. 9 3.5 Title to and Condition of Personal Property. Schedule 3.5 contains a ------------------------------------------- description of the items of Personal Property of the Station which shall be conveyed to Buyer at Closing. Except as described in Schedule 3.5, Seller owns and has good title to all Personal Property. None of the Personal Property is subject to any security interest, mortgage, pledge, conditional sales agreement, or other lien or encumbrance, except for (i) liens for current taxes not yet due and payable, and (ii) any other claims or encumbrances which are described in Schedule 3.5 and annotated to indicate that such claims or encumbrances shall be removed prior to or at Closing. Except as shown in Schedule 3.5, the Personal Property taken as a whole is in good operating condition and repair (ordinary wear and tear excepted), and is available for immediate use in the business or operation of the Station, and the transmitting and studio equipment included in the Personal Property (i) has been maintained consistent with FCC rules and regulations, and (ii) will permit the Station and any unit auxiliaries thereto to operate in accordance with the terms of the FCC Licenses and the rules and regulations of the FCC, and with all other applicable federal, state and local statutes, ordinances, rules and regulations. 3.6 Assumed Contracts. Schedule 3.6 contains descriptions of all the Assumed ----------------- Contracts. Seller has delivered to Buyer true and complete copies of all Assumed Contracts. All of the Assumed Contracts are in full force and effect, and are valid, binding and enforceable in accordance with their terms, except as the enforceability thereof may be affected by bankruptcy, insolvency or similar laws affecting creditors' rights generally, or by court-applied equitable remedies. Seller is not in material breach, nor to Seller's knowledge is any other party in material breach, of the terms of any Assumed Contracts. Except as expressly set forth in Schedule 3.6, the Seller is not aware of any intention by any party to any Assumed Contract (i) to terminate such contract or amend the terms thereof, (ii) to refuse to renew the same upon expiration of its term, or (iii) to renew the same upon expiration only on terms and conditions which are more onerous than those pertaining to such existing contract. Except for the Consents, Seller has full legal power 10 and authority to assign its rights under the Assumed Contracts to Buyer in accordance with this Agreement, and such assignment will not affect the validity, enforceability and continuation of any of the Assumed Contracts. 3.7 Consents. Except for the FCC Consent provided for in Section 6.1 and the -------- other Consents indicated in Schedule 3.6 or described in Schedule 3.7, no consent, approval, permit or authorization of, or declaration to or filing with any governmental or regulatory authority, or any other third party is required (i) to consummate this Agreement and the transaction contemplated hereby, (ii) to permit Seller to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct the business or operations of the Station in essentially the same manner as such business or operations are presently conducted. 3.8 Trademarks, Trade Names and Copyrights. Schedule 3.8 is a true and -------------------------------------- complete list of all copyrights, trademarks, trade names, licenses, patents, permits, jingles, privileges and other similar intangible property rights and interests (exclusive of those required to be listed in Schedule 3.4) applied for, issued to or owned by Seller, or under which Seller is licensed or franchised, and used or useful in the conduct of the business or operations of the Station, all of which are valid and in good standing and uncontested. Seller has delivered to Buyer copies of all documents establishing such rights, licenses, or other authority. Seller is not aware that it is infringing upon or otherwise acting adversely to any trademarks, trade names, copyrights, patents, patent applications, know-how, methods, or processes owned by any other person or persons, and there is no claim or action pending, or to the knowledge of Seller threatened, with respect thereto. 3.9 Insurance. All of the tangible property included in the Assets is --------- insured against loss or damage in amounts generally customary in the broadcast industry. Schedule 3.9 comprises a true and complete list of all insurance policies of Seller which insure any part of the Assets. All policies of insurance listed in Schedule 3.9 are in full force and effect. Since the date of Seller's acquisitions of the Station, no insurance policy 11 of Seller on the Assets or the Station has been cancelled by the insurer and no application of Seller for insurance has been rejected by any insurer. 3.10 Reports. Except where failure to do so would not have a material ------- adverse effect on the ownership or operation of the Station: all returns, reports and statements which the Station is currently required to file with the FCC or with any other governmental agency have been filed, and all reporting requirements of the FCC and other governmental authorities having jurisdiction thereof have been complied with; all of such reports, returns and statements are substantially complete and correct as filed; and the Station's public inspection file is located at the US National Bank in Banks, Oregon and is in compliance with the FCC's rules and regulations. 3.11 Labor Relations. Seller is not a party to or subject to any collective --------------- bargaining agreements with respect to the Station. Seller, in the operation of the Station, has complied in all material respects with all applicable laws, rules and regulations relating to the employment of labor, including those related to wages, hours, collective bargaining, occupational safety, discrimination, and the payment of social security and other payroll related taxes, and it has not received any notice alleging that it has failed to comply in any material respect with any such laws, rules or regulations. No controversies, disputes, or proceedings are pending or, to the best of its knowledge, threatened, between it and employees (collectively) of the Station. No labor union or other collective bargaining unit represents any of the employees of the Station. To the best knowledge of Seller, there is no union campaign being conducted to solicit cards from employees to authorize a union to request a National Labor Relations Board certification election with respect to any of Seller's employees at the Station. 3.12 Taxes. Seller has filed or caused to be filed all federal income tax ----- returns and all other federal, state, county, local or city tax returns which are required to be filed, and it has paid or caused to be paid all taxes shown on said returns or on any tax assessment received by it to the extent that such taxes have become due, or has set aside 12 on its books reserves (segregated to the extent required by sound accounting practice) deemed by it to be adequate with respect thereto. No events have occurred which could impose on Buyer any transferee liability for any taxes, penalties or interest due or to become due from Seller. 3.13 Claims, Legal Actions. Except for any investigations and rule-making --------------------- proceedings generally affecting the broadcasting industry, there is no claim, legal action, counterclaim, suit, arbitration, governmental investigation or other legal, administrative or tax proceeding, nor any order, decree or judgment, in progress or pending, or to the knowledge of Seller threatened, against or relating to Seller, the Assets, or the business or operations of the Station, nor does Seller know of any basis for the same. In particular, but without limiting the generality of the foregoing, there are no applications, complaints or proceedings pending or, to the best of its knowledge, threatened (i) before the FCC relating to the business or operations of the Station other than applications, complaints or proceedings which affect the radio industry generally, (ii) before any federal or state agency involving charges of illegal discrimination by the Station under any federal or state employment laws or regulations, or (iii) against Seller or the Station before any federal, state or local agency involving environmental or zoning laws or regulations. 3.14 Compliance with Laws. To the best knowledge of Seller, Seller has -------------------- complied in all material respects with (i) the Licenses, and (ii) all applicable federal, state and local laws, rules, regulations and ordinances. To the best knowledge of Seller, neither the ownership or use, nor the conduct of the business or operations, of the Station conflicts with rights of any other person, firm or corporation. 3.15 Environmental Matters. --------------------- (a) During Seller's period of ownership there has been no production, storage, treatment, recycling, disposal, use, generation, discharge, release or other handling or disposition of any kind by Seller or any such predecessor (collectively, "Handling") of any 13 toxic or hazardous wastes, substances, products, pollutants or materials of any kind, including, without limitation, petroleum and petroleum products and asbestos, or any other wastes, substances, products, pollutants or material regulated under any Environmental Laws (as defined below) (collectively, "Hazardous Materials") at, in, on, from or under the Station's transmission site (the "Site") or any structure or improvement on the Site which in any event is in material violation of Environmental Law. The operations of Seller at the Site, are and have been conducted, as the case may be, in material compliance with all applicable Environmental Laws. There are no pending or threatened actions, suits, claims, demands, legal proceedings, administrative proceedings, requests for information, or other notices, proceedings or requests (collectively, "Claims") against or upon Seller based on or relating to any Pre- Closing Environmental Matters (as defined below), and Seller has no knowledge that any such Claims will be asserted. Environmental Laws means any and all Federal, state or local laws, statutes, rules, regulations, plans, ordinances, codes, licenses or other restrictions relating to health, safety or the environment, including without limitation the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Air Act the Safe Drinking Water Act, the Toxic Substances Control Act and the Occupational Health and Safety Act. Pre-Closing Environmental Matters means (i) the Handling of any Hazardous Materials on, at, in, from or under the Site prior to the Closing Date, including without limitation, the effects of any Handling of Hazardous Materials within or outside the boundaries of the Site, the presence of any Hazardous Materials in, on or under the Site or any improvements or structures thereon regardless of how such Hazardous Materials came to 14 rest there, (ii) the failure of Seller to be in compliance with any Environmental Law or (iii) any other act, omission, event or condition which could give rise to liability or potential liability under any Environmental Law with respect to the Site or the present or prior business of Seller. (b) Buyer shall be entitled to order and have undertaken on its behalf prior to closing a Phase I Environmental Assessment of the at the Site, and shall be granted all cooperation and access by Seller reasonably necessary to complete such Assessment. If the report of such Assessment, which shall be completed and furnished to Seller no later than forty (40) days following the date hereof, demonstrates or recommends remediation in order to cause the Site to comply with Environmental Laws, Seller shall immediately undertake to arrange, at its own expense, such remediation prior to Closing. Notwithstanding the foregoing, in the event such remediation costs or is estimated to cost in excess of Fifty Thousand Dollars ($50,000), Seller shall not be obligated to expend such excess, but in such event Buyer may thereafter, at its option, (i) accept the condition of the Site at Closing as so remediated, or (ii) terminate its obligations to purchase the Station under this Agreement. 3.16 Conduct of Business in Ordinary Course. Since August 1, 1995, Seller -------------------------------------- has conducted the business and operations of the Station only in the ordinary course and has not: (a) Suffered any material adverse change in the business assets or properties, or condition of the Station, including without limitation any damage, destruction or loss affecting the Assets; (b) Made any sale, assignment, lease or other transfer of any of Seller's properties other than in the normal and usual course of business with suitable replacements being obtained therefor. 15 SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer represents and warrants to Seller as follows: 4.1 Organization, Standing and Authority. Buyer is a corporation duly ------------------------------------ organized, validly existing, and in good standing under the laws of the State of Delaware, and shall be, at Closing, qualified to conduct business in the State of Oregon. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and the documents contemplated hereby, and to perform and comply with all of the terms, covenants, and conditions to be performed and complied with by Buyer hereunder and thereunder. 4.2 Authorization and Binding Obligation. The execution, delivery and ------------------------------------ performance of this Agreement by Buyer have been duly authorized by all necessary corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms except as the enforceability hereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally, or by court-applied equitable remedies. 4.3 Absence of Conflicting Agreements. Subject to obtaining the Consents, --------------------------------- the execution, delivery, and performance of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (i) does not require the consent of any third party; (ii) will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with, result in a breach of, or constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, licenses, or permit to which Buyer is a party or by which Buyer may be bound. 16 4.4 FCC Qualification. Buyer has no knowledge of any facts which would, ----------------- under present law (including the Communications Act of 1934, as amended) and present rules, regulations and practices of the FCC, disqualify Buyer as an assignee of the licenses, permits and authorizations listed on Schedule 3.4 hereto, or as an owner and/or operator of the Station's Assets, and Buyer will not take, or unreasonably fail to take, any action which Buyer knows or has reason to know would cause such disqualification (it being understood that Buyer has an active duty to attempt to ascertain what would cause such disqualification). Should Buyer become aware of any such facts, it will promptly notify Seller in writing thereof and use its best efforts to prevent any such disqualification. Buyer further represents and warrants that it is financially qualified to meet all terms, conditions and undertakings contemplated by this Agreement and that all necessary amounts to or approvals of this transaction by Buyer's lenders have been obtained. SECTION 5 COVENANTS OF SELLER ------------------- 5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or with --------------------- the prior written consent of Buyer, not to be unreasonably withheld, between the date hereof and the Closing Date, Seller shall operate the Station in the ordinary course of business in accordance with its past practices (except where such would conflict with the following covenants or with Seller's other obligations hereunder), and abide by the following negative and affirmative covenants: A. Negative Covenants. Seller shall not do any of the following: ------------------ (1) Contracts. Modify or amend any of the Assumed Contracts; --------- (2) Disposition of Assets. Sell, assign, lease, or otherwise transfer --------------------- or dispose of any of the Assets, except for assets consumed or disposed of in the ordinary course of business, where no longer used or useful in the business or operations of the Station or in connection with the acquisition of replacement property of equivalent kind and value; 17 (3) Encumbrances. Create, assume or permit to exist any claim, ------------ liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon the Assets, except for (i) those in existence on the date of this Agreement, disclosed in Schedule 3.5, or permitted by Section 2.5 or 3.5 and (ii) mechanics' liens and other similar liens which will be removed prior to the Closing Date; (4) Programming. Make any material changes in the broadcast hours or ----------- in the percentages of types of programming broadcast by the Station, or make any other material changes in the Station's programming policies, except such changes as in the good faith judgment of the Seller are required by the public interest; (5) Licenses. Do any act or fail to do any act which might result in -------- the expiration, revocation, suspension or modification of any of the Licenses, or fail to prosecute with due diligence any applications to any governmental authority in connection with the operation of the Station; (6) Rights. Waive any material right relating to the Station or the ------ Assets; or (7) No Inconsistent Action. Knowingly take any action which is ---------------------- inconsistent with its obligations hereunder or which could hinder or delay the consummation of the transaction contemplated by this Agreement. B. Affirmative Covenants. Seller shall do the following: --------------------- (1) Access to Information. Upon prior notice, allow Buyer and its --------------------- authorized representatives reasonable access at mutually agreeable times at Buyer's expense during normal business hours to the Assets and to all other properties, equipment, books, records, agreements and documents relating to the Station for the purpose of audit and inspection, and furnish or cause to be furnished to Buyer or its authorized representatives all information with respect to the affairs and business of the Station as Buyer may reasonably request, it being understood that the rights of Buyer hereunder shall not be exercised in such a manner as to interfere with the operations of the business of Seller; provided that neither the furnishing of such information to Buyer or its representatives nor any investigation made heretofore or hereafter by Buyer shall affect Buyer's rights to rely on any representation or warranty made by Seller in this Agreement, each of which shall survive any furnishing of information or any investigation; 18 (2) Maintenance of Assets. Maintain all of the Assets or --------------------- replacements thereof and improvements thereon in current condition (ordinary wear and tear excepted), and use, operate and maintain all of the above assets in a reasonable manner, with inventories or spare parts and expendable supplies being maintained at levels consistent with past practices; (3) Insurance. Maintain the existing insurance policies on the --------- Station and the Assets; (4) Consents. Use its reasonable efforts to obtain the Consents; -------- (5) Books and Records. Maintain its books and records in accordance ----------------- with past practices; (6) Notification. Promptly notify Buyer in writing of any unusual ------------ or material developments with respect to the assets of the Station, and of any material change in any of the information contained in Seller's representations and warranties contained in Section 3 hereof or in the schedules hereto, provided that such notification shall not relieve Seller of any obligations hereunder; (7) Compliance with Laws. Comply in all material respects with all -------------------- rules and regulations of the FCC, and all other laws, rules and regulations to which Seller, the Station and the Assets are subject. 5.2 Post-Closing Covenants. After the Closing, Seller will take such actions, ---------------------- and execute and deliver to Buyer such further deeds, bills of sale, or other transfer documents as, in the reasonable opinion of counsel for Buyer and Seller, may be necessary to ensure, complete and evidence the full and effective transfer of the Assets to Buyer pursuant to this Agreement. SECTION 6 SPECIAL COVENANTS AND AGREEMENTS -------------------------------- 6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by ------------- this Agreement is subject to the prior consent and approval of the FCC. 19 A. Within ten (10) days after the execution of this Agreement, Buyer and Seller shall file with the FCC an appropriate application for FCC Consent. The parties shall prosecute said application with all reasonable diligence and otherwise use their best efforts to obtain the grant of such application as expeditiously as practicable. If the FCC Consent imposes any condition on any party hereto, such party shall use its best efforts to comply with such condition unless compliance would be unduly burdensome or would have a material adverse effect upon it. If reconsideration or judicial review is sought with respect to the FCC Consent, Buyer and Seller shall oppose such efforts to obtain reconsideration or judicial review (but nothing herein shall be construed to limit any party's right to terminate this Agreement pursuant to Section 9 of this Agreement). B. The transfer of the Assets hereunder is expressly conditioned upon (i) the grant of the FCC Consent without any materially adverse conditions on Buyer, (ii) compliance by the parties hereto with the condition (if any) imposed in the FCC Consent, and (iii) the FCC Consent, through the passage of time or otherwise, becoming a Final Order, provided, though, that the condition that the FCC Consent shall have become a Final Order may be waived by Buyer, in its sole discretion. 6.2 Signal Upgrade Application. Buyer shall afford Seller full permission -------------------------- and cooperation to seek an upgrade of the Station's signal to Class C-1 under FCC rules and proceedings. Without limitation, Buyer (i) shall be Framed full access to the technical facilities and records of the Station in Seller's possession, and (ii) shall be entitled to prepare and submit to the FCC such filings and applications as it deems advisable in order to prosecute such signal upgrade. Seller shall (i) continue using its best efforts to cause the licensee of KLLR(FM), Redmond, Oregon to join in and file positive Joint Comments with the FCC with respect to the such proceeding insofar as the change in frequency of KLLR is required therefor, and (ii) consent to or execute on its behalf as licensee any such filings or applications required in conjunction with the signal upgrade application. All expenses and fees associated with such application shall be borne solely by Buyer. 20 6.3 Control of the Station. Buyer shall not, directly or indirectly, ---------------------- control, supervise, direct, or attempt to control, supervise or direct, the operations of the Station; such operations, including complete control and supervision of all of the Station's programs, employees, and policies, shall be the sole responsibility of Seller until the completion of the Closing hereunder. 6.4 Taxes, Fees and Expenses. Seller and Buyer shall each pay 50% of all ------------------------ sales, gains, transfer and similar taxes and fees, if any, arising out of the transfer of the Assets pursuant to this Agreement. All filing fees required by the FCC shall be paid equally by Seller and Buyer. Except as otherwise provided in this Agreement, each party shall pay its own expenses incurred in connection with the authorization, preparation, execution, and performance of this Agreement, including all fees and expenses of counsel, accountants, agents, and other representatives. 6.5 Brokers. Buyer and Seller each represents and warrants that neither it ------- nor any person or entity acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transaction contemplated by this Agreement, except for Media Venture Partners, whose fee shall be the responsibility of Seller, provided that Buyer shall contribute thereto the amount of One Hundred Thousand Dollars ($100,000). 6.6 Confidentiality. Except as necessary for the consummation of the --------------- transaction contemplated hereby, including Buyer's obtaining financing in any form or means of its choosing related hereto, each party hereto will keep confidential any information which is obtained from the other party in connection with the transaction contemplated hereby and which is not readily available to members of the general public, and will not use such information for any purpose other than in furtherance of the transactions contemplated hereby. In the event this Agreement is terminated and the purchase and sale contemplated hereby abandoned, each party will return to the other 21 party all documents, work papers and other written material obtained by it in connection with the transaction contemplated hereby. 6.7 Cooperation. Buyer and Seller shall cooperate fully with each other and ----------- their respective counsel and accountants in connection with any actions required to be taken as part of their respective obligations under this Agreement, and Buyer and Seller shall execute such other documents as may be necessary and desirable to the implementation and consummation of this Agreement, and otherwise use their best efforts to consummate the transaction contemplated hereby and to fulfill their obligations hereunder. Notwithstanding the foregoing, except as otherwise set forth herein, Buyer shall have no obligation (i) to expend funds to obtain the Consents, or (ii) to agree to any adverse change in any License or Assumed Contract to obtain a Consent required with respect thereto. 6.8 Risk of Loss. ------------ A. The risk of loss, damage or impairment, confiscation or condemnation of any of the Assets from any cause whatsoever shall be borne by Seller at all times prior to the completion of the Closing. B. If any damage or destruction of the Assets or any other event occurs which prevents signal transmission by the Station in the normal and usual manner and Seller cannot restore or replace the Assets so that the conditions are cured and normal and usual transmission is resumed before the Closing Date, the Closing Date shall be postponed, for a period of up to one hundred and twenty (120) days, to permit the repair or replacement of the damage or loss. C. In the event of any damage or destruction of the Assets described above, if such Assets have not been restored or replaced and the Station's normal and usual transmission resumed within the one hundred and twenty (120) day period specified above, Buyer may terminate this Agreement forthwith without any further obligation hereunder by written notice to Seller. Alternatively, Buyer may, at its option, proceed to 22 close this Agreement and complete the restoration and replacement of such damaged Assets after the Closing Date, in which event Seller shall deliver to Buyer all insurance proceeds received in connection with such damage or destruction of the Assets to the extent not already expended by Seller arising in connection with such restoration and replacement. D. Notwithstanding any of the foregoing, Buyer may terminate this Agreement forthwith without any further obligation hereunder by written notice to Seller if any event occurs which prevents signal transmission by the Station in a manner generally equivalent to its current operations for a consecutive period of five (5) or a cumulative period of fourteen (14) days after the date hereof. 6.9 Audit Cooperation. Seller agrees to fully cooperate, and use reasonable ----------------- efforts to cause their accounting firms to reasonably cooperate with Buyer and at Buyer's expense, to the extent required for the Buyer to prepare audited financial statements for the Station for the period of Seller's ownership thereof. 6.10 Back Bay Transaction. Buyer has heretofore delivered to Seller a true, -------------------- correct and complete copy of the Back Bay Agreement as in effect on the date hereof. Pursuant to the Back Bay Agreement, American has the freely assignable right (a) at any time after August 31, 1998 to purchase (the "Purchase Right") all of the business and assets of Back Bay, including without limitation the WBNW Business (as defined in the Back Bay Agreement), and (b) of first refusal (the "Right of First Refusal") in the event Back Bay desires to sell, transfer or otherwise dispose of all or any material portion of the business and assets of Back Bay, including without limitation the WBNW Business. Buyer hereby agrees that Seller shall have the right (the "WBNW Purchase Right"), but not the obligation, to purchase the WBNW Business for $6,000,000 by written notice (the "Election Notice") given to and received by Buyer at any time prior to January 1, 1998. Anything herein to the contrary notwithstanding, if Buyer has not received the Election 23 Notice prior to January 1, 1998, all rights of Seller to purchase the WBNW Business shall cease and terminate and by of no further force and effect. The Election Notice shall constitute a representation that Seller is ready, willing and able, and has the financial resources, to purchase the WBNW Business for $6,000,000 and that it will negotiate in good faith with respect to and execute and deliver a purchase and sale agreement on terms and conditions customary with respect to similar transactions with Buyer (or, at Buyer's discretion, with Back Bay) to purchase the WBNW Business. Buyer agrees that it will cooperate in all reasonable respects with Seller in order to enable it to exercise the WBNW Purchase Right, including without limitation (a) advising Seller promptly of buyer's receipt of any Asset Transfer Notice pursuant to the provisions of Section 4.13 of the Back Bay Agreement, and (b) exercising any and all of its rights under the Back Bay Agreement, including without limitation the exercise by Buyer of the Right of First Refusal and the Purchase Right. Seller acknowledges and agrees that (a) Buyer's rights with respect to the Purchase Rights and the Right of First Refusal apply or may apply, as the case may be, to all of the business and assets of Back Bay and, therefore, Buyer may be required to acquire businesses and assets other than the WBNW Business in order to enable Seller to exercise its WBNW Purchase Rights, and (b) the purchase price to be paid by Buyer pursuant to the exercise of (i) the Purchase Rights will be based on a formula set forth in the Back Bay Agreement and (ii) the Right of First Refusal will be based on a third party offer. Accordingly, Buyer and Seller acknowledge and agree that the amount required to be paid by Buyer for the WBNW Business may be more or less than $6,000,000 and that Buyer will, therefore, be required to pay any excess of the purchase price over $6,000,000, and will be entitled to any excess of $6,000,000 over such purchase price. Buyer agrees that, in the event Seller purchases the WBNW Business pursuant to the exercise of the WBNW Purchase Right, from and after the consummation of such transaction, Buyer will assume, at no expense to Seller, fifty percent (50%) of the base 24 rental fees payable under the WBNW tower site lease between Back Bay and Fellsway Plaza Trust, dated December 14, 1987, as amended to the date hereof (the "WBNW Tower Lease"), or any extension or renewal therefore. Seller agrees that Buyer shall have the fight to manage, sublease and develop the tower site covered by the WBNW Tower Lease so long as such activities do not disrupt or interfere with, in either case in any material manner, with the operations of the WBNW Business. Buyer acknowledges its right of specific performance with respect to the purchase of the WBNW Business pursuant to Section 11.13 of the Back Bay Agreement and agrees to use its best efforts to enforce, and to assist Seller in enforcing, such fights to purchase the WBNW Business. Buyer further agrees not to take any action, and to use its best efforts not to allow any action to take place, which would impair or abrogate its fight to purchase the WBNW Business pursuant to the Back Bay Agreement. The parties recognize that the WBNW Business is of a special, unique and extraordinary character. Accordingly, if Seller is unable to acquire the WBNW Business by reason of Buyer failing to have complied with its agreements under this Section 6.10, Seller shall be entitled to bring an action against Buyer for damages or, in lieu of, and in substitution for any damages, to obtain specific performance of the terms of this Section 6.10. In the event of any action to enforce the provisions of this Section 6.10, Seller hereby waives the defense that there is an adequate remedy at law. The provisions of this Section 6.10 shall survive the termination of this Agreement if this Agreement is terminated by reason of the fault or default of Buyer. If this Agreement is terminated for any reason other than the fault or default of Buyer, the provisions of this Section 6.10 shall be of no force and effect. 6.11 Cooperation Regarding Tax Free Exchange. The parties acknowledge that --------------------------------------- Seller may desire to effectuate a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code (which may include a nonsimultaneous exchange), with respect to 25 the sale of the assets of the Station; however, such an exchange shall not be a condition or obligation of Seller under this Agreement. Buyer agrees to cooperate with Seller in connection therewith, provided: (a) There is no additional cost or expense to Buyer, Seller shall reimburse Buyer for the actual amount of reasonable attorneys' fees and other expenses incurred by Buyer in the review of any documentation presented to Buyer for its approval or execution in connection with a particular exchange transaction; and (b) The Closing is not delayed beyond the Closing Date. Seller will agree to hold Buyer free and harmless of, and indemnify Buyer from, any liabilities, claims, costs, damages, expenses and fees (including attorney's fees) which may arise out of the property or properties forming a part of such tax deferred exchange, including without limitation any claims by the Internal Revenue Service. SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER --------------------------------------------- 7.1 Conditions of Obligations of Buyer. All obligations of Buyer at the ---------------------------------- Closing hereunder are subject to the fulfillment prior to and at the Closing Date of each of the following conditions: A. Representations and Warranties. The representations and ------------------------------ warranties of Seller in this Agreement shall be true and complete in all material respects at and as of the Closing Date, except for changes contemplated by this Agreement, as though such representations and warranties were made at and as of such time. B. Covenants and Conditions. Seller shall have in all material ------------------------ respects performed and complied with the covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. 26 C. Consents. Each of the Consents marked as "material" on Schedule -------- 3.6 shall have been duly obtained and delivered to Buyer with no material adverse change to the terms of the License or Assumed Contract with respect to which such Consent is obtained. D. Licenses. Seller shall be the holder of the Licenses, and there -------- shall not have been any modification of any of such Licenses which has an adverse effect on the Station or the conduct of its business or operations. No proceeding shall be pending the effect of which would be to revoke, cancel, fail to renew, suspend or modify adversely any of the Licenses. E. Deliveries. Seller shall have made or stand willing and able to ---------- make all the deliveries to Buyer set forth in Section 8.2 F. Adverse Change. Between the date of this Agreement and the -------------- Closing Date, there shall have been no material adverse change in the Assets. 7.2 Conditions to Obligations of Seller. The obligations of Seller at the ----------------------------------- Closing hereunder are subject to the fulfillment prior to and at the Closing Date of each of the following conditions: A. Representations and Warranties. The representations and ------------------------------ warranties of Buyer contained in this Agreement shall be true and complete in all material respects at and as of the Closing Date, except for changes contemplated by this Agreement, as though such representations and warranties were made at and as of such time. B. Covenants and Conditions. Buyer shall have in all material ------------------------ respects performed and complied with the covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. C. Deliveries. Buyer shall have made or stand willing and able to ---------- make all the deliveries set forth in Section 8.3 27 SECTION 8 CLOSING AND CLOSING DELIVERIES ------------------------------ 8.1 Closing. The closing shall take place at 10:00am on a date, to be set ------- by Buyer, upon five (5) days written notice to Seller, no later than ten (10) days following the date upon which the FCC Consent has become a Final Order (the "Closing Date"), provided, though, that Buyer may waive the requirement for a Final Order and schedule the Closing Date, with five (5) days written notice to Seller, at any time after the receipt of FCC Consent. Closing shall be held at the offices of Seller's Portland, Oregon counsel or such other place as shall be mutually agreed to by Buyer and Seller. 8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall -------------------- deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel: (a) Transfer Documents. Duly executed bills of sale, assignments and ------------------ other transfer documents which shall be sufficient to vest good and marketable title to the Assets in the name of Buyer or its permitted assignees, free and clear of any claims, liabilities, mortgages, liens, pledges, conditions, charges, or encumbrances of any nature whatsoever (except for those permitted in accordance with Sections 2.5 or 3.5 hereof); (b) Consents. The original of each Consent marked as "material" with -------- an asterisk on Schedule 3.6; (c) Officer's Certificate. A certificate, dated as of the Closing --------------------- Date, executed by a duly authorized officer of Seller, certifying: (i) that the representations and warranties of Seller contained in this Agreement are true and complete in all material respects as of the Closing Date, except for changes contemplated by this Agreement, as though made on and as of that date; and (ii) that Seller has, in all material respects, performed its obligations and complied with its covenants set forth in this Agreement to be performed and complied with prior to or on the Closing Date; (d) Secretary's Certificate. A certificate, dated as of the Closing ----------------------- Date, executed by Seller's Secretary; certifying that the resolutions, as attached to such certificate, were duly adopted by such Seller's sole shareholder and Board of Directors, authorizing and approving the execution of this Agreement by Seller 28 and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect. (e) Licenses, Contracts, Business Records, Etc. Copies, if available, ------------------------------------------ of all licenses, Assumed Contracts, blueprints, schematics, working drawings, plans, projections, statistics, engineering records, and all files and records used by Seller in connection with its operations of the Station; (f) Opinions of Counsel. Opinions of Seller's General Counsel and ------------------- communications counsel dated as of the Closing Date, and addressed to Buyer and at Buyer's directions, to Buyer's lenders, substantially in the form of Schedule 8.2(f) hereto. 8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall ------------------- deliver to Seller the following, in form and substance reasonably satisfactory to Seller and its counsel: (a) Purchase Price. The Purchase Price as provided in Section 2.3; -------------- (b) Assumption Agreements. Appropriate assumption agreements pursuant --------------------- to which Buyer shall assume and undertake to perform Seller's obligations under the Licenses and Assumed Contracts arising on or after the Closing Date; (c) Officer's Certificate. A certificate, dated as of the Closing --------------------- Date, executed by the President or Vice President of Buyer, certifying (i) that the representations and warranties of Buyer contained in this Agreement are true and complete in all material respects as of the Closing Date, except for changes contemplated by this Agreement, as though made on and as of that date, and (ii) that Buyer has, in all material respects, performed its obligations and complied with its covenants set forth in this Agreement to be performed or complied with on or prior to the Closing Date; (d) Secretary's Certificate. A certificate, dated as of the Closing ----------------------- Date, executed by Buyer's Secretary, certifying that the resolutions, as attached to such certificate, were duly adopted by Buyer's Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect. (e) Opinion of Counsel. An opinion of Buyer's General Counsel dated ------------------ as of the Closing Date, substantially in the form of Schedule 8.3(e) hereto. 29 SECTION 9 RIGHTS OF BUYER AND SELLER -------------------------- ON TERMINATION OR BREACH ------------------------ 9.1 Termination Rights. This Agreement may be terminated by either Buyer or ------------------ Seller if the terminating party is not then in breach of any material provision of this Agreement, upon written notice to the other party, upon the occurrence of any of the following: (a) If on the Closing Date (i) any of the conditions precedent to the obligations of the terminating party set forth in Section 7 of this Agreement shall not have been materially satisfied, and (ii) satisfaction of such condition shall not have been waived by the terminating party; (b) If the application for FCC Consent shall be set for hearing by the FCC for any reason; or (c) If the Closing shall not have occurred on or before October 31, 1996. Upon termination: (i) if neither party hereto is in breach of any material provision of this Agreement, the parties hereto shall not have any further liability to each other; (ii) if Seller shall be in breach of any material provision of this Agreement, Buyer shall have only the rights and remedies provided in Sections 9.3 or 9.4 or (iii) if Buyer shall be in breach of any material provision of this Agreement, Seller shall be entitled only to liquidated damages as provided in Section 9.2 hereof, and its continued rights pursuant to Section 6.10 hereof. If, upon termination, Buyer shall not be in breach of any material provision of this Agreement, the Escrow Deposit, plus all interest or other proceeds from the investment thereof, less any compensation due the Escrow Agent, shall be paid to Buyer. 30 9.2 Liquidated Damages. In the event this Agreement is terminated by Seller ------------------ due to a material breach by Buyer of its representations, warranties, covenants and other obligations under this Agreement, then the Escrow Deposit shall be paid to Seller as liquidated damages, it being agreed that the Escrow Deposit shall constitute full payment for any and all damages suffered by Seller by reason of Buyer's failure to close this Agreement. Buyer and Seller agree in advance that actual damages would be difficult to ascertain and that the amount of the Escrow Deposit is a fair and equitable amount to reimburse Seller for damages sustained due to Buyer's failure to consummate this Agreement for the above-stated reason. All interest or other proceeds from the investment of the Escrow Deposit, less any compensation due the Escrow Agent, shall be paid to Seller. 9.3 Monetary Damages. Notwithstanding any provision of this Agreement to the ---------------- contrary, but subject to the provisions of the following sentence, if this Agreement is terminated pursuant to Section 9.1 by reason of Buyer being in breach of any material provision of this Agreement, Buyer shall not be entitled to any damages or indemnification from Seller. If, however, Seller attempts to terminate this Agreement under circumstances where it is not entitled to do so, or if Seller, by its own action, causes a breach of warranty or fails to satisfy a condition (including without limitation a refusal to consummate the transaction after Buyer has satisfied all conditions to Seller's obligation to close and Buyer has demonstrated its willingness and ability to close on the terms set forth in this Agreement and Buyer is not in default hereunder) of whereby Buyer is entitled to terminate this Agreement and Buyer does so elect to terminate, the monetary damages to which Buyer shall be entitled shall be limited to direct and actual damages and shall in no event exceed $250,000 in the aggregate. 31 9.4 Specific Performance. The parties recognize that the Station is of a -------------------- special, unique and extraordinary character. Accordingly, if Seller shall be in breach of any material provision of this Agreement, Buyer shall be entitled, in lieu of, and in substitution for the damages described in Section 9.3, to obtain specific performance of the terms of this Agreement. In the event of any action to enforce this Agreement, Seller hereby waives the defense that there is an adequate remedy at law. 9.5 Expenses Upon Default. In the event of a default by a party hereto (the --------------------- "Defaulting Party") which results in the filing of a lawsuit for damages, specific performance, or other remedy the other party (the Nondefaulting Party) shall be entitled to reimbursement by the Defaulting Party of reasonable legal fees and expenses incurred by the Nondefaulting Party in the event the Nondefaulting Party prevails. SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTS, ----------------------------------------- AND INDEMNIFICATION ------------------- 10.1 Representations and Warranties. All representations and warranties ------------------------------ contained in this Agreement shall be deemed continuing representations and warranties, and shall survive the Closing Date for a period of fifteen (15) months (the "Survival Period"). No claim for indemnification may be made under this Section 10 (except for section 10.3(a) or related claims under Section 10.3(c)) after the expiration of the Survival Period. Any investigations by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any representation or warranty contained herein, except that insofar as any party has knowledge of any misrepresentation or breach of warranty at Closing and such knowledge is documented in writing at Closing, such party shall be deemed to have waived such misrepresentation or breach. Notwithstanding the foregoing, the provision for survival and making of claims shall not apply to any agreements whereby 32 Buyer assumes the obligations under any Assumed Contract, each of which agreements shall be governed by its own terms to the extent longer periods of performance are therein provided. 10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer ------------------------- harmless against and with respect to, and shall reimburse Buyer for: (a) Any and all losses, liabilities or damages resulting from any untrue representation, breach of warranty or nonfulfillment of any covenants by Seller contained herein or in any certificate, delivered to Buyer hereunder. (b) Any and all obligations of Seller not assumed by Buyer pursuant to the terms hereof; (c) Any and all losses, liabilities or damages resulting from Seller's operation or ownership of the Station prior to the Closing Date, including any and all liabilities arising under the Licenses or the Assumed Contracts which relate to events occurring prior to the Closing Date; and (d) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, and reasonable costs and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof; provided, however, that if Closing occurs, Seller shall not be obligated to indemnify Buyer (i) for any amounts in excess of the Purchase Price in the aggregate, or (ii) until the aggregate amount of such claims, liabilities, damages, losses, costs and expenses exceeds Twenty Thousand Dollars ($20,000), in which case Buyer shall then be entitled to indemnification of the entire amount in excess of Twenty Thousand Dollars ($20,000). 10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller harmless ------------------------ against and with respect to, and shall reimburse Seller for: (a) Any and all losses, liabilities or damages resulting from any untrue representation, breach of warranty or nonfulfillment of any covenants by Buyer contained herein or in any certificate delivered to Seller hereunder; (b) Any and all losses, liabilities or damages resulting from Buyer's operation or ownership of the Station on or after the Closing Date, including any 33 and all liabilities or obligations arising under the Licenses or the Assumed Contracts which relate to events occurring after the Closing Date or otherwise assumed by Buyer under this Agreement; and (c) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, and reasonable costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof; provided, however, that if Closing occurs, Buyer shall not be obligated to indemnify Seller until the aggregate amount of such claims, liabilities, damages, losses, costs and expenses exceeds Twenty Thousand Dollars ($20,000), in which case Buyer shall then be entitled to indemnification of the entire amount in excess of Twenty Thousand Dollars ($20,000). 10.4 Procedures for Indemnification. The procedures for indemnification ------------------------------ shall be as follows: A. The party claiming the indemnification (the "Claimant") shall promptly give notice to the party from whom indemnification is claimed (the "Indemnifying Party") of any claim, whether between the parties or brought by a third party, specifying (i) the factual basis for such claim, and (ii) the amount of the claim. If the claim relates to an action, suit or proceeding filed by a third party against Claimant, such notice shall be given by Claimant within five (5) days after written notice of such action, suit or proceeding was given to Claimant. B. Following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty (30) days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and/or its authorized representative(s) the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifying Party agree at or prior to the expiration of said thirty (30) day period (or any mutually agreed upon extension thereof) to the validity 34 and amount of such claim, or if the Indemnifying Party does not respond to such notice, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifying Party do not agree within said period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate legal remedy. C. With respect to any claim by a third party as to which the Claimant is entitled to indemnification hereunder, the Indemnifying Party shall have the fight at its own expense, to participate in or assume control of the defense of such claim, and the Claimant shall cooperate fully with the Indemnifying Party, subject to reimbursement for reasonable actual out-of-pocket expenses incurred by the Claimant as the result of a request by the Indemnifying Party. If the Indemnifying Party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense. D. If a claim, whether between the parties or by a third party, requires immediate action, the parties will make all reasonable efforts to reach a decision with respect thereto as expeditiously as possible. E. If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third party claim, it shall be bound by the results obtained in good faith by the Claimant with respect to such claim. F. The indemnification rights provided in Sections 10.2 and 10.3 shall extend to the shareholders, directors, officers, partners employees and representatives of the Claimant although for the purpose of the procedures set forth in this Section 10.4, any indemnification claims by such parties shall be made by and through the Claimant. 35 SECTION 11 MISCELLANEOUS ------------- 11.1 Notices. All notices, demands, and requests required or permitted to be ------- given under the provisions of this Agreement shall be (i) in writing, (ii) delivered by personal delivery, or sent by commercial delivery service or registered or certified mail, return receipt requested, or by facsimile transmission, with receipt confirmation, (iii) deemed to have been given on the date of personal delivery or the date set forth in the records of the delivery service or on the return receipt, and (iv) addressed as follows: If to Seller: Common Ground Broadcasting, Inc. c/o Salem Communications 4880 Santa Rosa Road, Suite 300 Camarillo, CA 93012 Attn: Eric H. Halvorson, Executive Vice President Fax: (805) 482-8570 If to Buyer: American Radio Systems 116 Huntington Avenue Boston, MA 02116 Attention: Steven B. Dodge, President Fax: (617) 375-7575 with a copy (which shall not constitute notice) to: Michael B. Milsore, Vice President & General Counsel American Radio Systems, Inc. 116 Huntington Avenue Boston, MA 02116 Fax: (617) 375-7575 or to such other or additional persons and addresses as the parties may from time to time designate in a writing delivered in accordance with this Section 11.1. 36 11.2 Benefit and Binding Effect. Neither party hereto may assign this -------------------------- Agreement without the prior written consent of the other party hereto, except that Buyer may assign its rights and obligations under this Agreement to any affiliated entity; provided that following such assignment Buyer shall remain liable for all of the obligations of the Buyer. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 11.3 Governing Law. This Agreement shall be governed, construed, and ------------- enforced in accordance with the laws of the State of Oregon. 11.4 Headings. The headings herein are included for ease of reference only -------- and shall not control or affect the meaning or construction of the provisions of this Agreement. 11.5 Gender and Number. Words used herein, regardless of the gender and ----------------- number specifically used, shall be deemed and construed to include any other gender, masculine, feminine or neuter, and any other number, singular or plural, as the context required. 11.6 Entire Agreement. This Agreement, all schedules hereto, and all ---------------- documents and certificates to be delivered by the parties pursuant hereto collectively represent the entire understanding and agreement between Buyer and Seller with respect to the subject matter hereof. All schedules attached to this Agreement shall be deemed part of this Agreement and incorporated herein, where applicable, as if fully set forth herein. This Agreement supersedes all prior negotiations between Buyer and Seller, and all letters of intent and other writings related to such negotiations, and cannot be amended, supplemented or modified except by an agreement in writing which makes specific reference to this Agreement or an agreement delivered pursuant hereto, as the case may be, and which is signed by the party against which enforcement of any such amendment, supplement or modification is sought. 37 11.7 Waiver of Compliance; Consents. Except as otherwise provided in this ------------------------------ Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 11.7. 11.8 Severability. If any provision of this Agreement or the application ------------ thereof to any person or circumstance shall be invalid or unenforceable or any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greater extent permitted by law. 11.9 Counterparts. This Agreement may be signed in any number of counterparts ------------ with the same effect as if the signature on each such counterpart were upon the same instrument. 38 IN WITNESS WHEREOF, this Agreement has been executed by Buyer and Seller as of the date first above written. SELLER: COMMON GROUND BROADCASTING, INC. By: /s/ Eric H. Halvorson ------------------------------ Eric H. Halvorson Executive Vice President BUYER: AMERICAN RADIO SYSTEMS CORPORATION By: /s/ Steven B. Dodge ----------------------------- Title: President and CEO 39 SCHEDULES TO ASSET PURCHASE AGREEMENT 1.9 Escrow Agreement 3.4 Licenses 3.5 Personal property 3.6 Assumed Contracts 3.7 Consents required 3.8 Trademarks; trade names; copyrights 3.9 Insurance policies 8.2(f) Opinion of Seller's General and FCC Counsels 8.3(e) Opinion of Buyer's General Counsel 40 Exhibit 1.9 MEDIA VENTURE PARTNERS ESCROW AGREEMENT AGREEMENT, effective as of the ___ day of ______, 19__, by and among: BUYER: ____________________________________________ Address:___________________________________________ ___________________________________________ SELLER: ___________________________________________ Address:___________________________________________ ___________________________________________ ESCROW AGENT: Media Venture Partners, Ltd. Address: 1650 Tysons Boulevard Suite 790 McLean, VA 22102 WITNESSETH: WHEREAS, Buyer and Seller have entered into an Agreement of Purchase and Sale with respect to __________, said Agreement dated the __ day of ______ ,19__, being by reference incorporated herein and made a part hereof (the "Agreement"), and WHEREAS. the parties wish to provide for an orderly disposition of the funds deposited into escrow pursuant to said Agreement; NOW, THEREFORE, in consideration of the premises, promises and mutual covenants herein, the parties hereby agree as follows: 1. DEPOSIT OF ESCROW FUNDS. Upon the execution of this Escrow Agreement, buyer is delivering or causing to be delivered to the Escrow Agent, the sum of _____ Dollars in cash __, check __, or other _____ (check appropriate box, and if other, describe). MEDIA VENTURE PARTNERS 2. INVESTMENT OF ESCROW FUND. The Escrow Agent shall, upon request of Buyer, invest and reinvest the escrow funds in direct obligations of the United States government, in federally insured savings accounts or in bank certificates of deposits, as Buyer shall instruct; provided, that the Escrow Agent shall not be required to invest in or hold any instrument in bearer form. The Escrow Agent shall hold said escrow funds together with all interest accumulated thereon and proceeds therefrom and dispose of the same as hereinafter provided. 3. DISPOSITION OF ESCROW FUNDS. The Escrow Agent shall distribute and dispose of the escrow funds as follows: (a) In the event the purchase and sale closes in the manner contemplated in the Agreement, the escrow funds shall be paid over to the Seller at closing in accord with said Agreement. In such event, all interest earned and accumulated thereon and proceeds therefrom shall be paid over to Buyer at closing. (b) In the event the purchase and sale does not close as contemplated in the Agreement due to the material breach by or default of the Buyer under the terms of the Agreement, then the escrow funds shall be paid over to Seller together with all interest earned and accumulated thereon and the proceeds therefrom. (c) In the event the purchase and sale does not close as contemplated in the Agreement due to material breach by or default of the Seller under the terms of the Agreement, then the escrow funds shall be paid over to Buyer together with all interest earned and accumulated thereon and the proceeds therefrom. (d) In all other events, if the Agreement is terminated or if the transactions or closing contemplated thereby are not consummated, the escrow funds shall be returned to the Buyer together with all interest earned. (e) If any provision of this Paragraph with respect to the disposition of the escrow fund is in conflict with any provision or the Agreement with respect to such disposition, then such provision in the Agreement shall prevail. 4. CONTROVERSIES WITH RESPECT TO ESCROW. The Escrow Agent shall discharge his duties to dispose of the escrow fund in accord with the provisions of paragraph 3 above upon the joint written instructions of the Seller and Buyer or their duty designated representatives. If the Escrow Agent shall not have received such joint written instructions and a controversy shall exist between Buyer and Seller as to the correct disposition of the escrow funds, the Escrow Agent shall continue to hold the escrow funds and the income earned or accrued thereon until: (a) The receipt by the Escrow Agent of the joint written instructions of the Seller and Buyer as to the disposition of the escrow funds; or 2 MEDIA VENTURE PARTNERS (b) The receipt by the Escrow Agent of a final order entered by a court of competent jurisdiction determining the disposition of the escrow funds and the income earned or accrued thereon; or (c) The Escrow Agent shall have, at its option, filed an action or bill in interpleader, or similar action for such purpose, in a court of competent jurisdiction and paid the escrow funds and all income earned or accrued thereon into said court, in which event, the Escrow Agent's duties, responsibilities and liabilities with respect to the escrow fund, proceeds therefrom and this Agreement shall terminate. 5. CONCERNING THE ESCROW AGENT. The following shall control the fees, resignation, discharge, liabilities and indemnification of the Escrow Agent: (a) The Escrow Agent shall charge no fees for its service hereunder, but shall be reimbursed for all reasonable expenses, disbursements and advancements incurred or made by the Escrow Agent in performance of his duties hereunder, one-half (1/2) of any such expenses, disbursements and advances to be paid by Buyer and one-half (1/2) by the Seller, other than expenses for investments authorized hereunder which shall be borne by Buyer. (b) The Escrow Agent may resign and be discharged from its duties hereunder at any time by giving written notice of such resignation to the parties hereto, specifying the date when such resignation shall take effect. Upon such notice, a successor escrow agent shall be appointed with the unanimous consent of the parties hereto, and the service of such successor escrow agent shall be effective as of the date of resignation specified in such notice, which date shall not be less than thirty (30) days after the giving of such notice. If the parties hereto are unable to agree upon a successor escrow agent within thirty (30) days after such notice, the Escrow Agent shall be authorized to appoint its successor. The Escrow Agent shall continue to serve until its successor accepts the escrow by written notice to the parties hereto and the Escrow Agent deposits the escrow fund with such successor escrow agent. (c) The Escrow Agent undertakes to perform such duties as are specifically set forth herein and may conclusively rely, and shall be protected in acting or refraining from acting, on any written notice, instrument or signature believed by it to be genuine and to have been signed or presented by the proper party or parties duly authorized to do so. The Escrow Agent shall have no responsibility for the contents of any writing contemplated herein and may rely without any liability upon the contents thereof. 3 MEDIA VENTURE PARTNERS (d) The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized hereby or within the rights and powers conferred upon it hereunder, nor for action taken or omitted by it in good faith, or in accordance with advice of counsel and it shall not be liable for any mistake of fact or error of judgment or for any acts or omissions of any kind unless caused by its own misconduct or gross negligence. (e) Each of the Buyer and Seller agrees to indemnify the Escrow Agent and hold it harmless against any and all liabilities incurred by it hereunder as a consequence of such party's action, and the Buyer and Seller agree jointly to indemnify the Escrow Agent and hold it harmless against any and all liabilities incurred by it hereunder which are not a consequence of any party's actions, except in the case of liabilities incurred by the Escrow Agent resulting from its own misconduct or gross negligence. (f) The Escrow Agent acts hereunder as a depository only, and is not responsible or liable in any manner for the sufficiency, correctness, genuineness or validity of any cash or security deposited with it. (g) Buyer and Seller agree each to pay one half of the escrow agent's out- of-pocket costs within fifteen (15) days of presentment, including reasonable attorneys fees which the escrow agent may expend of incur in any dispute or action. Should Buyer or Seller fail to reimburse escrow agent for such out-of- pocket costs and/or attorneys fees, the escrow agent, at its option, may choose to deduct said expenses from any escrow funds disbursed from the escrow account. 6. MISCELLANEOUS. (a) This Escrow Agreement shall be construed by and governed in accordance with the laws of the District of Columbia, applicable to agreements executed and wholly to be performed therein. (b) This Escrow Agreement shall be binding upon and shall inure to the benefit of the parties, their successors and assigns. (c) This Escrow Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. (d) All notices, requests, demands and other communication hereunder shall be in writing, shall be given simultaneously to all parties hereunder and shall be deemed to have been duly given if delivered or mailed (certified mail, postage pre-paid, return receipt requested) as follows: 4 MEDIA VENTURE PARTNERS If to Seller: ---------------------- ---------------------- ---------------------- Attention: ---------------------- If to Buyer: ---------------------- ---------------------- ---------------------- Attention: ---------------------- If to Escrow Agent: Media Venture Partners, Ltd. 1650 Tysons Boulevard Suite 790 McLean, VA 22102 Attention: ------------------------- or to such other addresses as any party may have furnished to the other in writing, in accord herewith. 7. TERMINATION. This Escrow Agreement shall automatically terminate upon the distribution of the escrow fund in accord with the terms hereof. IN WITNESS WHEREOF, the parties have caused their hands, or those of their duly authorized officers, and seals to be affixed as of the date first above written. SELLER: By: -------------------------- BUYER: By: -------------------------- ESCROW AGENT: MEDIA VENTURE PARTNERS, LTD. By: -------------------------- 5 EXHIBIT 3.5 Personal Property KDBX INVENTORY -------------- 3/13/96 PAGE 1
Location QTY Item Manufacturer Model ==================================================================================================== Transmitter 700 feet 1 5/8 inch Celfex Coax Cable Wave - ----------------------------------------------------------------------------------------------------- Transmitter 1 1 5/8" Coax Switch Dielectric 1896 - ----------------------------------------------------------------------------------------------------- Transmitter 2 1 5/8" through line sections Bird - ----------------------------------------------------------------------------------------------------- Transmitter 1 1 kW slug Bird - ----------------------------------------------------------------------------------------------------- Transmitter 1 10 kW slug Bird - ----------------------------------------------------------------------------------------------------- Transmitter 1 3 1/8" 2-bay FM ant.(107.5) ERI - ----------------------------------------------------------------------------------------------------- Transmitter 1 480 to 208 Step down 45kva transformer Westinghouse DT3 - ----------------------------------------------------------------------------------------------------- Transmitter 1 5' Equipment Rack - ----------------------------------------------------------------------------------------------------- Transmitter 1 6' Equipment Rack - ----------------------------------------------------------------------------------------------------- Transmitter 1 A/C Breakpanels/disconnect (installed) - ----------------------------------------------------------------------------------------------------- Transmitter 2 A/C units (3 tons) Lennox CD19-31-3P- - ----------------------------------------------------------------------------------------------------- Transmitter 1 AC emergency power generator Kohler 40R03P - ----------------------------------------------------------------------------------------------------- Transmitter 1 AM noise monitor RDL ACM2 - ----------------------------------------------------------------------------------------------------- Transmitter 1 Bandpass Filter Shively Labs 2516-3A - ----------------------------------------------------------------------------------------------------- Transmitter 1 Best Fortress UPS L117.7KVA - ----------------------------------------------------------------------------------------------------- Transmitter 1 Cat Link Single composite QEI 400 - ----------------------------------------------------------------------------------------------------- Transmitter 1 Dummy Load Altronic Rsrch 6715E3 - ----------------------------------------------------------------------------------------------------- Transmitter 1 FM Antenna Shively Labs 6015-21-3R - ----------------------------------------------------------------------------------------------------- Transmitter 1 FM Transmitter QEI FMQ-10,000 - ----------------------------------------------------------------------------------------------------- Transmitter 1 FM Exciter QEI 675B - ----------------------------------------------------------------------------------------------------- Transmitter 1 FM Mod Monitor TFT 844A - ----------------------------------------------------------------------------------------------------- Transmitter 2 Interface panels Burk IP-8 - ----------------------------------------------------------------------------------------------------- Transmitter 1 misc. 1 5/8" elbows and coax hardline Cable Wave - ----------------------------------------------------------------------------------------------------- Transmitter 1 Modem (for Burke RC) Hayes Accura 144 - ----------------------------------------------------------------------------------------------------- Transmitter 1 Nitrogen Regulator - ----------------------------------------------------------------------------------------------------- Transmitter 1 Optimod FM Orban 8200/U35 - ----------------------------------------------------------------------------------------------------- Transmitter 1 Remote Control - Xmtr unit only Burk ARC-16 - ----------------------------------------------------------------------------------------------------- Transmitter 1 sample ports - ----------------------------------------------------------------------------------------------------- Transmitter 2 T1-ISO Digital Link DL551A - ----------------------------------------------------------------------------------------------------- Transmitter 1 Transformer Panel Zenith 43R-1000C
SCHEDULE 3.6 ------------ ASSUMED CONTRACTS ----------------- 1. Agreement dated March 26, 1996 by and between Combined Communications, Inc., Common Ground Broadcasting, Inc. and Salem Communications Corporation. 2. Agreement dated July 1, 1995 by and between First Media Television, L.P., a Delaware limited partnership, and Salem Communications Corporation, a California corporation. (Assignment of this agreement requires the consent of the landlord.) SCHEDULE 3.8 ------------ FCC LICENSES ------------ See Attached. [LETTERHEAD OF FEDERAL COMMUNICATIONS COMMISSION] FM BROADCAST STATION LICENSE Official Mailing Address: AUTHORIZING OFFICIAL: - ------------------------------- -------------------- COMMON GROUND BROADCASTING INC Robert D. Greenberg 57400 SOUTH MORSE ROAD Supervisory Engineer WARREN, OR 97053 Audio Services Division - ------------------------------- Mass Media Bureau GRANT DATE: NOV 28, 1995 Call Sign: KDBX This license expires 3:00 a.m. local time, February 01, 1998 License File No.: BLH-950801KC This license covers Permit No.: BPH-940930IE Subject to the provisions of the Communications Act of 1934, subsequent acts and treaties, and all regulations heretofore or hereafter made by this Commission, and further subject to the conditions set forth in this license, the licensee is hereby authorized to use and operate the radio transmitting apparatus herein described. This license is issued on the licensee's representation that the statements contained in licensee's application are true and that the undertakings therein contained so far as they are consistent herewith, will be carried out in good faith. The licensee shall, during the term of this license, render such broadcasting service as will serve the public interest, convenience, or necessity to the full extent of the privileges herein conferred. This license shall not vest in the licensee any right to operate the station nor any right in the use of the frequency designated in the license beyond the term hereof, nor in any other manner than authorized herein. Neither the license nor the right granted hereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934. This license is subject to the right of use or control by the Government of the United States conferred by Section 606 of the Communications Act of 1934. Name of Licensee: COMMON GROUND BROADCASTING, INC. Page 1 Callsign: KDBX License No.: BLH - 950801KC Station Location: OR BANKS Frequency (MHZ): 107.5 Channel: 298 Class: C2 Hours of Operation: Unlimited Main Studio Address: OR-448 SOUTH 1ST STREET, HILLSBORO Transmitter location (address or description): OR-262 NORTHWEST MILLER ROAD, PORTLAND Remote Control Point Address: OR - 448 SOUTH 1ST STREET, HILLSBORO OR - 5110 SOUTHEAST STARK STREET, PORTLAND Transmitter: Type Accepted. See Sections 73.1660, 73.1665 and 73.1670 of the Commission's Rules. Transmitter output power: 9.2 kW Antenna type: (directional or non-directional): Non-Directional Description: SHIVELY 6015-2-3R, TWO SECTIONS Antenna Coordinates: North Latitude: 45 31 22 West Longitude: 122 45 7
Horizontally Vertically Polarized Polarized Antenna Antenna Effective radiated power in the Horizontal Plane (kW) .......... : 6.3 6.3 Height of radiation center above ground (Meters) ................ : 198 198 Height of radiation center above mean sea level (Meters)......... : 493 493 Height of radiation center above average terrain (Meters)........ : 406 406
Overall height of antenna structure above ground (including obstruction lighting if any): 330 Meters Obstruction marking and lighting specifications for antenna structure: It is to be expressly understood that the issuance of these specifications Page 2 Callsign: KDBX License No.:BLH - 950801KC is in no way to be considered as precluding additional or modified marking or lighting as may hereafter be required under the provisions of Section 303(q) of the Communications Act of 1934, as amended. PARAGRAPH 01.0, FCC FORM 715 (OCTOBER 1985): Antenna structures shall be painted throughout their height with alternate bands of aviation surface orange and white, terminating with aviation surface orange bands-at both top and bottom. The width of the bands shall be equal and approximately one-seventh the height of the structure, provided however, that the bands shall not be more than 100 feet nor less than 1 and 1/2 feet in width. All towers shall be cleaned and repainted as often as necessary to maintain good visibility. PARAGRAPH 03.0, FCC FORM 715 (APRIL 1985): There shall be installed at the top of the structure one 300 m/m electric code beacon equipped with two 620- or 700-watt lamps (PS-40, Code Beacon type), both lamps to burn simultaneously, and equipped with aviation red color filters. Where a rod or other construction of not more than 20 feet in height and incapable of supporting this beacon is mounted on top of the structure and it is determined that this additional construction does not permit unobstructed visibility of the code beacon from aircraft at any normal angle of approach, there shall be installed two such beacons positioned so as to insure unobstructed visibility of at least one of the beacons from aircraft at any normal angle of approach. The beacons shall be equipped with a flashing mechanism producing not more than 40 flashes per minute nor less than 12 flashes per minute with a period of darkness equal to approximately one-half of the luminous period. PARAGRAPH 08.0, FCC FORM 715 (APRIL 1985): On levels at approximately three-fourths, one-half and one-fourth of the over-all height of the tower one similar flashing 300 m/m electric code beacon shall be installed in such position within the tower proper that the structural members will not impair the visibility of the beacon from aircraft at any normal angle of approach. In the event these beacons cannot be installed in a manner to insure unobstructed visibility of the beacon from aircraft at any normal angle of approach, there shall be installed two such beacons at each level. Each beacon shall be mounted on the outside of diagonally opposite corners or opposite sides of the tower at the prescribed height. PARAGRAPH 17.0, FCC FORM 715 (APRIL 1985): On levels at approximately seven-eighths, five-eighths, three-eighths and one-eight of the over-all height of the tower, at least one 116- or 125-watt lamp (A21/TS) enclosed in an aviation red obstruction light globe shall be installed on each outside corner of the structure. PARAGRAPH 21.0, FCC FORM 715 (APRIL 1985): All lighting shall burn continuously or shall be controlled by a light sensitive device adjusted so that the lights will be turned on at a north sky light intensity level of about 35 foot candles and turned off at a north sky light intensity level of about 58 foot candles. Page 3 Callsign: KDBX License No.: BLH - 950801KC Special operating conditions or restrictions: 1. The permittee/licensee in coordination with other users of the site must reduce power or cease operation as necessary to protect persons having access to the site, tower or antenna from radio- frequency radiation in excess of FCC guidelines. *** END OF AUTHORIZATION *** Page 4 Exhibit 3.9 Insurance Policies ================================================================================ Producer THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS Sullivan & Curtis UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE 3310 Two Union Square DOES NOT AMMEND, EXTEND OR ALTER THE COVERAGE Seattle, WA 98101 AFFORDED BY THE POLICIES BELOW. (206) 521-3800 ============================================== - ---------------------------------- COMPANIES AFFORDING COVERAGES Insured Company Letter A National Surety Corporation Common Ground Broadcasting, Inc. --------------------------------------------- (KDBX-FM) Company 448 S. First Ave., #100 Letter B TIG Insurance Company Hillsboro OR 97123 --------------------------------------------- Company Letter C CIGNA Insurance Company --------------------------------------------- Company Letter D National Casualty Company --------------------------------------------- Company Letter E Cert. #07 (KDBX-FM) =============================================================================== THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENTS, TERM OR CONDITION OR ANY CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSION AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. - --------------------------------------------------------------------------------
CO TYPE OF INSURANCE POLICY NUMBER POLICY EFF DATE POLICY EXP DATE LIMITS LTR mm/dd/yy mm/dd/yy - ------------------------------------------------------------------------------------------------------------------------- GENERAL LIABILITY General Aggregate $ 2,000,000 A [X] Commercial General liab. MXX80637062 12/31/95 12/31/96 Prod-Comp/Ops Agg $ 2,000,000 [_] claim made [X] Occur Pers & Adv Injury $ 1,000,000 [_] Owner's & Contractors Each Occurrence $ 1,000,000 Protective Fire Damage $ 50,000 [_] (Any one fire) [_] Medical Payments $ 5,000 (Any one person) - ------------------------------------------------------------------------------------------------------------------------- AUTOMOBILE LIABILITY Combined $ 1,000,000 A [X] Any Auto MXX80637062 12/31/95 12/31/96 Single Limit [_] All Owned Autos ------------------------------- [_] Scheduled Autos Bodily Injury $ [X] Hired Autos (Per Person) [X] Non-Owned Autos ------------------------------- [_] Garage Liability Bodily Injury $ [_] (Per Accident) -------------------------------- Property Damage $ ========================================================================================================================= EXCESS LIABILITY Ea Occurrence $10,000,000 B [X] Umbrella Form XKB2784050 12/31/95 12/31/96 Aggregate $10,000,000 [_] Other Than Umbrella Form - ------------------------------------------------------------------------------------------------------------------------ WORKER'S COMPENSATION [X] Statutory C AND C29205917 12/01/95 12/01/96 Each Accident $ 1,000,000 EMPLOYER'S LIABILITY Disease-Pol Limit $ 1,000,000 Disease-Each Empl $ 1,000,000 - ------------------------------------------------------------------------------------------------------------------------ A OTHER PROPERTY- MXX80637062 12/31/95 12/31/96 Blkt. Pars. Prop. and Equip. Special Form incl Towers & Antennas/EDP/BI. ======================================================================================================================== Description of Operations/Locations/Vehicles/Special Items Broadcaster and Film & Program Producer Errors and Omissions Coverage, Policy no, LS004536, Company Letter D, 12/31/95-12/31/96, $1,000,000 Limit each occurrence. ======================================================================================================================== 001 Should any of the above described policies be cancelled before the expiration date thereof, the issuing company will endeavor to mail For Informational Purposes Only 10 days written notice to the certificate holder named to the left, but failure to mail such notice shall impose no obligation or liability of any kind upon the company, it's agent's or representatives. -------------------------------------------------------------------- Authorized Representative /s/ Steven s. Stafford ========================================================================================================================
Opinion of Seller's Counsel __________ 1995 American Radio Systems, Inc. 116 Huntington Avenue Boston, MA 02116 The Bank of New York, as Agent One Wall Street New York, NY 10286 Gentlemen: This opinion is being delivered to you in connection with the Asset Purchase Agreement (the "Agreement") dated as of _______________ by and between American Radio Systems, Inc., a Massachusetts corporation ("Buyer") and ____________, a _____________ corporation ("Seller"). Capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to them in the Agreement. I have reviewed the Agreement and other pertinent information and records and files necessary to render this opinion. In arriving at the opinions expressed herein, I have examined and relied upon original or copies, identified to my satisfaction, of all corporate records and other instruments, documents, certificates of public officials, officers and representations of the Seller, and other persons or entities and have made such investigations as I have considered necessary or appropriate. In making such examinations, I have assumed but not independently verified the genuineness and authenticity of all documents, and the conformity to original documents of all certified or photostatic copies submitted. As to matters of fact material to the opinions expressed herein, and which have not been independently established, I have relied upon certificates of the officers, directors and representatives of the Seller and certificates of public officials, and I have assumed the accuracy and correctness of all statements of fact contained therein, including the accuracy and correctness of the factual representations and warranties of the Seller set forth in the Agreement and the documents and instruments delivered to you in connection therewith. 1. Seller is a corporation, duly organized, validly existing and in good standing under the laws of the State of ___________, and is duly qualified to conduct business in the State of ____________. 2. Seller has full corporate power and authority to enter into the Agreement and all documents required to be executed or delivered by Seller pursuant to the PAGE 2 Agreement (the "Related Documents"), and to consummate the transactions contemplated thereby. The Agreement and the Related Documents have been duly authorized, executed and delivered by Seller and constitute the legal, valid and binding obligations of Seller, enforceable in accordance with their respective terms, except as such enforceability may be limited by (a) applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the rights of creditors generally, or (b) general principles of equity, whether considered in a proceeding in equity or at law. 3. The execution and delivery of the Agreement and the Related Documents, and the consummation of the transactions contemplated thereby, will not (a) result in a breach of or constitute a default under, the Articles of Incorporation or Bylaws of Seller, (b) result in a breach of or constitute a default under any agreement, trust or instrument to which Seller is a party or by which Seller or its respective properties or assets are bound, or (c) constitute a breach, violation or default under any judgment, order, writ, injunction or decree of any court or governmental agency or other authority applicable to Seller. 4. Except as disclosed in the Agreement, there are no governmental consents, permits, approvals or authorizations required to be obtained by Seller in order to consummate the transactions contemplated by the Agreement. 5. To the best of our knowledge and except as set forth in the schedules to the Agreement, there is no litigation, proceeding or investigation of any nature pending or threatened, or any judgment, award, order or decree outstanding, against the Seller or the Assets, which if adversely determined might have a material adverse effect on the Station or the Assets (taken as a whole) or prevent the consummation of the transactions contemplated by the Agreement. The opinions expressed herein are rendered only to you and are solely for your benefit and that of other lenders who are participants in the Amended and Restated Credit Agreement dated September 12, 1994, as amended, by and among Seller, the Bank of New York as Agent, and the lenders named therein, their assigns, and by any future participants thereof and their assigns and may not be relied upon by you or by such other lenders for any purpose other than in connection with the transactions contemplated by the Agreement; or relied upon by any other person for any purpose; or, except as required by applicable law or requested by any governmental authority, furnished to or quoted to any person without our prior written consent. Very truly yours, Opinion of Seller's FCC Counsel ------------------------------- ___________1996 American Radio Systems Corporation 116 Huntington Avenue Boston, MA 02116 The Bank of New York, as Agent One Wall Street New York, NY 10286 Gentlemen: This opinion is being delivered to you in connection with the Asset Purchase Agreement (the "Agreement") dated as of, _____________, by and between American Radio Systems Corporation, a Delaware corporation ("Buyer") and _________________ ("Seller"). Capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to them in the Agreement. We have reviewed the Agreement and other pertinent information and records and files necessary to render this opinion. In arriving at the opinions expressed herein, I have examined and relied upon original or copies, identified to my satisfaction, of all records, instruments, documents, and certificates of the Seller and of public officials, officers and representatives of the Seller, as I have considered necessary or appropriate, and I have made such other investigations as I have considered necessary or appropriate. In making such examinations, I have assumed but not independently verified the genuineness and authenticity of all documents, and the conformity to original documents of all certified or photostatic copies submitted. As to matters of fact material to the opinions expressed herein, and which have not been independently established, we have relied upon certificates of the officers and representatives of the Seller and certificates of public officials, and we have assumed the accuracy and correctness of all statements of fact contained therein, including the accuracy and correctness of the factual representations and warranties of the Seller set forth in the Agreement and the documents and instruments delivered to you in connection therewith. This opinion is limited to the Communications Act of 1934, as amended (the "Act") and the Rules and Regulations of the FCC. 1. Seller validly holds the Licenses listed on Schedule 3.4 of the Agreement and the Licenses are in full force and effect. The Licenses include all licenses, permits and authorizations which are necessary under FCC rules for Seller to operate the Station in the manner in which we understand the station is currently being operated. Opinion of Buyer's Counsel -------------------------- ________________1996 Regent Broadcasting of Dayton, Inc. Gentlemen: This opinion is being delivered to you in connection with the Asset Purchase Agreement (the "Agreement") dated as of ________________ by and between American Radio Systems Corporation, a Delaware corporation ("Buyer") and _________ , a ________________ corporation ("Seller"). Capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to them in the Agreement. We have reviewed the Agreement and other pertinent information and records and files necessary to render this opinion. In arriving at the opinions expressed herein, we have examined and relied upon original or copies, identified to my satisfaction, of all corporate records and other instruments, documents, certificates of public officials, officers and representations of the Buyer, and other persons or entities and have made such investigations as we have considered necessary or appropriate. In making such examinations, we have assumed but not independently verified the genuineness and authenticity of all documents, and the conformity to original documents of all certified or photostatic copies submitted. As to matters of fact material to the opinions expressed herein, and which have not been independently established, we have relied upon certificates of the officers, directors and representatives of the Buyer and certificates of public officials, and we have assumed the accuracy and correctness of all statements of fact contained therein, including the accuracy and correctness of the factual representations and warranties of the Buyer set forth in the Agreement and the documents and instruments delivered to you in connection therewith. 1. Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, and is qualified to conduct business in the State of 2. Buyer has full corporate power and authority to enter into the Agreement and all documents required to be executed or delivered by Seller pursuant to the EX-10.06.03.02 27 1ST AM. TO ASSET PURCHASE AGREEMENT EXHIBIT 10.06.03.02 FIRST AMENDMENT TO THE ASSET PURCHASE AGREEMENT This amendment ("Amendment") is dated this 22nd day of July 1996, by and between AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation ("Buyer") and COMMON GROUND BROADCASTING, INC., an Oregon Corporation ("Seller"). WHEREAS, on March 28, 1996, Buyer and Seller entered into a Asset Purchase Agreement ("Agreement") relating to the sale of certain assets relating to radio station KDBX-FM, Banks, Oregon; and WHEREAS, the Schedules of the Agreement contained clerical errors; and WHEREAS, in connection with the sale contemplated by the Agreement, Seller elects to participate in a tax deferred exchange ("Exchange") pursuant to Internal Revenue Code (S)1031; and WHEREAS, pursuant to the Internal Revenue Service regulations regarding the Exchange, the Agreement shall be assigned to a qualified intermediary as defined in IRC (S)1031; and WHEREAS Buyer and Seller agree that certain portions of the Agreement shall not be assigned to the qualified intermediary; NOWTHEREFORE the parties agree as follows: 1. Unless defined herein all capitalized terms used in this Amendment shall have the meaning given such term in the Agreement. 2. The Agreement shall be amended as follows: 2.1 Section 6.10 of the Agreement shall be deleted in its entirety. ------------ 2.2 Schedule 3.4 shall be amended and restated as set forth on ------------ Exhibit "A" hereto. 2.3 Schedule 3.8 shall be amended and restated as set forth on ------------ Exhibit "B" hereto. 3. The effectiveness of this Amendment shall be expressly subject to and conditioned upon the execution by Buyer and delivery by Buyer to Seller of the Back Bay Agreement as set forth on Exhibit "C" hereto. 4. Except as expressly stated herein all terms and conditions of the Agreement shall remain in full force and affect. 5. This Amendment may be executed in any number of counterparts and all such counterparts shall be deemed to constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this amendment as of the date first stated above. "SELLER" COMMON GROUND BROADCASTING, INC. By: /s/ Edward G. Atsinger ----------------------------------- Edward G. Atsinger III President, CEO "BUYER" AMERICAN RADIO SYSTEMS CORPORATION By: ---------------------------------- Steven Dodge President, CEO EXHIBIT "A" ---------- SCHEDULE 3.4 ------------ FCC LICENSES ------------ See attached. EXHIBIT "B" ---------- SCHEDULE 3.8 ------------ TRADEMARKS; TRADENAMES; COPY RIGHTS ----------------------------------- None. EXHIBIT "C" ----------- BACK BAY AGREEMENT This Agreement ("Agreement") is entered into on this __ of July, 1996 by and between American Radio Systems Corporation, a Delaware corporation ("American") and Common Ground Broadcasting, Inc., an Oregon corporation ("CGB"). WHEREAS American has heretofore delivered to CGB a true, correct and complete copy of the agreement ("Back Bay Agreement") dated March 15, 1994, by and between American and Back Bay Broadcasters, Inc., a Delaware corporation ("Back Bay") as in effect on the date hereof. WHEREAS, pursuant to the Back Bay Agreement, American has the freely assignable right (a) at any time after August 31, 1998 to purchase (the "Purchase Right") all of the business and assets of Back Bay, including without limitation the WBNW Business (as defined in the Back Bay Agreement), and (b) of first refusal (the "Right of First Refusal") in the event Back Bay desires to sell, transfer or otherwise dispose of all or any material portion of the business and assets of Back Bay, including without limitation the WBNW Business. NOW THEREFORE, the parties, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, agree as follows: 1. CGB shall have the right (the "WBNW Purchase Right"), but not the obligation, to purchase the WBNW Business for $6,000,000 by written notice (the "Election Notice") given to and received by American at any time prior to January 1, 1998. Anything herein to the contrary notwithstanding, if American has not received the Election Notice prior to January 1, 1998, all rights of CGB to purchase the WBNW Business shall cease and terminate and by of no further force and effect. 2. The Election Notice shall constitute a representation that CGB is ready, willing and able, and has the financial resources, to purchase the WBNW Business for $6,000,000 and that it will negotiate in good faith with respect to and execute and deliver a purchase and sale agreement on terms and conditions customary with respect to similar transactions with American (or, at American's discretion, with Back Bay) to purchase the WBNW Business. American agrees that it will cooperate in all reasonable respects with CGB in order to enable it to exercise the WBNW Purchase Right, including without limitation (a) advising CGB promptly of American's receipt of any Asset Transfer Notice pursuant to the provisions of Section 4.13 of the Back Bay Agreement, and (b) exercising any and all of its rights under the Back Bay Agreement, including without limitation the exercise by American of the Right of First Refusal and the Purchase Right. 3. CGB acknowledges and agrees that (a) American's rights with respect to the Purchase Rights and the Right of First Refusal apply or may apply, as the case may be, to all of the business and assets of Back Bay and, therefore, American may be required to acquire businesses and assets other than the WBNW Business in order to enable CGB to exercise its WBNW Purchase Rights, and (b) the purchase price to be paid by American pursuant to the exercise of (i) the Purchase Rights will be based on a formula set forth in the Back Bay Agreement and (ii) the Right of First Refusal will be based on a third party offer. Accordingly, American and CGB acknowledge and agree that the amount required to be paid by American for the WBNW Business may be more or less than $6,000,000 and that American will, therefore, be required to pay any excess of the purchase price over $6,000,000, and will be entitled to any excess of $6,000,000 over such purchase price. 4. American agrees that, in the event CGB purchases the WBNW Business pursuant to the exercise of the WBNW Purchase Right, from and after the consummation of such transaction, American will assume, at no expense to CGB, fifty percent (50%) of the base rental fees payable under the WBNW tower site lease between Back Bay and Fellsway Plaza Trust, dated December 14, 1987, as amended to the date hereof (the "WBNW Tower Lease"), or any extension or renewal therefore. CGB agrees that American shall have the right to manage, sublease and develop the tower site covered by the WBNW Tower Lease so long as such activities do not disrupt or interfere with, in either case in any material manner, with the operations of the WBNW Business. 5. American acknowledges its right of specific performance with respect to the purchase of the WBNW Business pursuant to Section 11.13 of the Back Bay Agreement and agrees to use its best efforts to enforce, and to assist CGB in enforcing, such rights to purchase the WBNW Business. American further agrees not to take any action, and to use its best efforts not to allow any action to take place, which would impair or abrogate its right to purchase the WBNW Business pursuant to the Back Bay Agreement. 6. The parties recognize that the WBNW Business is of a special, unique and extraordinary character. Accordingly, if CGB is unable to acquire the WBNW Business by reason of American failing to have complied with its covenants under this Agreement, CGB shall be entitled to bring an action against American for damages or, in lieu of, and in substitution for any damages, to obtain specific performance of the terms of this Agreement. In the event of any action to enforce the provisions of this Agreement, CGB hereby waives the defense that there is an adequate remedy at law. IN WITNESS WHEREOF, the parties hereto have executed this amendment as of the date first stated above. "SELLER" "BUYER" COMMON GROUND BROADCASTING, INC. AMERICAN RADIO SYSTEMS CORPORATION By: By: ----------------------------- ------------------------------- Edward G. Atsinger III Steven Dodge President, CEO President, CEO EX-10.06.04.01 28 ASSET PURCHASE AGREEMENT Exhibit 10.06.04.01 ASSET PURCHASE AGREEMENT ------------------------ (WHK-AM, CLEVELAND, OHIO) This AGREEMENT (the "Agreement") is dated as of April 23, 1996 by and between OMNIAMERICA GROUP ("Omni Group") and WHK LICENSE PARTNERSHIP ("WHK LP") (Omni Group and WHK LP shall collectively be referred to herein as "Seller") and INSPIRATION MEDIA OF OHIO, INC. ("Buyer"). RECITALS: --------- 1. Seller owns and operates radio station WHK(AM) licensed to Cleveland, Ohio (the "Station"), and holds the licenses and authorizations issued by the FCC for the operation of the Station. 2. Buyer desires to acquire substantially all the assets of the Station, and Seller is willing to convey such assets to Buyer. 3. The acquisition of the Station is subject to prior approval of the FCC. NOW THEREFORE, in consideration of the mutual covenants contained herein, Seller and Buyer hereby agree as follows: ARTICLE 1 --------- TERMINOLOGY ----------- 1.1 ACT. The Communications Act of 1934, as amended. ---- 1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7(b), the amount by ------------------ -------------- which Buyer's account is to be credited or charged, as reflected on the Adjustment List. 1.3 ADJUSTMENT LIST. As provided in Section 2.7 (b), an itemized ---------------- --------------- list of all sums to be credited or charged against the account of Buyer, with a brief explanation in reasonable detail of the credits or charges. 1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined -------------------- in Section 2.3. ----------- 1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and ------------- Sundays, on which federally chartered banks in the city of Cleveland, Ohio, are regularly open for business. 1.6 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3 (b), ----------------------------- --------------- the threshold dollar amount for the aggregate of claims, liabilities, damages, losses, costs and expenses that must be incurred by Buyer before Seller shall be obligated to indemnify 1 Buyer. The Buyer's Threshold Limitation shall be (a) Twenty Five Thousand Dollars ($25,000) for all claims, liabilities, damages, losses, costs and expenses; and (b) Ten Thousand Dollars ($10,000) for any individual claim, liability, damage, loss, cost or expense. 1.7 CLOSING. The closing with respect to the transactions -------- contemplated by this Agreement. 1.8 CLOSING DATE. The date determined as the Closing Date as ------------- provided in Section 8.1. ----------- 1.9 DOCUMENTS. This Agreement and all Exhibits and Schedules ---------- hereto, and each other agreement, certificate, or instrument delivered pursuant to or in connection with this Agreement, including amendments thereto that are expressly permitted under the terms of this Agreement. 1.10 EARNEST MONEY. The amount of Three Hundred Twenty Five Thousand -------------- Dollars ($325,000). 1.11 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning ------------------------- defined in Section 5.10. ------------ 1.12 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response ------------------- Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as amended, and any other applicable federal, state and local laws, statutes, rules or regulations concerning the treating, producing, handling, storing, releasing, spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials. 1.13 ESCROW AGENT. Gary Stevens & Co., Incorporated. ------------- 1.14 ESCROW AGREEMENT. The Escrow Agreement in the form attached ------------------ as Exhibit A which Seller, Buyer and the Escrow Agent have entered into --------- concurrently with the execution of this Agreement relating to the deposit, holding, investment and disbursement of the Earnest Money. 1.15 EXCLUDED ASSETS. Such term shall have the meaning defined in ---------------- Section 2.2. - ------------ 1.16 FCC. Federal Communications Commission. ---- 1.17 FCC LICENSES. The licenses, permits and authorizations of the ------------- FCC for the operation of the Station as listed on Schedule 3.8. ------------- 1.18 FCC ORDER. An order or decisions of the FCC granting its ---------- consent to the assignment of the FCC Licenses to Buyer. 2 1.19 FINAL ACTION. An action of the FCC that has not been reversed, ------------- stayed, enjoined, set aside, annulled or suspended; with respect to which no timely petition for reconsideration or administrative or judicial appeal or sua --- sponte action of the FCC with comparable effect is pending and as to which the - ------ time for filing any such petition or appeal (administrative or judicial) or for the taking of any such sua sponte action of the FCC has expired. ---------- 1.20 KNOWLEDGE. As used herein, "knowledge" shall refer to the ---------- actual knowledge of Carl E. Hirsch, Anthony S. Ocepek, or H. Dean Thacker. 1.21 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes, -------------------- hazardous substances, pollutants or contaminants, asbestos or asbestos-related products, PCB's, petroleum, crude oil or any fraction or distillate thereof (as such terms are defined in any applicable federal, state or local laws, ordinances, rules and regulations, and including any other terms which are or maybe used in any applicable environmental laws to define prohibited or regulated substances). 1.22 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or ------------------ -------------- 9.4(a) against which any claim or liability may be asserted by a third party - ------ which would give rise to a claim for indemnification under the provisions of this Agreement by such party. 1.23 INDEMNIFYING PARTY. The party to the Agreement (not the ------------------- Indemnified Party) that, in the event of a claim or liability asserted by a third party against the Indemnified Party which would give rise to a claim for indemnification under the provisions of this Agreement, may at its own expense, and upon written notice to the Indemnified Party, compromise or defend such claim. 1.24 LIEN. Any mortgage, deed of trust, pledge, hypothecation, ----- security interest, encumbrance, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any written or oral agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction. 1.25 MATERIAL ADVERSE CONDITION. A condition which would materially --------------------------- restrict, limit, increase the cost or burden of or otherwise adversely affect or materially impair the right of Buyer to the ownership, use, control, enjoyment or operation of the Station or the proceeds therefrom; provided, however, that any condition which requires that the Station be operated in accordance with a condition similar to those contained in the present FCC licenses issued for operation of the Station shall not be deemed a Material Adverse Condition. 1.26 OSHA LAWS. The Occupational Safety and Health Act of 1970, as ---------- amended, and all other federal, state or local laws or ordinances, including orders, rules 3 and regulations thereunder, regulating or otherwise affecting health and safety of the workplace. 1.27 PERMITTED LIEN. Any statutory lien which secures a payment not --------------- yet due that arises, and is customarily discharged, in the ordinary course of Seller's business; any easement, right-of-way, encroachment or similar imperfection in the Seller's title to its assets or properties that, individually and in the aggregate, are not material in character or amount and do not and are not reasonably expected to materially impair the value or materially interfere with the use of any asset or property of the Seller material to the operation of its business as it has been and is now conducted. 1.28 PURCHASE PRICE. The consideration to be paid by Buyer to --------------- Seller for purchase of the Sale Assets in an amount equal to Six Million Five Hundred Thousand Dollars ($6,500,000). 1.29 REAL PROPERTY. Such term shall have the meaning defined in -------------- Section 3.7. - ----------- 1.30 RULES AND REGULATIONS. The rules of the FCC as set forth in ---------------------- Volume 47 of the Code of Federal Regulations, as well as such other written policies of the Commission, whether contained in the Code of Federal Regulations, or not, that apply to the Station. 1.31 SALE ASSETS. All of the tangible and intangible assets to be ------------ transferred by Seller to Buyer as set forth in Section 2.1. ----------- 1.32 STATION AGREEMENTS. The agreements, commitments, contracts, ------------------- leases and other items described in Section 2.1(d) which relate to operation of -------------- the Station. 1.33 SELLER'S THRESHOLD LIMITATION. As provided in Section 9.4(b), ------------------------------ -------------- the threshold dollar amount for the aggregate of claims, liabilities, damages, losses, costs and expenses that must be incurred by Seller before Buyer shall be obligated to indemnify Seller. The Seller's Threshold Limitation shall be (a) Twenty Five Thousand Dollars ($25,000) for all claims, liabilities, damages, losses, costs and expenses; and (b) Ten Thousand Dollars ($10,000) for any individual claim, liability, damage, loss, cost or expense. 1.34 SURVIVAL PERIOD. The term following the Closing Date during ---------------- which all representations, warranties, covenants and agreements of the parties under this Agreement shall survive. The term shall be twelve (12) months. 1.35 TANGIBLE PERSONAL PROPERTY. The personal property described in --------------------------- Section 2.1(a). - -------------- 4 ARTICLE II ---------- PURCHASE AND SALE ----------------- 2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer, assign ------------ and convey to Buyer, and Buyer will purchase from Seller, free and clear of all Liens, except Permitted Liens and other Liens expressly accepted by Buyer, all of Seller's right, title and interest, legal and equitable, in and to all tangible and intangible assets (except Excluded Assets) used in the operation of the Station as it is now operated, including the following: (a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies, -------------------------- furniture, fixtures and other tangible personal property now or hereafter owned by Seller and used in the operation of the Station as it is now operated, including but not limited to the items listed on Schedule 3.6, together with ------------ such modifications, replacements, improvements and additional items, and subject to such deletions therefrom, made or acquired between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement. (b) REAL PROPERTY. Seller's interests in the Real Property and any -------------- other real estate or interests therein acquired by Seller solely in connection with the Station between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement. (c) LICENSES AND PERMITS. The FCC Licenses and all other assignable --------------------- or transferable governmental permits, licenses and authorizations (and any renewals, extensions, amendments or modifications thereof) now held by Seller or hereafter obtained by Seller between the date hereof and the Closing Date, to the extent such other permits, licenses and authorizations pertain to or are used in the operation of the Station. (d) STATION AGREEMENTS. All agreements which Seller is a party to or ------------------ bound by which are listed on Schedule 3.9 as agreements which Buyer is electing ------------ to assume; any renewals, extensions, amendments or modifications of those agreements being assumed which are made in the ordinary course of Seller's operation of the Station and in accordance with the terms and provisions of this Agreement; and any additional such agreements, contracts, leases, commitments or orders (and any renewals, extensions, amendments or modifications thereof) made or entered into between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement and which Buyer elects to assume in writing. (e) RECORDS. True and complete copies of all of the books, records, -------- accounts, files, logs, ledgers, reports of engineers and other consultants or independent contractors, pertaining to or used in the operation of the Station (other than corporate records). 5 (f) MISCELLANEOUS ASSETS. Any other tangible or intangible assets, --------------------- properties or rights of any kind or nature not otherwise described above in this Section 2.1 and now or hereafter owned or used by Seller in the operation of the - ----------- Station, including but not limited to all goodwill of the Station. 2.2 EXCLUDED ASSETS. Notwithstanding any provision of this Agreement to ---------------- the contrary, Seller shall not transfer, convey or assign to Buyer, but shall retain all of its right, title and interest in and to, the following assets owned or held by it on the Closing Date ("Excluded Assets"): (a) Any and all cash, cash equivalents, cash deposits to secure contract obligations (except to the extent Seller receives a credit therefor under Section 2.7, in which event the deposit shall be included as part of the ----------- Sale Assets), all inter-company receivables from any affiliate of Seller and all other accounts receivable, bank deposits and securities held by Seller in respect of the Station at the Closing Date. (b) Any and all claims of Seller with respect to transactions prior to the Closing including, without limitation, claims for tax refunds and refunds of fees paid to the FCC. (c) All prepaid expenses (except to the extent Seller receives a credit therefor under Section 2.7, in which event the prepaid expense shall be ----------- included as part of the Sale Assets). (d) All contracts of insurance and claims against insurers. (e) All employee benefit plans and the assets thereof and all employment contracts. (f) All contracts that are terminated in accordance with the terms and provisions of this Agreement or have expired prior to the Closing Date in the ordinary course of business; and all loans and loan agreements. (g) All tangible personal property disposed of or consumed between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement. (h) Seller's corporate records except to the extent such records pertain to or are used in the operation of the Station, in which case Seller shall deliver accurate copies thereof to Buyer. (i) All commitments, contracts and agreements not specifically assumed by Buyer pursuant to Section 2.1(d), above. -------------- 6 (j) Any assets used in the operation of WMMS-FM (Cleveland, Ohio) and WMJI-FM (Cleveland, Ohio) and any assets used in the operation of the corporate offices of Seller. 2.3 ASSUMPTION OF LIABILITIES. -------------------------- (a) At the Closing, Buyer shall assume and agree to perform the following liabilities and obligations of Seller (the "Assumed Obligations"): (i) Current liabilities of Seller for which Buyer receives a credit pursuant to Section 2.7, but not in excess of the amount of such credit. ----------- (ii) Liabilities and obligations arising under the Station Agreements, if any, assumed by and transferred to Buyer in accordance with this Agreement, but only to the extent such liabilities and obligations relate to any period of time after the Closing Date. (iii) Liabilities and obligations as the landlord under the tower space lease for the WMMS-FM antenna substantially in the form of Exhibit "B". (b) Except for the Assumed Obligations, Buyer shall not assume or in any manner be liable for any duties, responsibilities, obligations or liabilities of Seller of any kind or nature, whether express or implied, known or unknown, contingent or absolute, including, without limitation, any liabilities to or in connection with Seller's employees whether arising in connection with the transaction contemplated hereunder or otherwise. 2.4 EARNEST MONEY. -------------- (a) Concurrently with the execution of this Agreement, Buyer has deposited with Escrow Agent under the Escrow Agreement, in immediately available funds, the Earnest Money. The Escrow Agent shall hold the Earnest Money under the terms of the Escrow Agreement in trust for the benefit of the parties hereto. Interest and other earnings on the Earnest Money shall be distributed by the Escrow Agent to Buyer from time to time upon the request of Buyer. (b) If Closing does not occur, the Earnest Money shall be delivered to Seller or returned to Buyer in accordance with Section 10.2, and if Closing ------------ does occur, the Earnest Money shall be applied to payment of the Purchase Price at Closing as provided in Section 2.5. ----------- 2.5 PAYMENT OF PURCHASE PRICE. -------------------------- (a) The Purchase Price shall be paid by Buyer as follows: (i) At the Closing, the Earnest Money shall, subject to execution and delivery by Seller of the closing documents described in Section ------- 8.2, - --- 7 become the property of Seller and shall, pursuant to the Escrow Agreement, be disbursed to Seller by cashier's check or wire transfer of immediately available funds. (ii) The Purchase Price, less the amount of the Earnest Money disbursed to Seller, shall be paid to Seller, at the option of Seller, either: (A) At Closing by wire transfer of immediately available funds; or (B) At Closing by delivery of Buyer's promissory note payable to Seller with a payment date of January 15, 1997, and a letter of credit securing payment of the promissory note, in each case in form and substance reasonably satisfactory to the parties, in which case Seller shall reimburse Buyer for all costs associated with procuring the letter of credit. (b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the Adjustment Amount in accordance with Section 2.7. ----------- 2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and Seller --------------------------------- shall agree to an allocation of the Purchase Price. Buyer and Seller shall use such allocation for all reporting purposes in connection with federal, state and local income and, to the extent permitted under applicable law, franchise taxes. Buyer and Seller agree to report such allocation to the Internal Revenue Service in the form required by Treasury Regulation (S) 1.1060-1T. 2.7 ADJUSTMENT OF PURCHASE PRICE. ----------------------------- (a) All operating income and operating expenses of the Station shall be adjusted and allocated between Seller and Buyer, and an adjustment in the Purchase Price shall be made as provided in this Section, to the extent necessary to reflect the principle that all such income and expenses attributable to the operation of the Station on or before the Closing Date shall be for the account of Seller, and all income and expenses attributable to the operation of the Station after the closing Date shall be for the account of Buyer. (b) To the extent not inconsistent with the express provisions of this Agreement, the allocations made pursuant to this Section 2.7 shall be made ----------- in accordance with generally accepted accounting principles. (c) For purposes of making the adjustments pursuant to this Section, Buyer shall prepare and deliver the Adjustment List to Seller within thirty (30) days following the Closing Date, or such earlier or later date as shall be mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the Adjustment Amount. If the Adjustment Amount is a credit to the account of Buyer, unless disputed, Seller shall pay such amount to Buyer, and if the Adjustment Amount is a charge to the account of Buyer, Buyer shall pay such amount to Seller. In the event Seller disagrees with the Adjustment Amount determined by Buyer or with any other matter arising out of this subsection, and 8 Buyer and Seller cannot within sixty (60) days resolve the disagreement themselves, the parties will refer the disagreement to a firm of independent certified public accountants, mutually acceptable to Seller and Buyer, 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 accountants. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Seller hereby represents and warrants to Buyer as follows: 3.1 ORGANIZATION AND GOOD STANDING. Omni Group is a general ------------------------------- partnership duly organized and validly existing under the laws of Massachusetts. WHK LP is a general partnership duly organized and validly existing under the laws of Ohio. Seller has all requisite power to own, operate and lease its properties and carry on its business as it is now being conducted and as the same will be conducted until the Closing. 3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and ---------------------------------------------- delivery of, and the performance of its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby, have been duly authorized and approved by all necessary action on the part of Seller. Seller has the power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Documents and to consummate the transactions hereby and thereby contemplated. This Agreement and each of the other Documents have been, or at or prior to the Closing will be, duly executed by Seller. This Agreement constitutes (and each of the other Documents, when so executed and delivered, will constitute) legal and valid obligations of Seller enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights or remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 3.3 ABSENCE OF CONFLICTS. Assuming all the consents described in --------------------- Section 3.4 are obtained, the execution and delivery of, and the performance of - ----------- its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby: (a) do not in any material respect (with or without the giving of notice or the passage of time or both) violate (or result in the creation of any Lien other than a Permitted Lien on any of the Sale Assets under), any provision of law, rule or regulation or any order, judgment, injunction, decree or ruling applicable to Seller; 9 (b) do not (with or without the giving of notice or the passage of time or both) conflict with or result in a breach or termination of, or constitute a default or give rise to a right of termination or acceleration, where such conflict, breach, termination, default or right would have a material adverse effect on the Sale Assets or the operation of the Station, under charter documents of Seller or pursuant to any lease, agreement, commitment or other instrument which Seller is a party to, or bound by, or by which any of the Sale Assets may be bound, or result in the creation of any Lien, other than a Permitted Lien, upon any of the Sale Assets. 3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except as ---------------------------------------------------- set forth on Schedule 3.4, Schedule 3.8 and Schedule 3.9, and to Seller's actual ------------ ------------ ------------ knowledge, the execution and delivery of, and the performance of its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby, do not require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration of filing with, any court or public agency or other authority, or the consent of any person under any agreement, arrangement or commitment of a nature which Seller is a party to or bound or by which the Sale Assets are bound by or subject to, the failure of which to obtain would have a material adverse effect on the Sale Assets or the operation of the Station. 3.5 SALE ASSETS. The Sale Assets include all of the assets, ------------ properties and rights of every type and description, real, personal and mixed, tangible and intangible, that are used to a material extent in the conduct of the business of owning and operating the Station in the manner in which that business is now conducted, with the exception of the Excluded Assets. 3.6 TANGIBLE PERSONAL PROPERTY. Except for supplies and other --------------------------- incidental items which in the aggregate are not of material value, the list of Tangible Personal Property set forth on Schedule 3.6 is a complete and correct ------------ list of all of the items of tangible personal property (other than Excluded Assets) used to a material extent in the operation of the Station in the manner in which it is now operated. Except as set forth on Schedule 3.6: ------------ (a) Seller has good, marketable and valid title to all of the items of Tangible Personal Property free and clear of all Liens except Permitted Liens, and including the right to transfer same. (b) The Tangible Personal Property is in working order. 3.7 REAL PROPERTY. -------------- (a) The real property described on Schedule 3.7 constitutes a ------------ complete and correct summary description in all material respects of all of the interests in real estate (other than any real property leased by Seller pursuant to a lease described in Schedule 3.9) used to any extent in the operation of the ------------ Station in the manner in which it is now operated. Said real property, together with all improvements affixed thereto, is herein defined as the "Real Property." 10 (b) Seller does not owe any money to any architect, contractor, subcontractor or material man for labor or materials performed, rendered or supplied to or in connection with the Real Property within the past four (4) months which shall not be paid in full on or before Closing. Except as set forth on Schedule 3.7, there is no work being done at or materials being ------------ supplied to the Real Property at the date hereof other than routine maintenance projects having an aggregate cost through completion thereof of no more than Ten Thousand Dollars ($10,000). (c) To Seller's actual knowledge the present use of the Real Property is in compliance with all applicable zoning codes in effect as of the date hereof, and Seller has not received any notices of uncorrected violations of the applicable housing, building, safety or fire ordinances. To Seller's actual knowledge the Real Property is served by electricity and water in capacities adequate for the present use of the Real Property and improvements thereon. Except as set forth on Section 3.7, Seller has not made any other agreement for ----------- the sale or lease of, or given any other person an option to purchase or lease or a right of first refusal to purchase or lease, all or any part of the Real Property, and except as set forth on Schedule 3.7, Seller has not subjected the ------------ Real Property to any Liens (other than Permitted Liens), easements, rights, duties, obligations, convenants, conditions, restrictions, limitations or agreements not of record. (d) To Seller's actual knowledge no portion of the Real Property or improvements thereon is the subject of any condemnation or eminent domain proceeding presently instituted or, to Seller's actual knowledge, pending, and Seller has not received notice from any condemning authority that such proceedings are threatened. 3.8 FCC LICENSES. Seller is the holder of the FCC Licenses listed on ------------- Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i) are - ------------ valid, in good standing and in full force and effect and constitute all of the licenses, permits and authorizations required by the Act, the Rules and Regulations or the FCC for, or used in, the operation of the Station as now operated, and (ii) constitute all the licenses and authorizations issued by the FCC to Seller for or in connection with the current operation of the Station. Seller has no knowledge of any condition imposed by the FCC as part of any FCC License which is neither set forth on the face thereof as issued by the FCC nor contained in the Rules and Regulations applicable generally to stations of the type, nature, class or location of the Station. Except as disclosed on Schedule -------- 3.8, the Station is being operated at full authorized power, in accordance with - --- the terms and conditions of the FCC Licenses applicable to it and in accordance with the Rules and Regulations. Except as set forth on Schedule 3.8, no ------------ proceedings are pending or, to the knowledge of the Seller, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any fines, forfeitures or other administrative actions by the FCC with respect to the Station or its operation, other than proceedings affecting the radio broadcasting industry in general. Seller has complied in all material respects with all requirements to file reports, applications and other documents with the FCC with respect to the Station, and all such reports, applications and 11 documents are complete and correct in all material respects. Seller has no knowledge of any matters (i) which could reasonably be expected to result in the suspension or revocation of or the refusal to renew any of the FCC Licenses or the imposition of any fines or forfeitures by the FCC, or (ii) against Seller which could reasonably be expected to result in the FCC's refusal to grant approval of the assignment to Buyer of the FCC Licenses or the imposition of any Material Adverse Condition in connection with approval of such assignment. There are not any unsatisfied or otherwise outstanding citations issued by the FCC with respect to the Station or its operation. Complete and accurate copies of all FCC Licenses are attached as a part of Schedule 3.8. The "Public Inspection ------------ File" of the Station is in substantial and material compliance with Section 73.3526 of the Rules and Regulations. 3.9 STATION AGREEMENTS. ------------------- (a) Schedule 3.9 sets forth an accurate and complete list of all ------------ material agreements, contracts, arrangements or commitments in effect as of the date hereof, including all amendments, modifications and supplements thereto which the Station or its assets or properties are bound by, except (A) employee benefit plans and employment contracts, (B) contracts for the sale of time on the Station, and (C) contracts which are cancelable by Seller or its assignee without breach or penalty on not more than sixty (60) days' notice. Complete and correct copies of all such agreements, contracts, arrangements or commitments that are in writing, including all amendments, modifications and supplements thereto, have been delivered to Buyer. (b) Except as set forth in the Schedules, and with respect to all material Station Agreements being assumed by Buyer, (i) all Station Agreements are legal, valid and enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity regardless of whether enforcement is sought in any proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of Seller, any other party thereto, is in material breach of or in material default under any material Station Agreements; (iii) to the knowledge of Seller, there has not occurred any event which, after the giving of notice or the lapse of time or both, would constitute a material default under, or result in the material breach of, any Station Agreements which are, individually or in the aggregate, material to the operation of the Station; and (iv) Seller holds the right to enforce and receive the benefits under all of the material Station Agreements, free and clear of all Liens (other than Permitted Liens) but subject to the terms and provision of each such agreement. (c) Schedule 3.9 indicates, for each Station Agreement listed thereon ------------ which is being assumed by Buyer, whether consent or approval by any party thereto is required thereunder for consummation of the transactions contemplated hereby. 3.10 LITIGATION. Except as disclosed on Schedule 3.10, there are no ----------- ------------- claims, investigations or administrative, arbitration or other proceedings (collectively referred to herein as "Litigation") pending or, to the actual knowledge of Seller, threatened against 12 Seller which would, individually or in the aggregate if adversely determined, have an adverse effect on the Sale Assets or the operation of the Station, or which would give any third party the right to enjoin the transactions contemplated by this Agreement. To the actual knowledge of Seller, there is no basis for any such claim, investigation, action, suit or proceeding which would, individually or in the aggregate if adversely determined, have an adverse effect on the Sale Assets or operation of the Station. There are no existing or, to the actual knowledge of Seller, pending orders, judgments or decrees of any court or governmental agency affecting Seller, the Station or any of the Sale Assets. Notwithstanding the disclosure of Litigation of Seller to Buyer pursuant to this Section, Buyer shall not assume any liability, damages, cost or expense of Seller relating to or arising out of any Litigation. 3.11 LABOR MATTERS. -------------- (a) Seller is not a party to any collective bargaining agreement, and there is no collective bargaining agreement that determines the terms and conditions of employment of any employees of Seller. (b) Except as disclosed on Schedule 3.11: ------------- (i) There is no labor strike, dispute, slow-down or stoppage pending or, to the knowledge of Seller, threatened against the Station; (ii) There are neither pending nor, to the actual knowledge of Seller threatened, any suits, actions, administrative proceedings, union organizing activities, arbitrations, grievances or other proceedings between Seller and any employees of the Station or any union representing such employees; and there are no existing labor or employment or other controversies or grievances involving employees of the Station which have had or are reasonably likely to have a material adverse effect on the operation of the Station; (iii) With respect to the Station, (A) Seller is in compliance in all material respects with all laws, rules and regulations relating to the employment of labor and all employment contractual obligations, including those relating to wages, hours, collective bargaining, affirmative action, discrimination, sexual harassment, wrongful discharge and the withholding and payment of taxes and contributions; (B) Seller has withheld all amounts required by law or agreement to be withheld from the wages or salaries of its employees; and (C) Seller is not liable to any present or former employees or any governmental authority for damages, arrears of wages or any tax or penalty for failure to comply with the foregoing; (iv) Buyer's consummation of the transactions contemplated by this Agreement in accordance with the terms hereof shall not, as a result of or in connection with the transactions contemplated hereby, impose upon Buyer the obligation to pay any severance or termination pay under any agreement, plan or arrangement binding upon Seller. 13 3.12 EMPLOYEE BENEFIT PLANS. Buyer's consummation of the ----------------------- transactions contemplated by this Agreement in accordance with the terms hereof shall not, as a result of or in connection with the transactions contemplated hereby, impose upon Buyer any obligation under any benefit plan, contract or arrangement (regardless of whether they are written or unwritten and funded or unfunded) covering employees or former employees of Seller in connection with their employment by Seller. For purposes of the Agreement, "benefit plans" shall include without limitation employee benefit plans within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, vacation benefits, employment and severance contracts, stock option plans, bonus programs and plans of deferred compensation. 3.13 COMPLIANCE WITH LAW. The operation of the Station complies in -------------------- all material respects with the applicable rules and regulations of the FCC. 3.14 ENVIRONMENTAL MATTERS; OSHA. ---------------------------- (a) Seller has obtained all environmental, health and safety permits, the failure of which to obtain would have a material adverse effect on either the operation of the Station or the ownership of the Real Property and all such permits are in full force and effect and Seller is in material compliance with all terms and conditions of such permits. (b) To Seller's actual knowledge on the date hereof, there is no proceeding pending or threatened which may result in the reversal, rescission, termination, modification or suspension of any environmental or health or safety permits necessary for the operation of the Station or the ownership of the Real Property. (c) Except as set forth on the Phase I Environmental Site Assessment dated April 21, 1994 attached hereto as Schedule 3.14 ("the 1994 ------------- Assessment"), with respect to the Station and the ownership of the Real Property, Seller is in compliance in all material respects with the provisions of Environmental Laws. (d) During Seller's occupancy of the Real Property, Seller has not, and to Seller's actual knowledge on the date hereof, no other person or entity has caused or permitted materials to be generated, released, stored, treated, recycled, disposed of on, under or at such parcels, which materials, if known to be present, would require clean up, removal or other remedial or responsive action under Environmental Laws (other than normal office, cleaning and maintenance supplies in reasonable quantities used and /or stored appropriately in the buildings or improvements on the Real Property). Seller has not caused the migration of any materials from the Real Property onto or under any property adjacent to the Real Property which materials, if known to be present, would require cleanup, removal or other remedial or responsive action under Environmental Laws. To Seller's actual knowledge on the date hereof, except as disclosed on the 1994 Assessment, there are no underground storage tanks and no polychlorinated biphenyls ("PCB") or friable asbestos on such property. 14 (e) To Seller's actual knowledge Seller is not subject to any judgment, decree, order or citation with respect to the Station or the Real Property related to or arising out of Environmental Laws, and Seller has not received notice that it has been named or listed as a potentially responsible party by any person or governmental body or agency in any matter arising under Environmental Laws. (f) Seller has not discharged or disposed of any petroleum product or solid waste on the Real Property or on the property adjacent to the Real Property owned by third parties, which may form the basis for any present or future claim based upon the Environmental Laws or any demand or action seeking clean-up of any site, location, body of water, surface or subsurface, under any Environmental Laws or otherwise, or which may subject the owner of the Real Property to claims by third parties (except to the extent third party liability can be established) for damages. (g) Except as otherwise disclosed on the 1994 Assessment no portion of the Real Property has ever been used by Seller, nor, to the actual knowledge of Seller as of the date hereof, any previous occupant of the Real Property, in material violation of Environmental Laws or as a landfill, dump site or any other use which involves the disposal or storage of Hazardous Materials on-site or in any manner which may adversely affect the value of the Real Property. (h) No pesticides, herbicides, fertilizers or other materials have been used on, applied to or disposed of by Seller on the Real Property in material violation of any Environmental Laws (other than normal office, cleaning and maintenance supplies in reasonable quantities used and/or stored appropriately in the buildings or improvements on the Real Property. (i) With respect to the Station or the Real Property, Seller has disposed of all waste in material compliance with all Environmental Laws and, to the actual knowledge of Seller on the date hereof, there is no existing condition that may form the basis of any present or future material claim, demand or action seeking clean up of any facility, site, location or body of water, surface or subsurface, for which the Buyer could be liable or responsible solely as a result of the disposal of waste at such site by a prior owner of the Real Property. (j) Seller is in material compliance with all OSHA Laws. 3.15 FILING OF TAX RETURNS. To the extent the failure to file or pay ---------------------- would result in a Lien on the Sale Assets, Seller has filed all Federal, State and local tax returns which are required to be filed and has paid all taxes and all assessments to the extent that such taxes and assessments have become due. 3.16 ABSENCE OF INSOLVENCY. Except as set forth on Schedule 3.16, no ---------------------- ------------- insolvency proceedings of any character including without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Seller or any of the Sale Assets, are pending or, to the best 15 knowledge of Seller, 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. 3.17 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule -------------------------- -------- 3.17, no agent, broker, investment banker or other person or firm acting on - ---- behalf of or under the authority of Seller or any affiliate of Seller is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with the transactions contemplated by this Agreement. 3.18 INSURANCE. There is now in full force and effect with reputable ---------- insurance companies fire and extended coverage insurance with respect to all material tangible Sale Assets and public liability insurance, all in commercially reasonable amounts. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer represents and warrants to Seller as follows: 4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly ------------------------------- organized, validly existing and in good standing under the laws of the State of Ohio. Buyer has all requisite corporate power to own, operate and lease its properties and carry on its business as it is now being conducted and as the same will be conducted following the Closing. 4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Buyer's execution ---------------------------------------------- and delivery of, and the performance of its obligations under, this Agreement and each of the other Documents, and the consummation by Buyer of the transactions contemplated hereby and thereby, have been duly authorized and approved by all necessary corporate action on the part of Buyer. This Agreement and each of the other Documents to be executed by Buyer have been, or at or prior to the Closing will be, duly executed by Buyer. The Documents, when executed and delivered by the parties hereto, will constitute the valid and legally binding agreement of Buyer, enforceable against Buyer in accordance with their terms, except as may be limited by bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors' rights generally, and except as may be limited by general principles of equity (regardless of whether such enforceability is sought in a proceeding in equity or at law). 4.3 ABSENCE OF CONFLICTS. Buyer's execution and delivery of, and the --------------------- performance of its obligations under, this Agreement and each of the other Documents and the consummation by Buyer of the transaction contemplated hereby and thereby: (a) Do not in any material respect (with or without the giving of notice or the passage of time or both) violate (or result in the creation of any claim, lien, charge or encumbrance on any of the assets or properties of Buyer under) any provision of law, rule 16 or regulation or any order, judgment, injunction, decree or ruling applicable to Buyer in any manner which would have a material adverse effect on the assets, business, operation or financial condition or results of operations of Buyer; (b) Do not (with or without the giving of notice or the passage of time or both) conflict with or result in a breach or termination of, or constitute a default or give rise to a right of termination or acceleration under, the articles of incorporation or bylaws of Buyer or any lease, agreement, commitment, or other instrument which Buyer is a party to, bound by, or by which any of its assets or properties may be bound. 4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for ---------------------------------------------------- the required consent of the FCC, Buyer's execution and delivery of, and the performance of its obligations under, this Agreement and each of the other Documents and the consummation by Buyer of the transaction contemplated hereby and thereby, do not require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration or filing with, any court or public agency or other authority, or the consent of any person under any agreement, arrangement or commitment of any nature which Buyer is a party to or bound by, the failure of which to obtain would have a material adverse effect on the assets, business, operation or financial condition or results of operations of Buyer. 4.5 QUALIFICATION. -------------- (a) Buyer has no knowledge after due inquiry of any facts concerning Buyer or any other person with an attributable interest in Buyer (as such term is defined under the Rules and Regulations) which, under present law (including the Act) and the Rules and Regulations, would (i) disqualify Buyer from being the holder of the FCC Licenses, the owner of the Sale Assets or the operator of the Station upon consummation of the transactions contemplated by this Agreement, or (ii) raise a substantial and material question of fact (within the meaning of Section 309(e) of the Act) respecting Buyer's qualifications. (b) Without limiting the foregoing Subsection (a), Buyer shall -------------- make the affirmative certifications provided in Section III of FCC Form 314 at the time of filing of such form with the FCC as contemplated by Section 5.2. ----------- 4.6 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17, -------------------------- ------------- no agent, broker, investment banker, or other person or firm acting on behalf of or under the authority or Buyer or any affiliate of Buyer is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with transactions contemplated by this Agreement. 4.7 LITIGATION. There are no legal, administrative, arbitration or ----------- other proceedings or governmental investigations pending or, to the knowledge of Buyer, threatened against Buyer that would give any third party the right to enjoin the transactions contemplated by this Agreement. 17 ARTICLE V TRANSACTIONS PRIOR TO THE CLOSING DATE -------------------------------------- 5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE. ------------------------------------------------------------ Seller covenants and agrees with Buyer that between the date hereof and the Closing Date, unless the Buyer otherwise agrees in writing (which agreement shall not be unreasonably withheld), Seller shall: (a) Use reasonable efforts to operate the Station in substantially the same manner in which it is currently being operated: (b) Use reasonable commercial efforts to maintain insurance upon all of the tangible Sale Assets in such amounts and of such kind comparable to that in effect on the date hereof with respect to such Sale Assets and with respect to the operation of the Station, with insurers of substantially the same or better financial condition; (c) Operate the Station and otherwise conduct its business in accordance with the terms or conditions of its FCC Licenses, the Rules and Regulations, the Act and use reasonable efforts to conduct its business in accordance with all other rules and regulations, statutes, ordinances and orders of all governmental authorities having jurisdiction over any aspect of the operation of the Station, except where the failure to so operate the Station would not have a material adverse effect on the Sale Assets or the operation of the Station or on the ability of Seller to consummate the transactions contemplated hereby; (d) Maintain the books and records of the Station in Seller's customary manner on a basis consistent with prior years; (e) Comply in all material respects with all Station Agreements now or hereafter existing which are material, individually or in the aggregate, to the operation of the Station; (f) Promptly notify Buyer of any material default by, or claim of default against, any party under any Station Agreements which are material, individually or in the aggregate, to the operation of the Station, and any event or condition which, with notice or lapse of time or both, would constitute a material default under such Station Agreements; (g) Not mortgage, pledge or subject to any Lien (except in the ordinary course of business) any of the Sale Assets; (h) Not sell, lease or otherwise dispose of, nor agree to sell, lease or otherwise dispose of, any of the Sale Assets, except for dispositions in the ordinary course of business; 18 (i) Not acquire or lease any goods or services or enter into, amend or terminate any license, lease of real or personal property or any other Station Agreement, other than in the ordinary course of business; (j) Not introduce any material change with respect to the operation of the Station including, without limitation, any material changes in the broadcast hours of the Station or any other material change in the Station's programming policies, except such changes as in the sole discretion of Seller, exercised in good faith after consultation with Buyer, are required by the public interest; (k) Notify Buyer of any material litigation pending or threatened against Station or Seller or any material damage to or destruction of any assets included or to be included in the Sale Assets; 5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC, ---------------------- within five (5) business days after the execution of this Agreement, such applications and other documents in the name of Seller or Buyer, as appropriate, as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall take all commercially reasonable steps necessary to prosecute such filings with diligence and shall diligently oppose any objections to, appeals from or petitions to reconsider such approval of the FCC, to the end that the FCC Order and a Final Action with respect thereto may be obtained as soon as practicable. Buyer shall not knowingly take, and Seller covenants that Seller shall not knowingly take, any action that party knows or has reason to know would materially and adversely affect or materially delay issuance of the FCC Order or materially and adversely affect or materially delay its becoming a Final Action without a Material Adverse Condition, unless such action is requested or required by the FCC, its staff or the Rules and Regulations. Should Buyer or Seller become aware of any facts which could reasonably be expected to materially and adversely affect or materially delay issuance of the FCC Order without a Material Adverse Condition (including but not limited to, in the case of Buyer, any facts which would reasonably be expected to disqualify Buyer from controlling the Station), such party shall promptly notify the other party thereof in writing and both parties shall cooperate to take all steps necessary or desirable to resolve the matter expeditiously and to obtain the FCC's approval of matters pending before it. 5.3 OTHER CONSENTS. Seller shall use commercially reasonable efforts to --------------- obtain the consent or waivers to the transactions contemplated by this Agreement required under any assumed Station Agreements; provided that Seller shall not be required to pay or grant any material consideration in order to obtain any such consent or waiver. 5.4 TAX RETURNS AND PAYMENTS. To the extent the failure to file any ------------------------- return, estimate, or report or pay any taxes would result in a Lien on the Sale Assets: (a) All tax returns, estimates, and reports required to be filed by Seller prior to the Closing Date or relating to periods prior to the Closing Date will be timely 19 filed with the appropriate governmental agencies unless valid extensions therefor shall have been obtained. (b) All taxes pertaining to ownership of the Sale Assets or operation of the Station prior to the Closing Date will be timely paid; provided that Seller shall not be required to pay any such tax so long as the validity thereof shall be contested in good faith by appropriate proceedings and Seller shall have set aside adequate reserves with respect to any such tax. 5.5 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and its --------------------------------- representatives may make such reasonable investigation of the assets and business of the Station as it may desire; and Seller shall give to Buyer, its engineers, counsel, accountants and other representatives reasonable access during normal business hours throughout the period prior to the Closing to personnel and all of the assets, books, records and files of or pertaining to the Station, provided that (i) Buyer shall give Seller reasonable advance notice of each date on which Buyer or any such other person or entity desires such access, (ii) each person (other than an officer of Buyer) shall, if requested by Seller, be accompanied by an officer or their representative of Buyer approved by Seller, which approval shall not be unreasonably withheld, (iii) the investigations at the offices of Seller shall be reasonable in number and frequency, and (iv) all investigations shall be conducted in such a manner as not to physically damage any property or constitute a disruption of the operation of the Station or Seller. Seller shall furnish to Buyer during such period all documents and copies of documents and information concerning the business and affairs of the Station as Buyer may reasonably request. 5.6 CONFIDENTIALITY; PRESS RELEASE. All information, data and materials ------------------------------- furnished or to be furnished to either party with respect to the other party in connection with this transaction or pursuant to this Agreement are confidential. Each party agrees that prior to Closing (a) it shall not disclose or otherwise make available, at any time, any such information, data or material to any person who does not have a confidential relationship with such party; (b) it shall protect such information, data and material with a high degree of care to prevent the disclosure thereof; and (c) if, for any reason, this transaction is not consummated, all information, data or material concerning the other party obtained by such party, and all copies thereof, will be returned to the other party. After Closing, neither party will disclose or otherwise make available to any person any of such information, data or material concerning the other party, except as may be necessary or appropriate in connection with the operation of the Station by Buyer. Each party shall use its reasonable efforts to prevent the violation of any of the foregoing confidentiality provisions by its respective representatives. Notwithstanding the foregoing, nothing contained herein shall prohibit Buyer or Seller from: (i) using such information, data and materials in connection with any action or proceeding brought or any claim asserted by Buyer or Seller in respect of any breach by the other of any representation, warranty or covenant made in or pursuant to this Agreement; or 20 (ii) supplying or filing such information, data or materials to or with the FCC or any other valid governmental or court authority to the extent reasonably necessary to obtain any consent, waiver, amendment, modification, approval, authorization, permit or license which may be necessary to effectuate this Agreement, and to consummate the transaction contemplated herein. In the event that either party determines in good faith that a press release or other public announcement is desirable under any circumstances, the parties shall consult with each other to determine the appropriate timing, form and content of such release or announcement and thereafter may make such release or announcement. 5.7 REASONABLE BEST EFFORTS. Subject to the terms and conditions of ------------------------ this Agreement, each of the parties hereto will use its reasonable best efforts to take all action and to do all things necessary, proper or advisable to satisfy any condition to the parties' obligations hereunder in its power to satisfy and to consummate and make effective as soon as practicable the transactions contemplated by this Agreement. 5.8 FCC REPORTS. Seller shall continue to file, on a current basis ------------ until the Closing Date, all reports and documents required to be filed with the FCC with respect to the Station. Seller shall provide Buyer with copies of all such filings within five business days of the filing with the FCC. 5.9 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing, ----------------------------------- Seller shall obtain executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Sale Assets and properties as security for payment of loans and other obligations or judgments and of any other Liens on the Sale Assets. At the closing, Seller shall transfer and convey to Buyer all of the Sale Assets free and clear of all Liens except Permitted Liens. 5.10 ENVIRONMENTAL ASSESSMENT. Not later than forty-five (45) days ------------------------- after execution of this Agreement, Buyer shall obtain a Phase I environmental assessment of the Real Property by an environmental engineer selected by Buyer (the "Environmental Assessment"). Buyer shall commission and pay the cost of such Environmental Assessment and shall provide a copy to Seller within ten (10) days of its receipt by Buyer. The Environmental Assessment shall be subject to the confidentiality provisions of Section 5.6. If, after appropriate inquiry ----------- into the previous ownership of and uses of the Real Property consistent with good commercial or customary practice, the engineer concludes, as set forth in the Environmental Assessment, that environmental conditions exist on, under or affecting such properties that would constitute a violation or breach of Seller's representations and warranties contained in Section 3.14 of this ------------ Agreement or cause the condition contained in Section 6.9 to not be satisfied, ------------ then notwithstanding any other provisions of this Agreement to the contrary, but subject to the following sentence, Seller shall at its sole cost and expense (up to a maximum amount of Fifty Thousand Dollars ($50,000)) remove, correct or remedy any condition or conditions which constitute a violation or breach of Seller's representations and warranties contained in Section 3.14 prior to the ------------ Closing Date and provide to Buyer at Closing a certificate from 21 an environmental abatement firm reasonably acceptable to Buyer that such removal, correction or remedy has been completed so that Seller's representations and warranties contained in Section 3.14 will be true as of the ------------ Closing Date and the condition contained in Section 6.9 will be satisfied as of ----------- the Closing Date. In the event the cost of removal, correction or remedy of the environmental conditions exceeds Fifty Thousand Dollars ($50,000), Buyer may elect to proceed with the Closing but shall not be obligated to close under any circumstances which would require Buyer to assume ownership of the Station under conditions where there exist any uncured violations of warranties, representations or covenants with respect to environmental matters. ARTICLE VI ---------- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE ----------------------------- Buyer's obligation to close the transaction contemplated by this Agreement is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, unless waived by Buyer in writing: 6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE. ---------------------------------------------------------------- (a) The representations and warranties of Seller contained in this Agreement or in any other Document shall be complete and correct in all material respects on the date hereof and at the Closing Date with same effect as though made at such time except for changes that are not materially adverse to the Station or the Sale Assets taken as a whole, and except as follows: (i) as to Section 3.14(d), (f), (g), (h) or (i) the accuracy -------------------------------------- or inaccuracy of this representation as of the date of this Agreement or as of the Closing Date shall not be a condition to Closing if (A) the item is removed on or before Closing, all costs associated with such removal, clean up or other action have been paid in full by Seller and all required certificates of removal or completion or other certificates demonstrating that all required action under Section 5.10 has been completed have been received from applicable regulatory - ------------ authorities, or (B) the removal, clean up or other action cannot be completed and/or governmental or regulatory certificates cannot be obtained prior to Closing (which Closing may be delayed by Seller or Buyer by not more than thirty (30) days if either party reasonably determines that any necessary action can be completed during such delay period), a portion of the Purchase Price equal to the estimated costs of completion and/or certification (to be determined by an independent consulting engineer but in no event exceeding Fifty Thousand Dollars ($50,000) without the prior consent of Seller) is escrowed under an agreement negotiated in good faith by the parties and the amount so escrowed is used to pay all costs of completion; provided, however, that in no event shall Buyer be required to consummate the Agreement if (A) the removal, clean up or other action would likely result in a disruption of Buyer's ability to broadcast at substantially full power from its transmitter site for material periods of 22 time or (B) the estimated cost of completion and/or certification exceeds the amount escrowed pursuant to this Section. (ii) as to Section 3.14(j), the accuracy or inaccuracy of this --------------- representation shall not be a condition to Closing if the noncompliance is cured on or before Closing or if the Seller remains liable for the noncompliance after the Closing; and (iii) as to Sections 3.6 and 3.7, the accuracy or inaccuracy -------------------- of the representations(s) shall not be a condition to Closing if the amount to cure or repair the matter is reasonably estimated at less than One Hundred Thousand Dollars ($100,000) in the aggregate and the Purchase Price is reduced accordingly (if the amount can be accurately determined) or a reasonable reserve is placed into escrow pending cure or repair or Buyer and Seller make other arrangements which are reasonable under the circumstances. In addition, Seller may elect to delay Closing for a period not to exceed thirty (30) days if Seller reasonably determines that any action necessary to cure or repair can be completed during such delay period; provided that the reduction or escrow described in the preceding sentence shall apply to the extent any cure or repair is not completed within such delay period. (b) Seller shall have delivered to Buyer on the Closing Date a certificate that (i) the condition specified in Section 6.1(a) is satisfied as -------------- of the Closing Date, and (ii) except as set forth in such certificate (none of which exceptions shall be materially adverse to the Station, the Sale Assets or Seller's ability to consummate the transaction contemplated hereby), the condition specified in Section 6.2 is satisfied as of the Closing Date, and ----------- further except that as to Section 6.2, non-satisfaction of the condition(s) ----------- shall not be a condition to Closing if the amount to cure or repair the matter is reasonably estimated at less than One Hundred Thousand Dollars ($100,000) in the aggregate and the Purchase Price is reduced accordingly (if the amount can be accurately determined) or a reasonable reserve is placed into escrow pending cure or repair or Buyer and Seller make other arrangements which are reasonable under the circumstances. In addition, Seller may elect to delay Closing for a period not to exceed thirty (30) days if Seller reasonably determines that any action necessary to cure or repair can be completed during such delay period; provided that the reduction or escrow described in the preceding sentence shall apply to the extent any cure or repair is not completed within such delay period. 6.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed in all -------------------------- material respects all of its covenants, agreements and obligations required by this Agreement and each of the other Documents to be performed or complied with by it prior to or upon the Closing Date. 6.3 FCC AND OTHER CONSENTS. ----------------------- (a) The FCC Order shall have been issued by the FCC and shall have become a Final Action without any Material Adverse Condition. 23 (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body relating thereto or in connection therewith specifies and requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall have been satisfied by Seller. (c) All other material authorizations, consents, approvals and clearances of federal, state or local governmental agencies required to permit the consummation by Buyer of the transactions contemplated by this Agreement shall have been obtained; all statutory and regulatory requirements for such consummation shall have been fulfilled; and no such authorizations, consents, approvals or clearances shall contain any conditions that individually or in the aggregate would have a material adverse effect on the operations of the Station. 6.4 ADVERSE PROCEEDINGS. Buyer shall not be subject to any ruling, ------------------- decree, order or injunction restraining, imposing material limitations on or prohibiting (i) the consummation of the transactions contemplated hereby or (ii) its participation in the operation, management, ownership or control of the Station; and no litigation, proceeding or other action seeking to obtain any such ruling, decree, order or injunction shall be pending or shall have been threatened in writing and have a reasonable likelihood of success. No governmental authority having jurisdiction shall have notified any party to this Agreement that consummation of the transaction contemplated hereby would constitute a violation of the laws of the United States or of any state or political subdivision or that it intends to commence proceedings to restrain such consummation or to force divestiture, unless such governmental authority shall have withdrawn such notice. No governmental authority having jurisdiction shall have commenced any such proceeding. 6.5 OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from -------------------------------- Seller's FCC counsel an opinion, dated the Closing Date, in form and substance reasonably satisfactory to Buyer's FCC counsel, to the effect that: (a) The FCC Licenses listed on Schedule 3.8 are valid, in good ------------ standing and in full force and effect and include all licenses, permits and authorizations which are necessary under the Rules and Regulations for Seller to operate the Station in the manner in which the Station is currently being operated. (b) To counsel's knowledge, no condition has been imposed by the FCC as part of any FCC License which is not set forth on the face thereof as issued by the FCC or contained in the Rules and Regulations applicable generally to stations of the type, nature, class or location of the Station. (c) No proceedings are pending or, to counsel's knowledge, are threatened which may result in the revocation, modification, non-renewal of, suspension of, or the imposition of a Material Adverse Condition upon, any of the FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any fines, forfeitures or other administrative actions by the FCC with respect to the 24 Station or its operation, other than proceedings affecting the radio broadcasting industry in general. In rendering such opinion, counsel shall be entitled to rely upon Seller's representations and warranties in this Agreement and to limit its inquiry to its files and such FCC files and records as are available to it as of 10:00 o'clock A.M. Eastern time the business day immediately preceding the Closing Date. Counsel may state that, as to any factual matters embodied in, or forming a basis for any legal opinion expressed in, such opinion, counsel's knowledge is based solely on such inquiry. 6.6 OTHER CONSENTS. Seller shall have obtained in writing and --------------- provided to Buyer on or before the Closing Date, without any condition materially adverse to Buyer or the Station, the consents or waivers to the transactions contemplated by this Agreement required under those Station Agreements which Buyer has elected to assume. 6.7 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or ------------------------------ caused to be delivered to Buyer on the Closing Date each of the Documents required to be delivered pursuant to Section 8.2. ----------- 6.8 NO CESSATION OF BROADCASTING. ---------------------------- (a) Between the date hereof and the Closing Date, the Station shall not have for a period of more than ten (10) days in the aggregate (i) ceased broadcasting on its authorized frequency, (ii) lost substantially all of its normal broadcasting capability or (iii) been broadcasting at a power level of 50% or less of its FCC authorized level. Seller shall promptly notify Buyer of the occurrence of any one or more of the foregoing events or conditions, and the non-fulfillment of the condition precedent set forth in this Subsection caused by the occurrence of the events specified in Seller's notice shall be deemed waived by Buyer unless, within fifteen (15) days after Buyer's receipt of Seller's written notice, Buyer notifies Seller in writing to the contrary. (b) In addition, during the five (5) days immediately preceding the Closing Date, the Station shall have been operating continuously with substantially all of its normal broadcasting capability except for cessation or reductions for insignificant periods of time resulting from occurrences (such as lightning strikes) over which Seller has no control. Seller or Buyer shall have the right to delay Closing for a period not to exceed thirty (30) days if Seller or Buyer reasonably determines that any action to restore the Station substantially all of its normal broadcasting capability can be completed during such delay period. 6.9 ENVIRONMENTAL CONDITIONS. The Environmental Assessment obtained ------------------------- by Buyer pursuant to Section 5.10 hereof shall not have disclosed any material ------------ violation of any Environmental Law at the Real Property which is not removed or cured by Seller prior to Closing. 25 6.10 TITLE INSURANCE COMMITMENT. Title to the Real Property shall be --------------------------- in fee simple, good and marketable and insurable at regular rates by Surety Title Agency, Inc., licensed in the State of Ohio, pursuant to the standard stipulations and conditions of the ALTA policy of owner's title insurance prescribed by the applicable regulatory authorities for the State of Ohio, free and clear of all liens and encumbrances except Permitted Encumbrances, as hereinafter defined. For purposes hereof, "Permitted Encumbrances" shall mean (i) easements, restrictions, and other similar matters which will not adversely affect the use of the Real Property in the ordinary course of business; (ii) liens for taxes not due and payable or, that are being contested in good faith by appropriate proceedings; (iii) mechanics, materialmen's, carriers', warehousemen's, landlords' or other similar liens in the ordinary course of business for sums not yet due or being contested in good faith by appropriate proceedings; (iv) deposits or pledges to secure the performance of bids, tenders, contracts (other than for borrowed money), leases, statutory obligations, surety or appeal bonds or other deposits or pledges for purposes of a like general nature made or given in the ordinary course of business: and (v) liens or mortgages that will be released at Closing; (vi) zoning ordinances and regulations, including statutes and ordinances relating to the liens of streets and to other municipal improvements, which will not adversely affect the use of the Real Property in the ordinary course of business. All costs associated with obtaining the standard ALTA policy of title insurance shall be shared equally by Seller and Buyer. 6.11 SURVEY. Within ten (10) business days after execution of this ------- Agreement, Seller shall provide Buyer with the originals or readable copies of any surveys of the Real Property in Seller's possession. All costs associated with updating such survey or preparing new surveys shall be paid by Buyer. 6.12 DISCLAIMER OF CONDITION PRECEDENT. Provided that Seller ---------------------------------- continues after the date of this Agreement to operate the Station in the ordinary course of business and in compliance with the provisions of this Agreement, then notwithstanding anything contained herein to the contrary, Buyer's obligation to close hereunder shall not be conditioned upon the absence, between the date hereof and the Closing Date, of a material adverse change in the Station's revenues, ratings, financial condition, assets, properties or prospects and such a material adverse change shall not relieve Buyer of its obligations to close hereunder; provided that nothing contained herein shall in any way diminish or affect any specific warranties and representations made by Seller in Article III. ----------- ARTICLE VII CONDITIONS PRECEDENT OF THE OBLIGATION OF SELLER TO CLOSE ----------------------------- The obligation of Seller to close the transaction contemplated by this Agreement is subject to the satisfaction, on or prior to the closing Date, of each of the following conditions, unless waived by Seller in writing: 26 7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. ------------------------------------------- (a) The representations and warranties of Buyer contained in this Agreement shall be complete and correct in all material respects on the date hereof and at the Closing Date with the same effect as though made at such time except for changes that are not materially adverse to Seller. (b) Buyer shall have delivered to Seller on the Closing Date a certificate that (i) the condition specified in Section 7.1(a) is satisfied as -------------- of the Closing Date, and (ii) except as set forth in such certificate (none of which exceptions shall be materially adverse to Buyer's ability to consummate the transaction contemplated hereby), the conditions specified in Section 7.2 ----------- are satisfied as of the Closing Date. 7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all -------------------------- material respects all of its covenants, agreements and obligations required by this Agreement and each of the other Documents to be performed or complied with by it prior to or upon the Closing Date. 7.3. FCC AND OTHER CONSENTS. ----------------------- (a) The FCC Order shall have been issued by the FCC and shall have become effective under the rules of the FCC. (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body relating thereto or in connection therewith specifies and requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall have been satisfied by Buyer. (c) All other material authorizations, consents, approvals and clearances of all Federal, state and local governmental agencies required to permit the consummation by Seller of the transactions contemplated by this Agreement shall have been obtained; all statutory and regulatory requirements for such consummation shall have been fulfilled; and no such authorizations, consents, approvals or clearances shall contain any conditions that individually or in the aggregate would have any material adverse effect on Seller. 7.4 ADVERSE PROCEEDINGS. Seller shall not be subject to any ruling, -------------------- decree, order or injunction restraining, imposing material limitations on or prohibiting the consummation of the transactions contemplated hereby; and no litigation, proceeding or other action seeking to obtain any such ruling, decrees, order or injunction shall be pending or shall have been threatened in writing and have a reasonable likelihood of success. No governmental authority having jurisdiction shall have notified any party to this Agreement that consummation of the transactions contemplated hereby would constitute a violation of the laws of the United States or of any state or political subdivision or that it intends to commence proceedings to restrain such consummation or to force divestiture, unless such governmental authority shall have withdrawn such 27 notice. No governmental authority having jurisdiction shall have commenced any such proceeding. 7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall ------------------------------------------------- have delivered or caused to be delivered to Seller on the Closing Date each of the Documents required to be delivered pursuant to Section 8.3, and Seller shall ----------- have received payment of the Purchase Price with the form of payment set forth in Section 2.5. ----------- ARTICLE VIII CLOSING ------- 8.1 TIME AND PLACE. The Closing shall take place at the offices of --------------- Seller's counsel in Cleveland, Ohio, or at such other place as the parties agree, at 10:00 A.M. Eastern Time on the fifth business day following the last to occur of the following dates (the "Closing Date") (i) the date on which issuance of the FCC Order without any Material Adverse condition has become a Final Action; (ii) the date on which the FCC's grant of Seller's application for renewal of the FCC Licenses has become a Final Action; provided, however, that Buyer, at its sole option, may elect to close at any time after the expiration of any time period allowed for petitions to deny or other public comment with respect to Seller's application for renewal of the FCC Licenses. 8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing, --------------------------------------------- Seller shall deliver or cause to be delivered to Buyer the following: (a) Certified resolutions of the Board of Directors of the Managing General Partner of WHK LP and the Omni Group approving the execution and delivery of this Agreement and each of the other documents and authorizing the consummation of the transactions contemplated hereby and thereby. (b) The certificate required by Section 6.1(b). -------------- (c) A bill of sale and other instruments of transfer and conveyance transferring to Buyer the Tangible Personal Property. (d) Executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Sale Assets as security for payment of loans and other obligations and of any other Liens (other than Permitted Liens). (e) Limited warranty deeds and any other required instruments of transfer and conveyance transferring to Buyer the Real Property. (f) Executed mortgage satisfactions and any other documents required by the title insurance company under Section 6.10 as a condition to ------------ issuing the title insurance policy in the form required by Section 6.10. ------------ 28 (g) An instrument or instruments assigning to Buyer all right, title and interest of Seller in and to all Station Agreements being assumed by Buyer. (h) An instrument assigning to Buyer all right, title and interest of Seller in the FCC Licenses, all pending applications relating to the station before the FCC, and any remaining Sale Assets not otherwise conveyed. (i) The opinion of Seller's FCC counsel, dated the Closing Date, to the effect set forth in Section 6.5. ------------ (j) Such additional information and materials as Buyer shall have reasonably requested, including without limitation, evidence that all material consents and approvals required as a condition to Buyer's obligation to close hereunder have been obtained. 8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing, --------------------------------------------- Buyer shall deliver or cause to be delivered to Seller the following: (a) Certified resolutions of the Board of Directors of Buyer and Salem Communications Corporation approving the execution and delivery of this Agreement and each of the other Documents and authorizing the consummation of the transaction contemplated hereby and thereby. (b) The Purchase Price as set forth in Section 2.5. ----------- (c) The agreement of Buyer assuming the obligations under any Station Agreements being assumed by Buyer. (d) The certificate required under Section 7.1(b). -------------- (e) Such additional information and materials as Seller shall have reasonably requested. ARTICLE IX ---------- SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ------------------------------------------- INDEMNIFICATION --------------- 9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations, ------------------------------------------ warranties, covenants and agreements contained in this Agreement or in any other Document shall survive the Closing for the Survival Period and the Closing shall not be deemed a waiver by either party of the representations, warranties, covenants or agreements of the other party contained herein or in any other Document. No claim may be brought under this Agreement or any other Document unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day 29 of the Survival Period. In the event such a notice is so given, the right to indemnification with respect thereto under this Article shall survive the Survival Period until such claim is finally resolved and any obligations with respect thereto are fully satisfied. Notwithstanding the foregoing, the provisions for survival and the making of claims shall not apply to the agreements whereby Buyer assumes the obligations under Subsection 8.3(c), each ----------------- of which agreements shall be governed by its own terms. 9.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the --------------------------- rights to indemnification and to be held harmless set forth in this Agreement shall, as between the parties hereto and their respective successors and assigns, be exclusive of all rights to indemnification and to be held harmless that such party (or its successors or assigns) would otherwise have by statute, common law or otherwise. 9.3 INDEMNIFICATION BY SELLER. -------------------------- (a) Subject to the provisions of Subsection (b) below and -------------- Section 10.2 below, Seller shall indemnify and hold harmless Buyer and any - ------------ officer, director, agent, employee and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses, including reasonable attorneys' fees, (collectively referred to herein or "Losses") relating to or arising out of: (i) Any breach or non-performance by Seller of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other Documents; or (ii) The ownership or operation by Seller of the Station or the Sale Assets on or prior to the Closing Date; or (iii) All other liabilities and obligations of Seller other than the Assumed Obligations; or (iv) Noncompliance by Seller with the provisions of the Bulk Sales Act, if applicable, in connection with the transaction contemplated hereby. (b) Notwithstanding anything contained herein to the contrary, if Closing occurs, Seller shall not be obligated until the aggregate amount of Losses exceeds Buyer's Threshold Limitation, in which case Buyer shall then be entitled to indemnification of the entire amount in excess of Buyer's Threshold Limitation, provided that any amounts owed by Seller to Buyer under Subsection ---------- (a) (iv) above and Section 2.7 shall not be counted in determining whether - -------- ----------- Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to recover any such payment without regard to such limitation. Notwithstanding anything contained herein to the contrary, if Closing occurs, Seller shall not be obligated to pay any amounts pursuant to this Section 9.3 in excess of the Purchase Price. 30 9.4 INDEMNIFICATION BY BUYER. ------------------------- (a) Subject to the provisions of Subsection (b) below and Section -------------- ------- 10.2 below, Buyer shall indemnify and hold harmless Seller and any officer, - ---- director, agent, employee and affiliate thereof with respect to any and all Losses relating to or arising out of: (i) Any breach or non-performance by Buyer of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other Document; or (ii) The ownership or operation of the Station after the Closing Date; or (iii) The Assumed Obligations and all other liabilities or obligations of Buyer. (b) Notwithstanding anything contained herein to the contrary, if Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to Subsection (a) above unless and until the aggregate amount of such Losses - -------------- exceeds Seller's Threshold Limitation, in which case Seller shall then be entitled to indemnification of the entire amount in excess of Seller's Threshold Limitation, provided that any payment owed by Buyer to Seller under Section 2.7 ----------- shall not be counted in determining whether Seller's Threshold Limitation is satisfied, and Seller shall have the right to recover any such payment without regard to any such limitation. Notwithstanding anything contained herein to the contrary, if Closing occurs, Buyer shall not be obligated to pay any amounts pursuant to this Section 9.4 in excess of the Purchase Price. 9.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified Party --------------------------- may be entitled to indemnification hereunder with respect to any asserted claim of, or obligation or liability to, any third party, such party shall notify the Indemnifying Party thereof, describing the matters involved in reasonable detail, and the Indemnifying Party shall be entitled to assume the defense thereof upon written notice to the Indemnified Party with counsel reasonably satisfactory to the Indemnified Party; provided, that once the defense thereof is assumed by the Indemnifying Party, the Indemnifying Party shall keep the Indemnified Party advised of all developments in the defense thereof and any related litigation, and the Indemnified Party shall be entitled at all times to participate in the defense thereof at its own expense. If the Indemnifying Party fails to notify the Indemnified Party of its election to defend or contest its obligation to indemnify under this Article IX, the Indemnified Party may pay, ---------- compromise, or defend such a claim without prejudice to any right it may have hereunder. {THIS SPACE INTENTIONALLY LEFT BLANK.} 31 ARTICLE X TERMINATION; LIQUIDATED DAMAGES ------------------------------- 10.1 TERMINATION. If Closing shall not have previously occurred, ------------ this Agreement shall terminate upon the earliest of: (a) the giving of written notice from Seller to Buyer, or from Buyer to Seller, if: (i) Seller gives such termination notice and is not at such time in material default hereunder, or Buyer gives such termination notice and Buyer is not at such time in material default hereunder; and (ii) Either: (A) any of the representations or warranties contained herein of Buyer (if such termination notice is given by Seller), or of Seller (if such termination notice is given by Buyer), are inaccurate in any respect and materially adverse to the party giving such termination notice unless the inaccuracy has been induced by or is the result of actions or omissions of the party giving such termination notice or unless the accuracy of such representation or warranty is not a condition to closing; or (B) Any material obligation to be performed by Buyer (if such termination notice is given by Seller) or by Seller (if such termination notice is given by Buyer) is not timely performed in any material respect unless the lack of timely performance has been induced by or is the result of actions or omissions of the party giving such termination notice; or (C) Any material condition (other than those referred to in foregoing Clauses (A) and (B)) to the obligation to close the ----------- --- transaction contemplated herein of the party giving such termination notice has not been timely satisfied, unless the failure of said condition to be satisfied was induced by the party giving such termination notice with the intended result of terminating the Agreement pursuant to this Clause (C); and ---------- (iii) any such inaccuracy, failure to perform or non- satisfaction of a condition neither has been cured nor satisfied within twenty (20) days after written notice thereof from the party giving such termination notice nor waived in writing by the party giving such termination notice. (b) Written notice from Seller to Buyer, or from Buyer to Seller, at any time after March 31, 1997 provided that termination shall not occur upon the giving of 32 such termination notice by Seller if Seller is at such time in material default hereunder or upon the giving of such termination notice by Buyer if Buyer is at such time in material default hereunder. (c) Written notice from Seller to Buyer, or from Buyer to Seller, at any time following a determination by the FCC that the application for consent to assignment of the FCC Licenses has been designated for hearing if Seller or Buyer reasonably determine that approval to the assignment can not be obtained prior to March 31, 1997, even with diligent efforts; provided, however, only the party whose qualifications are not in issue may terminate this Agreement under this provision and only if such party has given the other sixty (60) days' prior written notice and the requirement for such hearing has not been set aside within that period. (d) The written election by Buyer under Article XI. ---------- 10.2 OBLIGATIONS UPON TERMINATION. ---------------------------- (a) In the event this Agreement is terminated pursuant to Section ------- 10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder - -------------- --- shall be limited as provided in Subsections (c) and (e), below and the aggregate ----------------------- liability for Seller for breach hereunder shall be limited as provided in Subsections (d) and (e), below. In the event this Agreement is terminated for - ----------------------- any other reason, neither party shall have any liability hereunder. (b) Upon termination of this Agreement, Buyer shall be entitled to the return of the Earnest Money from the Escrow Agent under the Escrow Agreement (i) if such termination is effected by Buyer's giving of valid written notice to Seller pursuant to Subsections 10.1(a), (b), (c) or (d) , or (ii) if such ------------------------------------ termination is effected by Seller's giving of valid written notice to Buyer pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is ---------------------------------------------- entitled to the return of the Earnest Money, Seller shall cooperate with Buyer in taking such action as is required under the Escrow Agreement in order to effect such return from the Escrow Agent. (c) If this Agreement is terminated by Seller's giving of valid written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer -------------------------------- agrees that (i) Buyer shall pay Seller upon such termination, as liquidated damages and not as penalty, the sum ("Liquidated Damage Amount") of (A) Six Hundred Seventy Five Thousand Dollars ($675,000), plus (B) the amount of the Earnest Money; (ii) Seller shall be entitled to collect the Liquidated Damage Amount by receiving a disbursement from the Escrow Agent under the Escrow Agreement equal to the Earnest Money; and (iii) Seller shall be entitled to pursue any other remedy available to Seller at law or in equity to recover the full amount of the Liquidated Damage Amount from Buyer provided that the total monetary damages (including any amount received from the Escrow Agent under the Escrow Agreement) to which Seller shall be entitled shall not exceed the Liquidated Damage Amount. SELLER'S RECEIPT OF THE LIQUIDATED DAMAGE AMOUNT SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER 33 AND NOT A PENALTY, AND, EXCEPT AS PROVIDED IN SECTION 13.4, SHALL BE SELLER'S ------------ SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT OCCUR. EXCEPT AS PROVIDED IN SECTION 13.4, BUYER AND SELLER EACH ACKNOWLEDGE AND ------------ AGREE THAT THE LIQUIDATED DAMAGE AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER. (d) Notwithstanding any provision of this Agreement to the contrary, but subject to the provisions of the following sentences, if this Agreement is terminated by Buyer's giving of written notice to Seller pursuant to Subsection ---------- 10.1(a), Buyer shall not be entitled to damages or indemnification from Seller. - ------- Subject to the following sentence, if Seller attempts to terminate this Agreement under circumstances where it is not entitled to do so, or if Seller, by its own action, causes a breach of warranty or fails to satisfy a condition (including without limitation a refusal to consummate the transaction after Buyer has satisfied all conditions to Seller's obligation to close and Buyer has demonstrated its willingness and ability to close on the terms set forth in this Agreement and Buyer is not in default hereunder) with the intent of creating a situation whereby Buyer elects to terminate under Section 10.1(a) and Buyer does --------------- so elect to terminate, the monetary damages, if any, to which Buyer shall be entitled shall be limited to direct and actual damages and shall in no event exceed Three Hundred Thousand Dollars ($300,000) in the aggregate. If a circumstance described in the preceding sentence should arise and if Buyer establishes that the action of Seller described therein was taken intentionally in order to allow Seller to sell or enter into negotiations to sell the Station to another party, the damages to which Buyer shall be entitled shall not be limited to direct and actual damages. (e) In any dispute between Buyer and Seller as to which party is entitled to all or a portion of the Earnest Money, the prevailing party shall receive, in addition to that portion of the Earnest Money to which it is entitled, an amount equal to interest on that portion at the rate of 10% per annum, calculated from the date the prevailing party's demand for all or a portion of the Earnest Money is received by the Escrow Agent. 10.3 TERMINATION NOTICE. Each notice given by a party pursuant ------------------- to Section 10.1 to terminate this Agreement shall specify the Subsection (and ------------ clause or clauses thereof) of Section 10.1 pursuant to which such notice is ------------ given. ARTICLE XI ---------- CASUALTY -------- Upon the occurrence of any casualty loss, damage or destruction material to the operation of the Station prior to the Closing, Seller shall promptly give Buyer written 34 notice setting forth in detail the extent of such loss, damage or destruction and the cause thereof if known. Seller shall use its reasonable efforts to promptly commence and thereafter to diligently proceed to repair or replace any such lost, damaged or destroyed property. In the event that such repair or replacement is not fully completed prior to the Closing Date, Buyer may elect to postpone the Closing until Seller's repairs have been fully completed or to consummate the transactions contemplated hereby on the Closing Date, in which event Seller shall assign to Buyer the portion of the insurance proceeds (less all reasonable costs and expenses, including without limitation attorney's fees, expenses and court costs incurred by Seller to collect such amounts), if any, not previously expended by Seller to repair or replace the damaged or destroyed property (such assignment of proceeds to take place regardless of whether the parties close on the scheduled or deferred Closing Date) and Buyer shall accept the damaged Sale Assets in their damaged condition. In the event the loss, damage or destruction causes or will cause the Station to be off the air for more than seven (7) consecutive days or fifteen (15) total days, whether or not consecutive, then Buyer may elect either (i) to consummate the transactions contemplated hereby on the Closing Date, in which event Seller shall assign to Buyer the portion of the insurance proceeds (less all reasonable costs and expenses, including without limitation attorney's fees, expenses and court costs, incurred by Seller to collect such amounts), if any, not previously expended by Seller to repair or replace the damaged or destroyed property, and Buyer shall accept the damaged Sale Assets in their damaged condition, or (ii) to terminate this Agreement. ARTICLE XII CONTROL OF STATION ------------------ Between the date of this Agreement and the Closing Date, Buyer shall not control, manage or supervise the operation of the Station or conduct of its business, all of which shall remain the sole responsibility and under the control of Seller, subject to Seller's compliance with this Agreement. ARTICLE XIII MISCELLANEOUS ------------- 13.1 FURTHER ACTIONS. From time to time before, at and after the ---------------- Closing, each party, at its expense and without further consideration, will execute and deliver such documents to the other party as the other party may reasonably request in order more effectively to consummate the transactions contemplated hereby. 13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a ------------------------------ period of twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants and other representatives with reasonable access during normal business hours to the books, records, property, personnel, contracts, commitments and documents of the Station pertaining to transactions occurring prior to the Closing Date when requested by Seller, and Buyer shall retain such books and records for the normal document retention period 35 of Buyer. At the request and expense of Seller, Buyer shall deliver copies of any such books and records to Seller . 13.3 PAYMENT OF EXPENSES. -------------------- (a) Any fees assessed by the FCC in connection with the filings contemplated by Section 5.2(a) or consummation of the transactions -------------- contemplated hereby shall be shared equally between Seller and Buyer. (b) All state or local sales or use, stamp or transfer, grant and other similar taxes payable in connection with consummation of the transactions contemplated hereby shall be shared equally between Buyer and Seller. (c) Except as otherwise expressly provided in this Agreement, each of the parties shall bear its own expenses, including the fees of any attorneys and accountants engaged by such party, in connection with this Agreement and the consummation of the transactions contemplated herein. 13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a -------------------- special, unique, and extraordinary character, and that any breach of this Agreement by Seller could not be compensated for by damages. Accordingly, if Seller shall breach its obligations under this Agreement, Buyer shall be entitled, in addition to any of the remedies that it may have, to enforcement of this Agreement (subject to obtaining any required approval of the FCC) by decree of specific performance or injunctive relief requiring Seller to fulfill its obligations under this Agreement. Buyer acknowledges that certain transactions that Seller may enter into may be premised upon the consummation of the transaction contemplated by this Agreement and if Buyer breaches its obligations under this Agreement, the value of the Station to Seller could be adversely affected in an amount exceeding the Liquidated Damages Amount. Therefore, at Sellers option, in lieu of receiving the Liquidated Damages Amount as provided in Section 10.2(c), Seller shall be entitled to seek enforcement of this --------------- Agreement by decree of specific performance or injunctive relief requiring Buyer to fulfill its obligations under this Agreement. In any action to equitably enforce the provisions of this Agreement, the other party shall waive the defense that there is an adequate remedy at law or equity and agrees that the party seeking equitable relief shall have the right to obtain specific performance of the terms of this Agreement without being required to prove actual damages, post bond or furnish other security. 13.5 NOTICES. All notices, demands or other communications given ------- hereunder shall be in writing and shall be sufficiently given if delivered by courier or sent by registered or certified mail, first class, postage prepaid, or by telex, cable, telegram, facsimile machine or similar written means of communication, addressed as follows: THIS SPACE INTENTIONALLY LEFT BLANK. 36 (a) if to Seller, to: OmniAmerica Communications, Inc. 11111 Santa Monica Blvd., Suite 220 Los Angeles, California 90025 Attn: Carl Hirsch, CEO Copy to: Howard Mandel, Esq. Thompson, Hine & Flory 3900 Society Center 127 Public Square Cleveland, Ohio 44114 (b) if to Buyer, to: Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Facsimile No.: (805) 482-7290 Attention: Jonathan L. Block, Esq. Corporate Counsel or such other address with respect to any party hereto as such party may from time to time notify (as provided above) to the other party hereto. Any such notice, demand or communication shall be deemed to have been given (i) if so mailed, as of the close of the third business day following the date mailed, and (ii) if personally delivered or otherwise sent as provided above, on the date received. 13.5 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits ----------------- hereto, and the other Documents constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede any prior negotiations, agreements, understandings or arrangements between the parties with respect to the subject matter hereof. 13.6 BINDING EFFECT; BENEFITS. Except as otherwise provided herein, ------------------------- this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors or assigns. Except to the extent specified herein, nothing in this Agreement, express or implied, shall confer on any person other than the parties hereto and their respective successors or assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 13.7 ASSIGNMENT. This Agreement and any rights hereunder shall not ----------- be assignable by either party hereto without the prior written consent of the other party, 37 which consent shall not be unreasonably withheld; provided, however, that Buyer may, at its own expense, without Seller's prior written consent, assign its rights and obligations to acquire the Real Property to Edward G. Atsinger III and Stuart W. Epperson, or trusts or limited partnerships created for their benefit and/or the benefit of their spouses and their issue, so long as (i) no delay results in the Closing Date (ii) no extra expense results to Seller, and (iii) Buyer remains liable for indemnification of Seller in respect of all Assumed Obligations in respect of the Real Property. 13.8 GOVERNING LAW. This Agreement shall in all respects be -------------- governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. 13.9 BULK SALES. Buyer hereby waives compliance by Seller with the ----------- provisions of the Bulk Sales Act and similar laws of any state or jurisdiction, if applicable. Seller shall, in accordance with Article IX, indemnify and hold ---------- Buyer harmless from and against any and all claims made against Buyer by reason of such non-compliance. 13.10 AMENDMENTS AND WAIVERS. No term or provision of this Agreement ----------------------- may be amended, waived, discharged or terminated orally but only by an instrument in writing signed by the party against whom the enforcement of such amendment, waiver, discharge or termination is sought. Any waiver shall be effective only in accordance with its express terms and conditions. 13.11 SEVERABILITY. Any provision of this Agreement which is ------------- unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto hereby waive any provision of law now or hereafter in effect which renders any provision hereof unenforceable in any respect. 13.12 HEADINGS. The captions in this Agreement are for convenience --------- of reference only and shall not define or limit any of the terms or provisions hereof. 13.13 COUNTERPARTS. This Agreement may be executed in any number of ------------- counterparts, and by either party on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13.14 REFERENCES. All references in this Agreement to Articles and ----------- Sections are to Articles and Sections contained in this Agreement unless a different document is expressly specified. 13.15 SCHEDULES AND EXHIBITS. Unless otherwise specified herein, ----------------------- each Schedule and Exhibit referred to in this Agreement is attached hereto, and each such Schedule and Exhibit is hereby incorporated by reference and made a part hereof as if fully set forth herein. 38 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written. "SELLER" "BUYER " OMNIAMERICA GROUP INSPIRATION MEDIA OF OHIO, INC. By: /s/ Carl Hirsch By: /s/ Eric H. Halvorson ---------------------------- ---------------------------- Carl Hirsch Eric H. Halvorson Chief Executive Officer Executive Vice President WHK LICENSE PARTNERSHIP By: /s/ Carl Hirsch ---------------------------- Carl Hirsch Chief Executive Officer 39 GUARANTY Salem Communications Corporation ("Guarantor") hereby absolutely and unconditionally guarantees the following (the "Guaranteed Obligations"): (a) the punctual and full payment when due of all the obligations of Buyer in connection with the Documents; it being the intention of Guarantor that this guaranty be an absolute and unconditional guarantee of payment; and (b) the performance and observance by Buyer of all its obligations and covenants under the Documents. Guarantor further agrees that the guaranty will not be discharged or affected by the fact that the Guaranteed Obligations or any of them shall be invalid or unenforceable for any reason. The guaranty shall be liberally construed in favor of Seller. Guarantor hereby waives any right to require payment of the Guaranteed Obligations by Buyer, or to require Seller to proceed against any collateral or escrow for the Guaranteed Obligations, or to require any action or proceeding against Buyer on the Guaranteed Obligations, or otherwise to require Seller to exhaust any and all remedies against Buyer or any other person before proceeding against Guarantor on the guaranty. SALEM COMMUNICATIONS CORPORATION By: /s/ Eric H. Halvorson ------------------------- Eric H. Halvorson Executive Vice President 40 EX-10.06.04.02 29 1ST AM. TO THE ASSET PURCHASE AGREEMENT EXHIBIT 10.06.04.02 FIRST AMENDMENT TO THE ASSET PURCHASE AGREEMENT WHK-AM - CLEVELAND, OHIO This amendment ("Amendment") is dated as of this 23rd day of July, 1996 by and between OmniAmerica Group ("Omni Group") and WHK License Partnership ("WHK LP") (Omni Group and WHK LP shall be collectively be referred to herein as "Seller") and Inspiration Media of Ohio, Inc. ("Buyer"). WHEREAS, pursuant to an Asset Purchase Agreement ("WHK Agreement") dated April 23, 1996, by and between Seller and Buyer, Buyer obtained the right to purchase and acquire certain assets relating to radio station WHK-AM ("WHK"), Cleveland, Ohio; WHEREAS Buyer is a wholly owned subsidiary of Salem Communications Corporation ("Salem"); WHEREAS Common Ground Broadcasting, Inc., an Oregon corporation and wholly owned subsidiary of Salem, is selling certain assets relating to radio station KDBX-FM ("KDBX"), Banks, Oregon; WHEREAS Salem elects to exchange ("the Exchange") the assets of WHK, for purpose of a tax-deferred exchange pursuant to IRC (S) 1031, with the assets of KDBX; and, WHEREAS, in order to effectuate the Exchange, it is necessary that the purchaser named in the WHK Agreement be changed from "Inspiration Media of Ohio, Inc." to "Common Ground Broadcasting, Inc." NOW THEREFORE, Seller and Buyer agree as follows: 1. Any and all references to "Inspiration Media of Ohio, Inc." in the WHK Agreement shall be replaced by "Common Ground Broadcasting, Inc." 2. Except as expressly provided herein, the terms and conditions of the Agreement shall remain in full force and effect and unamended. In the event of a conflict between this Amendment and the terms of the Agreement, the terms of this Amendment shall control. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written. "SELLER" "BUYER" OMNIAMERICA COMMUNICATIONS, INC. INSPIRATION MEDIA OF OHIO, INC. By: By: /s/ Eric H. Halvorson ------------------------ ------------------------ Carl Hirsch Eric H. Halvorson Chief Executive Officer Executive Vice President WHK LICENSE PARTNERSHIP By: ------------------------ Carl Hirsch Chief Executive Officer 39 EX-10.06.04.03 30 2ND AM. TO ASSET PURCHASE AGREEMENT EXHIBIT 10.06.04.03 SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT This Second Amendment to Asset Purchase Agreement (the "Amendment") is executed as of August 12, 1996, by and between OmniAmerica Group ("Omni"), WHK License Partnership ("WHK LP") (Omni and WHK LP shall collectively be referred to herein as "Seller"), and Inspiration Media of Ohio, Inc. ("Buyer"). WHEREAS, Seller and Buyer have executed an Asset Purchase Agreement, dated April 23, 1996 (the "Agreement"), pertaining to the acquisition by Buyer of substantially all of the assets of WHK-AM (Cleveland) (the "Station"); and WHEREAS, Buyer and Seller desire to amend certain provisions of the Agreement; NOW, THEREFORE, for good and valuable consideration, including the furtherance of the transactions contemplated by the Agreement, the parties agree as follows: 1. Amendment to Section 8.1. Section 8.1 of the Agreement is hereby ------------------------ deleted in its entirety and replaced with the following: 8.1 TIME AND PLACE. The Closing shall take place at the offices of -------------- Seller's counsel in Cleveland, Ohio, or at such other place as the parties agree, but no later than January 17, 1997 if all conditions to closing have been satisfied by that date (the "Closing Date"); provided, however, that the Closing Date shall not occur until after the last to occur of the following dates: (i) the date on which issuance of the FCC Order without any Material Adverse condition has become a Final Action; and (ii) the date on which the FCC's grant of Seller's application for renewal of the FCC Licenses has become a Final Action; provided, however, that Buyer, at its sole option, may elect to close at any time after the expiration of any time period allowed for petitions to deny or other public comment with respect to Seller's application for renewal of the FCC Licenses. The parties agree to take all commercially reasonable actions to extend any approvals by the FCC through the Closing Date. 2. Addition of Section 13.16. The following is hereby added as Section ------------------------- 13.16 of the Agreement: 13.16 LOCAL MARKETING AGREEMENT. If the parties enter into a local ------------------------- marketing agreement for the operation of the Station by Buyer (the "LMA"), Buyer shall not have any right or claim, including, without limitation, any right to terminate this Agreement or any claim for liabilities, damages, losses, costs or expenses, due to the inaccuracy of any representation or warranty, the breach of any covenant, or the failure of any condition resulting from (a) the operation of the Station by Buyer under the LMA or (b) Buyer's repairs, modifications, or maintenance to the Station's broadcast facilities. 3. Addition of Section 13.17. The following is hereby added as Section ------------------------- 13.17 of the Agreement: 13.17 Access to Sale Assets; Waiver. Commencing on August 12, 1996, ----------------------------- Buyer shall have access to the Station's broadcast facilities in order to make certain repairs and modifications and conduct certain maintenance thereto (collectively, the "Work") at Buyer's sole expense. In exchange for this access, Buyer agrees to waive any right or claim, now existing or hereafter arising, known or unknown, for liabilities, damages, losses, costs or expenses due to the inaccuracy of any representation or warranty by Seller, the breach of any covenant by Seller, or the failure of any condition of Seller, in each case, relating to the condition of or the engineering or technical aspects of the Tangible Personal Property or their compliance with governmental (including FCC) law, rules, policies, or regulations; provided, however, Buyer shall be entitled to assert claims to the extent provided for in the Agreement in connection with casualty losses occasioned by events other than those for which Buyer is required to indemnify Seller pursuant to the immediately following sentence. Buyer will indemnify and hold Seller and all officers, directors, agents, employees and affiliates thereof harmless from and against any Losses arising in connection with the Work, regardless of whether such Work is done prior to or subsequent to August 12, 1996. 4. Common Ground Broadcasting, Inc.; Salem. Common Ground Broadcasting, --------------------------------------- Inc., an Oregon corporation and wholly owned subsidiary of Salem Communications Corporation ("Salem"), hereby assumes all obligations of Inspiration Media of Ohio, Inc. under the Agreement. Salem consents to the First Amendment to the Asset Purchase Agreement (the "First Amendment") and this Second Amendment and hereby reaffirms its guaranty as provided in the Agreement. 5. Limited Effect. Except as provided in the First Amendment and this -------------- Second Amendment, the Agreement remains unchanged and in full force and effect. 2 IN WITNESS WHEREOF, each of the parties has caused this Amendment to be duly executed and delivered as of date first above written. "SELLER" "BUYER" OMNIAMERICA GROUP COMMON GROUND BROADCASTING, INC. By: By: /s/ Eric H. Halvorson ------------------------ ----------------------- Carl Hirsch Eric H. Halvorson Chief Executive Officer Executive Vice President WHK LICENSE PARTNERSHIP SALEM COMMUNICATIONS CORPORATION By: By: /s/ Eric H. Halvorson ----------------------- ----------------------- Carl Hirsch Eric H. Halvorson Chief Executive Officer Executive Vice President 3 IN WITNESS WHEREOF, each of the parties has caused this Amendment to be duly executed and delivered as of date first above written. "SELLER" "BUYER" OMNIAMERICA GROUP COMMON GROUND BROADCASTING, INC. By: /s/ Carl Hirsch By: /s/ Eric H. Halvorson ---------------------------- ---------------------------- Carl Hirsch Eric H. Halvorson Chief Executive Officer Executive Vice President WHK LICENSE PARTNERSHIP SALEM COMMUNICATIONS CORPORATION By: /s/ Carl Hirsch By: /s/ Eric H. Halvorson ---------------------------- ---------------------------- Carl Hirsch Eric H. Halvorson Chief Executive Officer Executive Vice President EX-10.06.05 31 ASSET PURCHASE AGREEMENT EXHIBIT 10.06.05 EXECUTION COPY ================================================================================ ASSET PURCHASE AGREEMENT by and between INFINITY BROADCASTING CORPORATION OF DALLAS AND INSPIRATION MEDIA OF TEXAS, INC. Dated as of September 30, 1996 ================================================================================ TABLE OF CONTENTS
PAGE ARTICLE 1 ASSETS TO BE CONVEYED............................................ 1 1.1. Closing.......................................................... 1 1.2. Transfer of KEWS Assets.......................................... 1 1.3. Excluded Assets.................................................. 2 ARTICLE 2 PURCHASE PRICE................................................... 2 2.1. Purchase Price................................................... 2 2.2. Payment of Cash Purchase Price................................... 3 2.3. Transfer of the KDFX Assets...................................... 3 2.4. Allocation....................................................... 4 ARTICLE 3 ASSUMPTION OF OBLIGATIONS; PRORATIONS ........................... 4 3.1. Assumption of Obligations........................................ 4 3.2. Limitation....................................................... 4 3.3. Proration of Expenses............................................ 5 3.4. Payment of Proration Items....................................... 5 ARTICLE 4 REPRESENTATIONS AND WARRANTIES COMMON TO BOTH INFINITY AND SALEM.............................................. 6 4.1. Organization and Standing........................................ 6 4.2. Authorization and Binding Obligation............................. 6 4.3. Absence of Conflicting Agreements or Required Consents........... 6 4.5 Taxes............................................................ 7 4.6 Insolvency Proceedings........................................... 7 4.7. Broker's Fees.................................................... 7 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF INFINITY....................... 7 5.1. FCC Authorizations and Qualifications............................ 7 5.2. Title to and Condition of Personal Property...................... 8 5.3. Assumed Contracts; Real Estate Leases............................ 8 5.4. Compliance With Laws............................................. 9 5.5. Insurance........................................................ 10
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SALEM ......................... 10 6.1. FCC Authorizations and Qualifications............................ 10 6.2. Title to and Condition of Personal Property...................... 10 6.3. Assumed Contracts; Real Estate Leases............................ 11 6.4. Compliance With Laws............................................. 11 6.5. Insurance........................................................ 12 ARTICLE 7 GOVERNMENTAL CONSENTS ........................................... 12 7.1. FCC Application.................................................. 12 7.2 Compliance with HSRA............................................. 13 7.3 Other Governmental Consents...................................... 13 ARTICLE 8 COVENANTS........................................................ 14 8.1. Conduct of Business.............................................. 14 8.2. Notification..................................................... 14 8.3. Access........................................................... 14 8.4. Third-Party Consents............................................. 15 8.5. Pre-Closing Efforts.............................................. 15 8.6. Risk of Loss..................................................... 15 8.7. Confidentiality.................................................. 16 8.7. Further Assurances............................................... 16 8.8 Covenant Not to Compete.......................................... 16 8.9 KDFX Transmitter Site Lease...................................... 16 ARTICLE 9 CONDITIONS PRECEDENT............................................. 16 9.1. To Salem's Obligations........................................... 16 9.2 To Infinity's Obligations........................................ 17 ARTICLE 10 DOCUMENTS TO BE DELIVERED AT THE CLOSING......................... 18 10.1. Documents to be Delivered by Infinity............................ 18 10.2. Documents to be Delivered by Salem............................... 18 ARTICLE 11 INDEMNIFICATION, SURVIVAL........................................ 19 11.1. Infinity's Indemnities........................................... 19 11.2. Salem's Indemnities.............................................. 20 11.3. Procedure for Indemnification.................................... 20 11.4. Limitations...................................................... 21
ii 11.5. Survival of Representations, Warranties and Covenants............ 22 11.6. Sole Remedy...................................................... 22 ARTICLE 12 TERMINATION RIGHTS............................................... 22 12.1. Termination...................................................... 22 12.2. Effect of Termination............................................ 23 ARTICLE 13 REMEDIES LIPON DEFAULT; SPECIFIC PERFORMANCE..................... 23 13.1. Default by Infinity; Specific Performance........................ 23 13.2. Default by Salem; Liquidated Damages............................. 23 ARTICLE 14 OTHER PROVISIONS................................................. 24 14.1. Transfer Taxes and Expenses...................................... 24 14.2. Benefit and Assignment........................................... 24 14.3. Entire Agreement; Schedules; Amendment; Waiver................... 24 14.4. Headings......................................................... 24 14.5. Computation of Time.............................................. 25 14.6. Governing Law; Waiver of Jury Trial.............................. 25 14.7. Attorneys' Fees.................................................. 25 14.8. Severability..................................................... 25 14.9. Notices.......................................................... 25 14.10. Counterparts..................................................... 26 ARTICLE 15 DEFINITIONS...................................................... 26 15.1. Defined Terms.................................................... 26 15.2. Miscellaneous Terms.............................................. 30
iii EXHIBITS Exhibit A Escrow Agreement Exhibit B Form of Covenant Not to Compete Exhibit C Form of Amended KDFX Transmitter Site Lease SCHEDULES Schedule 1.2(a) KEWS FCC Licenses Schedule 1.2(c) KEWS Main Studio Equipment Schedule 1.2(d) KEWS Assumed Contracts Schedule 2.3(a)(i) KDFX FCC Licenses Schedule 2.3(a)(iii) KDFX Main Studio Equipment Schedule 2.3(a)(iv) KDFX Assumed Contracts Schedule 4.3(a) Infinity's Required Consents Schedule 4.3(b) Salem's Required Consents Schedule 5.1 Infinity's FCC Qualifications Exceptions iv ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (this "Agreement"), made as of the 30th day of September 1996, is between Infinity Broadcasting Corporation of Dallas, a Delaware corporation ("Infinity"), and Inspiration Media of Texas, Inc., a Texas corporation ("Salem"). Infinity is the licensee of station KEWS-FM, 94.9 mHz, Arlington, Texas ("KEWS"). Salem is the licensee of station KDFX(AM), 1190 kHz, Dallas, Texas ("KDFX"). Salem has expressed an interest in acquiring certain assets used in the operation of KEWS, including the KEWS FCC Licenses (as defined below). Infinity has expressed an interest in acquiring certain assets used in the operation of KDFX, including the KDFX FCC Licenses (as defined below). Infinity has agreed to sell the KEWS Assets (as defined below) to Salem in return for the payment of $32,000,000 and the assignment of the KDFX Assets (as defined below). Definitions of capitalized terms in this Agreement are set forth in SECTION 15.1. The assignment of KEWS FCC Licenses to Salem and the assignment of the KDFX FCC Licenses to Infinity require the prior consent of the Federal Communications Commission ("FCC"). Therefore, the parties agree as follows: ARTICLE 1 ASSETS TO BE CONVEYED --------------------- 1.1. CLOSING. Subject to SECTION 12.1 (Termination Rights), the closing (the "Closing") of the sale and purchase of the KEWS Assets and the KDFX Assets shall take place in the offices of Leventhal, Senter & Lerman, 2000 K Street, N.W., Washington, D.C., at 10:00 a.m., local time, on the fifth (5th) business day following the satisfaction or waiver of the conditions set forth in SECTIONS 9.1(b) and 9.2(b) (FCC Consent), but in no event prior to December 2, 1996, or at such other place, time or date as Salem and Infinity may agree in writing. 1.2. TRANSFER OF KEWS ASSETS. At the Closing, Infinity shall sell, assign, transfer and convey to Salem, and Salem shall purchase from Infinity, the following assets (the "KEWS Assets"): (a) all of Infinity's rights in and to the FCC licenses, permits and other authorizations, including any temporary waiver or special temporary authorization, issued to or held by Infinity exclusively in the operation of KEWS, including any pending applications therefor, all as set forth in Schedule 1.2(a) (the "KEWS FCC Licenses"). --------------- (b) all of Infinity's right, title and interest in the equipment, spare parts and other tangible personal property located at the KEWS transmitter site and used or held for use exclusively in the operation of KEWS (the "KEWS Transmitter Site Equipment"); (c) all of Infinity's right, title and interest in the equipment, spare parts and other tangible personal property listed on Schedule 1.2(c) (the --------------- "KEWS Main Studio Equipment" and together with the KEWS Transmitter Site Equipment, the "KEWS Personal Property"); (d) all of Infinity's rights under and interest in, to the extent assignable, the leases set forth contained in Schedule 1.2(d) (the "KEWS --------------- Assumed Contracts"); (e) KEWS's public inspection file, filings with the FCC related to KEWS, executed copies of all written KEWS Assumed Contracts, and such technical information, engineering data, rights under manufacturers' warranties as exist at Closing and relate exclusively to the KEWS Personal Property being conveyed hereunder. The KEWS Assets shall be delivered without any representation or warranty by Infinity except as expressly set forth in this Agreement, and Salem acknowledges that it has not relied on or been induced to enter into this Agreement by any representation or warranty other than those expressly set forth in ARTICLES 4 AND 5 hereof. The KEWS Assets shall be conveyed to Salem free and clear of all Liens, except as otherwise expressly provided in this Agreement. 1.3. EXCLUDED ASSETS. Except as set forth in SECTION 1.2, the KEWS Assets shall not include any properties, assets, privileges, rights, interests and claims, real and personal, tangible and intangible, of every type and description, wherever located, of Infinity or any of its affiliates, including all right, title and interest in the call sign "KEWS," which Salem agrees Infinity may use on any other station the Dallas/Ft. Worth market, including station KDFX after it has been acquired by Infinity. ARTICLE 2 PURCHASE PRICE -------------- 2.1. PURCHASE PRICE. (a) The aggregate purchase price to be paid by Salem for the KEWS Assets (the "Purchase Price") shall be (i) $32,100,000 (the "Cash Purchase Price") plus (ii) the assignment of the KDFX Assets as provided in SECTION 2.3 below. (b) The parties stipulate that the Purchase Price is not based in any way upon the ratings or financial performance of either KEWS or KDFX. Neither station is being sold as a going concern, and the assets being conveyed do not include any goodwill or intellectual property. Therefore, neither Infinity nor Salem makes any representation or warranty as to ratings or cash flow, and neither Salem's nor Infinity's obligations under this Agreement are conditioned in any way on the financial performance between the date of this Agreement and the Closing of the station to be acquired. 2 2.2. PAYMENT OF CASH PURCHASE PRICE. Salem shall pay the Cash Purchase Price as follows: (a) Simultaneous with the execution of this Agreement, Salem shall deposit $1,600,000 with the Escrow Agent to be held and distributed pursuant to the Escrow Agreement. (b) At the Closing, Salem shall pay $30,500,000 by wire transfer prior to 3:00 p.m., local Washington, D.C. time, of immediately available federal funds to an account at a bank or financial institution pursuant to wire instructions that Infinity shall deliver to Salem at least one (1) business day prior to the Closing Date. 2.3. TRANSFER OF THE KDFX ASSETS. (a) At the Closing, Salem shall sell, assign, transfer and convey to Infinity, and Infinity shall acquire from Salem, the following assets (the "KDFX Assets"): (i) all of Salem's rights in and to the FCC licenses, permits and other authorizations, including any temporary waiver or special temporary authorization, issued to or held by Salem exclusively in the operation of KDFX, including any pending applications therefor, all as set forth in Schedule 2.3(i) (the "KDFX FCC Licenses"). --------------- (ii) all of Salem's right, title and interest in the equipment, spare parts and other tangible personal property located at the KDFX transmitter site and used or held for use exclusively in the operation of KDFX (the "KDFX Transmitter Site Equipment"); (iii) all of Salem's right, title and interest in the equipment, spare parts and other tangible personal property included on Schedule 2.3(a)(iii) -------------------- (the "KDFX Main Studio Equipment" and together with the KDFX Transmitter Site Equipment, the "KDFX Personal Property"); (iv) subject to the requirement of SECTION 8.9 of this Agreement, all of Salem's rights under and interest in, to the extent assignable, the leases set forth in Schedule 2.3(a)(iv) (the "KDFX Assumed Contracts"); ------------------- (v) KDFX's public inspection file, filings with the FCC related to KDFX, executed copies of all written KDFX Assumed Contracts, and such technical information, engineering data, rights under manufacturers' warranties as exist at Closing and relate exclusively to the KDFX Personal Property being conveyed hereunder. 3 The KDFX Assets shall be delivered without any representation or warranty by Salem except as expressly set forth in this Agreement, and Infinity acknowledges that it has not relied on or been induced to enter into this Agreement by any representation or warranty other than those expressly set forth in ARTICLES 4 AND 6 hereof. The KDFX Assets shall be conveyed to Infinity free and clear of all Liens, except as otherwise expressly provided in this Agreement. (b) Except as set forth in this SECTION 2.3, the KDFX Assets shall not include any properties, assets, privileges, rights, interests and claims, real and personal, tangible and intangible, of every type and description, wherever located, of Salem or any of its affiliates, including all right, title and interest in the call sign "KDFX," which Infinity agrees Salem may use on any other station the Dallas/Ft. Worth market, including station KEWS after it has been acquired by Salem. 2.4. ALLOCATION. If Salem and Infinity are unable to agree between the date hereof and the Closing on an allocation of the Purchase Price for income tax purposes, Infinity shall arrange for an appraisal of the KDFX Assets and the KEWS Assets. Any such appraisal shall be completed within one hundred eighty (180) days after the Closing, and based upon such appraisal, if prepared, Infinity shall prepare an initial draft of IRS Form 8594. Infinity shall forward such form to Salem for its approval. If the parties reach an agreement on the contents of IRS Form 8594, Salem and Infinity shall each file the IRS Form 8594 finally agreed upon by the parties with their respective federal income tax return for the tax year in which the Closing occurs. ARTICLE 3 ASSUMPTION OF OBLIGATIONS; PRORATIONS ------------------------------------- 3.1. ASSUMPTION OF OBLIGATIONS. (a) At the Closing, Salem shall assume and undertake to pay, satisfy or discharge (i) all liabilities, obligations and commitments of Infinity under the KEWS Assumed Contracts, arising or accruing after 12:01 a.m., local Dallas time, on the Closing Date (the "Effective Time"), and (ii) all liabilities, obligations and commitments arising from or relating to the ownership of the KEWS Assets after the Effective Time. (b) At the Closing, Infinity shall assume and undertake to pay, satisfy or discharge (i) all liabilities, obligations and commitments of Salem under the KDFX Assumed Contracts, arising or accruing after the Effective Time, subject to the requirement of SECTION 8.9 of this Agreement, and (ii) all liabilities, obligations and commitments arising from or relating to the ownership of the KDFX Assets after the Effective Time. 3.2. LIMITATION. Except as set forth in Section 3.1, Infinity and Salem expressly do not, and shall not, assume or be deemed to assume, under this Agreement or otherwise by 4 reason of the transactions contemplated hereby, any liabilities, obligations or commitments of the other of any nature whatsoever. 3.3. PRORATION OF EXPENSES. All expenses arising from the operation of the KEWS Assets and the KDFX Assets shall be prorated between Infinity and Salem as of the Effective Time in accordance with GAAP. Such prorations shall be based upon the principle that (a) Infinity shall be responsible for all liabilities and obligations accruing in connection with the ownership of the KEWS Assets until the Effective Time, and Salem shall (subject to SECTION 3.2 above) be responsible for such liabilities and obligations accruing thereafter and (b) Salem shall be responsible for all liabilities and obligations accruing in connection with the ownership of the KDFX Assets until the Effective Time, and Infinity shall (subject to SECTION 3.2 above) be responsible for such liabilities and obligations accruing thereafter. Such prorations shall include, without limitation, all ad valorem and other property taxes (but excluding taxes arising by reason of the transfers of the KEWS Assets and the KDFX Assets as contemplated hereby, which shall be paid as set forth in SECTION 14.1 of this Agreement), deposits, utility expenses, liabilities and obligations under the KEWS Assumed Contracts and the KDFX Assumed Contracts, rents and similar prepaid and deferred items and all other expenses attributable to the ownership and operation of the KEWS Assets and the KDFX Assets. Any real estate taxes shall be apportioned on the basis of the number of days that each party owned such real property during the relevant tax year. 3.4. PAYMENT OF PRORATION ITEMS. Three (3) business days prior to the Closing, Infinity shall deliver to Salem a preliminary list of all items to be prorated pursuant to SECTION 3.3 and, to the extent feasible, such prorations shall be made at the Closing. In the event Infinity and Salem do not reach a final agreement on such prorations at the Closing, Salem shall deliver to Infinity a schedule of its proposed prorations (which shall set forth in reasonable detail the basis for those determinations) (the "Proration Schedule") no later than forty-five (45) days after the Closing Date. The Proration Schedule shall be conclusive and binding upon Infinity unless Infinity provides Salem with written notice of objection (the "Notice of Disagreement") within thirty (30) days after Infinity's receipt of the Proration Schedule, which notice shall state the prorations of expenses proposed by Infinity (the "Infinity's Proration Amount"). Salem shall have twenty (20) days from receipt of a Notice of Disagreement to accept or reject Infinity's Proration Amount. If Salem rejects Infinity's Proration Amount, the dispute shall be submitted within ten (10) days to the Dallas office of Arthur Andersen (the "Referee") for resolution of the dispute, such resolution to be made within thirty (30) days after submission to the Referee and to be final, conclusive and binding on Infinity and Salem. Salem and Infinity agree to share equally the cost and expenses of the Referee, but each party shall bear its own legal and other expenses, if any. Payment by Salem or Infinity, as the case may be, for the proration amounts determined pursuant to this SECTION 3.4 shall be due fifteen (15) days after the last to occur of (a) Infinity's acceptance of the Proration Schedule or failure to give Salem a timely Notice of Disagreement; (b) Salem's acceptance of Infinity's Proration Amount or failure to reject Infinity's Proration Amount 5 within twenty (20) days of receipt of a Notice of Disagreement; and (c) notice to Infinity and Salem of the resolution of the disputed amount by the Referee. ARTICLE 4 REPRESENTATIONS AND WARRANTIES COMMON TO BOTH INFINITY AND SALEM --------------------------------- Infinity represents and warrants to Salem, and Salem represents and warrants to Infinity, as follows (the party making the representations and warranties being referred to as the "Representing Party"): 4.1. ORGANIZATION AND STANDING. The Representing Party (a) is a corporation duly formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (b) if necessary, is qualified to do business as a foreign corporation and is in good standing in the State of Texas and (c) has all necessary corporate power and authority to own, lease and operate the assets it is conveying hereunder and to carry on its business as now conducted. 4.2. AUTHORIZATION AND BINDING OBLIGATION. The Representing Party has the full right and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions provided for herein. All required corporate action with respect to the Representing Party has been taken to approve this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Representing Party and constitutes its valid and binding obligation, enforceable against the Representing Party in accordance with its terms. 4.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as set forth in ARTICLE 7 and in Schedules 4.3 (a) and (b) hereto, the execution, --------- ------------------------- delivery and performance of this Agreement by the Representing Party: (a) do not and will not violate any provisions of the Representing Party's organizational documents; (b) do not and will not require the consent or approval of or any filing with any third party or governmental authority; (c) do not and will not violate any applicable law, judgment, order, injunction, decree, rule, regulation or ruling of any governmental authority; and (d) do not and will not, either alone or with the giving of notice or the passage of time, or both, conflict with, constitute grounds for termination or acceleration of or result in a breach of the terms, conditions or provisions of, or constitute a default under any agreement, lease, instrument, license or permit to which the Representing Party is now subject. 4.4. NO LITIGATION. There are (a) no unsatisfied judgments, awards, orders, writs, injunctions, arbitration decisions or decrees outstanding, and (b) no claims, actions, suits, investigations or proceedings pending or, to the best of the Representing Party's knowledge, threatened against or affecting the Representing Party's assets to be conveyed hereunder, in 6 any court or before any governmental authority or arbitrator that (if adversely determined, in the case of pending or threatened matters) would impair in any material respect the ability of the Representing Party to perform its obligations hereunder or would impair or hinder in any material respect the ability or right of the Acquiring Party to operate the station to be conveyed to it by the Representing Party after the Closing in the manner heretofore operated by the Representing Party. 4.5 TAXES. There are no tax audits or other governmental proceedings pending or, to the best of the Representing Party's knowledge, threatened that could result in a Lien on the assets being conveyed by the Representing Party hereunder or the imposition of any tax liability on the Acquiring Party and, to the best of the Representing Party's knowledge, no event has occurred that could impose on the applicable Acquiring Party any liability for any taxes, penalties or interest due or to become due from the Representing Party. 4.6 INSOLVENCY PROCEEDINGS. Neither the Representing Party nor any of the Representing Party's assets to be conveyed hereunder are the subject of any pending insolvency proceedings of any character. The Representing Party has neither made an assignment for the benefit of creditors nor taken any action with a view to the institution of any such insolvency proceedings. 4.7. BROKER'S FEES. Except for the brokerage fee payable to Gary Stevens & Co., neither the Representing Party nor any person or entity acting on its behalf has agreed to pay a commission, finder's fee or similar payment in connection with this Agreement or any matter related hereto to any person or entity, and no person or entity is entitled to any such payment from the Representing Party in connection with the transactions contemplated by this Agreement. The parties agree that Infinity shall pay $100,000 and Salem shall pay the balance of any brokerage fee payable to Gary Stevens & Co. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF INFINITY ------------------------------------------ Infinity represents and warrants to Salem as follows: 5.1. FCC AUTHORIZATIONS AND QUALIFICATIONS. (a) Schedule 1.2(a) contains a true and complete list of the KEWS FCC --------------- Licenses, and there are no other licenses, permits or other authorizations from the FCC required for the lawful operation of KEWS in the manner now operated. The KEWS FCC Licenses are in full force and effect. All required FCC regulatory fees with respect to the KEWS FCC Licenses have been paid. The KEWS FCC Licenses have been issued for the full terms customarily issued to a radio broadcast station in the State of Texas, and the KEWS FCC Licenses are not subject to any condition except for conditions shown on the face of the 7 KEWS FCC Licenses, applicable to radio broadcast licenses generally or otherwise disclosed in Schedule 1.2(a). Except as disclosed in Schedule 1.2(a), KEWS is --------------- being operated at full authorized power in material compliance with the terms and conditions of the KEWS FCC Licenses and the rules and regulations of the FCC. (b) Except as set forth in Schedule 1.2(a), to Infinity's knowledge, there --------------- are no applications, petitions, complaints, proceedings or other actions pending or threatened before the FCC relating to KEWS, other than proceedings affecting the radio broadcasting industry generally. (c) Except as disclosed on Schedule 5.1, to the best of its knowledge, ------------ Infinity is legally, financially and otherwise qualified under the Communications Act of 1934, as amended, and the rules and regulations of the FCC (together, the "Act"), to become the assignee of the KDFX FCC Licenses. Infinity has no reason to believe that the FCC Applications might be challenged or might not be granted by the FCC in the ordinary course. 5.2. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing, Infinity will have good title to the KEWS Personal Property free and clear of all Liens. At the Closing, the KEWS Personal Property will be in good operating condition and repair (ordinary wear and tear excepted), will be performing satisfactory and will be in material compliance with the rules and regulations of the FCC and all other applicable federal, state and local statues, ordinances, rules and regulations. 5.3. ASSUMED CONTRACTS; REAL ESTATE LEASES. (a) Infinity has delivered to Salem true and complete copies of all of the KEWS Assumed Contracts. At the Closing, all KEWS Assumed Contracts will be valid, binding and enforceable by Infinity in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. At the Closing, Infinity will have complied in all material respects with all KEWS Assumed Contracts. To Infinity's knowledge, no other contracting party will be in material default under any of the KEWS Assumed Contracts as of the Closing. Except as set forth in Schedule 4.3(a), as --------------- of the Closing, Infinity will have full legal power and authority to assign its rights under the KEWS Assumed Contracts to Salem 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 require the consent of any third party or affect the validity, enforceability and continuity of any of the KEWS Assumed Contracts. (b) So long as Infinity fulfills its obligations under any real property lease set forth on Schedule 1.2(d), Infinity has enforceable rights to --------------- nondisturbance and quiet enjoyment, and no third party holds any interest in the leased premises (the "KEWS Real Property") with the right to foreclose upon Infinity's leasehold or subleasehold interest. All of KEWS's transmitting antenna, antenna towers, guy anchors, transmitter buildings and related 8 improvements are located entirely on the KEWS Real Property. Infinity has no knowledge of any pending, threatened or contemplated action to take by eminent domain or otherwise to condemn any part of the KEWS Real Property. 5.4. COMPLIANCE WITH LAWS. Infinity has complied in all material respects with, and is not in violation of any federal, state or local laws, regulations or orders relating to the operation of KEWS. Without limiting the generality of the foregoing: (a) The KEWS transmitting and other equipment to be conveyed hereunder is operating in accordance with the terms and conditions of the KEWS FCC Licenses and all underlying construction permits, and the rules, regulations and policies of the FCC, including, without limitation all regulations concerning equipment authorization and human exposure to radio frequency radiation. (b) All ownership reports, employment reports and other documents required to be filed by Infinity with the FCC have been so filed. Such items as are required to be placed in KEWS's local public inspection files have been placed in such files. All proofs of performance and measurements that are required to be made by Infinity with respect to KEWS's transmission facilities have been completed and filed at KEWS. All information contained in the foregoing documents is true, complete and accurate in all material respects. (c) To the best of Infinity's knowledge, (a) no Hazardous Substance (i) is or has been used, treated, stored, disposed of, released, spilled, generated, manufactured, transported or otherwise handled on KEWS Real Property, (ii) has been spilled, released or disposed of on property adjacent to the KEWS Real Property, or (iii) has otherwise come to be located on or under the KEWS Real Property, (b) the KEWS Real Property and all operations on the KEWS Real Property are in compliance with all Environmental Laws, and (c) Infinity has obtained all environmental, health and safety permits necessary for the operation of KEWS, and all such permits are in full force and effect, and Infinity is in compliance with the terms and conditions of all such permits. No outstanding liens have been placed on the KEWS Real Property under any Environmental Laws. Infinity has not received any notice, and is not aware, of any administrative or judicial investigations, proceedings or actions with respect to violations, alleged or proven, of Environmental Laws by Infinity or any tenants of Infinity, or otherwise involving the KEWS Real Property or the operations conducted on the KEWS Real Property. The KEWS Real Property and all operations conducted on the KEWS Real Property are in compliance with all federal and state statutes and regulations relating to Asbestos, and to the best of Infinity's knowledge, no Asbestos-Containing Material is present in any of the improvements on the KEWS Real Property or is otherwise located on the KEWS Real Property. To the best of Infinity's knowledge, there are no underground storage tanks, whether in use or closed, on or under the KEWS Real Property, and no PCB is 9 present on the KEWS Real Property. No PCB is used in the KEWS Personal Property. 5.5. INSURANCE. The KEWS Assets are, and will be until the Closing Date, in the reasonable judgment of Infinity, adequately insured. ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SALEM --------------------------------------- Salem represents and warrants to Infinity as follows: 6.1. FCC AUTHORIZATIONS AND QUALIFICATIONS. (a) Schedule 2.3(a)(i) contains a true and complete list of the KDFX FCC ------------------ Licenses, and there are no other licenses, permits or other authorizations from the FCC required for the lawful operation of KDFX in the manner now operated. The KDFX FCC Licenses are in full force and effect. All required FCC regulatory fees with respect to the KDFX FCC Licenses have been paid. The KDFX FCC Licenses have been issued for the full terms customarily issued to a radio broadcast station in the State of Texas, and the KDFX FCC Licenses are not subject to any condition except for conditions shown on the face of the KDFX FCC Licenses, applicable to radio broadcast licenses generally or otherwise disclosed in Schedule 2.3(a)(i). Except as disclosed in Schedule 2.3(a)(i), KDFX is being - ------------------- ------------------- operated at full authorized power in material compliance with the terms and conditions of the KDFX FCC Licenses and the rules and regulations of the FCC. (b) Except as set forth in Schedule 2.3(a)(i), to Salem's knowledge, there ------------------- are no applications, petitions, complaints, proceedings or other actions pending or threatened before the FCC relating to KDFX, other than proceedings affecting the radio broadcasting industry generally. (c) To the best of its knowledge, Salem is legally, financially and otherwise qualified under the Act to be the assignee of the KEWS FCC Licenses. Salem has no reason to believe that the FCC Applications might be challenged or might not be granted by the FCC in the ordinary course. 6.2. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing, Salem will have good title to the KDFX Personal Property free and clear of all Liens. At the Closing, the KDFX Personal Property will be in good operating condition and repair (ordinary wear and tear excepted), will be performing satisfactory and will be in material compliance with the rules and regulations of the FCC and all other applicable federal, state and local statues, ordinances, rules and regulations. 10 6.3. ASSUMED CONTRACTS; REAL ESTATE LEASES. (a) Salem has delivered to Infinity true and complete copies of all of the KDFX Assumed Contracts. At the Closing, all KDFX Assumed Contracts will be valid, binding and enforceable by Salem in accordance with their respective terms, except as limited by laws affecting creditors' rights or equitable principles generally. At the Closing, Salem will have complied in all material respects with all KDFX Assumed Contracts. To Salem's knowledge, no other contracting party will be in material default under any of the KDFX Assumed Contracts as of the Closing. Except as set forth in Schedule 4.3(b), as of the ---------------- Closing, Salem will have full legal power and authority to assign its rights under the KDFX Assumed Contracts to Infinity 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 require the consent of any third party or affect the validity, enforceability and continuity of any of the KDFX Assumed Contracts. (b) so long as Salem fulfills its obligations under any real property lease set forth on Schedule 2.3(a)(iv), Salem has enforceable rights to nondisturbance ------------------- and quiet enjoyment, and no third party holds any interest in the leased premises (the "KDFX Real Property") with the right to foreclose upon Salem's leasehold or subleasehold interest. All of KDFX's transmitting towers, ground radials, guy anchors, transmitter buildings and related improvements are located entirely on the KDFX Real Property. Salem has no knowledge of any pending, threatened or contemplated action to take by eminent domain or otherwise to condemn any part of the KDFX Real Property. 6.4. COMPLIANCE WITH LAWS. Salem has complied in all material respects with, and is not in violation of any federal, state or local laws, regulations or orders relating to the operation of KDFX. Without limiting the generality of the foregoing: (a) The KDFX transmitting and other equipment to be conveyed hereunder is operating in accordance with the terms and conditions of the KDFX FCC Licenses and all underlying construction permits, and the rules, regulations and policies of the FCC, including, without limitation all regulations concerning equipment authorization and human exposure to radio frequency radiation. (b) All ownership reports, employment reports and other documents required to be filed by Salem with the FCC have been so filed. Such items as are required to be placed in KDFX's local public inspection files have been placed in such files. All proofs of performance and measurements that are required to be made by Salem with respect to KDFX's transmission facilities have been completed and filed at KDFX. All information contained in the foregoing documents is true, complete and accurate in all material respects. 11 (c) To the best of Salem's knowledge, (a) no Hazardous Substance (i) is or has been used, treated, stored, disposed of, released, spilled, generated, manufactured, transported or otherwise handled on KDFX Real Property, (ii) has been spilled, released or disposed of on property adjacent to the KDFX Real Property, or (iii) has otherwise come to be located on or under the KDFX Real Property, (b) the KDFX Real Property and all operations on the KDFX Real Property are in compliance with all Environmental Laws, and (c) Salem has obtained all environmental, health and safety permits necessary for the operation of KDFX, and all such permits are in full force and effect, and Salem is in compliance with the terms and conditions of all such permits. No outstanding liens have been placed on the KDFX Real Property under any Environmental Laws. Salem has not received any notice, and is not aware, of any administrative or judicial investigations, proceedings or actions with respect to violations, alleged or proven, of Environmental Laws by Salem or any tenants of Salem, or otherwise involving the KDFX Real Property or the operations conducted on the KDFX Real Property. The KDFX Real Property and all operations conducted on the KDFX Real Property are in compliance with all federal and state statutes and regulations relating to Asbestos, and to the best of Salem's knowledge, no Asbestos-Containing Material is present in any of the improvements on the KDFX Real Property or is otherwise located on the KDFX Real Property. To the best of Salem's knowledge, there are no underground storage tanks, whether in use or closed, on or under the KDFX Real Property, and no PCB is present on the KDFX Real Property. No PCB is used in the KDFX Personal Property. 6.5. INSURANCE. The KDFX Assets are, and will be until the Closing Date, in the reasonable judgment of Salem, adequately insured. ARTICLE 7 GOVERNMENTAL CONSENTS --------------------- 7.1. FCC Application. (a) The assignments of the KEWS FCC Licenses and the KDFX FCC Licenses as contemplated by this Agreement are subject to the prior consent and approval of the FCC. Between the date of this Agreement and the Closing, Salem shall not directly or indirectly, control the operation of KEWS, and Infinity shall not directly or indirectly, control the operation of KDFX. (b) No later than five (5) business days after the date of this Agreement, Salem and Infinity shall each prepare and jointly file complete and grantable applications requesting the FCC's consent to the assignment of the KEWS FCC Licenses to Salem and the assignment of KDFX FCC Licenses to Infinity pursuant to this Agreement (the "FCC 12 Applications"). Infinity and Salem shall thereafter prosecute the FCC Applications in good faith and with all reasonable diligence and otherwise use their best efforts to obtain the grant of the FCC Applications as expeditiously as practicable; provided, however, that neither Infinity nor Salem shall have any obligation to satisfy any complainant or the FCC by taking any steps which would have a material adverse effect upon Infinity or Salem or upon any affiliated entity, but neither the expense nor inconvenience to a party of defending against a complainant or an inquiry by the FCC shall be considered a material adverse effect on such party. If the FCC Consent to either of the FCC Applications imposes any condition on any party hereto, such party shall use its best efforts to comply with such condition; provided, however, that no party shall be required to comply with any condition that would have a material adverse effect upon it or any affiliated entity. If reconsideration or judicial review is sought with respect to one of the FCC Consents, the party or parties affected shall vigorously oppose such efforts for reconsideration or judicial review; provided, however, that nothing herein shall be construed to limit either party's right to terminate this Agreement pursuant to ARTICLE 12 (Termination Rights). (c) All FCC filing or grant fees shall be borne equally by Salem and Infinity. Each party shall otherwise bear its own costs and expenses (including the fees and disbursements of its counsel) in connection with the preparation of the portion of the FCC Applications to be prepared by it and in connection with the processing and defense of such applications. 7.2 COMPLIANCE WITH HSRA. Each party shall make or cause to be made in a timely fashion, and in any event within ten (10) business days following the date of this Agreement, all filings which are required in connection with the transactions contemplated hereby under the HSRA, and shall furnish to the other party all information that the other reasonably requests in connection with such filings. The transfer of the KEWS Assets hereunder is conditioned upon the expiration of the applicable waiting period under the HSRA without the institution or threat of any action with respect to the consummation of the transactions contemplated hereunder. Salem and Infinity shall split the cost of any HSRA filing fees. Each party shall otherwise bear its own costs and expenses (including the fees and disbursements of its counsel) in connection with the preparation of any HSRA filing to be prepared by it and in connection with the prosecution and defense of that filing. 7.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of this Agreement, the parties shall prepare and file with the appropriate governmental authorities any other requests for approval or waiver that are required from such governmental authorities in connection with the transactions contemplated hereby and shall diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such requests for approval or waiver and all proceedings necessary to secure such approvals and waivers. Each party shall bear its own costs and expenses in connection with the preparation of any filings, documents or requests to be prepared by it in order to obtain such 13 governmental consents, approvals or waivers and in connection with any prosecution or defense by it of such filings, documents or requests. ARTICLE 8 COVENANTS --------- 8.1. CONDUCT OF BUSINESS. Between the date of this Agreement and the Closing, Infinity, with respect to KEWS, and Salem, with respect to KDFX, shall, except as expressly permitted by this Agreement or with the prior written consent of the other: (a) comply in all material respects with all laws and contractual obligations applicable to such station or to the conduct of the business of such station; (b) perform all material obligations relating to the business of such station; (c) refrain from selling, assigning, leasing or otherwise transferring or disposing of any of the KEWS Assets or the KDFX Assets, as the case may be, except for assets consumed or disposed of in the ordinary course of business; (d) maintain the KEWS Assets or the KDFX Assets, as the case may be, in customary repair, maintenance and condition, replace all items of equipment at time intervals consistent with prior practice, and repair or replace (subject to SECTION 8.6 (Risk of Loss)) any asset that may be damaged or destroyed with items of equal or greater value and utility unless Infinity or Salem, as the case may be, determines in good faith that such a repair or replacement is not necessary or useful for the continued operation of such station; and (e) not modify the KEWS Assumed Contracts or the KDFX Assumed Contracts, as amended through the date of this Agreement. 8.2. NOTIFICATION. Between the date of this Agreement and the Closing, Infinity and Salem shall each promptly notify the other of (a) any pending or, to its knowledge, threatened litigation, arbitration or administrative proceeding that seeks to revoke, cancel, rescind, modify or fail to renew in the ordinary course any of the KEWS FCC Licenses or the KDFX FCC Licenses, as the case may be, or that challenges the transactions contemplated hereby, including any challenges to the FCC Applications; (b) the issuance of any order to show cause, notice of violation, notice of apparent liability or notice of forfeiture with respect to KEWS or KDFX; or (c) the submission, to such party's knowledge, of any material complaint against or with respect to KEWS or KDFX. 8.3. ACCESS. Between the date hereof and the Closing, Infinity and Salem shall each give, upon prior reasonable notice, the other or it representatives (including consultants 14 and advisors) reasonable access to the KEWS Assets or the KDFX Assets as applicable. It is expressly understood that, pursuant to this SECTION 8.3, the Acquiring Party, at its sole expense, shall be entitled to make such engineering and other inspections of the KEWS Assets or the KDFX Assets, as applicable, as it may desire, so long as such inspection does not unreasonably interfere with the operation of such station in the conveying party's reasonable judgment. 8.4. THIRD-PARTY CONSENTS. Between the date of this Agreement and the Closing, each party shall use reasonable efforts to obtain the consent of any third party necessary for the assignment of any of the KEWS Assumed Contracts or KDFX Assumed Contracts; provided, that neither party shall be obligated to pay any money to obtain such consent. In the event a consent or waiver required with respect to the assignment of any of the KEWS Assumed Contracts or the KDFX Assumed Contracts has not been obtained on or before the Closing, Infinity or Salem, as the case may be, shall use reasonable efforts to provide the other with the benefits of any such assumed contract (including, without limitation, permitting such other party to enforce any rights of Infinity or Salem under such assumed contract), and Salem or Infinity shall, to the extent Salem or Infinity, as the case may be, is provided with the benefits of such assumed contract, perform all obligations of the other party thereunder. 8.5. PRE-CLOSING EFFORTS. Between the date of this Agreement and the Closing, each party shall use its reasonable efforts to cause the fulfillment at the earliest practicable date of all of the conditions to the obligations of the other party to consummate the sale and purchase under this Agreement. Neither party shall take any action which is materially inconsistent with its obligations under this Agreement or that would materially hinder or delay the consummation of the transactions contemplated by this Agreement. In particular, neither party shall take any action that would result in its disqualification to hold the KEWS FCC Licenses or the KDFX FCC Licenses, as the case may be, or in any way delay grant of the FCC Applications or consummation of the transactions contemplated by this Agreement. Should either party become aware of any such fact or circumstance, such party shall promptly inform the other. 8.6. RISK OF LOSS. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the KEWS Assets from any cause whatsoever shall be borne by Infinity at all times prior to the Closing. The risk of any loss, damage, impairment, confiscation, or condemnation of any of the KDFX Assets from any cause whatsoever shall be borne by Salem at all times prior to the Closing. If there is any loss, damage, impairment, confiscation, or condemnation of or to any of such assets, Infinity or Salem, as the case may be, shall repair, replace, or restore such assets (the "Damaged Assets") to their prior condition as represented in this Agreement as soon thereafter as possible; provided, however, that no party shall have any obligation to repair or replace any immaterial or obsolete asset no longer necessary or useful for the continued operation of the station consistent with past practice. If Infinity or Salem, as the case may be (the "Repairing Party"), is unable to repair 15 or replace the Damaged Assets by the date on which the Closing would otherwise occur under this Agreement, then the Repairing Party shall reimburse all reasonable costs incurred by the Acquiring Party in repairing or replacing the Damaged Assets after the Closing. 8.7. CONFIDENTIALITY. (a) Salem and Infinity shall each keep confidential all information obtained by it with respect to the other in connection with this Agreement, except where such information is known or available through other lawful sources or where its disclosure is required in accordance with applicable law. If the transactions contemplated hereby are not consummated for any reason, Salem and Infinity shall return to the other, without retaining a copy thereof, any schedules, documents or other written information, including all financial information, obtained from the other in connection with this Agreement and the transactions contemplated hereby. (b) Except as required by the FCC in connection with the filing of the FCC application, without the prior consent of both Salem and Infinity, there shall be no public announcement relating to this Agreement or the transactions proposed herein. 8.7. FURTHER ASSURANCES. Infinity and Salem shall cooperate and take such actions, and execute such other documents, at the Closing or subsequently, as may be reasonably requested by the other in order to carry out the provisions and purposes of this Agreement. 8.8 COVENANT NOT TO COMPETE. At the Closing, Salem shall execute and deliver, and cause its parent to execute and deliver, the Covenant Not to Compete. 8.9 KDFX TRANSMITTER SITE LEASE. Prior to or at the Closing, Salem shall enter into an amended lease for KDFX's transmitter site. Such amended lease shall be in the form of Exhibit C hereto (the "Amended KDFX Transmitter Site --------- Lease"). ARTICLE 9 CONDITIONS PRECEDENT -------------------- 9.1. TO SALEM'S OBLIGATIONS. The obligations of Salem hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: 16 (a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) All representations and warranties made by Infinity in this Agreement shall be true and complete in all material respects on and as of the Closing Date (except to the extent they expressly relate to an earlier time, in which case they shall have been true and correct only as of such earlier time) as if made on and as of that date, except to the extent changes are permitted under SECTION 8.1 of this Agreement. (ii) All of the terms, covenants and conditions to be complied with and performed by Infinity under this Agreement on or prior to Closing Date shall have been complied with or performed in all material respects. (b) FCC CONSENT. The FCC Consents to the Applications shall have been obtained, without the imposition of any condition materially adverse to Salem, and such FCC Consents shall have become Final Orders; provided, that Salem agrees to waive the requirement of Final Orders if its senior lenders consent to such waiver. (c) NO INJUNCTION. No order of any court or administrative agency shall be in effect which restrains or prohibits the transactions contemplated by this Agreement in accordance with its terms. (d) DELIVERIES. Infinity shall have made or stand willing to make all deliveries required under SECTION 10.1. 9.2 TO INFINITY'S OBLIGATIONS. The obligations of Infinity hereunder are, at its option, subject to satisfaction, at or prior to the Closing Date, of each of the following conditions: (a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) All representations and warranties made by Salem in this Agreement shall be true and complete in all material respects on and as of the Closing Date (except to the extent they expressly relate to an earlier time, in which case they shall have been true and correct only as of such earlier time) as if made on and as of that date. (ii) All of the terms, covenants and conditions to be complied with and performed by Salem under this Agreement on or prior to the Closing Date shall have been complied with or performed in all material respects. (b) FCC CONSENT. The FCC Consents to the FCC Applications shall have been obtained, without the imposition of any condition materially adverse to Infinity, and such FCC Consents shall have become Final Orders; provided, that Infinity agrees 17 to waive the requirement of Final Orders if Salem's senior lenders consent to Salem's waiving of the requirement. (c) NO INJUNCTION. No order of any court or administrative agency shall be in effect which restrains or prohibits the transactions contemplated by this Agreement in accordance with its terms. (d) DELIVERIES. Salem shall have made or stand willing to make all the deliveries required under SECTION 10.2 and shall have paid or stand willing to pay the Cash Purchase Price as provided in SECTION 2.2. ARTICLE 10 DOCUMENTS TO BE DELIVERED AT THE CLOSING ---------------------------------------- 10.1. DOCUMENTS TO BE DELIVERED BY INFINITY. At the Closing, Infinity shall deliver to Salem the following: (a) a copy of the resolution of the board of directors of Infinity, certified by an authorized officer of Infinity, authorizing the execution, delivery and performance of this Agreement; (b) instruments of conveyance and transfer, in form and substance reasonably satisfactory to counsel to Salem, effecting the sale, transfer, assignment and conveyance of the KEWS Assets to Salem, including, but not limited to, the following: (i) an assignment of the KEWS FCC Licenses; (ii) bills of sale for all KEWS Personal Property; (iii) assignments of the Assumed Contracts, together with all third party consents as provided in SECTION 8.4; (c) instruments, in form and substance reasonably satisfactory to Salem and its counsel, pursuant to which Infinity assumes the obligations, liabilities and commitments of Salem as provided in ARTICLE 3; and (d) such other documents as may reasonably be requested by Salem's counsel. 10.2. DOCUMENTS TO BE DELIVERED BY SALEM. At the Closing, Salem shall deliver to Infinity the following: 18 (a) a copy of the resolution of the board of directors of Salem, certified by an authorized officer of Salem, authorizing the execution, delivery and performance of this Agreement; (b) instruments of conveyance and transfer, in form and substance reasonably satisfactory to counsel to Infinity, effecting the sale, transfer, assignment and conveyance of the KDFX Assets to Infinity, including, but not limited to, the following: (i) an assignment of the KDFX FCC Licenses; (ii) bills of sale for all KDFX Personal Property; (iii) assignments of the Assumed Contracts, together with all third party consents as provided in SECTION 8.4; (c) instruments, in form and substance reasonably satisfactory to Infinity and its counsel, pursuant to which Salem assumes the obligations, liabilities and commitments of infinity as provided in ARTICLE 3; (d) the Covenant Not to Compete duly executed by Salem and its parent; (e) immediately available wire transferred federal funds as provided in SECTION 2.2; (f) the Amended KDFX Transmitter Site Lease executed by the landlord thereunder and dated the Closing Date; and (g) such other documents as may reasonably be requested by Infinity's counsel. ARTICLE 11 INDEMNIFICATION, SURVIVAL ------------------------- 11.1. INFINITY'S INDEMNITIES. From and after the Closing, Infinity shall indemnify, defend, and hold harmless Salem and its affiliates and their respective directors, officers, employees, and representatives, and the successors and assigns of any of them, from and against, and reimburse them for, all claims, damages, costs and expenses, including, without limitation, interest, penalties, court costs and reasonable attorneys' fees and expenses, resulting from: (a) any liabilities or obligations of Infinity or its affiliates not assumed by Salem under this Agreement; 19 (b) any untrue representation, breach of warranty, or nonfulfillment of any covenant by Infinity contained in this Agreement or in any certificate document or instrument delivered to Salem under this Agreement; (c) Infinity's operation or ownership of KEWS prior to the Effective Time; (d) Infinity's operation or ownership of KDFX after the Effective Time; or (e) any failure to comply with any "bulk sales" laws applicable to the sale of KEWS hereunder. 11.2. SALEM'S INDEMNITIES. From and after the Closing, Salem shall indemnify, defend and hold harmless Infinity and its affiliates and their respective directors, officers, employees, and representatives, and the successors and assigns of any of them, from and against, and reimburse them for, all claims, damages, costs and expenses, including, without limitation, interest, penalties, court costs and reasonable attorneys' fees and expenses, resulting from: (a) any liabilities or obligations of Salem or its affiliates not assumed by Infinity under this Agreement; (b) any untrue representation, breach of warranty, or nonfulfillment of any covenant by Salem contained in this Agreement or in any certificate document or instrument delivered to Infinity under this Agreement; (c) Salem's operation or ownership of KDFX prior to the Effective Time; (d) Salem's operation or ownership of KEWS after the Effective Time; or (e) any failure to comply with any "bulk sales" laws applicable to the sale of KDFX hereunder. 11.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification shall be as follows: (a) The party seeking indemnification under this ARTICLE 11 (the "Claimant") shall give notice to the party from whom indemnification is sought (the "Indemnitor") of any claim, whether solely between the parties or brought by a third party, reasonably specifying (i) the factual basis for the claim, and (ii) the amount of the claim if then known. If the claim relates to an action, suit or proceeding filed by a third party against Claimant, notice shall be given by Claimant within fifteen (15) days after written notice of the action, suit or proceeding was given to Claimant. In all other circumstances, notice shall be given by Claimant within thirty (30) days after 20 Claimant becomes, or should have become, aware of the facts giving rise to the claim. Notwithstanding the foregoing, Claimant's failure to give Indemnitor timely notice shall not preclude Claimant from seeking indemnification from Indemnitor if Claimant's failure has not materially prejudiced Indemnitor's ability to defend the claim or litigation. (b) With respect to claims between the parties, following receipt of notice from the Claimant of a claim, the Indemnitor shall have thirty (30) days to make any investigation of the claim that the Indemnitor deems necessary or desirable. For the purposes of this investigation, the Claimant agrees to make available to the Indemnitor and/or its authorized representatives the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnitor cannot agree as to the validity and amount of the claim within the 30-day period (or any mutually agreed upon extension thereof), the Claimant may seek appropriate legal remedy. (c) With respect to any claim by a third party as to which the Claimant is entitled to indemnification hereunder, the Indemnitor shall have the right at its own expense to participate in or assume control of the defense of the claim with counsel reasonably acceptable to Claimant, and the Claimant shall cooperate fully with the Indemnitor, subject to reimbursement for reasonable expenses incurred by the Claimant as the result of a request by the Indemnitor. If the Indemnitor elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of the claim at its own expense. If the Indemnitor does not elect to assume control or otherwise participate in the defense of any third party claim, Claimant may, but shall have no obligation to, defend or settle such claim or litigation in such a manner as it deems appropriate, and in any event Indemnitor shall be bound by the results obtained by the Claimant with respect to the claim (by default or otherwise) and shall promptly reimburse Claimant for the amount of all expenses (including the amount of any judgment rendered), legal or otherwise, incurred in connection with such claim or litigation. The Indemnitor shall be subrogated to all rights of the Claimant against any third party with respect to any claim for which indemnity was paid. 11.4. LIMITATIONS. (a) Neither Infinity nor Salem shall have any obligation to the other party for any matter described in SECTION 11.1 or SECTION 11.2, as the case may be, except upon compliance by the other party with the provisions of this ARTICLE 11, particularly SECTION 11.3. (b) Neither party shall be required to indemnify the other party under this ARTICLE 11 unless (i) written notice of a claim under this ARTICLE 11 was received by the party within the pertinent survival period specified in SECTION 11.5 and (ii) unless and until the aggregate amount of claims against the party to which the other party (as a Claimant) is entitled to be 21 indemnified under this Agreement exceeds $50,000, and then only for the excess over $50,000. The foregoing "deductible" shall not apply to (i) any proration of expenses under SECTION 3.3, (ii) either party's obligation to indemnify by reason of such party's non-compliance with the provisions of any bulk sales laws applicable to this transaction, or (iii) any obligation to indemnify against third-party claims. Neither party shall have any liability to the other party under any circumstances for special, consequential, punitive or exemplary damages. 11.5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations, warranties, covenants, indemnities and agreements contained in this Agreement or in any certificate, document or instrument delivered pursuant to this Agreement are and will be deemed and construed to be continuing covenants, indemnities and agreements and shall survive the Closing for a period of six (6) months after the Closing Date (the "Survival Period"). No claim may be brought under this Agreement unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the Survival Period. In any event such notice is given, the tight to indemnification with respect thereto shall survive the Survival Period until such claim is finally resolved and any obligations thereto are fully satisfied. Any investigation by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any representation, warranty, covenant or agreement contained herein. 11.6. SOLE REMEDY. After the Closing, the right to indemnification under this ARTICLE 11 shall be the exclusive remedy of any party in connection with any breach or default by another party under this Agreement. ARTICLE 12 TERMINATION RIGHTS ------------------ 12.1. TERMINATION. (a) This Agreement may be terminated by either Salem or Infinity, if the party seeking to terminate is not in material default or breach of this Agreement, upon written notice to the other upon the occurrence of any of the following: (i) if, subject to the opportunity to cure period set forth in Section 12.1(c) below, the other party is in material breach of this Agreement; (ii) if there shall be in effect any order or decree from the Department of Justice or any judgment, final decree or order that would prevent or make unlawful the Closing or if the FCC shall have released a hearing designation order requiring a formal hearing on either of the FCC Applications; or (iii) if the Closing has not occurred by June 30, 1997 (the "Upset Date"). 22 (b) This Agreement may be terminated by mutual written consent of Salem and Infinity (c) If either party believes the other to be in breach or default of this Agreement, the non-defaulting party shall, prior to exercising its right to terminate under SECTION 12.1(a)(i), provide the defaulting party with notice specifying in reasonable detail the nature of such breach or default. Except for a failure to pay the Cash Purchase Price, the defaulting party shall have ten (10) days from receipt of such notice to cure such default; provided, that if the breach or default is due to no fault of the defaulting party and is incapable of cure within such 1O-day period, the cure period shall be extended as long as the defaulting party is diligently and in good faith attempting to effectuate a cure. Nothing in this SECTION 12.1(c) shall be interpreted to extend the Upset Date. 12.2. EFFECT OF TERMINATION. In the event of termination of this Agreement pursuant to SECTION 12.1, this Agreement (other than SECTION 8.7 (Confidentiality), which shall remain in full force and effect) shall forthwith become null and void, and no party hereto (nor any of their respective affiliates, directors, officers or employees) shall have any liability or further obligation, except as provided in this ARTICLE 12 and in ARTICLE 13; provided, that nothing in this SECTION 12.2 shall relieve any party from liability for any breach of this Agreement. ARTICLE 13 REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE ------------------------------------------- 13.1. DEFAULT BY INFINITY; SPECIFIC PERFORMANCE. Infinity recognizes that, in the event Infinity defaults in the performance of its obligations under this Agreement, monetary damages alone will not be adequate. In such event, Salem shall be entitled to obtain specific performance of the terms of this Agreement without being required to post bond or furnish other security. In addition, Salem shall be entitled to obtain from Infinity court costs and reasonable attorneys' fees and expenses incurred by it in enforcing its rights hereunder. As a condition to seeking specific performance, Salem shall not be required to have tendered the Purchase Price specified in ARTICLE 2 of this Agreement, but shall be ready, willing and able to do so. 13.2. DEFAULT BY SALEM; LIQUIDATED DAMAGES. If Salem breaches or defaults in its obligations under this Agreement, Infinity may pursue any legal or equitable remedies available to it and shall be entitled to obtain from Salem court costs and reasonable attorneys' fees and expenses incurred by it in enforcing its rights hereunder; provided, however, that if this Agreement is terminated by ------------------- Infinity pursuant to SECTION 12.1(a) as a result of a breach or default by Salem of its representations, warranties, covenants or obligations hereunder, then Salem shall pay Infinity $2,000,000 as liquidated damages, in full settlement of any damages of any kind or nature that Infinity may suffer or allege to suffer as a result thereof, it being 23 understood and agreed that the amount of liquidated damages represents Salem's and Infinity's reasonable estimate of actual damages and does not constitute a penalty. In the event that Infinity is entitled to liquidated damages, the Escrow Deposit shall be paid over to Infinity in partial satisfaction of Salem's liability for liquidated damages. In the event of a termination of this Agreement pursuant to SECTION 12.1 for any other reason, the Escrow Deposit, together with any interest and earnings thereon, shall be paid to Salem. ARTICLE 14 OTHER PROVISIONS ---------------- 14.1. TRANSFER TAXES AND EXPENSES. All recordation, transfer, documentary, excise, sales or use taxes or fees imposed on this transaction shall be shared equally by Salem and Infinity. Except as otherwise provided in this Agreement, each party shall be solely responsible for and shall pay all other costs and expenses incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement. 14.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Neither Salem nor Infinity may assign its rights under this Agreement without the prior written consent of the other party hereto. 14.3. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement, and the exhibits and schedules hereto and thereto, embody the entire agreement and understanding of the parties hereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein. Any matter that is disclosed in a Schedule hereto in such a way as to make its relevance to the information called for by another Schedule readily apparent shall be deemed to have been included in such other Schedule, notwithstanding the omission of an appropriate cross-reference. No amendment, waiver of compliance with any provision or condition hereof, or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment, change, extension or discharge is sought. No failure or delay on the part of Salem or Infinity in exercising any right or power under this Agreement 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. 14.4. HEADINGS. The headings set forth in this Agreement are for convenience only and shall not control or affect the meaning or construction of the provisions of this Agreement. 24 14.5. COMPUTATION OF TIME. If after making computations of time provided for in this Agreement, a time for action or notice falls on Saturday, Sunday or a Federal holiday, then such time shall be extended to the next business day. 14.6. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and performance of this Agreement shall be governed by the law of the State of New York without regard to its principles of conflicts of law. SALEM AND INFINITY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM MADE IN SUCH ACTION OR PROCEEDING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE DECIDED SOLELY BY A JUDGE. Salem and Infinity hereby acknowledge that they have each been represented by counsel in the negotiation, execution and delivery of this Agreement and that their lawyers have fully explained the meaning of the Agreement, including in particular the jury-trial waiver. Any question of doubtful interpretation shall not be resolved by any rule providing for interpretation against the party who causes the uncertainty to exist or against the drafter of this Agreement. 14.7. ATTORNEYS' FEES. In the event of any dispute between the parties to this Agreement, Infinity or Salem, as the case may be, shall reimburse the prevailing party for its reasonable attorneys' fees and other costs incurred in enforcing its rights or exercising its remedies under this Agreement. Such right of reimbursement shall be in addition to any other right or remedy that the prevailing party may have under this Agreement. 14.8. SEVERABILITY. If any term or provision of this Agreement, or the application thereof to any person or circumstance shall, to any extent be held invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 14.9. NOTICES. Any notice, demand or request required or permitted to be given under the provisions of this Agreement shall be in writing, addressed to the following addresses, or to such other address as any party may request. If to Infinity: c/o Infinity Broadcasting Corporation 600 Madison Avenue, 4th Floor New York, NY 10022 Attention: Mr. Mel Karmazin Telephone: 212-750-6400 Facsimile: 212-888-2959 25 With a copy (which shall not constitute notice) to: Leventhal, Senter & Lerman 2000 K Street, N.W., Suite 600 Washington, D.C. 20006-1809 Attention: Steven A. Lermart, Esq. Telephone: 202-429-8970 Facsimile: 202-293-7783 If to Salem: Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Attention: Jonathan L. Block, Esq. Telephone: 805-987-0400 Facsimile: 805-482-8570 Any such notice, demand or request shall be deemed to have been duly delivered and received (a) on the date of personal delivery, or (b) on the date of transmission, if sent by facsimile (but only if a hard copy is also sent by overnight courier), or (c) on the date of receipt, if mailed by registered or certified mail, postage prepaid and return receipt requested, or (d) on the date of a signed receipt, if sent by an overnight delivery service, but only if sent in the same manner to all persons entitled to receive notice or a copy. 14.10. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. ARTICLE 15 DEFINITIONS ----------- 15.1. DEFINED TERMS. Unless otherwise stated in this Agreement, the following terms when used herein shall have the meanings assigned to them below (such meanings to be equally applicable to both the singular and plural forms of the terms defined). "Acquiring Party" shall mean either Infinity or Salem, as required by the context in which such term is used, in its capacity as the party acquiring a station hereunder. "Act" shall have the meaning set forth in SECTION 5.1(c). "Agreement" shall mean this Asset Purchase Agreement. 26 "Amended KDFX Transmitter Site Lease" shall have the meaning set forth in SECTION 8.9. "Asbestos" shall mean any and all varieties of materials included in the definition of "asbestos" under any federal or state law or regulation relating to the protection of human health or the environment. "Asbestos-Containing Material" shall mean any material containing more than one (1) percent Asbestos by weight. "Cash Purchase Price" shall have the meaning set forth in SECTION 1.2. "Claimant" shall have the meaning set forth in SECTION 11.3. "Closing" shall have the meaning set forth in SECTION 1.1. "Closing Date" shall mean the date on which the Closing is completed. "Covenant Not to Compete" shall mean the Covenant Not to Compete among Infinity, Salem and Salem's parent substantially in the form of Exhibit B to --------- this Agreement. "Damaged Assets" shall have the meaning set forth in SECTION 8.6. "Effective Time" shall have the meaning set forth in SECTION 3.1. "Environmental Laws" shall mean all applicable local, state and federal statutes and regulations relating to the protection of human health or the environment including the FCC's regulations concerning radio frequency radiation. "Escrow Agent" shall mean Gary Stevens & Co. "Escrow Agreement" shall mean the agreement among Infinity, Salem and Escrow Agent substantially in the form attached hereto as Exhibit A. --------- "Escrow Deposit" shall mean the amount held by the Escrow Agent pursuant to the Escrow Agreement, including all earnings and interest thereon. "FCC" shall have the meaning set forth in the preamble to this Agreement. "FCC Applications" shall have the meaning set forth in SECTION 7.1. "FCC Consent" shall mean the action by the FCC granting the applicable FCC Application. 27 "Final Order" shall mean action by the FCC, with respect to an FCC Application, (i) which has not been vacated, reversed, stayed, or suspended; (ii) with respect to which no timely appeal, request for stay or petition for rehearing, reconsideration or review by any party or by the FCC on its own motion, is pending; and (iii) as to which the time for filing any such appeal request, petition, or similar document or for the reconsideration or review by the FCC on its own motion under the Communications Act of 1934, as amended, and the rules and regulations of the FCC, has expired. "GAAP" shall mean generally accepted accounting principles, consistently applied. "Hazardous Substance" shall mean all hazardous or toxic waste or material which, because of its quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. "Hazardous Substance" shall include, but is not limited to, any and all hazardous or toxic substances, materials or wastes as defined or listed under the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Comprehensive Environmental Response, Compensation and Liability Act or any comparable state statute or any regulation promulgated under any of such federal or state statutes. "Hazardous Substance" shall not include ordinary quantities of consumer or commercial products used in the normal course of broadcast station operations, including grounds and building operation and maintenance; provided, that such products have been properly stored, handled and disposed of. - -------- "HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements Act 1976, as amended, and the regulations adopted thereunder. "Indemnitor" shall have the meaning set forth in SECTION 11.3. "Infinity" shall have the meaning set forth in the preamble to this Agreement. "Infinity's Proration Amount" shall have the meaning set forth in SECTION 3.4. "KDFX" shall have the meaning set forth in the preamble to this Agreement. "KDFX Assets" shall have the meaning set forth in SECTION 2.3(a). "KDFX Assumed Contracts" shall have the meaning set forth in SECTION 2.3(a)(iv). "KDFX FCC Licenses" shall have the meaning set forth in SECTION 2.3(a)(i). "KDFX Main Studio Equipment" shall have the meaning set forth in SECTION 2.3(a)(iii). 28 "KDFX Personal Property" shall have the meaning set forth in SECTION 2.3(a)(iii). "KDFX Real Property" shall have the meaning set forth in SECTION 6.3(b). "KDFX Transmitter Site Equipment shall have the meaning set forth in SECTION 2.3(a)(ii). "KEWS" shall have the meaning set forth in the preamble to this Agreement. "KEWS Assets" shall mean the assets to be transferred to Salem hereunder, as more fully specified in SECTION 1.2. "KEWS Assumed Contracts" shall have the meaning set forth in SECTION 1.2. "KEWS FCC Licenses" shall have the meaning set forth in SECTION 1.2. "KEWS Main Studio Equipment" shall have the meaning set forth in SECTION 1.2. "KEWS Personal Property" shall have the meaning set forth in SECTION 1.2. "KEWS Real Property" shall have the meaning set forth in SECTION 5.3(C). "KEWS Transmitter Site Equipment" shall have the meaning set forth in SECTION 1.2. "Liens" shall mean mortgages, deeds of trust, liens, security interests, pledges, collateral assignments, conditional sales agreements, leases, encumbrances, claims, or other defects of title, but shall not include (i) liens for current taxes not yet due and payable, (ii) other liens imposed by law (such as materialman's, mechanic's, carrier's, worker's and repairman's liens) arising in the ordinary course of business (provided that such liens do not interfere in any material respect with the use of the Station Assets as currently used), (iii) valid leases or subleases to third parties with respect to property not used in the operation of the Station, and (iv) defects in title or other matters that are not material to the owner or lessee, as the case may be. "Notice of Disagreement" shall have the meaning set forth in SECTION 3.4. "PCB" shall mean polychlorinated biphenyl. "Proration Schedule" shall have the meaning set forth in SECTION 3.4. "Purchase Price" shall have the meaning set forth in SECTION 2.1. "Referee" shall have the meaning set forth in SECTION 3.4. 29 "Repairing Party" shall have the meaning set forth in SECTION 8.6. "Representing Party" shall have the meaning set forth in ARTICLE 4. "Salem" shall have the meaning set forth in the preamble to this Agreement. "Survival Period" shall have the meaning set forth in SECTION 11.5. "To Infinity's knowledge," or words of similar import, shall mean to the actual knowledge of the president or chief financial officer of Infinity. "To Salem's knowledge," or words of similar import, shall mean to the actual knowledge of the president or chief financial officer of Salem. "Upset Date" shall have the meaning set forth in SECTION 12.1. 15.2. MISCELLANEOUS TERMS. The term "or" is disjunctive; the term "and" is conjunctive. The term "shall" is mandatory; the term "may" is permissive. Masculine terms apply to females; feminine terms apply to males. The term "includes" or "including" is by way of example and not limitation. [Signatures immediately following this page.] 3O IN WITNESS WHEREOF. the parties hereto have caused this Asset Purchase Agreement to be duly executed as of the date first written above. INFINITY BROADCASTING CORPORATION OF DALLAS By: /s/ Farid Suleman ----------------------------- Name: Farid Suleman Title: VP Finance/CFO INSPIRATION MEDIA OF TEXAS, INC. By: ----------------------------- Eric H. Halvorson Executive Vice President IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement to be duly executed as of the date first written above. INFINITY BROADCASTING CORPORATION OF DALLAS By: ---------------------------- Name: ----------------------- Title: ---------------------- INSPIRATION MEDIA OF TEXAS, INC. By: /s/ Eric H. Halvorson ---------------------------- Eric H. Halvorson Executive Vice President EX-10.06.06.01 32 ASSET PURCHASE AGREEMENT EXHIBIT 10.06.06.01 ASSET PURCHASE AGREEMENT ------------------------ (WBNW, BOSTON, MASSACHUSETTS) This AGREEMENT (the "Agreement") is dated as of December 4, 1996 by and between BACK BAY BROADCASTERS, INC. ("Seller"), and NEW ENGLAND CONTINENTAL MEDIA, INC. ("Buyer"). RECITALS: --------- 1. Seller owns and operates radio station WBNW(AM) licensed to Boston, Massachusetts (the "Station"), and holds the licenses and authorizations issued by the FCC for the operation of the Station. 2. Buyer desires to acquire substantially all the assets of the Station, and Seller is willing to convey such assets to Buyer. 3. The acquisition of the Station is subject to prior approval of the FCC. NOW THEREFORE, in consideration of the mutual covenants contained herein, Seller and Buyer hereby agree as follows: ARTICLE 1 --------- TERMINOLOGY ----------- 1.1 ACT. The Communications Act of 1934, as amended. ---- 1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7(b), the amount by ------------------ -------------- which Buyer's account is to be credited or charged, as reflected on the Adjustment List. 1.3 ADJUSTMENT LIST. As provided in Section 2.7(b), an itemized list ---------------- -------------- of all sums to be credited or charged against the account of Buyer, with a brief explanation in reasonable detail of the credits or charges. 1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in -------------------- Section 2.3. - ----------- 1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and Sundays, on ------------- which federally chartered banks in the city of Boston, Massachusetts, are regularly open for business. 1.6 BUYER'S Threshold Limitation. As provided in Section 9.3 (b), the ----------------------------- --------------- threshold dollar amount for the aggregate of claims, liabilities, damages, losses, costs and expenses that must be incurred by Buyer before Seller shall be obligated to indemnify 1 Buyer. The Buyer's Threshold Limitation shall be (a) Ten Thousand Dollars ($10,000) for any individual claim, liability, damage, loss, cost or expense and (b) Twenty Five Thousand Dollars ($25,000) for all claims, liabilities, damages, losses, costs and expenses. 1.7 CLOSING. The closing with respect to the transactions contemplated -------- by this Agreement. 1.8 CLOSING DATE. The date determined as the Closing Date as provided ------------- in Section 8.1. ------------ 1.9 DOCUMENTS. This Agreement and all Exhibits and Schedules hereto, ---------- and each other agreement, certificate, or instrument delivered pursuant to or in connection with this Agreement, including amendments thereto that are expressly permitted under the terms of this Agreement. 1.10 EARNEST MONEY. The amount of Three Hundred Thousand Dollars -------------- ($300,000). 1.11 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning defined ------------------------- in Section 5.10. ------------- 1.12 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response ------------------- Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as amended, and any other applicable federal, state and local laws, statutes, rules or regulations concerning the treating, producing, handling, storing, releasing, spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials. 1.13 ESCROW AGENT. Media Services Group, Inc. and Gary Stevens & Co., ------------- Incorporated. 1.14 ESCROW AGREEMENT. The Escrow Agreement in the form attached as ----------------- Exhibit A which Seller, Buyer and the Escrow Agent have entered into - --------- concurrently with the execution of this Agreement relating to the deposit, holding, investment and disbursement of the Earnest Money. 1.15 EXCLUDED ASSETS. Such term shall have the meaning defined in ---------------- Section 2.2. - ------------ 1.16 FCC. Federal Communications Commission. ---- 1.17 FCC LICENSES. The licenses, permits and authorizations of the FCC ------------- for the operation of the Station as listed on Schedule 3.8. ------------- 2 1.18 FCC ORDER. An order or decisions of the FCC granting its consent ---------- to the assignment of the FCC Licenses to Buyer. 1.19 FINAL ACTION. An action of the FCC that has not been reversed, ------------- stayed, enjoined, set aside, annulled or suspended; with respect to which no timely petition for reconsideration or administrative or judicial appeal or sua --- sponte action of the FCC with comparable effect is pending and as to which the - ------ time for filing any such petition or appeal (administrative or judicial) or for the taking of any such sua sponte action of the FCC has expired. ---------- 1.20 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes, hazardous -------------------- substances, pollutants or contaminants, asbestos or asbestos-related products, PCB's, petroleum, crude oil or any fraction or distillate thereof (as such terms are defined in any applicable federal, state or local laws, ordinances, rules and regulations, and including any other terms which are or maybe used in any applicable environmental laws to define prohibited or regulated substances). 1.21 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or 9.4(a) ------------------ -------------- ------ against which any claim or liability may be asserted by a third party which would give rise to a claim for indemnification under the provisions of this Agreement by such party. 1.22 INDEMNIFYING PARTY. The party to the Agreement (not the ------------------- Indemnified Party) that, in the event of a claim or liability asserted by a third party against the Indemnified Party which would give rise to a claim for indemnification under the provisions of this Agreement, may at its own expense, and upon written notice to the Indemnified Party, compromise or defend such claim. 1.23 LIEN. Any mortgage, deed of trust, pledge, hypothecation, security ----- interest, encumbrance, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any written or oral agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction. 1.24 LMA. The Local Programming and Marketing Agreement entered into on ---- this date by Buyer and Seller. 1.25 MATERIAL ADVERSE CONDITION. A condition which would materially --------------------------- restrict, limit, increase the cost or burden of or otherwise adversely affect or materially impair the right of Buyer to the ownership, use, control, enjoyment or operation of the Station or the proceeds therefrom; provided, however, that any condition which requires that the Station be operated in accordance with a condition similar to those contained in 3 the present FCC licenses issued for operation of the Station shall not be deemed a Material Adverse Condition. 1.26 OSHA LAWS. The Occupational Safety and Health Act of 1970, as ---------- amended, and all other federal, state or local laws or ordinances, including orders, rules and regulations thereunder, regulating or otherwise affecting health and safety of the workplace. 1.27 PERMITTED LIEN. Any lien which secures a payment not yet due that --------------- arises, and is customarily discharged, in the ordinary course of Seller's business; any easement, right-of-way or similar imperfection in the Seller's title to its assets or properties that, individually and in the aggregate, are not material in character or amount and do not and are not reasonably expected to materially impair the value or materially interfere with the use of any asset or property of the Seller material to the operation of its business as it is now conducted. 1.28 PURCHASE PRICE. The consideration to be paid by Buyer to Seller --------------- for purchase of the Sale Assets in an amount equal to Six Million Dollars ($6,000,000). 1.29 REAL PROPERTY. Such term shall have the meaning defined in Section -------------- ------- 3.13. - ---- 1.30 RULES AND REGULATIONS. The rules of the FCC as set forth in Volume ---------------------- 47 of the Code of Federal Regulations, as well as such other policies of the Commission, whether contained in the Code of Federal Regulations, or not, that apply to the Station. 1.31 SALE ASSETS. All of the tangible and intangible assets to be ------------ transferred by Seller to Buyer as set forth in Section 2.1. ----------- 1.32 STATION AGREEMENTS. The agreements, commitments, contracts, leases ------------------- and other items described in Section 2.l(c). -------------- 1.33 SELLER'S THRESHOLD LIMITATION. As provided in Section 9.4(b), the ------------------------------ -------------- threshold dollar amount for the aggregate of claims, liabilities, damages, losses, costs and expenses that must be incurred by Seller before Buyer shall be obligated to indemnify Seller. The Seller's Threshold Limitation shall be (a) Ten Thousand Dollars ($10,000) for any individual claim, liability, damage, loss, cost or expense and (b) Twenty Five Thousand Dollars ($25,000) for all claims, liabilities, damages, losses, costs and expenses. 1.34 SURVIVAL PERIOD. The term following the Closing Date during which ---------------- all representations, warranties, covenants and agreements of the parties under this Agreement shall survive. The term shall be twelve (12) months. 4 1.35 TANGIBLE PERSONAL PROPERTY. The personal property described in --------------------------- Section 2.1(a). - -------------- ARTICLE II ---------- PURCHASE AND SALE ----------------- 2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer, ----------- assign and convey to Buyer, and Buyer will purchase from Seller, free and clear of all Liens, except Permitted Liens, all of Seller's right, title and interest, legal and equitable, in and to all tangible and intangible assets (except Excluded Assets) used or useful in the operation of the Station as it is now operated, including the following: (a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies, -------------------------- furniture, fixtures and other tangible personal property now or hereafter owned by Seller and used and/or useful in the operation of the Station as it has been and is now operated, including but not limited to the items listed on Schedule -------- 3.6, together with such modifications, replacements, improvements and additional - --- items, and subject to such deletions therefrom, made or acquired between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement; (b) LICENSES AND PERMITS. The FCC Licenses and all other -------------------- assignable or transferable governmental permits, licenses and authorizations (and any renewals, extensions, amendments or modifications thereof) now held by Seller or hereafter obtained by Seller between the date hereof and the Closing Date, to the extent such other permits, licenses and authorizations pertain to or are used in the operation of the Station. (c) STATION AGREEMENTS. All agreements which Seller is a party to ------------------- or bound by which are listed on Schedule 3.8 and which Buyer is electing to ------------ assume; any renewals, extensions, amendments or modifications of those agreements being assumed which are made in the ordinary course of Seller's operation of the Station and in accordance with the terms and provisions of this Agreement; and any additional such agreements, contracts, leases, commitments or orders (and any renewals, extensions, amendments or modifications thereof) made or entered into between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement and which Buyer elects to assume in writing. (d) RECORDS. True and complete copies of all of the books, -------- records, accounts, files, logs, reports of engineers and other consultants or independent contractors, pertaining to or used in the operation of the Station (other than corporate records). (e) MISCELLANEOUS ASSETS. Any other tangible or intangible assets, --------------------- properties or rights of any kind or nature not otherwise described above in this Section - ------- 5 2.1 and now or hereafter owned or used by Seller in the operation of the - --- Station, including but not limited to all goodwill of the Station; excepting therefrom, any and all right, title or interest in and to the call letters of the Station, "WBNW". 2.2 EXCLUDED ASSETS. Notwithstanding any provision of this ---------------- Agreement to the contrary, Seller shall not transfer, convey or assign to Buyer, but shall retain all of its right, title and interest in and to, the following assets owned or held by it on the Closing Date ("Excluded Assets"): (a) Any and all cash, cash equivalents, cash deposits to secure contract obligations (except to the extent Seller receives a credit therefor under Section 2.7, in which event the deposit shall be included as part of the ----------- Sale Assets), all inter-company receivables from any affiliate of Seller and all other accounts receivable, bank deposits and securities held by Seller in respect of the Station at the Closing Date. (b) Any and all claims of Seller with respect to transactions prior to the Closing including, without limitation, claims for tax refunds and refunds of fees paid to the FCC. (c) All prepaid expenses (except to the extent Seller receives a credit therefor under Section 2.7, in which event the prepaid expense shall be ----------- included as part of the Sale Assets). (d) All contracts of insurance and claims against insurers. (e) All employee benefit plans and the assets thereof and all employment contracts. (f) All contracts that are terminated in accordance with the terms and provisions of this Agreement or have expired prior to the Closing Date in the ordinary course of business; and all loans and loan agreements. (g) All tangible personal property disposed of or consumed between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement. (h) Seller's corporate records except to the extent such records pertain to or are used in the operation of the Station, in which case Seller shall deliver accurate copies thereof to Buyer. (i) All commitments, contracts and agreements not specifically assumed by Buyer pursuant to Section 2.1 (d), above. --------------- (j) Any asset of Seller not comprising the Sale Assets. 6 (k) All of Seller's right, title and interest in and to the call letters of the Station, "WBNW". 2.3 ASSUMPTION OF LIABILITIES. ------------------------- (a) At the Closing, Buyer shall assume and agree to perform, without duplication of Seller's performance, the following liabilities and obligations of Seller (the "Assumed Obligations"): (i) Current liabilities of Seller for which Buyer receives a credit pursuant to Section 2.7, but not in excess of the amount of such credit. ----------- (ii) Liabilities and obligations arising under the Station Agreements, if any, assumed by and transferred to Buyer in accordance with this Agreement, but only to the extent such liabilities and obligations relate to any period of time after the Closing Date. (b) Except for the Assumed Obligations and except as expressly provided in the LMA, Buyer shall not assume or in any manner be liable for any duties, responsibilities, obligations or liabilities of Seller of any kind or nature, whether express or implied, known or unknown, contingent or absolute, including, without limitation, any liabilities to or in connection with Seller's employees whether arising in connection with the transaction contemplated hereunder or otherwise. 2.4 EARNEST MONEY. ------------- (a) Concurrently with the execution of this Agreement, Buyer has deposited with Escrow Agent under the Escrow Agreement, in immediately available funds, the Earnest Money. The Escrow Agent shall hold the Earnest Money under the terms of the Escrow Agreement in trust for the benefit of the parties hereto. Interest and other earnings on the Earnest Money shall be distributed by the Escrow Agent to Buyer from time to time upon the request of Buyer. (b) If Closing does not occur, the Earnest Money shall be delivered to Seller or returned to Buyer in accordance with Section 10.2, and if Closing ------------ does occur, the Earnest Money shall be applied to payment of the Purchase Price at Closing as provided in Section 2.5. ----------- 2.5 PAYMENT OF PURCHASE PRICE. -------------------------- (a) The Purchase Price shall be paid by Buyer as follows: (i) At the Closing, the Earnest Money shall, subject to execution and delivery of the closing documents described in Section 8.2, become ----------- the 7 property of Seller and shall, pursuant to the Escrow Agreement, be disbursed to Seller by wire transfer of immediately available federal funds. (ii) The Purchase Price, less the amount of the Earnest Money disbursed to Seller, shall be paid to Seller at Closing by wire transfer of immediately available federal funds. (b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the Adjustment Amount in accordance with Section 2.7. ----------- 2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and --------------------------------- Seller shall use good faith efforts to agree to an allocation of the Purchase Price. Buyer and Seller shall use such allocation, if agreed upon, for all reporting purposes in connection with federal, state and local income and, to the extent permitted under applicable law, franchise taxes. Buyer and Seller agree to report such allocation to the Internal Revenue Service in the form required by Treasury Regulation (S) 1.1060-1T. 2.7 ADJUSTMENT OF PURCHASE PRICE. ----------------------------- (a) Except as otherwise provided in the LMA, all operating income and operating expenses of the Station shall be adjusted and allocated between Seller and Buyer, and an adjustment in the Purchase Price shall be made as provided in this Section, to the extent necessary to reflect the principle that all such income and expenses attributable to the operation of the Station on or before the Closing Date shall be for the account of Seller, and all income and expenses attributable to the operation of the Station after the Closing Date shall be for the account of Buyer. (b) To the extent not inconsistent with the express provisions of this Agreement, the allocations made pursuant to this Section 2.7 shall be made ----------- in accordance with generally accepted accounting principles. (c) For purposes of making the adjustments pursuant to this Section, Buyer shall prepare and deliver the Adjustment List to Seller within thirty (30) days following the Closing Date, or such earlier or later date as shall be mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the Adjustment Amount. If the Adjustment Amount is a credit to the account of Buyer, Seller shall pay such amount to Buyer, and if the Adjustment Amount is a charge to the account of Buyer, Buyer shall pay such amount to Seller. In the event Seller disagrees with the Adjustment Amount determined by Buyer or with any other matter arising out of this subsection, and Buyer and Seller cannot within sixty (60) days resolve the disagreement themselves, the parties will refer the disagreement to a firm of independent certified public accountants, mutually acceptable to Seller and Buyer, whose decision shall be final and whose fees and expenses shall be allocated between and paid by Seller and Buyer, respectively, to the 8 extent that such party does not prevail on the disputed matters decided by the accountants. ARTICLE III ----------- REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Seller hereby represents and warrants to Buyer as follows: 3.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation, validly ------------------------------- existing and in good standing under the laws of the Commonwealth of Massachusetts. Seller has all requisite power to own, operate and lease its properties and carry on its business as it is now being conducted and as the same will be conducted until the Closing. 3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and ---------------------------------------------- delivery of, and the performance of its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby, have been duly authorized and approved by all necessary corporate action on the part of Seller. Seller has the power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Documents and to consummate the transactions hereby and thereby contemplated. This Agreement and each of the other Documents have been, or at or prior to the Closing will be, duly executed by Seller. This Agreement constitutes (and each of the other Documents, when so executed and delivered, will constitute) legal and valid obligations of Seller enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights or remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 3.3 ABSENCE OF CONFLICTS. The execution and delivery of, and the --------------------- performance of its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby: (a) Do not in any material respect (with or without the giving of notice or the passage of time or both) violate (or result in the creation of any Lien other than a Permitted Lien on any of the Sale Assets under), any provision of law, rule or regulation or any order, judgment, injunction, decree or ruling applicable to Seller; (b) Do not (with or without the giving of notice or the passage of time or both) conflict with or result in a breach or termination of, or constitute a default or give rise to a right of termination or acceleration under the Articles of Organization or Bylaws 9 of Seller or pursuant to any lease, agreement, commitment or other instrument which Seller is a party to, or bound by, or by which any of the Sale Assets may be bound, or result in the creation of any Lien, other than a Permitted Lien, upon any of the Sale Assets. 3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except as set ---------------------------------------------------- forth on Schedule 3.4, Schedule 3.8 and Schedule 3.9, the execution and delivery ------------ ------------ ------------ of, and the performance of its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby, do not require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration of filing with, any court or public agency or other authority, or the consent of any person under any agreement, arrangement or commitment of a nature which Seller is a party to or bound or by which the Sale Assets are bound by or subject to, the failure of which to obtain would have a material adverse effect on the Sale Assets or the operation of the Station. 3.5 SALE ASSETS. The Sale Assets include all of the assets, properties ------------ and rights of every type and description, real, personal and mixed, tangible and intangible, that are used to a material extent in the conduct of the business of owning and operating the Station in the manner in which that business has been and is now conducted, with the exception of the Excluded Assets. 3.6 TANGIBLE PERSONAL PROPERTY. Except for supplies and other --------------------------- incidental items which in the aggregate are not of material value, the list of Tangible Personal Property set forth on Schedule 3.6 is a complete and correct ------------ list of all of the items of tangible personal property (other than Excluded Assets) used to a material extent in the operation of the Station in the manner in which it has been and is now operated. Except as set forth on Schedule 3.6: ------------ (a) Seller has good, marketable and valid title to all of the items of Tangible Personal Property free and clear of all Liens except Permitted Liens, and including the right to transfer same. (b) The Tangible Personal Property has been maintained in accordance with industry practices and is in good operating condition subject to ordinary wear and tear. (c) The Tangible Personal Property complies with applicable rules and regulations of the FCC and the terms of the FCC Licenses. (d) Seller has no knowledge of any defect in the condition or operation of any item of the Tangible Personal Property which is reasonably likely to have a material adverse effect on the operation of the Station. 10 3.7 FCC LICENSES. Seller is the holder of the FCC Licenses listed on ------------- Schedule 3.7, and except as set forth on such Schedule, the FCC Licenses (i) are - ------------ valid, in good standing and in full force and effect and constitute all of the licenses, permits and authorizations required by the Act, the Rules and Regulations or the FCC for, or used in, the operation of the Station as now operated, and (ii) constitute all the licenses and authorizations issued by the FCC to Seller for or in connection with the current operation of the Station. Seller has no knowledge of any condition imposed by the FCC as part of any FCC License which is neither set forth on the face thereof as issued by the FCC nor contained in the Rules and Regulations applicable generally to stations of the type, nature, class or location of the Station. Except as disclosed on Schedule -------- 3.7, the Station is being operated at full authorized power, in accordance with - --- the terms and conditions of the FCC Licenses applicable to it and in accordance with the Rules and Regulations. Except as set forth on Schedule 3.7, no ------------ proceedings are pending or, to the knowledge of the Seller, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any fines, forfeitures or other administrative actions by the FCC with respect to the Station or its operation, other than proceedings affecting the radio broadcasting industry in general. Seller has complied in all material respects with all requirements to file reports, applications and other documents with the FCC with respect to the Station, and all such reports, applications and documents are complete and correct in all material respects. Seller has no knowledge of any matters (i) which could reasonably be expected to result in the suspension or revocation of or the refusal to renew any of the FCC Licenses or the imposition of any fines or forfeitures by the FCC, or (ii) against Seller which could reasonably be expected to result in the FCC's refusal to grant approval of the assignment to Buyer of the FCC Licenses or the imposition of any Material Adverse Condition in connection with approval of such assignment. There are not any unsatisfied or otherwise outstanding citations issued by the FCC with respect to the Station or its operation. Complete and accurate copies of all FCC Licenses are attached as a part of Schedule 3.8. The "Public Inspection File" of the Station is complete ------------ and in substantial and material compliance with Section 73.3526 of the Rules and Regulations. 3.8 STATION AGREEMENTS. ------------------- (a) Schedule 3.8 sets forth an accurate and complete list of all ------------ agreements, contracts, arrangements, commitments or leases in effect as of the date hereof and which Buyer has agreed to assume, including all amendments, modifications and supplements thereto by which the Station or its assets or properties are bound. Complete and correct copies of all such agreements, contracts, arrangements or commitments that are in writing, including all amendments, modifications and supplements thereto, have been delivered to Buyer. (b) Except as set forth in the Schedules, (i) all Station Agreements are legal, valid and enforceable in accordance with their terms, subject to applicable 11 bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity regardless of whether enforcement is sought in any proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of Seller, any other party thereto, is in material breach of or in material default under any Station Agreements; (iii) to the knowledge of Seller, there has not occurred any event which, after the giving of notice or the lapse of time or both, would constitute a material default under, or result in the material breach of, any Station Agreements which are, individually or in the aggregate, material to the operation of the Station; and (iv) Seller holds the right to enforce and receive the benefits under all of the Station Agreements, free and clear of all Liens (other than Permitted Liens) but subject to the terms and provision of each such agreement. (c) Schedule 3.8 indicates whether consent or approval by any party ------------ thereto is required for consummation of the transactions contemplated hereby. 3.9 LITIGATION. Except as set forth on Schedule 3.9, there are no ----------- ------------ claims, known investigations or administrative, arbitration or other proceedings ("Litigation") pending or, to the actual knowledge of Seller, threatened against Seller which would, individually or in the aggregate if adversely determined, have a material adverse effect on the Sale Assets or the operation of the Station, or which would give any third party the right to enjoin the transactions contemplated by this Agreement. To the actual knowledge of Seller, there is no basis for any such claim, investigation, action, suit or proceeding which would, individually or in the aggregate if adversely determined, have an adverse effect on the Sale Assets or operation of the Station. There are no existing or, to the actual knowledge of Seller, pending orders, judgments or decrees of any court or governmental agency materially affecting Seller, the Station or any of the Sale Assets. Notwithstanding the disclosure of Litigation of Seller to Buyer, Buyer shall not assume any liability, damages costs or expense of Seller relating to or arising out of the Litigation. 3.10 LABOR MATTERS. -------------- (a) Except as set forth on Schedule 3.10, Seller is not a party to ------------- any collective bargaining agreement, and there is no collective bargaining agreement that determines the terms and conditions of employment of any employees of Seller. (b) There is no labor strike, dispute, slow-down or stoppage pending or, to the actual knowledge of Seller, threatened against the Station; (c) There are neither pending nor, to the actual knowledge of Seller threatened, any suits, actions, administrative proceedings, union organizing activities, arbitrations, grievances or other proceedings between Seller and any employees of the Station or any union representing such employees; and there are no existing labor or employment or other controversies or grievances involving employees of the Station 12 which have had or are reasonably likely to have a material adverse effect on the operation of the Station; (d) With respect to the Station, (i) Seller is in compliance in all material respects with all laws, rules and regulations relating to the employment of labor and all employment contractual obligations, including those relating to wages, hours, collective bargaining, affirmative action, discrimination, sexual harassment, wrongful discharge and the withholding and payment of taxes and contributions; (ii) Seller has withheld all amounts required by law or agreement to be withheld from the wages or salaries of its employees; and (iii) Seller is not liable to any present or former employees or any governmental authority for damages, arrears of wages or any tax or penalty for failure to comply with the foregoing; (e) Buyer's consummation of the transactions contemplated by this Agreement in accordance with the terms hereof shall not, as a result of or in connection with the transactions contemplated hereby, impose upon Buyer the obligation to pay any severance or termination pay under any agreement, plan or arrangement binding upon Seller. 3.11 EMPLOYEE BENEFIT PLANS. Buyer's consummation of the transactions ----------------------- contemplated by this Agreement in accordance with the terms hereof shall not, as a result of or in connection with the transactions contemplated hereby, impose upon Buyer any obligation under any benefit plan, contract or arrangement (regardless of whether they are written or unwritten and funded or unfunded) covering employees or former employees of Seller in connection with their employment by Seller. For purposes of the Agreement, "benefit plans" shall include without limitation employee benefit plans within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, vacation benefits, employment and severance contracts, stock option plans, bonus programs and plans of deferred compensation. 3.12 COMPLIANCE WITH LAW. The operation of the Station complies in all -------------------- material respects with the applicable rules and regulations of the FCC and all federal, state, local or other laws, statutes, ordinances, regulations, and any applicable order, writ, injunction or decree of any court, commission, board, agency or other instrumentality. 3.13 ENVIRONMENTAL MATTERS; OSHA. ---------------------------- (a) Seller has obtained all environmental, health and safety permits necessary or required for either the operation of the Station and all such permits are in full force and effect and Seller is in compliance with all terms and material conditions of such permits. 13 (b) There is no proceeding pending or, to Seller's actual knowledge, threatened which may result in the reversal, rescission, termination, modification or suspension of any environmental or health or safety permits necessary for the operation of the Station. (c) With respect to the Station, Seller is in compliance in all material respects with the provisions of Environmental Laws. (d) During Seller's occupancy of any real property associated with the Station ("the Real Property"), Seller has not, and to Seller's actual knowledge, no other person or entity has caused or permitted materials to be generated, released, stored, treated, recycled, disposed of on, under or at such parcels, which materials, if known to be present, would require clean up, removal or other remedial or responsive action under Environmental Laws. Seller has not caused the migration of any materials from the Real Property onto or under any property adjacent to the Real Property which materials, if known to be present, would require cleanup, removal or other remedial or responsive action under Environmental Laws. To Seller's actual knowledge there are no underground storage tanks and no polychlorinated biphenyls ("PCB") or friable asbestos on such property. (e) Seller is not subject to any judgment, decree, order or citation with respect to the Station or the Real Property related to or arising out of Environmental Laws, and Seller has not received notice that it has been named or listed as a potentially responsible party by any person or governmental body or agency in any matter arising under Environmental Laws. (f) Seller has not discharged or disposed of any petroleum product or solid waste on the Real Property, or on the property adjacent to the Real Property, which may form the basis for any present or future claim based upon the Environmental Laws in existence on the date hereof or as of the Closing, or any demand or action seeking clean-up of any site, location, body of water, surface or subsurface, under any Environmental Laws or otherwise, or which may subject the owner of the Real Property to claims by third parties (except to the extent third party liability can be established) for damages. (g) No portion of the Real Property has ever been used by Seller in material violation of Environmental Laws or used by Seller as a landfill, dump site or any other use which involves the disposal or storage of Hazardous Materials on-site or in any manner which may adversely affect the value of the Real Property. (h) No pesticides, herbicides, fertilizers or other materials have been used on, applied to or disposed of by Seller on the Real Property in material violation of any Environmental Laws. 14 (i) With respect to the Station or the Real Property, Seller has disposed of all waste in full compliance with all Environmental Laws and to Seller's actual knowledge, there is no existing condition that may form the basis of any present or future claim, demand or action seeking clean up of any facility, site, location or body of water, surface or subsurface. (j) To Seller's actual knowledge, Seller is in material compliance with all OSHA Laws. 3.14 TOWER COORDINATES. At closing Seller shall provide to Buyer the ------------------ current vertical elevation and geographical coordinates of the Station's towers ("the Tower Coordinates") and that the Tower Coordinates comply with and correspond to the then current vertical elevation an geographical coordinates authorized by the FAA and FCC. 3.15 FILING OF TAX RETURNS. Seller has filed all Federal, State and ---------------------- local tax returns which are required to be filed, and has paid all taxes and all assessments to the extent that such taxes and assessments have become due. 3.16 ABSENCE OF INSOLVENCY. No insolvency proceedings of any character ---------------------- including without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Seller or any of the Sale Assets, are pending or, to the best knowledge of Seller, 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. 3.17 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17, -------------------------- ------------- no agent, broker, investment banker or other person or firm acting on behalf of or under the authority of Seller or any affiliate of Seller is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with the transactions contemplated by this Agreement. 3.18 INSURANCE. There is now in full force and effect with reputable ---------- insurance companies fire and extended coverage insurance with respect to all material tangible Sale Assets and public liability insurance, all in commercially reasonable amounts. ARTICLE IV ---------- REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer represents and warrants to Seller as follows: 4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly ------------------------------- organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts. Buyer has all requisite corporate power to own, operate and lease its 15 properties and carry on its business as it is now being conducted and as the same will be conducted following the Closing. 4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and ---------------------------------------------- delivery of, and the performance of its obligations under, this Agreement and each of the other Documents by Buyer, and the consummation by Buyer of the transactions contemplated hereby and thereby, have been duly authorized and approved by all necessary corporate action on the part of Buyer. Buyer has the power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Documents and to consummate the transactions hereby and thereby contemplated. This Agreement and each of the other Documents have been, or at or prior to the Closing will be, duly executed by Buyer. This Agreement constitutes (and each of the other Documents, when so executed and delivered, will constitute) legal and valid obligations of Buyer enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights or remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 4.3 ABSENCE OF CONFLICTS. The execution and delivery of, and the --------------------- performance of its obligations under, this Agreement and each of the other Documents by Buyer, and the consummation by Seller of the transactions contemplated hereby and thereby: (a) Do not in any material respect (with or without the giving of notice or the passage of time or both) violate (or result in the creation of any claim, lien, charge or encumbrance on any of the assets or properties of Buyer under) any provision of law, rule or regulation or any order, judgment, injunction, decree or ruling applicable to Buyer; (b) Do not (with or without the giving of notice or the passage of time or both) conflict with or result in a breach or termination of, or constitute a default or give rise to a right of termination or acceleration under, the Articles of Organization or Bylaws of Buyer or any lease, agreement, commitment, or other instrument which Buyer is a party to, bound by, or by which any of its assets or properties may be bound. 4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the ---------------------------------------------------- required consent of the FCC, Buyer's execution and delivery of, and the performance of its obligations under, this Agreement and each of the other Documents and the consummation by Buyer of the transaction contemplated hereby and thereby, do not require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration or filing with, any court or public agency or other authority, or the consent of any person under any agreement, arrangement or commitment of any nature which Buyer is a party to or bound by, the failure of which to obtain would have a 16 material adverse effect on the assets, business, operation or financial condition or results of operations of Buyer. 4.5 QUALIFICATION. -------------- (a) Buyer has no knowledge after due inquiry of any facts concerning Buyer or any other person with an attributable interest in Buyer (as such term is defined under the Rules and Regulations) which, under present law (including the Act) and the Rules and Regulations, would (i) disqualify Buyer from being the holder of the FCC Licenses, the owner of the Sale Assets or the operator of the Station upon consummation of the transactions contemplated by this Agreement, or (ii) raise a substantial and material question of fact (within the meaning of Section 309(e) of the Act) respecting Buyer's qualifications. (b) Without limiting the foregoing Subsection (a), Buyer shall make -------------- the affirmative certifications provided in Section III of FCC Form 314 at the time of filing of such form with the FCC as contemplated by Section 5.2. ----------- 4.6 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17, no -------------------------- ------------- agent, broker, investment banker, or other person or firm acting on behalf of or under the authority or Buyer or any affiliate of Buyer is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with transactions contemplated by this Agreement. 4.7 LITIGATION. There are no legal, administrative, arbitration or ---------- other proceedings or governmental investigations pending or, to the knowledge of Buyer, threatened against Buyer that would give any third party the right to enjoin the transactions contemplated by this Agreement. ARTICLE V --------- TRANSACTIONS PRIOR TO THE CLOSING DATE -------------------------------------- 5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE. ------------------------------------------------------------ Seller covenants and agrees with Buyer that between the date hereof and the Closing Date, unless the Buyer otherwise agrees in writing (which agreement shall not be unreasonably withheld), Seller shall: (a) Subject to the LMA, use reasonable efforts to operate the Station in substantially the same manner in which it is currently being operated: (b) Use reasonable commercial efforts to maintain insurance upon all of the tangible Sale Assets in such amounts and of such kind comparable to that in effect on 17 the date hereof with respect to such Sale Assets and with respect to the operation of the Station, with insurers of substantially the same or better financial condition; (c) Subject to the LMA, operate the Station and otherwise conduct its business in accordance with the terms or conditions of its FCC Licenses, the Rules and Regulations, the Act and all other rules and regulations, statutes, ordinances and orders of all governmental authorities having jurisdiction over any aspect of the operation of the Station, except where the failure to so operate the Station would not have a material adverse effect on the Sale Assets or the operation of the Station or on the ability of Seller to consummate the transactions contemplated hereby; (d) Maintain the books and records of the Station in Seller's customary manner on a basis consistent with prior years; (e) Comply in all material respects with all Station Agreements now or hereafter existing which are material, individually or in the aggregate, to the operation of the Station; provided, however, that Seller shall not be required to continue or resume the broadcast of Bloomberg Financial News once the existing arraignment for such service is terminated; (f) Promptly notify Buyer of any material default by, or claim of default against, any party under any Station Agreements which are material, individually or in the aggregate, to the operation of the Station, and any event or condition which, with notice or lapse of time or both, would constitute an event of default under such Station Agreements; (g) Not mortgage, pledge or subject to any Lien (except in the ordinary course of business) any of the Sale Assets; (h) Not sell, lease or otherwise dispose of, nor agree to sell, lease or otherwise dispose of, any of the Sale Assets, except for dispositions in the ordinary course of business; (i) Not acquire or lease any goods or services or enter into, amend or terminate any license, lease of real or personal property or any other Station Agreement, other than in the ordinary course of business; (j) Subject to the LMA, not introduce any material change with respect to the operation of the Station including, without limitation, any material changes in the broadcast hours of the Station or any other material change in the Station's programming policies, except such changes as in the sole discretion of Seller, exercised in good faith after consultation with Buyer, are required by the public interest; 18 (k) Notify Buyer of any material litigation pending or threatened against Station or Seller or any material damage to or destruction of any assets included or to be included in the Sale Assets; 5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC, --------------------- within five (5) business days after the execution of this Agreement, such applications and other documents in the name of Seller or Buyer, as appropriate, as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall take all commercially reasonable steps necessary to prosecute such filings with diligence and shall diligently oppose any objections to, appeals from, petitions to reconsider or administrative review of such approval of the FCC, to the end that the FCC Order and a Final Action with respect thereto may be obtained as soon as practicable; provided, however, that in the event the application for assignment of the FCC Licenses has been designated for hearing, either Buyer or Seller may elect to terminate this Agreement pursuant to Section 10.1 (c). Buyer ---------------- shall not knowingly take, and Seller covenants that Seller shall not knowingly take, any action that party knows or has reason to know would materially and adversely affect or materially delay issuance of the FCC Order or materially and adversely affect or materially delay its becoming a Final Action without a Material Adverse Condition, unless such action is requested or required by the FCC, its staff or the Rules and Regulations. Should Buyer or Seller become aware of any facts which could reasonably be expected to materially and adversely affect or materially delay issuance of the FCC Order without a Material Adverse Condition (including but not limited to, in the case of Buyer, any facts which would reasonably be expected to disqualify Buyer from controlling the Station), such party shall promptly notify the other party thereof in writing and both parties shall cooperate to take all steps necessary or desirable to resolve the matter expeditiously and to obtain the FCC's approval of matters pending before it. Should Buyer, at any time after entering into this Agreement, enter into an agreement to acquire other radio stations in a manner that, in the reasonable opinion of Buyer's counsel, will disqualify Buyer from acquiring the Station without a waiver of the Rules and Regulations by the FCC, then, to the extent permitted by the Rules and Regulations, Buyer shall request such waiver only in conjunction with its acquisition of the other radio stations and Buyer shall request the FCC to process the applications necessary to obtain the FCC Order as if the Buyer did not enter into the agreement to acquire other radio stations; provided, however, that nothing herein shall prohibit Buyer from informing the FCC that such waivers relate to the instant transaction and may affect the ability to obtain a FCC Order. 5.3 OTHER CONSENTS. Seller shall use its reasonable best efforts to -------------- obtain the consent or waivers to the transactions contemplated by this Agreement required under any assumed Station Agreements; provided that Seller shall not be required to pay or grant any material consideration in order to obtain any such consent or waiver. 19 5.4 TAX RETURNS AND PAYMENTS. ------------------------ (a) All tax returns, estimates, and reports required to be filed by Seller prior to the Closing Date or relating to periods prior to the Closing Date will be timely filed with the appropriate governmental agencies unless valid extensions therefor shall have been obtained. (b) All taxes pertaining to ownership of the Sale Assets or operation of the Station prior to the Closing Date will be timely paid; provided that Seller shall not be required to pay any such tax so long as the validity thereof shall be contested in good faith by appropriate proceedings and Seller shall have set aside adequate reserves with respect to any such tax. 5.5 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and its representatives may make such reasonable investigation of the Sale Assets as it may desire; and Seller shall give to Buyer, its engineers, counsel, accountants and other representatives reasonable access during normal business hours throughout the period prior to the Closing to personnel and all of the assets, books, records and files of or pertaining to the Station, provided that (i) Buyer shall give Seller reasonable advance notice of each date on which Buyer or any such other person or entity desires such access, (ii) each person (other than an officer of Buyer) shall, if requested by Seller, be accompanied by an officer or their representative of Buyer approved by Seller, which approval shall not be unreasonably withheld, (iii) the investigations at the offices of Seller shall be reasonable in number and frequency, and (iv) all investigations shall be conducted in such a manner as not to physically damage any property or constitute a disruption of the operation of the Station or Seller. Seller shall furnish to Buyer during such period all documents and copies of documents and information concerning the business and affairs of Seller and the Station as Buyer may reasonably request. 5.6 CONFIDENTIALITY; PRESS RELEASE. All information, data and materials ------------------------------ furnished or to be furnished to either party with respect to the other party in connection with this transaction or pursuant to this Agreement are confidential. Each party agrees that prior to Closing (a) it shall not disclose or otherwise make available, at any time, any such information, data or material to any person who does not have a confidential relationship with such party; (b) it shall protect such information, data and material with a high degree of care to prevent the disclosure thereof; and (c) if, for any reason, this transaction is not consummated, all information, data or material concerning the other party obtained by such party, and all copies thereof, will be returned to the other party. After Closing, neither party will disclose or otherwise make available to any person any of such information, data or material concerning the other party, except as may be necessary or appropriate in connection with the operation of the Station by Buyer. Each party shall use its reasonable efforts to prevent the violation of any of the foregoing 20 confidentiality provisions by its respective representatives. Notwithstanding the foregoing, nothing contained herein shall prohibit Buyer or Seller from: (i) using such information, data and materials in connection with any action or proceeding brought or any claim asserted by Buyer or Seller in respect of any breach by the other of any representation, warranty or covenant made in or pursuant to this Agreement; or (ii) supplying or filing such information, data or materials to or with the FCC or any other valid governmental or court authority to the extent reasonably necessary to obtain any consent, waiver, amendment, modification, approval, authorization, permit or license which may be necessary to effectuate this Agreement, and to consummate the transaction contemplated herein. In the event that either party determines in good faith that a press release or other public announcement is desirable under any circumstances, the parties shall consult with each other to agree upon the appropriate timing, form and content of such release or announcement prior to making such release or announcement. 5.7 REASONABLE BEST EFFORTS. Subject to the terms and conditions of ------------------------ this Agreement, each of the parties hereto will use its reasonable best efforts to take all action and to do all things necessary, proper or advisable to satisfy any condition to the parties' obligations hereunder in its power to satisfy and to consummate and make effective as soon as practicable the transactions contemplated by this Agreement. 5.8 FCC REPORTS. Seller shall continue to file, on a current basis ------------ until the Closing Date, all reports and documents required to be filed with the FCC with respect to the Station. Seller shall provide Buyer with copies of all such filings within five business days of the filing with the FCC. 5.9 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing, ----------------------------------- Seller shall obtain executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Sale Assets as security for payment of loans and other obligations or judgments and of any other Liens (other than Permitted Liens) on the Sale Assets. At the closing, Seller shall transfer and convey to Buyer all of the Sale Assets free and clear of all Liens except Permitted Liens. 5.10 Intentionally Omitted 5.11 REQUEST FOR CALL SIGN CHANGE. Seller shall cooperate with all ----------------------------- reasonable requests of Buyer to change the call sign of the Station. Buyer shall pay the costs of the call sign change. 21 ARTICLE VI ---------- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE ----------------------------- Buyer's obligation to close the transaction contemplated by this Agreement is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, unless waived by Buyer in writing: 6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE. ---------------------------------------------------------------- (a) The representations and warranties of Seller contained in this Agreement or in any other Document shall be complete and correct in all material respects on the date hereof and at the Closing Date with same effect as though made at such time except for changes that are not materially adverse to the Station or the Sale Assets taken as a whole. (b) Seller shall have delivered to Buyer on the Closing Date a certificate that (i) the condition specified in Section 6.1(a) is satisfied as -------------- of the Closing Date, and (ii) except as set forth in such certificate (none of which exceptions shall be materially adverse to the Station, the Sale Assets or Seller's ability to consummate the transaction contemplated hereby), the condition specified in Section 6.2 is satisfied as of the Closing Date. ----------- 6.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed in all -------------------------- material respects all of its covenants, agreements and obligations required by this Agreement and each of the other Documents to be performed or complied with by it prior to or upon the Closing Date. 6.3 FCC AND OTHER CONSENTS. ----------------------- (a) The FCC Order shall have been issued by the FCC and shall have become a Final Action without any Material Adverse Condition. (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body relating thereto or in connection therewith specifies and requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall have been satisfied by Seller. (c) All other authorizations, consents, approvals and clearances of federal, state or local governmental agencies required to permit the consummation by Buyer of the transactions contemplated by this Agreement shall have been obtained; all statutory and regulatory requirements for such consummation shall have been fulfilled; and no such authorizations, consents, approvals or clearances shall contain any conditions that 22 individually or in the aggregate would have a material adverse effect on the operations of the station. 6.4 ADVERSE PROCEEDINGS. Neither Buyer nor any affiliate of Buyer shall -------------------- be subject to any ruling, decree, order or injunction restraining, imposing material limitations on or prohibiting (i) the consummation of the transactions contemplated hereby or (ii) its participation in the operation, management, ownership or control of the Station; and no litigation, proceeding or other action seeking to obtain any such ruling, decree, order or injunction shall be pending or shall have been threatened in writing. No governmental authority having jurisdiction shall have notified any party to this Agreement that consummation of the transaction contemplated hereby would constitute a violation of the laws of the United States or of any state or political subdivision or that it intends to commence proceedings to restrain such consummation or to force divestiture, unless such governmental authority shall have withdrawn such notice. No governmental authority having jurisdiction shall have commenced any such proceeding. 6.5 OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from -------------------------------- Seller's FCC counsel an opinion, dated the Closing Date, in form and substance reasonably satisfactory to Buyer's FCC counsel, to the effect that: (a) The FCC Licenses listed on Schedule 3.7 are valid, in good ------------ standing and in full force and effect and include all licenses, permits and authorizations which are necessary under the Rules and Regulations for Seller to operate the Station in the manner in which the Station is currently being operated. (b) To counsel's knowledge, no condition has been imposed by the FCC as part of any FCC License which is not set forth on the face thereof as issued by the FCC or contained in the Rules and Regulations applicable generally to stations of the type, nature, class or location of the Station. (c) No proceedings are pending or, to counsel's knowledge, are threatened which may result in the revocation, modification, non-renewal of, suspension of, or the imposition of a Material Adverse Condition upon, any of the FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any fines, forfeitures or other administrative actions by the FCC with respect to the Station or its operation, other than proceedings affecting the radio broadcasting industry in general. In rendering such opinion, counsel shall be entitled to rely upon Seller's representations and warranties in this Agreement and to limit its inquiry to its files and such FCC files and records as are available to it as of 10:00 o'clock A.M. Eastern time the business day immediately preceding the Closing Date. Counsel may state that, as to any factual matters embodied in, or forming a basis for any legal opinion expressed in, such opinion, counsel's knowledge is based solely on such inquiry. 23 6.6 OTHER CONSENTS. Seller shall have obtained in writing and provided --------------- to Buyer on or before the Closing Date, without any condition materially adverse to Buyer or the Station, the consents or waivers to the transactions contemplated by this Agreement required under the Station Agreements. 6.7 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or ------------------------------ caused to be delivered to Buyer on the Closing Date each of the Documents required to be delivered pursuant to Section 8.2. ------------ 6.8 NO CESSATION OF BROADCASTING. ----------------------------- (a) Between the date hereof and the Closing Date, the Station shall not have for a period of more than ten (10) days in the aggregate (i) ceased broadcasting on its authorized frequency, (ii) lost substantially all of its normal broadcasting capability or (iii) been broadcasting at a power level of 50% or less of its FCC authorized level. Seller shall promptly notify Buyer of the occurrence of any one or more of the foregoing events or conditions, and the non-fulfillment of the condition precedent set forth in this Subsection caused by the occurrence of the events specified in Seller's notice shall be deemed waived by Buyer unless, within fifteen (15) days after Buyer's receipt of Seller's written notice, Buyer notifies Seller in writing to the contrary. (b) In addition, during the five (5) days immediately preceding the Closing Date, the Station shall have been operating continuously with substantially all of its normal broadcasting capability except for cessation or reductions for insignificant periods of time resulting from occurrences (such as lightning strikes) over which Seller has no control. Seller shall have the right to delay Closing for a period not to exceed thirty (30) days if Seller reasonably determines that any action to restore the Station substantially all of its normal broadcasting capability can be completed during such delay period. (c) Notwithstanding the foregoing, the loss or damage to Seller's transmission facilities or the failure to comply with any standard set forth in Section 6.8(a) or Section 6.8(b) shall not be a condition precedent to Buyer's - -------------- -------------- obligation to close if such loss, damage or failure to comply arose solely by reason of the act or omission of Buyer in its capacity as the programmer of the Station under the LMA. 6.9 Intentionally Omitted 24 ARTICLE VII ----------- CONDITIONS PRECEDENT OF THE OBLIGATION OF SELLER TO CLOSE ----------------------------- The obligation of Seller to close the transaction contemplated by this Agreement is subject to the satisfaction, on or prior to the closing Date, of each of the following conditions, unless waived by Seller in writing: 7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. ------------------------------------------- (a) The representations and warranties of Buyer contained in this Agreement shall be complete and correct in all material respects on the date hereof and at the Closing Date with the same effect as though made at such time except for changes that are not materially adverse to Seller. (b) Buyer shall have delivered to Seller on the Closing Date a certificate that (i) the condition specified in Section 7.1(a) is satisfied as -------------- of the Closing Date, and (ii) except as set forth in such certificate (none of which exceptions shall be materially adverse to Buyer's ability to consummate the transaction contemplated hereby), the conditions specified in Section 7.2 ----------- are satisfied as of the Closing Date. 7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all -------------------------- material respects all of its covenants, agreements and obligations required by this Agreement and each of the other Documents to be performed or complied with by it prior to or upon the Closing Date. 7.3. FCC AND OTHER CONSENTS. ----------------------- (a) The FCC Order shall have been issued by the FCC and shall have become effective under the rules of the FCC. (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body relating thereto or in connection therewith specifies and requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall have been satisfied by Buyer. (c) All other authorizations, consents, approvals and clearances of all federal, state and local governmental agencies required to permit the consummation by Seller of the transactions contemplated by this Agreement shall have been obtained; all statutory and regulatory requirements for such consummation shall have been fulfilled; and no such authorizations, consents, approvals or clearances shall contain any conditions that individually or in the aggregate would have any material adverse effect on Seller. 25 7.4 ADVERSE PROCEEDINGS. Neither Seller nor any affiliate of Seller -------------------- shall be subject to any ruling, decree, order or injunction restraining, imposing material limitations on or prohibiting (i) the consummation of the transactions contemplated hereby or (ii) its participation in the operation, management, ownership or control of the Station; and no litigation, preceding or other action seeking to obtain any such ruling, decree, order or injunction shall be pending or threatened in writing. No governmental authority having jurisdiction shall have notified any party to this Agreement that consummation of the transactions contemplated hereby would constitute a violation of the laws of the United States or of any state or political subdivision or that it intends to commence proceedings to restrain such consummation or to force divestiture, unless such governmental authority shall have withdrawn such notice. No governmental authority having jurisdiction shall have commenced any such proceeding. 7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall have ------------------------------------------------- delivered or caused to be delivered to Seller on the Closing Date each of the Documents required to be delivered pursuant to Section 8.3, and Seller shall ----------- have received payment of the Purchase Price with the form of payment set forth in Section 2.5. ------------ ARTICLE VIII ------------ CLOSING ------- 8.1 TIME AND PLACE. Unless otherwise agreed to in advance by the --------------- parties, Closing shall take place at the offices of Seller's counsel in Boston, Massachusetts, or at such other place as the parties agree, at 10:00 A.M. Eastern Time on the date (the "Closing Date") that is the later of (i) the fifth Business Day after the Applicable Date or (ii) the date as soon as practicable following satisfaction or waiver of the conditions precedent hereunder. The Applicable Date shall be the date on which issuance of the FCC Order without any Material Adverse Condition has become a Final Action. 8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing, --------------------------------------------- Seller shall deliver or cause to be delivered to Buyer the following: (a) Certified resolutions of Seller's Board of Directors (and shareholders, if required by applicable law) approving the execution and delivery of this Agreement and each of the other Documents and authorizing the consummation of the transactions contemplated hereby and thereby. (b) The certificate required by Section 6.1 (b). --------------- (c) A bill of sale and other instruments of transfer and conveyance transferring to Buyer the Tangible Personal Property. 26 (d) Executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Sale Assets as security for payment of loans and other obligations and of any other Liens (other than Permitted Liens). (e) An instrument or instruments assigning to Buyer all right, title and interest of Seller in and to all Station Agreements being assumed by Buyer. (f) An instrument assigning to Buyer all right, title and interest of Seller in the FCC Licenses, all pending applications relating to the station before the FCC, and any remaining Sale Assets not otherwise conveyed. (g) The opinion of Seller's FCC counsel, dated the Closing Date, to the effect set forth in Section 6.5. ------------ (h) Such additional information and materials as Buyer shall have reasonably requested, including without limitation, evidence that all consents and approvals required as a condition to Buyer's obligation to close hereunder have been obtained. 8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing, Buyer --------------------------------------------- shall deliver or cause to be delivered to Seller the following: (a) Certified resolutions of Buyer's Board of Directors (ad Buyer's shareholders if required by law) approving the execution and delivery of this Agreement and each of the other Documents and authorizing the consummation of the transaction contemplated hereby and thereby. (b) The Purchase Price as set forth in Section 2.5. ------------ (c) The agreement of Buyer assuming the obligations under any Station Agreements being assumed by Buyer. (d) The certificate required under Section 7.1 (b). ---------------- (e) Such additional information and materials as Seller shall have reasonably requested. 27 ARTICLE IX ---------- SURVIVAL OF REPRESENTATIONS AND WARRANTIES: ------------------------------------------- INDEMNIFICATION --------------- 9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations, ------------------------------------------ warranties, covenants and agreements contained in this Agreement or in any other Document shall survive the Closing for the Survival Period and the Closing shall not be deemed a waiver by either party of the representations, warranties, covenants or agreements of the other party contained herein or in any other Document. No claim may be brought under this Agreement or any other Document unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the Survival Period. In the event such a notice is so given, the right to indemnification with respect thereto under this Article shall survive the Survival Period until such claim is finally resolved and any obligations with respect thereto are fully satisfied. Notwithstanding the foregoing, the provisions for survival and the making of claims shall not apply to the agreements whereby Buyer assumes the obligations under Subsection 8.3(c), each of which agreements shall be governed by its own ----------------- terms. 9.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the rights --------------------------- to indemnification and to be held harmless set forth in this Agreement shall, as between the parties hereto and their respective successors and assigns, be exclusive of all rights to indemnification and to be held harmless that such party (or its successors or assigns) would otherwise have by statute, common law or otherwise. 9.3 INDEMNIFICATION BY SELLER. -------------------------- (a) Subject to the provisions of Subsection (b) below and Section -------------- ------- 10.2 below, Seller shall indemnify and hold harmless Buyer and any officer, - ---- director, agent, employee and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: (i) Any breach or non-performance by Seller of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other Documents; or (ii) The ownership or operation by Seller of the Station or the Sale Assets on or prior to the Closing Date, except as relates to operation of the Station by Buyer under the LMA; (iii) All other liabilities and obligations of Seller other than the Assumed Obligations; or 28 (iv) Noncompliance by Seller with the provisions of the Bulk Sales Act, if applicable, in connection with the transaction contemplated hereby. (b) Notwithstanding anything contained herein to the contrary, if Closing occurs, Seller shall not be obligated to indemnify Buyer pursuant to Subsection (a) above (i) for any amounts in excess of the Purchase Price in - -------------- the aggregate, or (ii) unless and until the aggregate amount of such claims, liabilities, damages, losses, costs and expenses exceeds Buyer's Threshold Limitation, in which case Buyer shall then be entitled to indemnification of the entire aggregate amount, provided that any amounts owed by Seller to Buyer under Sections 2.7 and 9.3(a)(iv) above shall not be counted in determining whether - ------------ ---------- Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to recover any such payment without regard to such limitation. In no event shall Seller be liable hereunder for any lost profits of Buyer, consequential damages or injury to the reputation of Buyer. 9.4 INDEMNIFICATION BY BUYER. ------------------------- (a) Subject to the provisions of Subsection (b) below and Section -------------- ------- 10.2 below, Buyer shall indemnify and hold harmless Seller and any officer, - ---- director, agent, employee and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: (i) Any breach or non-performance by Buyer of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other Document; or (ii) The ownership or operation of the Station after the Closing Date; or (iii) All other liabilities or obligations of Buyer including, without limitation, the Assumed Obligations. (b) Notwithstanding anything contained herein to the contrary, if Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to Subsection (a) above unless and until the aggregate amount of such claims, - -------------- liabilities, damages, losses, costs and expenses exceeds Seller's Threshold Limitation, in which case Seller shall then be entitled to indemnification of the entire aggregate amount, provided that any amounts owed by Buyer to Seller under Section 2.7 above shall not be counted in determining whether Seller's ----------- Threshold Limitation is satisfied, and Seller shall have the right to recover any such payment without regard to such limitation. In no event shall Buyer be liable hereunder for any lost profits of Seller, consequential damages or injury to the reputation of Seller. 29 9.5 Indemnification Procedures. In the event that an Indemnified Party --------------------------- may be entitled to indemnification hereunder with respect to any asserted claim of, or obligation or liability to, any third party, such party shall notify the Indemnifying Party thereof, describing the matters involved in reasonable detail, and the Indemnifying Party shall be entitled to assume the defense thereof upon written notice to the Indemnified Party with counsel reasonably satisfactory to the Indemnified Party; provided, that once the defense thereof is assumed by the Indemnifying Party, the Indemnifying Party shall keep the Indemnified Party advised of all developments in the defense thereof and any related litigation, and the Indemnified Party shall be entitled at all times to participate in the defense thereof at its own expense. If the Indemnifying Party fails to notify the Indemnified Party of its election to defend or contest its obligation to indemnify under this Article IX, the Indemnified Party may pay, ------------ compromise, or defend such a claim without prejudice to any right it may have hereunder. ARTICLE X --------- TERMINATION; LIQUIDATED DAMAGES ------------------------------- 10.1 TERMINATION. If Closing shall not have previously occurred, this ------------ Agreement shall terminate upon the earliest of: (a) the giving of written notice from Seller to Buyer, or from Buyer to Seller, if: (i) Seller gives such termination notice and is not at such time in material default hereunder, or Buyer gives such termination notice and Buyer is not at such time in material default hereunder; and (ii) Either: (A) any of the representations or warranties contained herein of Buyer (if such termination notice is given by Seller), or of Seller (if such termination notice is given by Buyer), are inaccurate in any respect and materially adverse to the party giving such termination notice unless the inaccuracy has been induced by or is the result of actions or omissions of the party giving such termination notice; or (B) Any material obligation to be performed by Buyer (if such termination notice is given by Seller) or by Seller (if such termination notice is given by Buyer) is not timely performed in any material respect unless the lack of timely performance has been induced by or is the result of actions or omissions of the party giving such termination notice; or 30 (C) Any condition (other than those referred to in fore-going Clauses (A) and (B) to the obligation to close the transaction ----------- --- contemplated herein of the party giving such termination notice has not been timely satisfied; and any such inaccuracy, failure to perform or non-satisfaction of a condition neither has been cured nor satisfied within twenty (20) days after written notice thereof from the party giving such termination notice nor waived in writing by the party giving such termination notice. (b) Written notice from Seller to Buyer, or from Buyer to Seller, at any time after June 30, 1997 provided that termination shall not occur upon the giving of such termination notice by Seller if Seller is at such time in material default hereunder or upon the giving of such termination notice by Buyer if Buyer is at such time in material default hereunder. (C) Written notice from Seller to Buyer, or from Buyer to Seller, at any time following a determination by the FCC that the application for consent to assignment of the FCC Licenses has been designated for hearing; provided that the party which is the subject of the hearing (or whose alleged actions or omissions resulted in the designation for heating) may not elect to terminate under this subsection (c). (d) The written election by Buyer under Article XI. ------------ 10.2 OBLIGATIONS UPON TERMINATION. ----------------------------- (a) In the event this Agreement is terminated pursuant to Section 10.1 ------------ (a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder shall - ---------- --- be limited as provided in Subsections (c) and (e), below and the aggregate ----------------------- liability for Seller for breach hereunder shall be limited as provided in Subsections (d) and (e), below. In the event this Agreement is terminated for - ----------------------- any other reason, neither party shall have any liability hereunder. (b) Upon termination of this Agreement, Buyer shall be entitled to the return of the Earnest Money from the Escrow Agent under the Escrow Agreement (i) if such termination is effected by Buyer's giving of valid written notice to Seller pursuant to Subsections 10.1 (a), (b) (c) or (d), or (ii) if such ------------------------------------ termination is effected by Seller's giving of valid written notice to Buyer pursuant to Subsections 10.1 (a)(ii)(C), 10.1 (b) or 10.1 (c). If Buyer is ------------------------------------------------- entitled to the return of the Earnest Money, Seller shall cooperate with Buyer in taking such action as is required under the Escrow Agreement in order to effect such return from the Escrow Agent. (c) If this Agreement is terminated by Seller's giving of valid written notice to Buyer pursuant to Subsection 10.1 (a)(ii)(A) or (B), Buyer agrees that --------------------------------- Seller shall be entitled to receive upon such termination, as liquidated damages and not as a 31 penalty, the Earnest Money ("Liquidated Damages Amount"). SELLER'S RECEIPT OF THE EARNEST MONEY SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT OCCUR. BUYER AND SELLER EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGES AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER. (d) Notwithstanding any provision of this Agreement to the contrary, but subject to the provisions of the following sentences, if this Agreement is terminated by Buyer's giving of written notice to Seller pursuant to Subsection ---------- 10.1 (a), Buyer shall not be entitled to damages or indemnification from Seller. - -------- Subject to the following sentence, if Seller attempts to terminate this Agreement under circumstances where it is not entitled to do so, or if Seller, by its own action, causes a breach of warranty or fails to satisfy a condition (including without limitation a refusal to consummate the transaction after Buyer has satisfied all conditions to Seller's obligation to close and Buyer has demonstrated its willingness and ability to close on the terms set forth in this Agreement and Buyer is not in default hereunder) with the intent of creating a situation whereby Buyer elects to terminate under Section 10.1 (a) and Buyer ---------------- does so elect to terminate, the monetary damages, if any, to which Buyer shall be entitled shall be limited to direct and actual damages and shall in no event exceed Three Hundred Thousand Dollars ($300,000) in the aggregate. (e) In any dispute between Buyer and Seller as to which party is entitled to all or a portion of the Earnest Money, the prevailing party shall receive, in addition to that portion of the Earnest Money to which it is entitled, an amount equal to interest on that portion at the rate of 10% per annum, calculated from the date the prevailing party's demand for all or a portion of the Earnest Money is received by the Escrow Agent. 10.3 TERMINATION NOTICE. Each notice given by a party pursuant to Section ------------------- ------- 10.1 to terminate this Agreement shall specify the Subsection (and clause or - ---- clauses thereof) of Section 10.1 pursuant to which such notice is given. ---- ARTICLE XI CASUALTY ------------------- Upon the occurrence of any casualty loss, damage or destruction material to the operation of the Station prior to the Closing, Seller shall promptly give Buyer written notice setting forth in detail the extent of such loss, damage or destruction and the cause 32 thereof if known. Seller shall use its reasonable efforts to promptly commence and thereafter to diligently proceed to repair or replace any such lost, damaged or destroyed property; provided, however, that if Seller shall have complied with Section 5.1 (b) hereof, Seller shall have no obligation to incur any costs or expenses for such repair or replacement not covered by insurance available therefore. In the event that the repair or replacement of any such lost, damaged or destroyed property is not fully completed prior to the Closing Date, Buyer may elect to: (a) terminate this Agreement; (b) postpone the Closing until Seller's repairs have been fully completed; or (c) consummate the transactions contemplated hereby on the Closing Date, in which event Seller shall assign to Buyer the portion of the insurance proceeds (less all reasonable costs and expenses, including without limitation attorney's fees, expenses and court costs incurred by Seller to collect such amounts), if any, not previously expended by Seller to repair or replace the damaged or destroyed property (such assignment of proceeds to take place regardless of whether the parties close on the scheduled or deferred Closing Date) and Buyer shall accept the damaged Sale Assets in their damaged condition. In the event the loss, damage or destruction causes or will cause the Station to be off the air for more than seven (7) consecutive days or fifteen (15) total days, whether or not consecutive, then Buyer may elect either (i) to consummate the transactions contemplated hereby on the Closing Date, in which event Seller shall assign to Buyer the portion of the insurance proceeds (less all reasonable costs and expenses, including without limitation attorney's fees, expenses and court costs, incurred by Seller to collect such amounts), if any, not previously expended by Seller to repair or replace the damaged or destroyed property, and Buyer shall accept the damaged Sale Assets in their damaged condition, or (ii) to terminate this Agreement. ARTICLE XII ----------- CONTROL OF STATION ------------------ Except as otherwise provided in the LMA, between the date of this Agreement and the Closing Date, Buyer shall not control, manage or supervise the operation of the Station or conduct of its business, all of which shall remain the sole responsibility and under the control of Seller, subject to Seller's compliance with this Agreement. ARTICLE XIII ------------ MISCELLANEOUS ------------- 13.1 FURTHER ACTIONS. From time to time before, at and after the Closing, ---------------- each party, at its expense and without further consideration, will execute and deliver such documents to the other party as the other party may reasonably request in order more effectively to consummate the transactions contemplated hereby. 33 13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a period of ------------------------------ thirty-six (36) months, Buyer shall provide Seller, Seller's counsel, accountants and other representatives with reasonable access during normal business hours to the books, records, property, personnel, contracts, commitments and documents of the Station pertaining to transactions occurring prior to the Closing Date when requested by Seller, and Buyer shall retain such books and records for the normal document retention period of Buyer. At the request and expense of Seller, Buyer shall deliver copies of any such books and records to Seller. 13.3 PAYMENT OF EXPENSES. -------------------- (a) Any fees assessed by the FCC in connection with the filings contemplated by Section 5.2(a) or consummation of the transactions contemplated -------------- hereby shall be shared equally between Seller and Buyer. (b) All state or local sales or use, stamp or transfer, grant and other similar taxes payable in connection with consummation of the transactions contemplated hereby shall be paid by the party primarily liable under applicable law to pay such tax. (c) Except as otherwise expressly provided in this Agreement, each of the parties shall bear its own expenses, including the fees of any attorneys and accountants engaged by such party, in connection with this Agreement and the consummation of the transactions contemplated herein. 13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a --------------------- special, unique, and extraordinary character, and that any breach of this Agreement by Seller could not be compensated for by damages. Accordingly, if Seller shall breach its obligations under this Agreement, Buyer shall be entitled, in addition to any of the remedies that it may have, to enforcement of this Agreement (subject to obtaining any required approval of the FCC) by decree of specific performance or injunctive relief requiring Seller to fulfill its obligations under this Agreement. In any action by Buyer to equitably enforce the provisions of this Agreement, Seller shall waive the defense that there is an adequate remedy at law or equity and agrees that Buyer shall have the right to obtain specific performance of the terms of this Agreement without being required to prove actual damages, post bond or furnish other security. 13.5 NOTICES. All notices, demands or other communications given hereunder -------- shall be in writing and shall be sufficiently given if delivered by courier or sent by registered or certified mail, first class, postage prepaid, or by telex, cable, telegram, facsimile machine or similar written means of communication, addressed as follows: 34 (a) if to Seller, to: Mr. Peter Ottmar Mercury Print and Mail P.O. Box 6447 Providence, RI 02940 Facsimile No.: (401) 728-1865 with a copies to: Thomas E. Neely, Esq. Hale & Dorr 60 State Street Boston, MA 02109 Facsimile No.: (617) 526-5000 and Peter Tannenwald, Esq. Irwin, Campbell & Tannenwald 1730 Rhode Island Ave., NW, Suite 200 Washington D.C. 20036-5101 Facsimile No.: (202) 728-0354 (b) if to Buyer, to: Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Facsimile No.: (805) 482-7290 Attention: Jonathan L. Block, Esq. Corporate Counsel or such other address with respect to any party hereto as such party may from time to time notify (as provided above) to the other party hereto. Any such notice, demand or communication shall be deemed to have been given (i) if so mailed, as of the close of the third (3rd) business day following the date mailed, and (ii) if personally delivered or otherwise sent as provided above, on the date received. 13.6 ENTIRE AGREEMENT. Except as provided in the following sentence, this ------------------ Agreement, the Schedules and Exhibits hereto, and the other Documents constitute the 35 entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede any prior negotiations, agreements, understandings or arrangements between the parties with respect to the subject matter hereof. The execution of this Agreement shall in no way terminate or modify the rights of Buyer to otherwise acquire the Station in the future (by reason of its rights as successor to an option held by American Radio Systems) unless this Agreement is terminated as the result of Buyer's failure to act in good faith to pursue and effect the consummation of the Station pursuant to the terms set forth herein. 13.7 BINDING EFFECT; BENEFITS. Except as otherwise provided herein, this ------------------------- Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors or assigns. Except to the extent specified herein, nothing in this Agreement, express or implied, shall confer on any person other than the parties hereto and their respective successors or assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 13.8 ASSIGNMENT. This Agreement and any rights hereunder shall not be ----------- assignable by either party hereto without the prior written consent of the other party, except that Buyer may assign its rights and obligations to an entity controlled directly or indirectly by Edward G. Atsinger III and Stuart W. Epperson without the prior written consent of Seller. 13.9 GOVERNING LAW. This Agreement shall in all respects be governed by and -------------- construed in accordance with the laws of the Commonwealth of Massachusetts, including all matters of construction, validity and performance. 13.10 BULK SALES. Buyer hereby waives compliance by Seller with the ----------- provisions of the Bulk Sales Act and similar laws of any state or jurisdiction, if applicable. Seller shall, in accordance with Article IX, indemnify and hold ----------- Buyer harmless from and against any and all claims made against Buyer by reason of such non-compliance. 13.11 SECTION 1031 ASSET EXCHANGE. The parties acknowledge that each may ---------------------------- desire to effectuate a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code (the "Code"), which may include a non-simultaneous exchange, with respect to the sale and acquisition of the Sale Assets. The parties agree to cooperate with each other in connection therewith, provided each party participating in such an exchange agrees to hold the other free and harmless of, and indemnify the other from, any liabilities, claims, costs, damages, expenses and fees (including attorneys' fees) which may arise out of said party's participation in a tax-deferred exchange, including without limitation any claims by the Internal Revenue Service. 13.12 AMENDMENTS AND WAIVERS. NO term or provision of this Agreement may be ----------------------- amended, waived, discharged or terminated orally but only by an instrument in writing 36 signed by the party against whom the enforcement of such amendment, waiver, discharge or termination is sought. Any waiver shall be effective only in accordance with its express terms and conditions. 13.13 SEVERABILITY. Any provision of this Agreement which is unenforceable in ------------- any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto hereby waive any provision of law now or hereafter in effect which renders any provision hereof unenforceable in any respect. 13.14 HEADINGS. The captions in this Agreement are for convenience of --------- reference only and shall not define or limit any of the terms or provisions hereof. 13.15 COUNTERPARTS. This Agreement may be executed in any number of ------------- counterparts, and by either party on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13.16 REFERENCES. All references in this Agreement to Articles and Sections ----------- are to Articles and Sections contained in this Agreement unless a different document is expressly specified. 13.17 SCHEDULES AND EXHIBITS. Unless otherwise specified herein, each ----------------------- Schedule and Exhibit referred to in this Agreement is attached hereto, and each such Schedule and Exhibit is hereby incorporated by reference and made a part hereof as if fully set forth herein. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written. "SELLER" "BUYER" BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC. By /s/ Peter Ottman By /s/ Eric H. Halvorson ------------------------ ------------------------ Peter Ottman Eric H. Halvorson Chairman/Chief Executive Officer Executive Vice President 37 SCHEDULE 3.4 ------------ NAME DESCRIPTION - --------------------------------- --------------------------------- The Flatley Company Office Lease Fellsway Plaza Trust Tower Land Lease Federal Communications Commission FCC Licenses Bloomberg Communications, Inc. Programming SMI Multi Media Group Programming - Don McDonald Westwood One Programming - Bruce Williams FirstCom Production Library Tokai Financial Services Telephone equipment Notwithstanding the disclosure of the required consents herein, except as specifically provided in this Agreement, the failure to obtain such consents shall not be a condition precedent to the obligations of the parties hereto, or either of them, to complete the transactions contemplated by this Agreement. 38 SCHEDULE 3.6 ------------ SEE ATTACHED. 39 SCHEDULE 3.7 ------------ 1. License for Station WBNW(AM), Boston, MA, FCC File No. BR-901203UW, renewing authority to operate facilities specified in FCC File No. BZ-861022AM, expiring October 1, 1998. Assignment of license to Back Bay Broadcasters, Inc. authorized under FCC File No. BAL-940405EA, granted June 1, 1994. Transfer of control to James H. Ottmar and Peter H. Ottmar (50% each authorized under FCC File No. BTC-941130EA, granted December 21, 1994. Frequency 590 KHz. 2. Studio transmitter link used by WBNW, call sign WLO-559, frequency 946.5 MHz, expiring October 1, 1998. 3. Remote pickup license used by WBNW, call sign KVY914, frequency 450.95 MHz. 4. Remote control point under File No. BRC-951006AB, granted 3/7/96. 5. Microwave license, call sign WNEF-633, used for security camera at transmitter site, expires 10/14/98. 40 SCHEDULE 3.8 ------------ AGREEMENTS BUYER ELECTS TO ASSUME: - ---------------------------------- Capital Engineering (Maintenance) - through March 31, 1997. Harvard University (Football) - through 1997 season. Metro Traffic Control (Traffic Reports) - through January 24, 1997. Seller to give notice of termination at least 90 days prior to January 24, 1997. Tower Site Lease - through remainder of 20 year term. (Consent Required) Studios/Offices - through remainder of 20 year term. (Consent Required) University of Massachusetts (Men's Basketball) - through 1996/1997 regular season AGREEMENTS BUYER ELECTS NOT TO ASSUME: - -------------------------------------- AFTRA - Collective Bargaining Agreement Bloomberg Financial News Capitol Engineering FirstCom The Media Audit New England Weather Bureau Tokai Financial Services Richard Shafer Tofias Fleishman Shapiro & Co. SMI Multi Media Group Westwood One Joan Venocchi Steve Bailey John Hannah Josh Hyatt Maryhelen Gillespie CBSI (Traffic/Accounting Software) 41 SCHEDULE 3.9 ------------ 1. Back Bay Broadcasters, Inc. v. Michele E. Merolla, et al, Attleboro District Court. This is a claim by Back Bay against Merolla for failure to honor a sales contract, to which Merolla has filed a counterclaim alleging breach of contract to sell Merolla real estate. Merolla asked damages in excess of $57,000. 2. BBB adv. Associated Press - Boston Municipal Court. The Associated Press has sued BBB alleging breach of contract and asking for damages of $75,900 plus costs and interests. 3. BBB v. Merolla Chiropractic, Attleboro District Court. This is a companion case to the case referred to at item #1 above, and Merolla Chiropractic has failed to pay approximately $5,500 owed to Back Bay. SCHEDULE 3.10 ------------- 1. AFTRA - WBNW 1995-97 Collective Bargaining Agreement between Back Bay Broadcasters, Inc. and American Federation of Television and Radio Artists. (2/1/95-1/31/97). 2. Agreement dated February 8, 1994 with Local Union No. 1228 of the International Brotherhood of Electrical Workers (AFL-CIO). SCHEDULE 3.17 ------------- Buyer and Seller acknowledge that Gary Stevens & Co., Inc. and Media Services Group, Inc. acted as the brokers with respect to this transaction. All fees due Gary Stevens & Co., Inc. arising out of this transaction shall be paid in full by Buyer. All fees due Media Services Group, Inc. shall be paid in full by Seller. 44 ESCROW AGREEMENT ---------------- THIS ESCROW AGREEMENT (the "Agreement") is made as of this __ day of December, 1996 by and among BACK BAY BROADCASTERS, INC. ("Seller"), NEW ENGLAND CONTINENTAL MEDIA, INC. ("Buyer"), and MEDIA SERVICES GROUP, INC. ("Escrow Agent"). WITNESSETH WHEREAS, concurrently with the execution of this Agreement, Seller and Buyer are entering into an Asset Purchase Agreement (the "Purchase Agreement"), pursuant to which Seller has agreed to sell to Buyer, subject to the terms and conditions of the Purchase Agreement, substantially all the assets used in the operation of radio station WBNW-AM, Boston, Massachusetts; and WHEREAS, the Purchase Agreement provides, upon the terms and conditions set forth therein, for Buyer to deposit into escrow the amount of Three Hundred Thousand Dollars ($300,000) (the "Escrow Deposit"), and WHEREAS, the Escrow Deposit shall be held by the Escrow Agent subject to the terms and conditions hereof. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein and in the Purchase Agreement, the parties hereto agree as follows: 1. The Escrow Agent is hereby appointed and shall have all the rights, powers, duties and obligations hereinafter provided, and the Escrow Agent accepts such appointment. 2. Concurrently with the execution and delivery of this Agreement, Buyer has deposited with the Escrow Agent, in escrow, the Escrow Deposit. The Escrow Deposit shall be held and disbursed by Escrow Agent as hereinafter set forth. 3. The Escrow Agent agrees to accept Buyer's deposit of the Escrow Deposit. The Escrow Agent agrees to invest and reinvest the Escrow Deposit in accordance with the following provisions: (a) The Escrow Agent shall invest and reinvest the Escrow Deposit in one or more of the following investments as selected from time to time by the Escrow Agent in its discretion (the "Obligations"): EXHIBIT A (i) Direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, or (ii) money market funds or certificates of deposit issued by any bank, trust company or national banking association, provided the capital stock, surplus, and undivided profits of such institution are not less that Fifty Million Dollars ($50,000,000), or (iii) Money market funds authorized to invest solely in direct obligations of the United States of America. (b) The Obligations shall have a maturity of thirty (30) days or less during the sixty (60) days immediately after deposit of the Escrow Deposit, and thereafter shall be available on demand without penalty unless Escrow Agent is otherwise directed in writing by both Seller and Buyer. (c) Notwithstanding anything else in this Agreement to the contrary, interest and other earnings on the Escrow Deposit shall be distributed by the Escrow Agent to Buyer from time to time upon the request of Buyer. 4. If the Escrow Agent shall receive a certificate in the form of Exhibit B --------- executed by an authorized officer of each of Buyer and Seller named on Exhibit A --------- (each, an "Authorized Officer"), the Escrow Agent shall deliver the Escrow Deposit to Seller not more than one (1) business day after receipt of such certificate. 5. If the Escrow Agent shall receive a certificate in the form of Exhibit C --------- executed by an Authorized Officer of each of Buyer and Seller, the Escrow Agent shall deliver the Escrow Deposit to Buyer not more than one (1) business day after receipt of such certificate. 6. Either Buyer or Seller, on its own, may request the Escrow Agent to release the Escrow Deposit to it by sending a written request to the Escrow Agent, with a copy to the other party, which request shall state the basis upon which the Buyer or Seller is requesting the release of the Escrow Deposit. The Escrow Agent shall deliver the Escrow Deposit to the requesting party if the other party hereto has not objected in writing to such written request with seven (7) business days after the date of receipt of the request by the Escrow Agent. 7. If a controversy arises between the parties hereto with respect to the release of the Escrow Deposit, the Escrow Agent shall not be required to resolve such controversy or take any action, but shall await final resolution of the controversy by joint written instructions from the parties hereto or pursuant to a nonappealable order from a court of competent jurisdiction. In any dispute between the Buyer and Seller as to which party is entitled to all or a portion of the Escrow Deposit, the prevailing party shall receive from the losing party, in addition to that portion of the Escrow Deposit to which it is entitled, an amount equal to interest on that portion of the Escrow Deposit to which it is entitled at the rate of ten percent (10%) per annum, calculated from the date the prevailing party's demand for all or a portion of the Escrow Deposit is received by the Escrow Agent. 8. The Escrow Agent's duties are only such as are specifically provided herein, and the Escrow Agent shall incur no liability whatsoever to Buyer or Seller except for gross negligence or willful misconduct. The Escrow Agent shall have no responsibility hereunder other than to follow the instructions herein contained. The Escrow Agent may consult with counsel and shall be fully protected in any action taken reasonably and in good faith in accordance with any written instructions given to it hereunder and believed by it reasonably and in good faith to have been executed by the proper parties. 9. As between Seller and Buyer on the one hand and Escrow Agent on the other, Seller and Buyer shall be jointly and severally liable to indemnify Escrow Agent for all reasonable costs, charges, damages and expenses, including but not limited to reasonable attorneys' fees (the "Indemnifiable Costs") incurred by Escrow Agent arising out of or in connection with the performance of its obligations under this Agreement, provided that Indemnifiable Costs shall not include any costs, charges, damages or expenses, including attorneys' fees, arising out of or in connection with Escrow Agent's gross negligence or willful misconduct. Solely as between Seller and Buyer in connection with any controversy or litigation regarding the Escrow Deposit, (i) the one of them who as a claimant fails to obtain a majority of the relief sought, or who as a defendant or respondent fails to obtain denial by a judgment not subject to further appeal of a majority of the relief sought by the other, shall be responsible for payment of all of the Escrow Agent's Indemnifiable Costs relating to the controversy or litigation in question; and (ii) in any other event, Seller and Buyer shall each be responsible for payment of one-half of Escrow Agent's Indemnifiable Costs. 10. Escrow Agent agrees to serve without compensation for the services to be rendered hereunder. 11. The obligations of Seller and Buyer to indemnify Escrow Agent under Paragraph 9 shall survive termination of this Agreement. - ----------- 12. The Escrow Agent may resign at any time by giving written notice thereof to the other parties hereto, but such resignation shall not become effective until a successor escrow agent shall have been appointed by the Escrow Agent and approved by Seller and Buyer and shall have accepted such appointment in writing. If an instrument of acceptance by a successor escrow agent shall not have been delivered to the Escrow Agent within thirty (30) days after the giving of such notice of resignation, the resigning Escrow Agent may at the expense of both Buyer and Seller petition any court of competent jurisdiction for the appointment of a successor escrow agent. 13. In the event of any litigation between Seller and Buyer involving a disputed claim to the Escrow Deposit, the one of them who is the prevailing party shall be entitled to receive from the other reasonable attorneys' fees and other reasonable costs and expenses reasonably incurred by the prevailing party in connection with such litigation regardless of whether such litigation is prosecuted to judgment. As used herein, "prevailing party" shall mean in the case of a claimant, one who is successful in obtaining a majority of the relief sought, and in the case of a defendant or respondent, one who is successful in obtaining denial by a judgment not subject to further appeal of a majority of the relief sought by the claimant. 14. If a controversy arises between the parties hereto with respect to the release of the Escrow Deposit, any of the Seller, Buyer or Escrow Agent shall, at its option, file an action or bill in interpleader, or similar action for such purpose, in a court of competent jurisdiction and the Escrow Agent shall promptly pay the Escrow Deposit into said court, in which event the Escrow Agent's duties, responsibilities and liabilities under this Agreement shall terminate. 15. This Agreement shall be construed in accordance with the laws of the Commonwealth of Massachusetts. This Agreement may be executed in several counterparts, each one of which shall constitute an original, and all collectively shall constitute but one instrument. 16. Any notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sufficiently given if delivered by overnight delivery service or sent by registered or certified mail, first class postage prepaid, or by telegram, facsimile machine or similar written means of communication, addressed as follows: (a) if to the Escrow Agent, to: Media Services Group, Inc. 170 Westminster Street Suite 701 Providence, RI 02903 Facsimile No.: (401) 454-3131 (b) if to Seller, to: Mr. Peter Ottmar Mercury Print and Mail P.O. Box 6447 Providence, RI 02940 Facsimile No.: (401) 724-1865 with a copies to: Thomas E. Neely, Esq. Hale & Dorr 60 State Street Boston, MA 02109 Facsimile No.: (617) 526-5000 and Peter Tannenwald, Esq. Irwin, Campbell & Tannenwald 1730 Rhode Island Ave., NW, Suite 200 Washington D.C. 20036-3101 Facsimile No.: (202) 728-0354 (b) if to Buyer, to: Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Facsimile No.: (805) 482-7290 Attention: Jonathan L. Block, Esq. Corporate Counsel or any such other address with respect to any party hereto as such party may from time to time notify (as provided above) to the other parties hereto. Any such notice, demand or communication shall be deemed to have been given (i) if so mailed, as of the close of the third business day following the date so mailed, and (ii) if personally delivered or sent by overnight mail or otherwise sent as provided above, on the date received. 17. This Agreement shall terminate upon valid delivery of the Escrow Deposit to Seller and/or Buyer or to a successor escrow agent which executes an Escrow Agreement substantially similar to this Agreement. 18. Buyer's Federal Taxpayer Identification Number is 77-0121400. IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as of the date first written. "SELLER" "BUYER" BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC. By: By: --------------------------- -------------------------------- Peter Ottmar Eric H. Halvorson Chairman/Chief Executive Officer Executive Vice President "ESCROW AGENT" MEDIA SERVICES GROUP, INC. By: -------------------------------- EXHIBIT A --------- TO ESCROW AGREEMENT ------------------- SIGNATURES OF AUTHORIZED OFFICERS --------------------------------- "SELLER" "BUYER" BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC. By: By: ------------------------------- ------------------------------- Peter Ottmar Eric H. Halvorson Chairman/Chief Executive Officer Executive Vice President EXHIBIT B --------- TO ESCROW AGREEMENT ------------------- This Certificate is presented pursuant to Section 4 of the Escrow Agreement, dated December 4, 1996 by and among BACK BAY BROADCASTERS, INC. ("Seller"), NEW ENGLAND CONTINENTAL MEDIA, INC. ("Buyer") and MEDIA SERVICES GROUP, INC. ("Escrow Agent"). All capitalized terms used and not otherwise defined shall have their respective meanings provided in the Escrow Agreement. Pursuant to Section 4 of the Escrow Agreement, Seller and Buyer DO HEREBY CERTIFY that Seller is entitled to delivery of the Escrow Deposit. Accordingly, the Escrow Agent is hereby directed to deliver the Escrow Deposit to Seller within one (1) business day of the receipt of this Certificate. IN WITNESS WHEREOF, the undersigned have hereunto set their hand as of the date indicated. Dated:__________, 1997. "SELLER" "BUYER" BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC. By: By: ---------------------------------- --------------------------- Peter Ottmar Eric H. Halvorson Chairman/Chief Executive Officer Executive Vice President EXHIBIT C --------- TO ESCROW AGREEMENT ------------------- This Certificate is presented pursuant to Section 5 of the Escrow Agreement, dated December 4, 1996 by and among BACK BAY BROADCASTERS, INC. ("Seller"), NEW ENGLAND CONTINENTAL MEDIA, INC. ("Buyer") and MEDIA SERVICES GROUP, INC. ("Escrow Agent"). All capitalized terms used and not otherwise defined shall have their respective meanings provided in the Escrow Agreement. Pursuant to Section 5 of the Escrow Agreement, Seller and Buyer DO HEREBY CERTIFY that Buyer is entitled to delivery of the Escrow Deposit. Accordingly, the Escrow Agent is hereby directed to deliver the Escrow Deposit to Buyer within one (1) business day of the receipt of this Certificate. Dated:___________, 1997. "SELLER" "BUYER" BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC. By: By: ---------------------------------- ---------------------- Peter Ottmar Eric H. Halvorson Chairman/Chief Executive Officer Executive Vice President EX-10.06.06.02 33 1ST AM. TO ASSET PURCHASE AGREEMENT EXHIBIT 10.06.06.02 FIRST AMENDMENT TO THE ASSET PURCHASE AGREEMENT This amendment ("Amendment") is dated as of this ___ day of February, 1997 by and between BACK BAY BROADCASTERS, INC. ("Seller"), and NEW ENGLAND CONTINENTAL MEDIA, INC. ("Buyer"). WHEREAS, pursuant to an agreement ("Purchase Agreement") dated December 4, 1996, by and between Seller and Buyer, Buyer obtained the right to purchase and acquire certain assets relating to radio station WBNW(AM), Boston Massachusetts; WHEREAS, pursuant to Section 2.1(c) of the Purchase Agreement Buyer agreed, -------------- inter alia, to assume all obligations of Seller arising out of that certain lease agreement ("Lease") dated May 19, 1988 by and between Thomas J. Flatley d/b/a/ The Flatley Company ("the Landlord"), and WEEI, The Helen Broadcasting Company Limited Partnership, on or after the date for the closing ("the Closing") of the transactions contemplated by the Purchase Agreement; WHEREAS, Buyer has entered into an agreement ("Termination Agreement") with the Landlord to terminate the Lease as of February 21, 1997, provided the Closing occurs before said date; and, WHEREAS, the parties have agreed to and desire to amend the Purchase Agreement as set forth herein so that the Closing may occur on February 21, 1997, NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows: 1. Section 1.28 of the Purchase Agreement is amended in its entirety to ------------ provide as follows: "PURCHASE PRICE. The consideration to be paid by Buyer to -------------- Seller for purchase of the Sale Assets in an amount equal to Five Million Nine Hundred Eighty Three Thousand Five Hundred Dollars ($5,983,500)." 2. Buyer hereby waives the requirement under Section 6.3 of the Purchase ----------- Agreement, that the FCC Order shall have "become a Final Action without any Material Adverse Condition." 3. Section 8.1 of the Purchase Agreement is amended in its entirety to provide ----------- as follows: "The Closing shall take place by mail on February 28, 1997." 4. Section 8.2 of the Purchase Agreement is amended to provide that at the ----------- Closing, Seller shall deliver or cause to be delivered to Buyer an Unwind Agreement in the form of Exhibit "B", attached hereto. 5. Section 8.3 of the Purchase Agreement is amended to provide that at the ----------- Closing, Buyer shall deliver or cause to be delivered to Seller an Unwind Agreement in the form of Exhibit "B", attached hereto. 6. Section 9.4(a) of the Purchase Agreement is amended in its entirety to -------------- provide as follows: (a) Subject to the provisions of Subsection (b) below and Section -------------- ------- 10.2 below, Buyer shall indemnify and hold harmless Seller and any ---- officer, director, agent, employee and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: (i) Any breach or non-performance by Buyer of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other Document; or (ii) The ownership or operation of the Station after the Closing Date; (iii) Commissions, fees, compensation or reimbursement due pursuant to the agreement attached hereto as Exhibit "C" and resulting from the termination by Buyer of the Station Agreement known as the Flatley Lease. (This Section 9.4(a)(iii) shall not be subject to Seller's ------------------ Threshold Limitation.) (iv) Any activity on or after December 4, 1996 relating to the failure by Back Bay or New England to enter into the proposed subleases to Shadow Broadcast Services LLC ("Shadow") and Partner Provider Health, Inc. ("PPH") of space demised by the Flatley Lease, including without limitation any claims by Shadow, PPH, any broker or finder, or the Flatley Company. (This Section 9.4(a)(iv) shall not be subject to Seller's Threshold Limitation.) - ------------------ (v) All other liabilities or obligations of Buyer including, without limitation, the Assumed Obligations. 7. Except as expressly provided herein, the terms and conditions of the Purchase Agreement shall remain in full force and effect and unamended. In the event of a conflict between this Amendment and the terms of the Purchase Agreement, the terms of this Amendment shall control. IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the date first written above. "SELLER" "BUYER" BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC. By: /s/ Peter Othmar By: ------------------------ -------------------------------- Peter Othmar Eric H. Halvorson Chairman/Chief Executive Officer Executive Vice President (v) All other liabilities or obligations of Buyer including, without limitation, the Assumed Obligations. 7. Except as expressly provided herein, the terms and conditions of the Purchase Agreement shall remain in full force and effect and unamended. In the event of a conflict between this Amendment and the terms of the Purchase Agreement, the terms of this Amendment shall control. IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the date first written above. "SELLER" "BUYER" BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC. By: By: /s/ ERIC H. HALVORSON -------------------------------- -------------------------------- Peter Ottmar Eric H. Halvorson Chairman/Chief Executive Officer Executive Vice President EX-10.06.07 34 ASSET PURCHASE AGREEMENT EXHIBIT 10.06.07 ASSET PURCHASE AGREEMENT ------------------------ WPZE(AM), BOSTON, MASSACHUSETTS AGREEMENT (the "Agreement") dated as of June 2nd, 1997 by and between NEW ENGLAND CONTINENTAL MEDIA, INC. ("Seller"), and HIBERNIA COMMUNICATIONS, INC. ("Buyer"). RECITALS: --------- 1. WHEREAS, Seller owns and operates radio station WPZE(AM) 1260 kHz, Boston, Massachusetts (the "Station"), and holds the licenses and authorizations issued by the FCC for the operation of the Station. 2. AND WHEREAS Buyer desires to acquire substantially all the assets of the Station, and Seller is willing to convey such assets to Buyer. 3. AND WHEREAS the acquisition of the Station is subject to prior approval of the FCC. NOW THEREFORE, in consideration of the mutual covenants contained herein, Seller and Buyer hereby agree as follows: ARTICLE 1 --------- TERMINOLOGY ----------- 1.1 ACT. The Communications Act of 1934, as amended. ---- 1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7(b), the amount by which ------------------ -------------- Buyer's account is to be credited or charged, as reflected on the Adjustment List. 1.3 ADJUSTMENT LIST. As provided in Section 2.7 (b), an itemized list of all ---------------- --------------- sums to be credited or charged against the account of Buyer, with a brief explanation in reasonable detail of the credits or charges. 1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in Section -------------------- ------- 2.3. - --- 1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and Sundays, on which ------------- federally chartered banks in the city of Boston, Massachusetts, are regularly open for business. 1.6 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3 (b), the ----------------------------- --------------- threshold dollar amount for the aggregate of claims, liabilities, damages, losses, costs and expenses that must be incurred by Buyer before Seller shall be obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be Twenty- Five Thousand Dollars ($25,000). 1.7 CLOSING. The closing with respect to the transactions contemplated by -------- this Agreement. 1.8 CLOSING DATE. The date determined as the Closing Date as provided in ------------- Section 8.1. - ----------- 1.9 DOCUMENTS. This Agreement and all Exhibits and Schedules hereto, and ---------- each other agreement, certificate, or instrument delivered pursuant to or in connection with this Agreement, including amendments thereto that are expressly permitted under the terms of this Agreement. 1.10 EARNEST MONEY. Such term shall have the meaning defined in Section -------------- ------- 2.4. - --- 1.11 ESCROW AGENT. (TBD). ------------- 1.12 ESCROW AGREEMENT. The Escrow Agreement in the form attached as Exhibit A ----------------- --------- which Seller, Buyer and the Escrow Agent have entered into concurrently with the execution of this Agreement relating to the deposit, holding, investment and disbursement of the Earnest Money. 1.13 EXCLUDED ASSETS. Such term shall have the meaning defined in Section ---------------- ------- 2.2. - ---- 1.14 FCC. Federal Communications Commission. ---- 1.15 FCC LICENSES. The licenses, permits and authorizations of the FCC for ------------- the operation of the Station and all pending applications related thereto including, without limitation, those licenses, permits, authorizations and applications as listed on Schedule 3.7. ------------- 1.16 FCC ORDER. An order or decision of the FCC granting its consent to the ---------- assignment of the FCC Licenses to Buyer. 1.17 FINAL ACTION. An action of the FCC that has not been reversed, stayed, ------------- enjoined, set aside, annulled or suspended; with respect to which no timely petition for reconsideration or administrative or judicial appeal or sua sponte ---------- action of the FCC with comparable effect is pending and as to which the time for filing any such petition or 2 appeal (administrative or judicial) or for the taking of any such sua sponte ---------- action of the FCC has expired. 1.18 INDEMNIFIED PARTY. Any party described in Section 9.3 (a) or 9.4(a) ------------------ ------------------------- against which any claim or liability may be asserted by a third party which would give rise to a claim for indemnification under the provisions of this Agreement by such party. 1.19 INDEMNIFYING PARTY. The party to the Agreement (not the Indemnified ------------------- Party) that, in the event of a claim or liability asserted by a third party against the Indemnified Party which would give rise to a claim for indemnification under the provisions of this Agreement, may at its own expense, and upon written notice to the Indemnified Party, compromise or defend such claim. 1.20 LIEN. Any mortgage, deed of trust, pledge, hypothecation, security ----- interest, encumbrance, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any written or oral agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction. 1.21 LMA. A Local Programming and Marketing Agreement by and between Buyer ---- and Seller relating to the programming of the Station prior to Closing, which agreement may be entered into after the execution of this Agreement. 1.22 MATERIAL ADVERSE CONDITION. A condition which would materially restrict, --------------------------- limit, increase the cost or burden of or otherwise adversely affect or materially impair the right of Buyer to the ownership, use, control, enjoyment or operation of the Station or the proceeds therefrom; provided, however, that any condition which requires that a Station be operated in accordance with a condition similar to those contained in the present FCC licenses issued for operation of that Station, shall not be deemed a Material Adverse Condition. 1.23 PERMITTED LIEN. Any statutory lien which secures a payment not yet due --------------- that arises, and is customarily discharged, in the ordinary course of Seller's business; any easement, right-of-way or similar imperfection in the Seller's title to its assets or properties that, individually and in the aggregate, are not material in character or amount and do not and are not reasonably expected to materially impair the value or materially interfere with the use of any asset or property of the Seller material to the operation of its business. 1.24 PURCHASE PRICE. The consideration to be paid by Buyer to Seller for --------------- purchase of the Sale Assets in an amount equal to Five Million Dollars ($5,000,000). 3 1.25 RULES AND REGULATIONS. The rules of the FCC as set forth in Volume ---------------------- 47 of the Code of Federal Regulations, as well as such other policies of the Commission, whether contained in the Code of Federal Regulations, or not, that apply to the Station. 1.26 SALE ASSETS. All of the tangible and intangible assets to be ------------ transferred by Seller to Buyer as set forth in Section 2.1. ----------- 1.27 STATION AGREEMENTS. The agreements, commitments, contracts and other ------------------- items described in Section 2.1 (c) which relate to operation of the Station. --------------- 1.28 SELLER'S THRESHOLD LIMITATION. As provided in Section 9.4(b), the ------------------------------ -------------- threshold dollar amount for the aggregate of claims, liabilities, damages, losses, costs and expenses that must be incurred by Seller before Buyer shall be obligated to indemnify Seller. The Seller's Threshold Limitation shall be Twenty-Five Thousand Dollars ($25,000). 1.29 SURVIVAL PERIOD. The term following the Closing Date during which ---------------- all representations, warranties, covenants and agreements of the parties under this Agreement shall survive. The term shall be twelve (12) months. 1.30 TANGIBLE PERSONAL PROPERTY. The personal property described in --------------------------- Section 2.1(a). - -------------- ARTICLE II ---------- PURCHASE AND SALE ----------------- 2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer, assign ------------ and convey to Buyer, and Buyer will purchase from Seller, free and clear of all Liens except Permitted Liens, all of Seller's right, title and interest, legal and equitable, in and to the tangible and intangible assets (except Excluded Assets) set forth below: (a) TANGIBLE PERSONAL PROPERTY. The equipment, parts, supplies, -------------------------- furniture, fixtures and other tangible personal property now owned by Seller and set forth on Schedule 3.6, and any improvements, replacements and alterations ------------ thereto made between the date of this Agreement and the Closing Date. (b) LICENSES AND PERMITS. The FCC Licenses and all other assignable or --------------------- transferable governmental permits, licenses and authorizations (and any renewals, extensions, amendments or modifications thereof) now held by Seller or hereafter obtained by Seller between the date hereof and the Closing Date, to the extent such other permits, licenses and authorizations pertain to or are used in the operation of the Station. (c) STATION AGREEMENTS. All agreements which Seller is a party to or ------------------- bound by which are listed on Schedule 3.8; any renewals, extensions, amendments ------------ or 4 modifications of those agreements which are made in the ordinary course of Seller's operation of the Station and in accordance with the terms and provisions of this Agreement. (d) RECORDS. True and complete copies of all of the public inspection -------- files, logs, reports of engineers and other consultants or independent contractors, pertaining to or used in the operation of the Station (other than corporate records). 2.2 EXCLUDED ASSETS. Notwithstanding any provision of this Agreement to the ---------------- contrary, Seller shall not transfer, convey or assign to Buyer, but shall retain all of its right, title and interest in and to, the following assets owned or held by it on the Closing Date ("Excluded Assets"): (a) Any and all cash, cash equivalents, cash deposits to secure contract obligations (except to the extent Seller receives a credit therefor under Section 2.7, in which event the deposit shall be included as part of the Sale - ----------- Assets), all inter-company receivables from any affiliate of Seller and all other accounts receivable, bank deposits and securities held by Seller in respect of the Station at the Closing Date. (b) Any and all claims of Seller with respect to transactions prior to the Closing including, without limitation, claims for tax refunds and refunds of fees paid to the FCC. (c) All prepaid expenses (except to the extent Seller receives a credit therefor under Section 2.7, in which event the prepaid expense shall be included ----------- as part of the Sale Assets). (d) All contracts of insurance and claims against insurers. (e) All employee benefit plans and the assets thereof and all employment contracts. (f) All contracts that are terminated in accordance with the terms and provisions of this Agreement or have expired prior to the Closing Date in the ordinary course of business; and all loans and loan agreements. (g) All tangible personal property disposed of or consumed between the date hereof and the Closing Date in the ordinary course of business and in accordance with the terms and provisions of this Agreement. (h) Seller's corporate records except to the extent such records pertain to or are used in the operation of the Station, in which case Seller shall deliver accurate copies thereof to Buyer. 5 (i) All contracts for the sale of broadcast time on the Station for cash or non-cash consideration. (j) All commitments, contracts and agreements not specifically assumed by Buyer pursuant to Section 2.1 (d), above. --------------- (k) Any and all assets of Seller used by Seller in the ownership and/or operation of the radio station WEZE(AM) 590 kHz, Boston, Massachusetts ("WEZE"). 2.3 ASSUMPTION OF LIABILITIES. -------------------------- (a) At the Closing, Buyer shall assume and agree to perform, without duplication of Seller's performance, the following liabilities and obligations of Seller (the "Assumed Obligations"): (i) Current liabilities of Seller for which Buyer receives a credit pursuant to Section 2.7, but not in excess of the amount of such credit. ----------- (ii) Liabilities and obligations arising under the Station Agreements assumed by and transferred to Buyer in accordance with this Agreement, but only to the extent such liabilities and obligations relate to any period of time after the Closing Date. (b) Except for the Assumed Obligations, Buyer shall not assume or in any manner be liable for any duties, responsibilities, obligations or liabilities of Seller of any kind or nature, whether express or implied, known or unknown, contingent or absolute, including, without limitation, any liabilities to or in connection with Seller's employees whether arising in connection with the transaction contemplated hereunder or otherwise. 2.4 EARNEST MONEY. -------------- (a) Concurrently with the execution of this Agreement, Buyer has deposited with Escrow Agent under the Escrow Agreement, in immediately available funds, the sum of Two Hundred Fifty Thousand Dollars ($250,000), which amount is hereinafter referred to as the "Earnest Money". The Escrow Agent shall hold the Earnest Money under the terms of the Escrow Agreement in trust for the benefit of the parties hereto. Interest and other earnings on the Earnest Money shall be distributed by the Escrow Agent to Buyer from time to time upon the request of Buyer. (b) If Closing does not occur, the Earnest Money shall be delivered to Seller or returned to Buyer in accordance with Section 10.2, and if Closing does ------------ occur, the Earnest Money shall be applied to payment of the Purchase Price at Closing as provided in Section 2.5. ----------- 6 2.5 PAYMENT OF PURCHASE PRICE. -------------------------- (a) The Purchase Price shall be paid by Buyer as follows: (i) At the Closing, the Earnest Money shall, subject to execution and delivery of the closing documents described in Section 8.2, become ----------- the property of Seller and shall, pursuant to the Escrow Agreement, be disbursed to Seller by cashier's check or wire transfer of immediately available funds. (ii) At the Closing, Purchase Price, less the amount of the Earnest Money disbursed to Seller, shall be paid to Seller by wire transfer of immediately available funds. (b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the Adjustment Amount in accordance with Section 2.7. ----------- 2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and Seller -------------------------------- shall use their best efforts to agree on an allocation of the Purchase Price. In the event Buyer and Seller cannot agree, the allocation shall be made by an independent appraiser, with the fees of the appraiser to be shared equally by Buyer and Seller. Buyer and Seller shall use such allocation for all reporting purposes in connection with federal, state and local income and, to the extent permitted under applicable law, franchise taxes. Buyer and Seller agree to report such allocation to the Internal Revenue Service in the form required by Treasury Regulation (S) 1.1060-1T. 2.7 ADJUSTMENT OF PURCHASE PRICE. ---------------------------- (a) All operating income and operating expenses of the Station shall be adjusted and allocated between Seller and Buyer, and an adjustment in the Purchase Price shall be made as provided in this Section, to the extent necessary to reflect the principle that all such income and expenses attributable to the operation of the Station on or before the Closing Date shall be for the account of Seller, and all income and expenses attributable to the operation of the Station after the Closing Date shall be for the account of Buyer. (b) To the extent not inconsistent with the express provisions of this Agreement, the allocations made pursuant to this Section 2.7 shall be made in ----------- accordance with generally accepted accounting principles. (c) For purposes of making the adjustments pursuant to this Section, Buyer shall prepare and deliver the Adjustment List to Seller within thirty (30) days following the Closing Date, or such earlier or later date as shall be mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the Adjustment Amount. If the 7 Adjustment Amount is a credit to the account of Buyer, Seller shall pay such amount to Buyer, and if the Adjustment Amount is a charge to the account of Buyer, Buyer shall pay such amount to Seller. In the event Seller disagrees with the Adjustment Amount determined by Buyer or with any other matter arising out of this subsection, and Buyer and Seller cannot within sixty (60) days resolve the disagreement themselves, the parties will refer the disagreement to an independent certified public accounting firm mutually agreeable to Buyer and Seller, 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 accountants. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Seller hereby represents and warrants to Buyer as follows: 3.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation, validly ------------------------------ existing and in good standing under the laws of the Commonwealth of Massachusetts. Seller has all requisite power to own, operate and lease its properties and carry on its business as it is now being conducted and as the same will be conducted until the Closing. 3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and --------------------------------------------- delivery of, and the performance of its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby, have been duly authorized and approved by all necessary action on the part of Seller. Seller has the power and authority to execute, deliver and perform its obligations under this Agreement and each of the other Documents and to consummate the transactions hereby and thereby contemplated. This Agreement and each of the other Documents have been, or at or prior to the Closing will be, duly executed by Seller. This Agreement constitutes (and each of the other Documents, when so executed and delivered, will constitute) legal and valid obligations of Seller enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights or remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 3.3 ABSENCE OF CONFLICTS. The execution and delivery of, and the -------------------- performance of its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby: (a) do not in any material respect, (with or without the giving of notice or the passage of time or both) violate (or result in the creation of any Lien other than a 8 Permitted Lien on any of the Sale Assets under) any provision of law, rule or regulation or any order, judgment, injunction, decree or ruling applicable to Seller; (b) do not in any material respect, (with or without the giving of notice or the passage of time or both) conflict with or result in a breach or termination of, or constitute a default or give rise to a right of termination or acceleration under the articles of incorporation or bylaws of Seller or pursuant to any lease, agreement, commitment or other instrument which Seller is a party to or bound by or by which any of the Sale Assets may be bound, or result in the creation or any Lien other than a Permitted Lien upon any of the Sale Assets. 3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the --------------------------------------------------- required consent of the FCC and except as set forth on Schedule 3.8, the ------------ execution and delivery of, and the performance of its obligations under, this Agreement and each of the other Documents by Seller, and the consummation by Seller of the transactions contemplated hereby and thereby, do not require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration of filing with, any court or public agency or other authority, or the consent of any person under any agreement, arrangement or commitment of a nature which Seller is a party to or bound or by which the Sale Assets are bound by or subject to, the failure of which to obtain would have a material adverse effect on the Sale Assets or the operation of the Station. 3.5 SALE ASSETS. The Sale Assets include all of the assets, properties and ----------- rights of every type and description, real, personal and mixed, tangible and intangible, that are used to a material extent in the conduct of the business of operating the Station in the manner in which it is now being conducted, with the exception of the Excluded Assets. The Sale Assets include sufficient assets to operate the transmitter site of the Station in a manner consistent with ordinary industry practices, except that no field intensity meter is included in the Sale Assets. 3.6 TANGIBLE PERSONAL PROPERTY. Except as set forth on Schedule 3.6: -------------------------- ------------ (a) Seller has good, marketable and valid title to all of the items of Tangible Personal Property free and clear of all Liens except Permitted Liens, and including the right to transfer same. (b) The Tangible Personal Property complies with applicable rules and regulations of the FCC and the terms of the FCC Licenses. (c) The items of Tangible Personal Property are in good operating condition and repair and Seller has no knowledge of any defect in the condition or operation of any item of the Tangible Personal Property which is reasonably likely to have a material adverse effect on the operation of the Station. 9 3.7 FCC LICENSES. Seller is the holder of the FCC Licenses listed on ------------ Schedule 3.7, and except as set forth on such Schedule, the FCC Licenses (i) are - ------------ valid, in good standing and in full force and effect and constitute all of the licenses, permits and authorizations required by the Act, the Rules and Regulations or the FCC for, or used in, the operation of the Station as now operated, and (ii) constitute all the licenses and authorizations issued by the FCC to Seller for or in connection with the current operation of the Station. Seller has no actual knowledge of any condition imposed by the FCC as part of any FCC License which is neither set forth on the face thereof as issued by the FCC nor contained in the Rules and Regulations applicable generally to stations of the type, nature, class or location of the Station. Except as disclosed on Schedule 3.7, the Station is being operated in accordance with the terms and - ------------ conditions of the FCC Licenses applicable to it and in accordance with the Rules and Regulations. Except as set forth on Schedule 3.7, no proceedings are pending ------------ or, to the knowledge of the Seller, are threatened which may result in the revocation, modification, non-renewal or suspension of any of the FCC Licenses, the denial of any pending applications, the issuance of any cease and desist order or the imposition of any fines, forfeitures or other administrative actions by the FCC with respect to the Station or its operation, other than proceedings affecting the radio broadcasting industry in general. Seller has complied in all material respects with all requirements to file reports, applications and other documents with the FCC with respect to the Station, and all such reports, applications and documents are complete and correct in all material respects. Seller has no knowledge of any matters (i) which could reasonably be expected to result in the suspension or revocation of or the refusal to renew any of the FCC Licenses or the imposition of any fines or forfeitures by the FCC, or (ii) against Seller which could reasonably be expected to result in the FCC's refusal to grant approval of the assignment to Buyer of the FCC Licenses or the imposition of any Material Adverse Condition in connection with approval of such assignment. There are not any unsatisfied or otherwise outstanding citations issued by the FCC with respect to the Station or its operation. The "Public Inspection File" of the Station is complete and in substantial and material compliance with Section 73.3526 of the Rules and Regulations. 3.8 STATION AGREEMENTS. ------------------ (a) Schedule 3.8 sets forth an accurate and complete list of all ------------ agreements, contracts, arrangements or commitments in effect as of the date hereof, including all amendments, modifications and supplements thereto which the Station or its assets or properties are bound by (except employee benefit plans and employment contracts, and other contracts comprising Excluded Assets) which Buyer has agreed to assume. (b) Except as set forth in the Schedules, (i) all Station Agreements are legal, valid and enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' fights generally, and subject, as to enforceability, to general principles of equity regardless of whether enforcement is sought in any proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of Seller, any other party thereto, is in material 10 breach of or in material default under any Station Agreements; (iii) to the knowledge of Seller, there has not occurred any event which, after the giving of notice or the lapse of time or both, would constitute a material default under, or result in the material breach of, any Station Agreements which are, individually or in the aggregate, material to the operation of the Station; and (iv) Seller holds the right to enforce and receive the benefits under all of the Station Agreements, free and clear of all Liens (other than Permitted Liens) but subject to the terms and provision of each such agreement. (c) Schedule 3.8 indicates, for each Station Agreement listed thereon, ------------ whether consent or approval by any party thereto is required thereunder for consummation of the transactions contemplated hereby. 3.9 LITIGATION. There are no claims, investigations or administrative, ------------ arbitration or other proceedings pending or, to the knowledge of Seller, threatened against Seller which would, individually or in the aggregate if adversely determined, have an adverse effect on the Sale Assets or the operation of the Station, or which would give any third party the right to enjoin the transactions contemplated by this Agreement. To the knowledge of Seller, there is no basis for any such claim, investigation, action, suit or proceeding which would, individually or in the aggregate if adversely determined, have an adverse effect on the Sale Assets or the operation of the Station. There are no existing or, to the knowledge of Seller, pending orders, judgements or decrees of any court or governmental agency affecting Seller, the Station or any of the Sale Assets. 3.10 LABOR MATTERS. Buyer's consummation of the transactions contemplated by -------------- this Agreement in accordance with the terms hereof shall not, as a result of or in connection with the transactions contemplated hereby, impose upon Buyer the obligation to pay any severance or termination pay under any agreement, plan or arrangement binding upon Seller. Seller is not a party or subject to any collective bargaining agreements with respect to the Station. Seller, in the operation of the Station, has complied in all material respects with all applicable laws, rules and regulations relating to the employment of labor, including those related to wages, hours, collective bargaining, occupational safety, discrimination, and the payment of social security and other payroll- related taxes, and it has not received any notice alleging that it has failed to comply in any material respect with any such laws, rules or regulations. No labor union or other collective bargaining representative represents or, to the knowledge of the Seller, claims to represent any of the employees of the Station. To the knowledge of Seller, there is no effort being made to organize the employees or any group of employees of the Station for purposes of collective bargaining. 3.11 COMPLIANCE WITH LAW. The operation of the Station complies in all ------------------- material respects with the applicable rules and regulations of the FCC and all federal, state, local or other laws, statutes, ordinances, regulations, and any applicable order, writ, injunction or decree of any court, commission, board, agency or other instrumentality. 11 3.12 ABSENCE OF INSOLVENCY. No insolvency proceedings of any character --------------------- including without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Seller or any of the Sale-Assets, are pending or, to the best knowledge of Seller, 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. 3.13 BROKER'S OR FINDER'S FEES. Except as set forth on Schedule 3.13, no ------------------------- agent, broker, investment banker or other person or firm acting on behalf of or under the authority of Seller or any affiliate of Seller is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with the transactions contemplated by this Agreement. 3.14 INSURANCE. There is now in full force and effect with reputable --------- insurance companies fire and extended coverage insurance with respect to all material tangible Sale Assets and public liability insurance, all in reasonable commercial amounts. 3.15 TAXES. Seller has filed, or caused to be filed, all federal, state and ----- local tax returns required to be filed by Seller with respect to the Station and the Sale Assets. Seller has paid all taxes due for periods covered by such returns. 3.16 TRANSMITTER SITE ZONING. The transmitter site utilized by the Station ----------------------- conforms in all material respects with all applicable zoning ordinances and other governmental regulations. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer represents and warrants to Seller as follows: 4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly organized, ------------------------------ validly existing and in good standing under the laws of the State of Delaware and, as of the date of closing, shall be authorized and in good standing to conduct business in the Commonwealth of Massachusetts. Buyer has all requisite corporate power to own, operate and lease its properties and carry on its business as it is now being conducted and as the same will be conducted following the Closing. 4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Buyer's execution and --------------------------------------------- delivery of, and the performance of its obligations under, this Agreement and each of the other Documents, and the consummation by Buyer of the transactions contemplated hereby and thereby, have been duly authorized and approved by all necessary corporate action on the part of Buyer. This Agreement and each of the other Documents to be executed by Buyer have been, or at or prior to the Closing will be, duly executed by Buyer. The Documents, when executed and delivered by the parties hereto, will 12 constitute the valid and legally binding agreement of Buyer, enforceable against Buyer in accordance with their terms, except as may be limited by bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors' rights generally, and except as may be limited by general principles of equity (regardless of whether such enforceability is sought in a proceeding in equity or at law). 4.3 ABSENCE OF CONFLICTS. Buyer's execution and delivery of, and the -------------------- performance of its obligations under, this Agreement and each of the other Documents and the consummation by Buyer of the transaction contemplated hereby and thereby: (a) Do not in any material respect (with or without the giving of notice or the passage of time or both) violate (or result in the creation of any claim, lien, charge or encumbrance on any of the assets or properties of Buyer under) any provision of law, rule or regulation or any order, judgment, injunction, decree or ruling applicable to Buyer in any manner which would have a material adverse effect on the assets, business, operation or financial condition or results of operations of Buyer; (b) Do not (with or without the giving of notice or the passage of time or both) conflict with or result in a breach or termination of, or constitute a default or give rise to a right of termination or acceleration under, the articles of incorporation or bylaws of Buyer or any lease, agreement, commitment or other instrument which Buyer is a party to or bound by or by which any of its assets or properties may be bound. 4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the --------------------------------------------------- required consent of the FCC, Buyer's execution and delivery of, and the performance of its obligations under, this Agreement and each of the other Documents and the consummation by Buyer of the transaction contemplated hereby and thereby, do not require the consent, waiver, approval, permit, license, clearance or authorization of, or any declaration or filing with, any court or public agency or other authority, or the consent of any person under any agreement, arrangement or commitment of any nature which Buyer is a party to or bound by, the failure of which to obtain would have a material adverse effect on the assets, business, operation or financial condition or results of operations of Buyer. 4.5 QUALIFICATION. ------------- (a) Buyer has no knowledge after due inquiry of any facts concerning Buyer or any other person with an attributable interest in Buyer (as such term is defined under the Rules and Regulations) which, under present law (including the Act) and the Rules and Regulations, would (i) disqualify Buyer from being the holder of the FCC Licenses, the owner of the Sale Assets or the operator of the Station upon consummation of the transactions contemplated by this Agreement, or (ii) raise a substantial and material question of fact (within the meaning of Section 309(e) of the Act) respecting Buyer's qualifications. 13 (b) Without limiting the foregoing Subsection (a), Buyer shall make the -------------- affirmative certifications provided in Section III of FCC Form 314 at the time of filing of such form with the FCC as contemplated by Section 5.2. ----------- 4.6 BROKER'S OR FINDER'S FEES. No agent, broker, investment banker, or other ------------------------- person or firm acting on behalf of or under the authority or Buyer or any affiliate of Buyer is or will be entitled to any broker's or finder's fee or any other commission or similar fee, directly or indirectly, in connection with transactions contemplated by this Agreement. 4.7 LITIGATION. There are no legal, administrative, arbitration or other ---------- proceedings or governmental investigations pending or, to the knowledge of Buyer, threatened against Buyer that would give any third party the right to enjoin the transactions contemplated by this Agreement. ARTICLE V --------- TRANSACTIONS PRIOR TO THE CLOSING DATE -------------------------------------- 5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE. Subject ----------------------------------------------------------- to the terms and conditions of the LMA, Seller covenants and agrees with Buyer that between the date hereof and the Closing Date, unless the Buyer otherwise agrees in writing, Seller shall: (a) Use reasonable efforts to operate the Station in substantially the manner in which it is currently being operated: (b) Use reasonable commercial efforts to maintain insurance upon all of the tangible Sale Assets in such amounts and of such kind comparable to that in effect on the date hereof with respect to such Sale Assets and with respect to the operation of the Station, with insurers of substantially the same or better financial condition; (c) Operate the Station and otherwise conduct its business in accordance with the terms or conditions of its FCC Licenses, the Rules and Regulations, the Act and all other rules and regulations, statutes, ordinances and orders of all governmental authorities having jurisdiction over any aspect of the operation of the Station, except where the failure to so operate the Station would not have a material adverse effect on the Sale Assets or the operation of the Station or on the ability of Seller to consummate the transactions contemplated hereby; (d) Comply in all material respects with all Station Agreements now or hereafter existing which are material, individually or in the aggregate, to the operation of the Station; 14 (e) Promptly notify Buyer of any material default by, or claim of default against, any party under any Station Agreements which are material, individually or in the aggregate, to the operation of the Station, and any event or condition which, with notice or lapse of time or both, would constitute an event of default under such Station Agreements; (f) Not mortgage, pledge or subject to any Lien (except in the ordinary course of business) any of the Sale Assets; (g) Not sell, lease or otherwise dispose of, nor agree to sell, lease or otherwise dispose of, any of the Sale Assets, except for dispositions in the ordinary course of business unless said assets are replaced with assets of equivalent condition and functionality; (h) Not acquire or lease any goods or services or enter into, amend or terminate any license, lease of real or personal property or any other Station Agreement, other than in the ordinary course of business; (i) Notify Buyer of any material litigation pending or threatened against the Station or Seller or any material damage to or destruction of any assets included or to be included in the Sale Assets. 5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC, within --------------------- ten (10) business days after the execution of this Agreement, such applications and other documents in the name of Seller or Buyer, as appropriate, as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall take all commercially reasonable steps necessary to prosecute such filings with diligence and shall diligently oppose any objections to, appeals from or petitions to reconsider such approval of the FCC, to the end that the FCC Order and a Final Action with respect thereto may be obtained as soon as practicable; provided, however, that in the event the application for assignment of the FCC Licenses has been designated for hearing, either Buyer or Seller may elect to terminate this Agreement pursuant to Section 10.1 (c). Buyer shall not knowingly take, and ---------------- Seller covenants that Seller shall not knowingly take, any action that party knows or has reason to know would materially and adversely affect or materially delay issuance of the FCC Order without a Material Adverse Condition, unless such action is requested or required by the FCC, its staff or the Rules and Regulations. Should Buyer or Seller become aware of any facts which could reasonably be expected to materially and adversely affect or materially delay issuance of the FCC Order without a Material Adverse Condition (including but not limited to, in the case of Buyer, any facts which would reasonably be expected to disqualify Buyer from controlling the Station), such party shall promptly notify the other party thereof in writing and both parties shall cooperate to take all steps necessary or desirable to resolve the matter expeditiously and to obtain the FCC's approval of matters pending before it. 15 5.3 OTHER CONSENTS. Seller shall use its reasonable best efforts to obtain -------------- the consent or waivers to the transactions contemplated by this Agreement required under any assumed Station Agreements; provided that Seller shall not be required to pay or grant- any material consideration in order to obtain any such consent or waiver. 5.4 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and its -------------------------------- representatives may make such reasonable investigation of the assets and business of the Station as it may desire; and Seller shall give to Buyer, its counsel, accountants and other representatives reasonable access during normal business hours throughout the period prior to the Closing, provided that (i) Buyer shall give Seller reasonable advance notice of each date on which Buyer or any such other person or entity desires such access, (ii) each person (other than an officer of Buyer) shall, if requested by Seller, be accompanied by an officer or their representative of Buyer approved by Seller, which approval shall not be unreasonably withheld, (iii) the investigations at the offices of Seller shall be reasonable in number and frequency, and (iv) all investigations shall be conducted in such a manner as not to physically damage any property or constitute a disruption of the operation of the Station or Seller. Seller shall furnish to Buyer during such period all documents and copies of documents and information concerning the business and affairs of Seller and the Station as Buyer may reasonably request. 5.5 CONFIDENTIALITY; PRESS RELEASE. ------------------------------ (a) All information, data and materials furnished or to be furnished to either party with respect to the other party in connection with this transaction or pursuant to this Agreement are confidential. Each party agrees that prior to Closing (i) it shall not disclose or otherwise make available, at any time, any such information, data or material to any person who does not have a confidential relationship with such party; (ii) it shall protect such information, data and material with a high degree of care to prevent the disclosure thereof; and (iii) if, for any reason, this transaction is not consummated, all information, data or material concerning the other party obtained by such party, and all copies thereof, will be returned to the other party. After Closing, neither party will disclose or otherwise make available to any person any of such information, data or material concerning the other party, except as may be necessary or appropriate in connection with the operation of the Station by Buyer. Each party shall use its reasonable efforts to prevent the violation of any of the foregoing confidentiality provisions by its respective representatives. (b) Nothing in this Section shall prohibit Buyer or Seller from: (i) using such information, data and materials in connection with any action or proceeding brought or any claim asserted by Buyer or Seller in respect of any breach by the other of any representation, warranty or covenant made in or pursuant to this Agreement; (ii) supplying or filing such information, data or materials to or with the FCC or any other valid governmental or court authority to the extent reasonably necessary to obtain any consent, waiver, amendment, modification, approval, authorization, permit or license which may be necessary to effectuate this Agreement, and to consummate the transaction 16 contemplated herein; or (iii) in the case of Buyer, supplying such information, data or materials as may be reasonably requested by a prospective lender or investor; provided that said prospective lender or investor shall agree, in advance of its receipt of said information, data or materials, to treat the information, data and materials confidentially and will not disclose it, or any portion of it, to anyone. (c) In the event that either party determines in good faith that a press release or other public announcement is desirable under any circumstances, the parties shall consult with each other to determine the appropriate timing, form and content of such release or announcement and thereafter may make such release or announcement. 5.6 REASONABLE BEST EFFORTS. Subject to the terms and conditions of this ----------------------- Agreement, each of the parties hereto will use its reasonable best efforts to take all action and to do all things necessary, proper or advisable to satisfy any condition to the parties' obligations hereunder in its power to satisfy and to consummate and make effective as soon as practicable the transactions contemplated by this Agreement. 5.7 FCC REPORTS. Seller shall continue to file, on a current basis until the ----------- Closing Date, all reports and documents required to be filed with the FCC with respect to the Station. Seller shall provide Buyer with copies of all such filings within five (5) business days of the filing with the FCC. 5.8 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing, Seller ---------------------------------- shall obtain executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Sale Assets and properties as security for payment of loans and other obligations or judgments and of any other Liens on the Sale Assets. At the closing, Seller shall transfer and convey to Buyer all of the Sale Assets free and clear of all Liens except Permitted Liens. ARTICLE VI ---------- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO CLOSE ----------------------------- Buyer's obligation to close the transaction contemplated by this Agreement is subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, unless waived by Buyer in writing: 6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE. --------------------------------------------------------------- (a) The representations and warranties of Seller contained in this Agreement or in any other Document shall be complete and correct in all material respects on the date hereof and at the Closing Date with same effect as though made at such time except for changes that are not materially adverse to the Station or the Sale Assets taken as a whole; provided, however, that the accuracy of Seller's representations 17 or warranties shall not be a condition precedent to Buyer's obligation to close if the representation or warranty are made untrue by the acts, errors, or omissions of Buyer in its capacity as programmer under the LMA agreement. (b) Seller shall have delivered to Buyer on the Closing Date a certificate that (i) the condition specified in Section 6.1 (a) is satisfied as --------------- of the Closing Date, and (ii) except as set forth in such certificate (none of which exceptions shall be materially adverse to the Station, the Sale Assets or Seller's ability to consummate the transaction contemplated hereby), the condition specified in Section 6.2 is satisfied as of the Closing Date. ----------- 6.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed in all material ------------------------- respects all of its covenants, agreements and obligations required by this Agreement and each of the other Documents to be performed or complied with by it prior to or upon the Closing Date. 6.3 FCC AND OTHER CONSENTS. ---------------------- (a) The FCC Order shall have been issued by the FCC without any Material Adverse Condition affecting Buyer and shall have become a Final Action without any Material Adverse Condition affecting Buyer. (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body relating thereto or in connection therewith specifies and requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall have been satisfied by Seller. (c) All other authorizations, consents, approvals and clearances of federal, state or local governmental agencies required to permit the consummation by Buyer of the transactions contemplated by this Agreement shall have been obtained; all statutory and regulatory requirements for such consummation shall have been fulfilled; and no such authorizations, consents, approvals or clearances shall contain any conditions that individually or in the aggregate would have a material adverse effect on the operations of the Station. 6.4 ADVERSE PROCEEDINGS. Neither Buyer nor any affiliate of Buyer shall be ------------------- subject to any ruling, decree, order or injunction restraining, imposing material limitations on or prohibiting (i) the consummation of the transactions contemplated hereby or (ii) its participation in the operation, management, ownership or control of the Station; and no litigation, proceeding or other action seeking to obtain any such ruling, decree, order or injunction shall be pending or shall have been threatened in writing. No governmental authority having jurisdiction shall have notified any party to this Agreement that consummation of the transaction contemplated hereby would constitute a violation of the laws of the United States or of any state or political subdivision or that it intends to commence proceedings to restrain such consummation or to force divestiture, 18 unless such governmental authority shall have withdrawn such notice. No governmental authority having jurisdiction shall have commenced any such proceeding. 6.5 OTHER CONSENTS. Seller shall have obtained in writing and provided to -------------- Buyer on or before the Closing Date, without any condition materially adverse to Buyer or the Station, the consents or waivers to the transactions contemplated by this Agreement required under those Station Agreements which Buyer has elected to assume. 6.6 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or caused to ----------------------------- be delivered to Buyer on the Closing Date each of the Documents required to be delivered pursuant to Section 8.2. ----------- 6.7 DAMAGE TO THE ASSETS. The Station shall not have on the Closing Date, or -------------------- any time between the date of this Agreement and the Closing Date, suspended broadcasting at authorized power by reason of any cause or event. In such event, Buyer shall have the fight to postpone the Closing Date until the Station is broadcasting at authorized power. Seller shall use all reasonable efforts to effect the resumption of such broadcasting. In any event, if the Station has suspended broadcasting and does not resume broadcasting at authorized power within 168 hours, Buyer at any time thereafter shall have the right, in its complete discretion, to terminate this Agreement upon written notice to Seller. For purposes of this Section 6.7, suspending broadcasting at authorized power ----------- shall mean failure to broadcast regularly with the presently authorized power in accordance with established past practice and schedules, except for ordinary maintenance and other temporary suspension. ARTICLE VII CONDITIONS PRECEDENT OF THE OBLIGATION OF SELLER TO CLOSE ----------------------------- The obligation of Seller to close the transaction contemplated by this Agreement is subject to the satisfaction, on or prior to the closing Date, of each of the following conditions, unless waived by Seller in writing: 7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. ------------------------------------------ (a) The representations and warranties of Buyer contained in this Agreement shall be complete and correct in all material respects on the date hereof and at the Closing Date with the same effect as though made at such time except for changes that are not materially adverse to Seller. (b) Buyer shall have delivered to Seller on the Closing Date a certificate that (i) the condition specified in Section 7.1(a) is satisfied as of the Closing Date, and (ii) except as set forth in such certificate (none of which exceptions shall be materially 19 adverse to Buyer's ability to consummate the transaction contemplated hereby), the conditions specified in Section 7.2 are satisfied as of the Closing Date. ----------- 7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all material ------------------------- respects all of its covenants, agreements and obligations required by this Agreement and each of the other Documents to be performed or complied with by it prior to or upon the Closing Date. 7.3 FCC AND OTHER CONSENTS. ---------------------- (a) The FCC Order shall have been issued by the FCC and shall have become effective without a material adverse condition affecting Seller. (b) Conditions which the FCC Order or any order, ruling or decree of any judicial or administrative body relating thereto or in connection therewith specifies and requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall have been satisfied by Buyer. (c) All other authorizations, consents, approvals and clearances of all Federal, state and local governmental agencies required to permit the consummation by Seller of the transactions contemplated by this Agreement shall have been obtained; all statutory and regulatory requirements for such consummation shall have been fulfilled; and no such authorizations, consents, approvals or clearances shall contain any conditions that individually or in the aggregate would have any material adverse effect on Seller. 7.4 ADVERSE PROCEEDINGS. Seller shall not be subject to any ruling, decree, ------------------- order or injunction restraining, imposing material limitations on or prohibiting the consummation of the transactions contemplated hereby. No governmental authority having jurisdiction shall have notified any party to this Agreement that consummation of the transactions contemplated hereby would constitute a violation of the laws of the United States or of any state or political subdivision or that it intends to commence proceedings to restrain such consummation or to force divestiture, unless such governmental authority shall have withdrawn such notice. No governmental authority having jurisdiction shall have commenced any such proceeding. 7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall have ------------------------------------------------ delivered or caused to be delivered to Seller on the Closing Date each of the documents required to be delivered pursuant to Section 8.3, and Seller shall ----------- have received payment of the Purchase Price with the form of payment set forth in Section 2.5. ----------- 20 ARTICLE VIII CLOSING ------- 8.1 TIME AND PLACE. The Closing shall take place at the offices of Seller's -------------- Counsel in Boston, Massachusetts, or at such other place as the parties agree, at 10:00 A.M. Pacific Time on the date (the "Closing Date") that is the later of (i) the fifth Business Day after the Applicable Date or (ii) the date as soon as practicable following satisfaction or waiver of the conditions precedent hereunder. The Applicable Date shall be the date on which the FCC Order shall have become a Final Action. 8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing, Seller -------------------------------------------- shall deliver or cause to be delivered to Buyer the following in form and substance reasonably satisfactory to Buyer: (a) Certified resolutions of Seller's Board of Directors approving the execution and delivery of this Agreement and each of the other documents and authorizing the consummation of the transactions contemplated hereby and thereby. (b) The certificate required by Section 6.1(b). -------------- (c) A bill of sale and other instruments of transfer and conveyance transferring to Buyer the Tangible Personal Property. (d) Executed releases, in suitable form for filing and otherwise in form and substance reasonably satisfactory to Buyer, of any security interests granted in the Sale Assets as security for payment of loans and other obligations and of any other Liens (other than Permitted Liens). (e) An instrument or instruments assigning to Buyer all fight, title and interest of Seller in and to all Station Agreements being assumed by Buyer. (f) An instrument assigning to Buyer all right, title and interest of Seller in the FCC Licenses, all pending applications relating to the Station before the FCC, and any remaining Sale Assets not otherwise conveyed. (g) A receipt acknowledging payment by the Buyer of the Purchase Price. (h) A certificate of Seller's good standing in the Commonwealth of Massachusetts. (i) Such additional information and materials as Buyer shall have reasonably requested, including without limitation, evidence that all consents and 21 approvals required as a condition to Buyer's obligation to close hereunder have been obtained. 8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing, Buyer -------------------------------------------- shall deliver or cause to be delivered to Seller the following in form and substance reasonably satisfactory to Seller: (a) Certified resolutions of Buyer's Board of Directors approving the execution and delivery of this Agreement and each of the other Documents and authorizing the consummation of the transaction contemplated hereby and thereby. (b) The Purchase Price with the form of payment set forth in Section ------- 2.5. - --- (c) All documents necessary for the release of the Earnest Money to Seller; (d) The certificate required under Section 7.1 (b). --------------- (e) An instrument executed by Buyer whereby Buyer shall assume all obligations of Seller under the Station Agreements. (f) A certificate of Buyer's good standing in Massachusetts. (g) Such additional information and materials as Seller shall have reasonably requested. ARTICLE IX ---------- SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ------------------------------------------- INDEMNIFICATION --------------- 9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations, ----------------------------------------- warranties, covenants and agreements contained in this Agreement or in any other Document shall survive the Closing for the Survival Period and the Closing shall not be deemed a waiver by either party of the representations, warranties, covenants or agreements of the other party contained herein or in any other Document. No claim may be brought under this Agreement or any other Document unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the Survival Period. In the event such a notice is so given, the fight to indemnification with respect thereto under this Article shall survive the Survival Period until such claim is finally resolved and any obligations with respect thereto are fully satisfied. 9.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the rights to -------------------------- indemnification and to be held harmless set forth in this Agreement shall, as between the parties hereto and their respective successors and assigns, be exclusive of all rights to 22 indemnification and to be held harmless that such party (or its successors or assigns) would otherwise have by statute, common law or otherwise. 9.3 INDEMNIFICATION BY SELLER. ------------------------- (a) Subject to the provisions of Subsection (b) below, Seller shall -------------- indemnify and hold harmless Buyer and any officer, director, agent, employee and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: (i) Any breach or non-performance by Seller of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other Documents; or (ii) The ownership or operation by Seller of the Station or the Sale Assets on or prior to the Closing Date; or (iii) All other liabilities and obligations of Seller other than the Assumed Obligations; or (iv) Noncompliance by Seller with the provisions of the Bulk Sales Act, if applicable, in connection with the transaction contemplated hereby. (b) Notwithstanding anything contained herein to the contrary, if Closing occurs, Seller shall not be obligated to indemnify Buyer pursuant to Subsection (a), above (i) for any amounts in excess of the Purchase Price in the - -------------- aggregate, or (ii) until the aggregate amount of such claims, liabilities, damages, losses, costs and expenses exceeds Buyer's Threshold Limitation, in which case Buyer shall then be entitled to indemnification of the amount in excess of Buyer's Threshold Limitation, provided that any amounts owed by Seller to Buyer under Subsection (a) (iv) above and Section 2.7 shall not be counted in ------------------- ----------- determining whether Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to recover any such payment without regard to such limitation. 9.4 INDEMNIFICATION BY BUYER. ------------------------- (a) Subject to the provisions of Subsection (b) below and Section 10.2 -------------- ------------ below, Buyer shall indemnify and hold harmless Seller and any officer, director, agent, employee and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: 23 (i) Any breach or non-performance by Buyer of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other Document; or (ii) The ownership or operation of the Station or the sale of the Station after the Closing Date. (b) Notwithstanding anything contained herein to the contrary, if Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to Subsection (a) above (i) for any amounts in excess of the Purchase Price in the - -------------- aggregate, or (ii) unless and until the aggregate amount of such claims, liabilities, damages, Iosses, costs and expenses exceeds Seller's Threshold Limitation, in which case Seller shall then be entitled to indemnification of the amount in excess of Seller's Threshold Limitation, provided that any payment owed by Buyer to Seller under Section 2.7 shall not be counted in determining ----------- whether Seller's Threshold Limitation is satisfied, and Seller shall have the right to recover any such payment without regard to any such limitation. 9.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified Party may -------------------------- be entitled to indemnification hereunder with respect to any asserted claim of, or obligation or liability to, any third party, such party shall notify the Indemnifying Party thereof, describing the matters involved in reasonable detail, and the Indemnifying Party shall be entitled to assume the defense thereof upon written notice to the Indemnified Party with counsel reasonably satisfactory to the Indemnified Party; provided, that once the defense thereof is assumed by the Indemnifying Party, the Indemnifying Party shall keep the Indemnified Party advised of all developments in the defense thereof and any related litigation, and the Indemnified Party shall be entitled at all times to participate in the defense thereof at its own expense. If the Indemnifying Party fails to notify the Indemnified Party of its election to defend or contest its obligation to indemnify under this Article IX, the Indemnified Party may pay, ---------- compromise, or defend such a claim without prejudice to any fight it may have hereunder. ARTICLE X --------- TERMINATION; LIQUIDATED DAMAGES ------------------------------- 10.1 TERMINATION. If Closing shall not have previously occurred, this ----------- Agreement shall terminate upon the earliest of: (a) the giving of written notice from Seller to Buyer, or from Buyer to Seller, if: (i) Seller gives such termination notice and is not at such time in material default hereunder, or Buyer gives such termination notice and Buyer is not at such time in material default hereunder; and 24 (ii) Either: (A) any of the representations or warranties contained herein of Buyer (if such termination notice is given by Seller), or of Seller (if such termination notice is given by Buyer), are inaccurate in any material respect and materially adverse to the party giving such termination notice unless the inaccuracy has been induced by or is the result of actions or omissions of the party giving such termination notice, and such inaccuracy has not been corrected or remedied within twenty (20) days after written notice thereof from the party giving such termination notice nor waived in writing by the party giving such termination notice; or (B) Any material obligation to be performed by Buyer (if such termination notice is given by Seller) or by Seller (if such termination notice is given by Buyer) is not timely performed in any material respect unless the lack of timely performance has been induced by or is the result of actions or omissions of the party giving such termination notice, and such material obligation has not been satisfied within twenty (20) days after written notice thereof from the party giving such termination notice nor waived in writing by the party giving such termination notice; or (C) Any condition (other than those referred to in foregoing Clauses (A) and (B)) to the obligation to close the transaction contemplated - ----------- --- herein of the party giving such termination notice has not been timely satisfied; and any such inaccuracy, failure to perform or non-satisfaction of a condition neither has been cured nor satisfied within twenty (20) days after written notice thereof from the party giving such termination notice nor waived in writing by the party giving such termination notice. (b) Written notice from Seller to Buyer, or from Buyer to Seller, at any time after one year from the date of execution of this Agreement, provided that termination shall not occur upon the giving of such termination notice by Seller if Seller is at such time in material default hereunder or upon the giving of such termination notice by Buyer if Buyer is at such time in material default hereunder. (c) Written notice from Seller to Buyer, or from Buyer to Seller, at any time following a determination by the FCC that the application for consent to assignment of the FCC Licenses has been designated for hearing; provided that the party which is the subject of the hearing (or whose alleged actions or omissions resulted in the designation for hearing) may not elect to terminate under this subsection (c). (d) The written election by Buyer under Article XI. ---------- (e) The default of Buyer under the LMA. (f) The default of Seller under the LMA. 25 10.2 OBLIGATIONS UPON TERMINATION. ---------------------------- (a) In the event this Agreement is terminated pursuant to Section 10.1 ---------- (a)(ii)(A), Section 10.1 (a)(ii)(B) or Section 10.1 (e), the aggregate - ---------- ----------------------- ---------------- liability of Buyer for breach hereunder shall be limited as provided in Subsections (c) and (e), below and the aggregate liability for Seller for breach - ----------------------- hereunder shall be limited as provided in Subsections (d) and (e), below. In the ----------------------- event this Agreement is terminated for any other reason, neither party shall have any liability hereunder. (b) Upon termination of this Agreement, Buyer shall be entitled to the return of the Earnest Money from the Escrow Agent under the Escrow Agreement (i) if such termination is effected by Buyer's giving of valid written notice to Seller pursuant to Sections 10.1 (a), (b), (c), (d) or (f), or (ii) if such --------------------------------------- termination is effected by Seller's giving of valid written notice to Buyer pursuant to Sections 10.1 (a)(ii)(C), 10.1 (b) or 10.1 (c). If Buyer is entitled ---------------------------------------------- to the return of the Earnest Money, Seller shall cooperate with Buyer in taking such action as is required under the Escrow Agreement in order to effect such return from the Escrow Agent. (c) If this Agreement is terminated by Seller's giving of valid written notice to Buyer pursuant to Section(s) 10.1 (a)(ii)(A) or (B) or Section 10.1 --------------------------------- ------------ (e), Buyer agrees that: (i) Seller shall be entitled to receive upon such - --- termination, as liquidated damages and not as a penalty, Two Hundred Fifty Thousand Dollars ($250,000) ("Liquidated Damages Amount"); (ii) Seller shall be entitled to collect the Liquidated Damages Amount by receiving a disbursement from the Escrow Agent under the Escrow Agreement equal to the lesser of the entire Earnest Money or the Liquidated Damages Amount; and (iii) Seller shall be entitled to pursue any other remedy available to Seller at law or equity to recover from Buyer the full amount of the Liquidated Damages Amount provided that the total monetary damages to which Seller shall be entitled shall not exceed the Liquidated Damages Amount. Notwithstanding anything herein to the contrary, in the event the parties enter into the LMA, the "Liquidated Damages Amount" shall be Three Hundred Fifty Thousand Dollars ($350,000). SELLER'S RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT OCCUR. BUYER AND SELLER EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGE AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER. (d) Notwithstanding any provision of this Agreement to the contrary, but subject to the provisions of the following sentence, if this Agreement is terminated by Buyer's giving of written notice to Seller pursuant to Subsection ---------- 10.1 (a), Buyer shall not - -------- 26 be entitled to damages or indemnification from Seller. Subject to the following sentence, if Seller attempts to terminate this Agreement under circumstances where it is not entitled to do so, or if Seller, by its own action, causes a breach of warranty or fails to satisfy a condition (including without limitation a refusal to consummate the transaction after Buyer has satisfied all conditions to Seller's obligation to close and Buyer has demonstrated its willingness and ability to close on the terms set forth in this Agreement and Buyer is not in default hereunder) with the intent of creating a situation whereby Buyer elects to terminate under Section 10.1(a) and Buyer does so elect to terminate, the --------------- monetary damages, if any, to which Buyer shall be entitled shall be limited to direct and actual damages and shall in no event exceed One Hundred Thousand Dollars ($100,000) in the aggregate. (e) In any dispute between Buyer and Seller as to which party is entitled to all or a portion of the Earnest Money, the prevailing party shall receive, in addition to that portion of the Earnest Money to which it is entitled, an amount equal to interest on that portion at the rate of 10% per annum, calculated from the date the prevailing party's demand for all or a portion of the Earnest Money is received by the Escrow Agent. 10.3 Termination Notice. Each notice given by a party pursuant to Section ------------------ ------- 10.1 to terminate this Agreement shall specify the Subsection (and clause or - ---- clauses thereof) of Section 10.1 pursuant to which such notice is given. ------------ ARTICLE XI ---------- CASUALTY -------- The risk of any loss, damage or destruction to the Sale Assets from fire or other cause shall be borne by Seller at all times prior to the Closing Date hereunder. Upon the occurrence of any casualty loss, damage or destruction material to the operation of the Station prior to the Closing, Seller shall promptly give Buyer written notice setting forth in detail the extent of such loss, damage or destruction and the cause thereof if known. Seller shall use its reasonable efforts to promptly commence and thereafter to diligently proceed to repair or replace any such lost, damaged or destroyed property. In the event that such repair or replacement is not fully completed prior to the Closing Date, Buyer may elect to postpone the Closing until Seller's repairs have been fully completed or to consummate the transactions contemplated hereby on the Closing Date, in which event Seller shall assign to Buyer the portion of the insurance proceeds (less all reasonable costs and expenses, including without limitation attorney's fees, expenses and court costs incurred by Seller to collect such amounts), if any, not previously expended by Seller to repair or replace the damaged or destroyed property (such assignment of proceeds to take place regardless of whether the parties close on the scheduled or deferred Closing Date) and Buyer shall accept the damaged Sale Assets in their damaged condition. 27 ARTICLE XII ----------- CONTROL OF STATION ------------------ Except as otherwise provided in the LMA, between the date of this Agreement and the Closing Date, Buyer shall not control, manage or supervise the operation of the Station or conduct of its business, all of which shall remain the sole responsibility and under the control of Seller, subject to Seller's compliance with this Agreement. ARTICLE XIII ------------ MISCELLANEOUS ------------- 13.1 FURTHER ACTIONS. From time to time before, at and after the Closing, ---------------- each party, at its expense and without further consideration, will execute and deliver such documents to the other party, and take all such actions, as the other party may reasonably request in order more effectively to consummate the transactions contemplated hereby. 13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a period of ----------------------------- twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants and other representatives with reasonable access during normal business hours to the books, records and personnel of the Station pertaining to transactions occurring prior to the Closing Date when requested by Seller, and Buyer shall retain such books and records for the normal document retention period of Buyer. At the request and expense of Seller, Buyer shall deliver copies of any such books and records to Seller. 13.3 PAYMENT OF EXPENSES. -------------------- (a) Any fees assessed by the FCC in connection with the filings contemplated by Section 5.2(a) or consummation of the transactions contemplated -------------- hereby shall be shared equally between Seller and Buyer. (b) All state or local sales or use, stamp or transfer, grant and other similar taxes payable in connection with consummation of the transactions contemplated hereby shall be shared equally between Seller and Buyer. (c) Except as otherwise expressly provided in this Agreement, each of the parties shall bear its own expenses, including the fees of any attorneys and accountants engaged by such party, in connection with this Agreement and the consummation of the transactions contemplated herein. 13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a --------------------- special, unique, and extraordinary character, and that any breach of this Agreement by Seller could not be compensated for by damages. Accordingly, if Seller shall breach its obligations under this Agreement, Buyer shall be entitled, in addition to any other 28 remedies it may have pursuant to this Agreement, to enforcement of this Agreement (subject to obtaining any required approval of the FCC) by decree of specific performance or injunctive relief requiring Seller to fulfill its obligations under this Agreement. In any action by Buyer to equitably enforce the provisions of this Agreement, Seller shall waive the defense that there is an adequate remedy at law or equity and agrees that Buyer shall have the right to obtain specific performance of the terms of this Agreement without being required to prove actual damages, post bond or furnish other security. 13.5 NOTICES. All notices, demands or other communications given hereunder -------- shall be in writing and shall be sufficiently given if delivered by courier or sent by registered or certified mail, first class, postage prepaid, or by telex, cable, telegram, telecopy or similar written means of communication, addressed as follows: (a) if to Buyer, to: Hibernia Communications, Inc. 42 West Lancaster Drive, Suite 200 Ardmore, Pennsylvania 19003 Facsimile No.: (610) 658-2929 With a copy to: Kenneth E. Satten, Esq. Wilkinson, Barker, Knauer & Quinn 1735 New York Avenue, N.W. Washington, D.C. 20006 Facsimile No.: (202) 783-5851 (b) if to Seller, to: New England Continental Media, Inc. c/o Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, CA 93012 Facsimile No.: (805) 482-7290 Attention: Jonathan L. Block, Esq. or such other address with respect to any party hereto as such party may from time to time notify (as provided above) to the other party hereto. Any such notice, demand or communication shall be deemed to have been given (i) if so mailed, as of the close of the third business day following the date mailed, and (ii) if personally delivered or otherwise sent as provided above, on the date received. 29 13.6 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits hereto, ----------------- and the other Documents constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede any prior negotiations, agreements, understandings or arrangements between the parties with respect to the subject matter hereof. 13.7 BINDING EFFECT; BENEFITS. Except as otherwise provided herein, this ------------------------- Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors or assigns. Except to the extent specified herein, nothing in this Agreement, express or implied, shall confer on any person other than the parties hereto and their respective successors or assigns any fights, remedies, obligations or liabilities under or by reason of this Agreement. 13.8 ASSIGNMENT. This Agreement and any rights hereunder shall not be ----------- assignable by either party hereto without the prior written consent of the other party; provided, however, that (so long as the assignment does not delay the date of Closing hereunder) Buyer may assign this Agreement and its rights hereunder to an entity controlled by Buyer or controlled by those persons and/or entities controlling Buyer. 13.9 GOVERNING LAW. This Agreement shall in all respects be governed by and -------------- construed in accordance with the laws of the Commonwealth of Massachusetts, including all matters of construction, validity and performance. 13.10 BULK SALES. Buyer hereby waives compliance by Seller with the ----------- provisions of the Bulk Sales Act and similar laws of any state or jurisdiction, if applicable. Seller shall, in accordance with Article IX, indemnify and hold ---------- Buyer harmless from and against any and all claims made against Buyer by reason of such non-compliance. 13.11 ENVIRONMENTAL REPORTS. Buyer may, at its election and cost, conduct a ---------------------- Phase I audit of the Real Property. 13.12 EMPLOYEES AND EMPLOYEE BENEFITS. Buyer has no obligation hereunder to -------------------------------- offer employment to any employee of Seller. Seller shall be responsible for all compensation (including accrued vacation and commissions), employees benefits and any severance obligations due to be paid for employees of the Station. 13.13 AMENDMENTS AND WAIVERS. No term or provision of this Agreement may be ----------------------- amended, waived, discharged or terminated orally but only by an instrument in writing signed by the party against whom the enforcement of such amendment, waiver, discharge or termination is sought. Any waiver shall be effective only in accordance with its express terms and conditions. 13.14 SEVERABILITY. Any provision of this Agreement which is ------------- unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such 30 unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereto hereby waive any provision of law now or hereafter in effect which renders any provision hereof unenforceable in any respect. 13.15 HEADINGS. The captions in this Agreement are for convenience of -------- reference only and shall not define or limit any of the terms or provisions hereof. 13.16 COUNTERPARTS. This Agreement may be executed in any number of ------------ counterparts, and by either party on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13.17 REFERENCES. All references in this Agreement to Articles and Sections ---------- are to Articles and Sections contained in this Agreement unless a different document is expressly specified. 13.18 SCHEDULES AND EXHIBITS. Unless otherwise specified herein, each ---------------------- Schedule and Exhibit referred to in this Agreement is attached hereto, and each such Schedule and Exhibit is hereby incorporated by reference and made a part hereof as if fully set forth herein. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written. NEW ENGLAND CONTINENTAL MEDIA, INC. By: /s/ Eric H. Halvorson -------------------------------- Eric H. Halvorson Vice President HIBERNIA COMMUNICATIONS, INC. By: /s/ Michael Craven -------------------------------- Name: Michael Craven ------------------------ Title: President ------------------------ 31 Schedule 3.6 ------------ See attached. Schedule 3.13 ------------- Serafin Bros. has acted as the exclusive broker in this transaction and shall be paid by Seller pursuant to a separate agreement between Seller and Serafin Bros. TRANSMITTER EQUIPMENT LIST -------------------------- (WPZE) ------ QUANTITY DESCRIPTION -------- ----------- 1 Coax Cable 3 Antenna, ATUs 1 Ground System 1 Antenna Phasor 3 AM Self-Support Towers 1 Catwalk System 1 Power Generator 1 Aux Transmitter* 1 Electric Transformer 1 Main XMTR 1 Belar Monitor 1 XMTR Wiring 1 RF Meter 1 Panel 1 ADC Propatch 1 CRL Processor w/NRSC Chassis 1 Antenna Monitor Existing Satellite Dish * Buyer and Seller acknowledge that the auxiliary transmitter may contain PCB containing capacitors. Seller shall remove and dispose of said capacitors at its sole expense; provided Seller shall not be obligated to replace said capacitors. STUDIO EQUIPMENT LIST --------------------- (WPZE) ------ QUANTITY DESCRIPTION -------- ----------- 1 McCurdy SS8760 13 Channel Audio Console with Power Supply 1 Tascam 112 Cassette Tape Recorder 4 ITC Delta Audio Cartridge Player Machine 2 ITC Delta Record Cart Machine 2 RANE HC-6 Headphone Amplifier Console 1 Ramko RC 1/48 IPB Remote Control 1 UREI 535 Dual Graphic Equalizer 1 Gentner IC - 20 Station Control Unit 1 Technics SL 1200MKII Turntable 1 Audio Metrics TP - 84 Preamplifier 2 JBL 4408 Studio Monitor Speakers 1 Crown 75 Monitor Amplifier 1 Electro Voice 635 Microphone 1 Gentnet Telemix X Phone Director 4 Lake Audio Patch Panels 1 Gentner SPH - 5 Telephone Hybrid 1 Crown D - 75 Monitor Amplifier 2 Fostex 630 1B Personal Monitor 1 Tascam 122MKII Cassette Recorder QUANTITY DESCRIPTION -------- ----------- 1 Technics RS - TR333 Double Cassette Deck 1 Technics SL - PG440 Compact Disc Player 2 JBL 4410 Studio Monitors 1 Technics SL 1200MKII Turntable 1 Stanton 310 Turntable Pre Amplifier 4 Rarnko DA - 2080 Distribution Amplifiers with Mounting Rack 4 Rarnko RS - 1616LC Primus Routing Units 1 Ramko RC 1/48 IPB Remote Control 1 Ramko Primus RCR - 1 Receiver Interface 1 Gentner SPH - 3 Telephone System 1 Technics RS - T22 Dual Cassette Deck 4 Otari MX - 5050 Stereo Reel-to-Reel Recorders with Floor Stand 2 Ramko DA - 2080 with Power Supply 1 Tascam 112 Cassette Tape Recorder 1 Arrakis 10000 20 Channel Audio Console with Power Supply 1 Electro Voice 635A Microphone 2 Microphone Booms * Seller shall provide Buyer a credit of $5,000 which Buyer may use to purchase or install studio equipment; said credit being given on the understanding that Seller shall not be obligated to provide any equipment to Buyer except as stated in this schedule. Schedule 3.7 ------------ See attached. FCC Form 352 UNITED STATES OF AMERICA File No.: BZ-910201AC May 1988 FEDERAL COMMUNICATIONS COMMISSION AM BROADCAST STATION LICENSE Call Sign: W E Z E - ------------------------------------------------------------------------------- LICENSEE: New England Continental Media, Inc. - ------------------------------------------------------------------------------- 1. Community of License........: Boston, MA 2. Transmitter location........: Corner of Vershire Street and Harriet Avenue Quincy, MA North latitude..............: 42 . 16' 30" West longitude..............: 71 . 02' 31" 3. Transmitter(s): Type Accepted. (See Sections 73,1660, 73,1665 and 73,1670 of the Commission's rules) 4. Main Studio location: (See Section 73,1125) 500 Victory Road Quincy, MA 5. Remote control location: 500 Victory Road Quincy, MA 6. Antenna and ground system: Attached 7. Obstruction marking and lighting specifications - FCC Form 715, paragraphs: 1, 3, 21 & 21. 8. Frequency .................: l260 kHZ --------------- 9. Nominal power (kW) ........: 5.0 Day 5.0 Night --------------- --------------- Antenna input power (kW) :
5.0 Day [XX] Non-directional antenna: current 10.0 amperes; resistance 50.0 --------------- [ ] Directional antenna : --------------- --------------- ohms. 5.0 Night [ ] Non-directional antenna: current 10.4 amperes; resistance 50.0 --------------- [XX] Directional antenna : --------------- --------------- ohms.
10. Hours of operation: Specified in BZ-800530AP 11. Conditions ..............: - - - ---------------- Subject to the provisions of the Communications Act of 1934, as amended subsequent Acts, Treaties, and Commission rules made thereunder, and further subject to conditions set forth in this license,/1/ the LICENSEE is hereby authorized to use and operate the radio transmitting apparatus herein described for the purpose of broadcasting for the term ending 3 A.M. Local Time April 1, 1998 - --------------------. - ------------------------------------------------------------------------------- The Commission reserves the right during said license period of terminating this license or making effective any change, or modification of this license which may be necessary to comply with any decision of the Commission rendered as a result of any hearing held under the rules of the Commission prior to the commencement of this license period or any decision rendered as a result of any such hearing which has been designated but not held, prior to the commencement of this license period. The license is issued on the licensee's representation that the statements contained in the licensee's application are true and that the undertakings therein contained so far as they are consistent herewith, will be carried out in good faith. The licensee shall, during the term of this license, render such broadcasting service as will serve the public interest, convenience, or necessity to the full extent of the privileges herein conferred. This license shall not vest in the licensee any right to operate the station nor any right in the use of the frequency designated in the license beyond the term hereof, nor in any other manner than authorized herein. Neither the license nor the right granted hereunder shall be assigned or otherwise transferred in violation of the Communications Act of 1934, as amended. This license is subject to the right of use or control by the Government of the United States conferred by Section 606 of the Communications Act of 1934, as amended. - -------------------------------------------------------------------------------- /1/ This license consists of FEDERAL JNW:yl this page and pages 2 & 3 COMMUNICATIONS [FCC LOGO] JUN 25, 1991 COMMISSION Dated: JUN 19, 1991 FEDERAL COMMUNICATIONS COMMISSION LICENSE RENEWAL AUTHORIZATION WASHINGTON, DC. 20554 ----------------------------- ------------------- OFFICIAL BUSINESS PENALTY FOR PRIVATE USE $300 THIS IS TO NOTIFY YOU THAT YOUR APPLICATION FOR RENEWAL OF LICENSE WAS GRANTED ON 03-20-91 FOR A TERM POSTAGE AND FEES PAID EXPIRING ON 04-01-98. FEDERAL COMMUNICATION COMMISSION FCC 615 FREQUENCY: 1260KHZ THIS IS YOUR LICENSE RENEWAL AUTHORIZATION FOR STATION WEZE LOCATION: BOSTON, MA THIS ALSO IS THE RENEWAL CERTIFICATE NEW ENGLAND CONTINENTAL MEDIA, INC. FOR YOUR CURRENTLY AUTHORIZED WEZE AM STATION AUXILIARY SERVICES. C/O 2310 PONDEROSA DRIVE CAMARILLO, CA 93010 THIS CARD MUST BE POSTED WITH THE STATION'S LICENSE CERTIFICATE AND ANY SUBSEQUENT MODIFICATIONS. Schedule 3.8 ------------ Tower Lease Agreement - Attached to this Schedule. LEASE AGREEMENT --------------- This agreement is entered into on this __ day of ___________ , 199_, by and between the ATSINGER FAMILY TRUST and the EPPERSON FAMILY LIMITED PARTNERSHIP (collectively "Lessor") and HIBERNIA COMMUNICATIONS, INC. ("Lessee"). WHEREAS Lessor owns the real property and improvements comprising Lessor's Property, as hereafter defined, for the use and enjoyment of Lessor, and such other and future tenants and sub-tenant's of Lessor's Property; and WHEREAS Lessee desires to lease space on Lessor's Property to install, maintain and operate the facilities and equipment required for the operation of Lessee's radio station WPZE(AM), Boston, Massachusetts ("the Station") thereon; and, NOW THEREFORE, for valuable consideration as set forth herein, the parties agree as follows: ARTICLE I --------- DEFINITIONS ----------- The terms listed below when spelled with initial capital letters have the following meanings in this agreement: 1.1 ADJUSTMENT DATE shall mean the first (l/st/) day of February following --------------- the first (l/st/) anniversary of the Commencement Date and each subsequent first (1/st/) day of February this Agreement remains is effect. 1.2 AGREEMENT means this Lease Agreement, including the schedules and any --------- other executed attachments and/or addenda all of which are made part of this Agreement. 1.3 ANTENNA means the AM radio towers identified on Schedule 1.3 hereof. ------- ------------ 1.4 ARTICLE or ARTICLES means one or more of the articles of this Agreement. ------- -------- 1.5 CABLING means the coaxial cable, wire or other electrical ------- transmission facilities of Lessee. 1.6 COMMENCEMENT DATE means 12:01 AM on the date specified in this Agreement ----------------- as the Commencement Date of the Initial Term. Lease Agreement - Hibernia Page 2 1.7 EQUIPMENT. Any device, equipment, structure, buildings, material and ---------- apparatus used or useful in the operation of the Station and approved by Lessor for use on Lessor's Property. Notwithstanding anything in this Agreement to the contrary, the Equipment shall be paid for, furnished and installed by Lessee. 1.8 EXPIRATION DATE means 11:59 PM on the date specified in this Agreement as --------------- the date on which the Initial Term or any extended term of this Agreement expires. 1.9 FACILITIES and FACILITY refer collectively or individually to any and all ---------- -------- Equipment, Cabling, and/or Antenna as the context may indicate. 1.10 INITIAL TERM means the period from the Commencement Date to the date set ------------ forth in Section 3.2. ------------ 1.11 INTEREST RATE means the lesser of eighteen percent (18%) per annum or ------------- the maximum amount of interest permitted by applicable law. 1.12 LEASED SPACE refers to the portion of Lessor's Property reasonably ------------ necessary for Lessee's use of its Facilities. 1.13 LESSEE'S EMPLOYEES means any employee, officer, or partner of Lessee; ------------------ any agent, contractor, invitee or subcontractor of Lessee; any employee, officer, or partner of such agent, contractor, or subcontractor; and any person placed on the Authorized Entry List, as provided in Article VIII, at the request ------------ of Lessee. 1.14 LESSOR'S PROPERTY means the land and improvements comprising the ----------------- premises in which the Leased Space is located. The address and location of the Lessor's Property is more fully and legally described in Schedule 1.14. -------------- 1.15 SCHEDULE or SCHEDULES means one or more schedules attached to this -------- --------- Agreement. 1.16 SECTION or SECTIONS means one or more of the sections of this ------- -------- Agreement. 1.17 SECURITY DEPOSIT. Four Thousand Seven Hundred Fifty Dollars ($4,750). ---------------- ARTICLE II ---------- SCOPE OF THE AGREEMENT ---------------------- 2.1 LEASE. This Agreement sets forth the terms and conditions under which ------ Lessor agrees to lease space to Lessee. Lessee agrees to use the Leased Space and related rights only in accordance with the terms and conditions of this Agreement; to comply with all applicable Lease Agreement - Hibernia Page 3 governmental regulations and requirements of law pertaining to Lessee's activities in or around Lessor's Property; to pay all fees, charges, costs and expenses in accordance with this Agreement promptly when due; to keep the Facilities properly maintained and to comply in all respects with each of the obligations, duties, rules, conditions, and requirements applicable to Lessee under this Agreement 2.2 NO OTHER USE. Lessee will use the Leased Space and related rights solely ------------- for the purposes of operating Lessee's AM radio station. Lease will not make any other use of the Leased Space and related rights provided under this Agreement without the prior written consent of Landlord. 2.3 NO OTHER RIGHTS. Only the Leased Space and related rights described in ---------------- this Agreement are provided under this Agreement. Lessor does not provide any service or product under this Agreement. ARTICLE III ----------- TERM OF THE AGREEMENT; TERMINATION; RENEWALS -------------------------------------------- 3.1 COMMENCEMENT DATE. The Commencement Date shall be the day and year first ------------------ written above. 3.2 EXPIRATION DATE. The Expiration Date of this Lease shall be the day ---------------- preceding the fifth (5/th/) anniversary of the Commencement Date. If the term has been extended as provided in Section 3.3, the Expiration Date shall be the ----------- last day of the term as so extended. 3.3 LEASE OPTION. Lessee shall have four (4) options, if Lessee is not then ------------- in default under this Agreement, to extend the term of this Agreement for a period of five (5) years, each, (the "Extension Term") and except as provided in Section 4.3 hereof, on the same terms, covenants and conditions herein - ----------- contained. The word "Term" as used in this Agreement shall be deemed to include the Extension Term when and if the Agreement is extended. The option to extend the Term shall be exercised only by Lessee's delivery to Lessor, by United States mail, on or before one hundred eighty (180) days prior to the Expiration Date, written notice of Lessee's election to extend as provided herein. 3.4 TERMINATION ON INTERFERENCE. [Intentionally Omitted] ---------------------------- 3.5 TERMINATION BY LAW. Lessor shall also have the right to terminate this ------------------- Lease, upon notice to Lessee, and shut down and/or remove Lessee's Antenna, Cabling and Equipment, at Lessee's cost, if: Lease Agreement - Hibernia Page 4 (a) This Lease is required to be terminated by a final ruling or regulation, not subject to appeal, of the Federal Communications Commission ("FCC"); or (b) A final determination, not subject to appeal, of any local, state or federal governmental body that the placement and/or operation of Lessee's Facilities is in violation of any laws, rules or regulations of any local state or federal agencies including, without limitation, any land use provisions and/or any zoning and/or planning codes and such violation is not corrected within ninety (90) days; or (c) A final determination, not subject to appeal, that the Facilities fail to meet the requirements imposed by law or the rules and regulations of local, state and federal agencies. ARTICLE IV ---------- FEES AND CHARGES; BILLING ------------------------- 4.1 PAYMENT OF RENT. Lessee agrees to pay rent to Lessor, without notice ---------------- or demand, from the Commencement Date through the Expiration Date, or such earlier date as this Agreement is terminated as provided herein, at: 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Attention: Accounting or to such other person or place as Lessor may designate from time to time by notice to Lessee, in the following amounts and in the following manner: 4.2 BASE RENT. During the first year beginning with the Commencement Date, ---------- the base rent shall be the sum of $57,000 per annum, payable in equal monthly installments of $4,750 in advance of the first day of each month (and thereafter on each and every Adjustment Date the monthly rent shall be computed according to Section 4.3); provided, however, that the installment of the base rent ----------- payable for the first full month of the term shall be due and payable on the full execution and delivery of this Lease. If the Commencement Date and/or Expiration Date occur on a day other than the first day of a calendar month, rent shall be prorated for the month in which the Commencement Date and/or Expiration Date occurs. 4.3 ADJUSTED RENT. During the one (1) year period beginning with each -------------- Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment, as herein provided, for the change, if any, from the year in which the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners and Clerical Workers, Los Angeles area [Base Year 1982 - 84=100] ("CPI") as measured in February and published by the United States Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year period beginning with the Lease Agreement - Hibernia Page 5 Adjustment Date, the monthly rent shall be the product obtained by multiplying the Base Rent times a fraction, the numerator of which shall be the CPI for February of the year such Adjustment Date falls and the denominator of which shall be the CPI for February of the year in which the Commencement Date falls. Notwithstanding the results of the foregoing calculation, the annual base rent payable by Lessee hereunder shall not in any event be less than 103% of the annual base rent payable during the immediately preceding one (1) year period. In the event that the Bureau of Labor Statistics shall change the base period for the CPI, the new index number shall be substituted for the old index number in making the above computation. In the event the Bureau of Labor Statistics ceases publishing the CPI, or materially changes the method of its computation, Lessor and Lessee shall accept comparable statistics on the purchasing power of the consumer dollar as published at the time of said discontinuation or change by a responsible financial periodical of recognized authority to be chosen by Lessor subject to reasonable consent of Lessee. 4.4 ADDITIONAL RENT. In addition to the monthly rent provided for in Section ---------------- ------- 4.2 herein, Lessee shall be obligated to pay monthly, as additional rent, a sum - --- equal to Lessee's allocable share of all Operating Expenses incurred by Lessor. (a) Lessee's allocable share shall be a percentage ("Lessee's Percentage"), as reasonably determined by Lessor from time to time based upon Lessor's determination of the benefit derived by Lessee from the Operating Expenses, which percentage shall, together with the percentage of Operating Expenses paid by other tenants of the Real Property, shall equal not less than one hundred percent (100%) of the Operating Expenses; it being the intention of the parties hereto that Lessor shall have no operational or ownership cost associated with Lessor's Property or this Agreement. (b) For purposes of this Agreement, the term "Operating Expenses" shall mean the amount of all of Lessor's direct costs and expenses reasonably paid or incurred in operating and maintaining Lessor's Property in accordance with generally accepted accounting principles, consistently applied, including by way of illustration and not limitation, all general real estate taxes and all special assessments levied against Lessor's Property; costs and expenses of contesting the validity or amount of real estate taxes; insurance premiums; water, sewer, electrical and other utility charges other than the separately billed electrical and other charges paid by Lessee as provided in this Agreement; service and other charges incurred in the operation and maintenance of the plumbing systems, the electrical systems and the heating, ventilation and air-conditioning systems (if any); cleaning and other janitorial services; tools and supplies; repair costs; landscape and maintenance costs; security services; license, permit and inspection fees; wages and related employee benefits payable for the maintenance and operation of Lessor's Property; amortization of capital improvements or replacements for Lessor's Property including those that benefit the health and safety of the tenants of Lessor's Property, produce a reduction in operating costs or are required under any applicable Lease Agreement - Hibernia Page 6 governmental law, ordinance, resolution, order or regulation, together with interest at the Interest Rate on the unamortized balance thereof; maintenance and repair costs, dues, fees and assessments incurred under any documents of record or owners association agreement, as amended from time to time, if any (the "Covenants"); and in general all other costs and expenses which would, under generally accepted accounting principles, be regarded as operating and maintenance costs and expenses, including those which would normally be amortized over a period not to exceed five (5) years. The foregoing list of Operating Expenses is for definitional purposes only and shall not impose any obligations upon Lessor to incur such expenses or provide such services. (c) Lessee shall pay as additional rent with each monthly installment of base rent an amount equal to one-twelfth (1/12) of Lessor's reasonable estimate of the amount of Operating Expenses for the year multiplied by Lessee's Percentage. An adjustment will be made at the end of each calendar year based upon the actual Operating Expenses of Lessor, with Lessee receiving a credit against the payment of Rent for any excess Operating Expense paid by Lessee in the previous year. If the actual Operating Expenses of Lessor exceed the Operating Expenses paid by Lessee, then Lessee shall pay the difference within ten (10) business days from the receipt by Lessee of Lessor's statement indicating a balance due. (d) Lessee shall also be obligated to pay all sums due from Lessee to Lessor pursuant to any term or provision of this Lease requiring Lessee to reimburse Lessor for any costs and/or expenses incurred by Lessor, and all expenses, including but not limited to, court costs, reasonable attorneys' fees, bond expenses and recording charges, incurred by Lessor in collecting any Rent due under this lease and all monies expended by Lessor releasing any liens filed against the Real Property arising from the construction contemplated hereby. (e) As used herein, "Rent" shall refer to all sums due to Lessor under the terms of this Article IV. ----------- 4.5 NO NOTICE. From and after the Commencement Date, Lessee will pay to ---------- Lessor the monthly installments identified herein. Said installments are due and payable in advance, without notice or demand. Although Lessor may, for its own convenience, issue bills to Lessee, any failure of Lessor to issue a timely bill will not relieve Lessee of its obligation to pay the monthly installments without notice or demand. 4.6 NO SET-OFF. Except as otherwise provided in this Agreement, Lessee will ----------- pay all monthly installments, fees, costs, and expenses without deduction or set-off of any kind. 4.7 SECURITY DEPOSIT. Simultaneously with the execution of this Lease, Lessee ----------------- shall deposit in the form of cash the Security Deposit with Lessor, which shall be held by Lessor, Lease Agreement - Hibernia Page 7 without obligation for interest, as security, for the performance of Lessee's obligations and covenants under this Lease. It is expressly understood and agreed that such deposit is not an advance rental deposit or a measure of Lessor's damages in case of Lessee's default. If Lessee shall be in default of this Lease or fails to surrender the Leased Space and Lessor's Property in the condition required by this Lease, Lessor shall have the right (but not the obligations), without prejudice to any other remedy which Lessor may have on account thereof, to apply all or any portion of the Security Deposit to cure such default or to remedy the condition of the Lessor's Property. If Lessor so applies the Security Deposit or any portion thereof before the Expiration Date or earlier termination of this Lease, Lessee shall deposit with Lessor, upon demand, the amount necessary to restore the Security Deposit to 150% of its original amount. If Lessor shall sell or transfer its interest in Lessor's Property, Lessor shall have the fight to assign this agreement and transfer the Security Deposit to such purchaser or transferee, in which event Lessee shall look solely to the new owner for the return of the Security Deposit, and Lessor thereupon shall be released from all liability to Lessee for the return of the Security Deposit. Although the Security Deposit shall be deemed the property of Lessor, any remaining balance of the Security Deposit shall be returned to Lessee no later than thirty (30) days after the Expiration Date or earlier termination of this Lease that all of Lessee's obligations under this Lease have been fulfilled. ARTICLE V --------- GRANT OF LEASED SPACE --------------------- Lessor, in consideration of the rents to be paid and the covenants contained herein, hereby leases to Lessee the Leased Space for the limited purpose of installing, maintaining, operating, or repairing the Facilities in accordance with this Agreement; and to pass through portions of the Lessor's Property designated by Lessor for ingress to and egress from the Leased Space. Notwithstanding the foregoing, Lessor shall have the exclusive right to lease Lessor's Property, other than the Leased Space, to any other tenant for any use; provided said tenant's uses of Lessor's Property shall not unreasonably interfere with Lessee's use of the Leased Space. Lessor agrees that it will not lease or license other persons or entities to use Lessor's Property if the use by any such person or entity will cause interference with Lessee's then-in-use frequency or signal or with Lessee's Facilities. ARTICLE VI ---------- INSTALLATIONS OF FACILITIES --------------------------- 6.1 SPECIFICATIONS. Lessor accepts all of the Facilities of Lessee as they --------------- exist on the Commencement Date of this Lease. Lessor shall prepare specifications for Lessee's delivery in the future of any additional Facilities to Lessor's property and Lessee's installation of the Facilities in the Leased Space. All such specifications shall be based upon engineering data Lease Agreement - Hibernia Page 8 furnished by Lessee and may include the requirement of Lessee to provide at Lessee' s expense the purchase and installation of such equipment or the taking of the action for protecting Lessor's Property, or the property of any adjacent or neighboring property 6.2 PRIOR APPROVAL. Prior to the initiation by Lessee of the delivery, --------------- installation, replacement, or removal of Facilities, Lessee must obtain the prior written approval of Lessor to Lessee's proposed scheduling of work and Lessee's choice of vendors and contractors, which approval shall not be unreasonably withheld. Lessor, at its sole discretion and election, may condition said approval on obtaining additional information and/or requiring schedule changes and substitution of vendors and contractors. Lessor's approval of any act or action of Lessee or Lessee's Employees pursuant to this Agreement shall not be considered an endorsement, representation, or warranty regarding the viability of said scheduling, and/or the ability or suitability of said vendor or contractor to perform the work intended by Lessee. Lessee shall deliver and install the Facilities in conformity with the specifications, schedules, and choice of vendors and contractors approved by Lessee. This Section 6.2 shall not apply to any delivery, installation, replacement or - ----------- removal of Facilities which in Lessee's reasonable judgment is necessary to remedy an emergency situation. 6.3 DELIVERY & INSTALLATION OF FACILITIES. Lessee shall furnish and -------------------------------------- install all Facilities, and is solely responsible for their timely delivery and installation to Lessor's Property. Physical delivery of the Facilities to Lessor's property and all installation work performed by Lessee shall be performed in accordance with the specifications and approvals furnished pursuant to this Article. 6.4 LESSEE'S RESPONSIBILITIES. Lessee has the sole responsibility for any -------------------------- product liability claims, product warranty claims, delays and service outages of Lessee that may result from defective Facilities, improper scheduling, improper installation, or any other matter, irrespective of the cause. ARTICLE VII ----------- USE OF LEASED SPACE ------------------- 7.1 FACILITIES. Lessee may bring the Facilities into the Leased Space at ------------ Lessee's own risk and expense. 7.2 OTHER MATERIALS. In addition to the Antenna, Cabling, and Equipment, ---------------- Lessee may bring into the Leased Space, at Lessee's own risk and expense, (a) any materials and apparatus specially identified in written engineering specifications approved in writing by Lessor, and (b) small tools and portable test equipment as needed to perform Lessee's obligations under this Agreement. Lessee's rights under this Section 7.2 are subject to the conditions that all ----------- such materials, apparatus, tools, and test equipment will remain at all times in the care, custody, and control of Lessee's Employees. Lease Agreement - Hibernia Page 9 7.3 NEGATIVE COVENANTS. Lessee may not bring into the Leased Space any ------------------- material, apparatus, facilities, tools, or equipment other than those identified in this Agreement unless Lessee first obtains written permission from Lessor. Without limiting the foregoing, Lessee is specifically informed that the following are not permitted within the Leased Space or in or upon the Lessor's Property: wet cell batteries, explosives, flammable liquids or gases, alcohol, controlled substances, weapons, toxic materials, hazardous waste, pollutants, contaminants, asbestos and asbestos related products, polychlorinated biphenyls, petroleum, crude oil or any fraction or distillate thereof, and any similar equipment and/or materials. Lessee shall not use or permit Lessor's Property to be used by any dangerous, toxic, noxious, offensive, or unlawful purposes. 7.4 EMERGENCY NUMBER. During the term of this Agreement and any extension ----------------- thereof, Lessee shall provide Lessor with a telephone number which, if called, will ring at a location that is staffed by Lessee's agents 24 hours each and every day, 7 days a week and every week. Lessee shall notify Lessor promptly in the event of any change in such telephone number. ARTICLE VIII ------------ RIGHT OF ENTRY -------------- 8.1 ACCESS. Lessor shall provide Lessee with 24-hour access to the ------- Leased Space for the purpose of installing, operating, maintaining, and repairing Lessee's Facilities. 8.2 AUTHORIZED PERSONNEL. All persons, contractors and/or engineers --------------------- installing, maintaining, repairing, removing or otherwise working on the Facilities shall be approved in advance by Lessor, which approval shall not be unreasonably withheld. A list ("Authorized Entry List") of those persons, contractors and/or engineers approved by Lessor shall be maintained by Lessor. Prior to the Commencement Date, Lessee will submit to Lessor a proposed "Authorized Entry List". Lessor may request additional information from Lessee before granting its approval, which approval may not be unreasonably withheld. Lessee will promptly give notice to Lessor, both orally and in writing, of the name of any person who ceases to be one of Lessee's employees or agents or whom Lessee wishes to remove from the "Authorized Entry List". Lessor shall issue its approval or disapproval of any additions to the Authorized Entry List within five (5) business days of Lessor's receipt of Lessee's request therefor and such approval shall not be unreasonably withheld. 8.3 QUALIFIED PERSONNEL. Lessee represents and warrants that on the date -------------------- hereof and each and every date prior to the last act to be performed by Lessee pursuant to this Agreement, Lessee's Employees and any other person(s) installing, maintaining, repairing, removing or otherwise working on the Facilities or otherwise on Lessor's Property at the request or direction Lease Agreement - Hibernia Page 10 of Lessee shall be a technician qualified to perform said duties and have been trained in compliance with current OSHA, FCC, and ANSI standards regarding radio frequency radiation. ARTICLE IX ---------- PROTECTION OF PROPERTY ---------------------- Lessee and Lessee's Employees will at all times exercise the highest degree of care to prevent damages to the Lessor's Property and to the Leased Space and to all other real and personal property of Lessor and Lessee. Lessee and Lessee's Employees will perform any work and use the Facilities in a manner that will protect all other structures, equipment, utilities, and/or work areas of any kind against damage or interruption of service. Lessor reserves the right, and Lessee hereby grants Lessor the right, to take any reasonable action needed to cease or prevent any harm to the personnel, property and/or services of Lessor. ARTICLE X --------- INSPECTION ---------- 10.1 WORK IN PROGRESS. Lessor, its employees and agents may inspect and ----------------- observe any work while in progress or after completion to ascertain whether the work is in accordance with the specifications and requirements of this Agreement, provided, however, that Lessor's exercise of its rights hereunder shall not unreasonably interfere with Lessee's use of the Leased Space. Lessor may require Lessee to correct any faulty work. However, inspection or observation by Lessor or by its agents of work performed by Lessee or Lessee's Employees will not relieve Lessee of full responsibility for the proper performance of the work. 10.2 TIME. Lessor, its agent and its designees (including without limitation ----- building inspectors, fire marshals, and other officials) may inspect the Leased Space and the Facilities at any reasonable time. At Lessee's request, Lessee's Employees on the Authorized Entry List may accompany Lessor during such inspections except when, in the reasonable judgment of Lessor, safety or service considerations require otherwise. ARTICLE XI ---------- UTILITIES --------- 11.1 ELECTRICITY. Lessee shall be required to provide any and all electrical ------------ service to the Leased Space necessary for the installation, maintenance, use and removal of the Facilities including, without limitation, any and all meters, transformers or other machinery or equipment attached thereto. Lease Agreement - Hibernia Page 11 11.2 INTERRUPTION. Lessor shall not be liable for any interruption or failure ------------- in the supply of any utility, service, repair or damage to the Leased Space or Lessee, nor shall Lessee have any right to an abatement in rent or offset to rent in such circumstances. In the event Lessee fails to pay an electrical service charge and for any reason Lessor is approached by a utility company for such payment, Lessor may, but shall not be obligated to, pay such amount and collect the amount paid as additional rent. ARTICLE XII ----------- OWNERSHIP OF FACILITIES ----------------------- 12.1 RISK OF LOSS. Except as otherwise provided in this Agreement, all ------------- Facilities shall be owned by Lessee, and Lessee shall bear all risk of loss and/or damage to the Facilities. 12.2 OWNERSHIP. Any and all machinery, equipment and trade fixtures installed ---------- in the Leased Space by Lessee shall remain personalty of Lessee notwithstanding the fact that it may be affixed or attached to the realty or Lessor's Property, and shall, during the term of this Agreement or any extension thereof, belong to Lessee. ARTICLE XIII ------------ MAINTENANCE AND REPAIR ---------------------- 13.1 FACILITIES. Lessee will, at its own risk and expense, maintain and ----------- repair, including replacement if necessary (collectively referred to as "Maintenance"), the Facilities and any other items or things placed on Lessor's Property by Lessee pursuant to this Agreement. All Maintenance shall be performed in a manner suitable to Lessor so as not to conflict with the use of Lessor's Property by Lessor, or any other tenant of Lessor. All Maintenance shall be provided by qualified technicians, authorized to enter Lessor's Property pursuant to Article VIII. ------------ 13.2 LEASED SPACE. Subject to Section 4.4 hereof, Lessor shall provide all -------------- ----------- Maintenance to the Leased Space. 13.3 MATERIAL DAMAGE OR DESTRUCTION. In case of any material damage to or ------------------------------- destruction of the Lessor's Property or any part thereof, Lessee shall promptly give written notice thereof to Lessor and any mortgagee, generally describing the nature and extent of such damage or destruction. In case of any such damage to or destruction of the Lessor's Property or any parts thereof, caused by Lessee or Lessee's Employees or which is covered by insurance maintained by Lessee, Lessee, whether or not the insurance proceeds, if any, on account of such damage or destruction shall be sufficient for the purpose, at its sole expense, shall promptly commence and complete the restoration, replacement or rebuilding of the Lessor's Property as nearly as possible to its value, condition and character immediately prior to such damage or destruction. Lease Agreement - Hibernia Page 12 ARTICLE XIV ----------- NO ALTERATIONS -------------- Except as specifically set forth in this Agreement, Lessee may not make any alterations, additions and/or improvements to any part of the Lessor's Property, the Leased Space, the Antenna, Equipment, and or Cabling without the prior written consent of the Lessor, which consent shall not be unreasonably withheld. Notwithstanding anything herein to the contrary, Lessor shall have the right to condition its consent to any alterations, additions, and/or improvements by Lessee or the posting of a bond or other security securing the ability of Lessee to fulfill its obligations pursuant to Article IX, hereof. ---------- ARTICLE XV ---------- REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS ------------------------------------------------- 15.1 LESSOR'S REPRESENTATIONS AND WARRANTIES. Lessor represents and ---------------------------------------- warrants that: (a) Lessor owns Lessor's Property in fee simple. The execution and performance of this Agreement shall not constitute a breach or violation under any Agreement to which Lessor is a party. (b) To the best of Lessor's knowledge, there are no violations of any federal, state, county or municipal law, ordinance, order, regulations or requirement with respect to Lessor's Property and the Leased Space. (c) There is no action, suit or proceeding pending or, to Lessor's knowledge, threatened against or affecting Lessor's Property or the Leased Space or any portion thereof and Lessor has not received notice, written or otherwise, of any litigation affecting or concerning Lessor's Property or the Leased Space relating to or arising out of its ownership, management, use or operation. (d) The execution, delivery and performance of this Agreement, and the consummation of the transaction contemplated hereby, have been duly authorized by all necessary action on the part of Lessor. This Agreement constitutes a valid and binding agreement and obligation of Lessor, enforceable in accordance with its terms. (e) Lessor's Property, the existing use of Lessor's Property and the Leased Space conform in all material respects with applicable zoning ordinances and other governmental regulations. Lease Agreement - Hibernia Page 13 15.2 LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants ---------------------------------------- that: (a) The Facilities and the operation thereof do not and will 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 ("Acceptable Radio Frequency Radiation Standards"). (b) The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, have been duly and validly authorized by all necessary actions on the part of Lessee. This Agreement constitutes a valid and binding agreement and obligation of Lessee, enforceable in accordance with its terms. (c) Lessee will conduct its activities on Lessor's Property in material compliance with all applicable laws, including, without limitation, all OSHA, FCC, and FAA rules and regulations, environmental laws, and any rule or law applicable to the construction or operation of Lessee's Facilities. ARTICLE XVI ----------- EVENTS OF DEFAULT ----------------- 16.1 DEFAULT OF LESSEE. Any of the following events shall constitute a ------------------ default on the part of Lessee: (a) The failure of Lessee to pay rent or additional rent, and continuation of such failure for more than ten (10) days after Lessee's receipt of written notice thereof from Lessor; provided however that Lessor shall not be required to provide such written notice to Lessee more than twice in any twelve (12) month period prior to declaring such failure to pay an event of default; or (b) The failure of Lessee to cure any other default under the terms hereof, and continuation of such failure to cure for more than thirty (30) days after notice by Lessor, provided, however, that if the nature of Lessee's default is such that more than thirty (30) days is required for its cure, then Lessee shall not be deemed to be in default if Lessee has commenced such cure within the thirty (30) day period, demonstrates to Lessor's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. 16.2 Termination of Default by Lessee. If an event of default on the part of --------------------------------- Lessee shall occur at any time, Lessor, at its election, may give Lessee a notice of termination specifying a day not less than thirty (30) days thereafter on which the term of this Agreement shall end. If Lease Agreement - Hibernia Page 14 such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Space to Lessor. If the Agreement is terminated pursuant to this Section, Lessee shall remain liable to Lessor for the payment of rent for the remainder of the lease term and without prejudice to any other right or remedy which Lessor may have hereunder or by law. Notwithstanding any waiver of any prior breach or event of default hereunder, Lessor may, after the termination of this Lease as a result of a default by Lessee, re-enter the Leased Space either by reasonable force or otherwise, or dispossess Lessee, any legal representative of Lessee or other occupant of the Leased Space by appropriate suit, action or proceeding and remove its effects and hold the Leased Space as if this Agreement had not been made. 16.3 DEFAULT OF LESSOR. The failure of Lessor to comply with any of its ------------------ obligations under the terms of this Agreement, and continuation of such failure to cure for more than thirty (30) days after notice by Lessee, shall constitute a default on the part of Lessor; provided however that if the nature of Lessor's default is such that more than thirty (30) days is required for its cure, then Lessor shall not be deemed to be in default if Lessor has commenced such cure within the thirty (30) day period, demonstrates to Lessee's reasonable satisfaction that such default is curable and thereafter diligently prosecutes such cure to completion. 16.4 TERMINATION BY DEFAULT OF LESSOR. If an event of default on the --------------------------------- part of Lessor shall occur at any time, Lessee, at its election, may give Lessor a notice of termination specifying a day not less than thirty (30) days thereafter on which the term of this Agreement shall end. If such notice is given, the Agreement shall expire on the day so specified as fully and completely as if that day were the day herein originally fixed for such expiration, and Lessee shall then quit and surrender the Leased Space to Lessor, and Lessee shall not be liable for payment of rent for any period after such expiration. ARTICLE XVII ------------ INSURANCE --------- 17.1 LESSEE'S OBLIGATION. It is understood that Lessor is not an -------------------- insurer, and the parties mutually agree that Lessee will obtain insurance against risks of loss, damage, and liability, as set forth below. The parties also mutually agree that liability will be allocated or limited in accordance with the terms of this Agreement. These insurance and liability provisions are part of the consideration underlying this Agreement. 17.2 INSURANCE AND INDEMNIFICATION. Lessee shall, at its sole cost and ------------------------------ expense, during the Term hereof, obtain or provide and keep in full force for the benefit of Lessor, as an additional named insured (i) general public liability insurance, insuring Lessor against any and all liability or claims or liability arising out of, occasioned by or resulting from any accident or other occurrence in or about Lessor's Property arising out of any act or omission of Lessee's Lease Agreement - Hibernia Page 15 Employees, Lessee or any officer, agent or contractor of Lessee, for injuries to any person or persons, with limits of not less than Three Million Dollars ($3,000,000.00) for injuries to one person, Five Million Dollars ($5,000,000.00) for injuries to more than one person, in any one accident or occurrence, and for loss or damage to the property of any person or persons, for not less than Five Million Dollars ($5,000,000.00); (ii) insurance with respect to any improvements against loss or damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke and other risks from time to time included under "extended coverage" policies, in an amount equal to at least One Hundred Percent (100%) of the full replacement value of the improvements and the Facilities and, in any event, in an amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial loss under the applicable policies, which shall be written on a replacement cost basis; (iii) appropriate workers' compensation or other insurance against liability arising from claims of workers in respect of and during the period of any work on or about Lessor's Property; and (iv) insurance against such other hazards and in such amounts as is customarily carried by owners and operators of similar properties, and as Lessor may reasonably require for its protection. Lessee shall comply with such other requirements as Lessor, or any mortgagee, may from time to time reasonably request for the protection by insurance of their respective interests. The policy or policies of insurance maintained by Lessee pursuant to this Paragraph shall be of a company or companies authorized to do business in Massachusetts and a certificate thereof shall be delivered to Lessor, together with evidence of the payment of the premiums therefor, not less than fifteen (15) days prior to the commencement of the Term hereof or of the date when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At least thirty (30) days prior to the expiration or termination date of any policy, Lessee shall deliver a certificate of a renewal or replacement policy with proof of the payment of the premium therefor. Any such insurance required by this Paragraph may, at Lessee's option, be provided through a blanket policy or policies. 17.3 PRIMARY & NON-CONTRIBUTING. Each policy evidencing insurance required to --------------------------- be carded by Lessee pursuant to this Article must contain a provision that the insurance policy, and the coverage it provides, shall be primary and non- contributing with respect to any policies carried by Lessor, and that any coverage carried by Lessor shall be excess insurance. 17.4 RIGHT OF SUBROGATION. The insurance policies shall contain a waiver by --------------------- Lessee's insurer of any right of subrogation against Lessor and its respective agents, officers, employees, and representatives, which arises or might arise by reason of any payment under such policy or by reason of any act or omission of Lessor, or its respective agents, officers, employees, or representatives. 17.5 WAIVER. Notwithstanding any provision in this Agreement to the contrary, ------- Lessee hereby waives any and all rights of recovery, claim, action, or causes of action, against Lessor, its agents, officers or employees for any loss or damage that may occur to the Facilities by reason of fire, the elements or any other cause, claim or damage which could be insured against or for under the terms of any insurance policy, including, without limitation, the insurance policies set Lease Agreement - Hibernia Page 16 forth in Section 17.2 hereof, regardless of the cause or origin including, ------------ without limitation, the negligence of either party hereto, its agents, officers or employees, or a loss resulting from the interruption of Lessee's business operations. ARTICLE XVIII ------------- INDEMNIFICATION --------------- 18.1 INDEMNIFICATION BY LESSEE. Lessee shall indemnify and defend Lessor, its -------------------------- agents, officers and employees and hold Lessor, its agents, officers and employees harmless from and against all claims, actions, losses, damages, liabilities and expense (including reasonable attorneys' fees) incurred by or asserted against Lessor, whether during or after the term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from, in whole or any material part, (i) any breach of this Agreement by Lessee, (ii) Lessee's breach of any warranty contained in this Agreement (iii) any negligent or intentional act or omission of Lessee, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Space or Lessor's Property or otherwise, (iv) the use by Lessee of any part of the Leased Space or Lessor's Property, (v) any work undertaken by or at the request of Lessee on or about the Leased Space, (vi) any inspection, observation or any action undertaken by Lessor pursuant to Article ------- X, hereof, (vii) the existence or discovery of any hazardous substance on - - Lessor's Property arising from Lessee's activities on Lessor's Property, (viii) any other activity undertaken by or at the request of Lessee pursuant to or in connection with this Agreement, (ix) any claim brought by Lessee's Employees, or (x) the presence of any individuals on the Leased Space or Lessor's Property as a result of Lessee's request or this Agreement; provided, however, that Lessee shall not be required to indemnify Lessor for any damages, injury, loss or expense arising solely out of Lessor's or its agents', employees', invitees' or contractors' willfully negligent acts or omissions. 18.2 DEFENSE BY LESSEE. If Lessor so elects by notice to Lessee, Lessee shall ------------------ have the obligation of defending, at its sole cost and expense, by counsel selected by Lessee and approved by Lessor (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessor may assume, or require that such defense be assumed, by Lessor and counsel selected by Lessor, at the cost and expense of Lessee if Lessor is for any reason dissatisfied with the defense by Lessee, or believes that its interests would be better served thereby. In any case where Lessee is defending any such claim, Lessor may participate in the defense thereof by counsel selected by it, but at Lessor's expense. Lessee shall not enter into any settlement of any claim without the consent of Lessor, which consent shall not be unreasonably withheld. 18.3 INDEMNIFICATION BY LESSOR. Lessor shall indemnify and defend Lessee and -------------------------- hold Lessee harmless from and against all claims, actions, losses, damages, liabilities and expenses (including reasonable attorneys' fees) incurred by or asserted against Lessee, whether during or Lease Agreement - Hibernia Page 17 after the term of this Agreement, including by reason of personal injury, loss of life, or damage to property, caused by or resulting from in whole or any material part, (i) any breach of this Agreement by Lessor, (ii) Lessor's breach of any warranty contained in this Agreement, (iii) any negligent or intentional act or omission of Lessor, its employees, agents, invitees or contractors, whether in, on, about or with respect to the Leased Space or Lessor's Property, (iv) the existence or discovery of any hazardous substance on Lessor's Property or the Leased Space (or liability for violation of any federal, state or local environmental law or regulation) arising from Lessor's use, or the use by any current, future or previous tenant of Lessor's Property or the Leased Space (other than Lessee); (v) any work undertaken by or at the request of Lessor on or about the Leased Space; provided, however, that Lessor shall not be required to indemnify Lessee for any damages, injury, loss or expense arising out of Lessee's or its agents', employees', invitees' or contractors' negligent acts or omissions. 18.4 DEFENSE BY LESSOR. If Lessee so elects by notice to Lessor, Lessor shall ------------------ have the obligation of defending, at its sole cost and expense, by counsel selected by Lessor and approved by Lessee (such approval not to be unreasonably withheld), against any claim to which the foregoing indemnity may apply. Lessee may assume, or require that such defense be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or believes that its interests would be better served thereby. In any case where Lessor is defending any such claim, Lessee may participate in the defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall not enter into any settlement of any claim without the consent of Lessee, which consent shall not be unreasonably withheld. ARTICLE XIX ----------- FORCE MAJEURE ------------- 19.1 FORCE MAJEURE. Except for Lessee's obligation to pay rent, neither party -------------- shall be held liable for any delay or failure in performance of any part of this Agreement from any cause beyond its control and without its fault or negligence, such as acts of God, acts of civil or military authority, government regulations, strikes, labor disputes, embargoes, epidemics, war, terrorist acts, riots, insurrections, fire, explosions, earthquakes, nuclear accidents, floods, power blackouts or brownouts or surges, volcanic action, other major environmental disturbances, unusually severe weather conditions, inability to secure products or services of other persons or transportation facilities, or act or omissions of transportation common carriers (collectively referred to as "Force Majeure Conditions"). 19.2 TERMINATION BY FORCE MAJEURE. If any such Force Majeure Condition occurs ------------------------------ and is the proximate cause of a delay or failure in performance of any part of a party's obligations under this Agreement for more than ninety (90) days, Lessor or Lessee may, by written notice given to the other, terminate this Agreement or that part of this Agreement that is affected by such delay or failure to perform. Lease Agreement - Hibernia Page 18 ARTICLE XX ---------- SAFETY ------ 20.1 FACILITIES. Lessee is responsible for the safety of all Antenna, ----------- Cabling and Equipment and other materials brought by Lessee onto Lessor's Property, and for the safety of all work performed by Lessee's Employees in the delivery, provision, installation, operation, maintenance, repair and removal of the Antenna, Cabling or Equipment and any other material brought by Lessee onto Lessor's Property. In discharging this responsibility, Lessee shall comply (and shall cause Lessee's Employees to comply) with the requirements of the Occupational Safety and Health Act of 1970, as amended; and with any other Federal, state, or local act or other requirements of law affecting safety and health. 20.2 VIOLATIONS. ----------- (a) Lessee shall be responsible for any violation by Lessee or Lessee's Employees of any safety or health standard under this Agreement. If any material furnished or any work performed by Lessee or Lessee's Employees gives rise to a safety or health violation, Lessee will immediately remedy such condition and will indemnify, defend, and hold Lessor (or any of Lessor's employees, agents, officers, representatives, affiliates, parent, subsidiaries and their affiliated companies, and their employees, agents, officers and representatives) harmless from any penalty, fine, or liability in connection with such a violation. (b) Lessor shall be responsible for any violation by Lessor or Lessor's employees of any safety or health standard relating to Lessor's Property. If any material furnished or any work performed by Lessor or Lessor's employees gives rise to a safety or health violation relating to the Lessor's Property, Lessor will immediately remedy such condition and will indemnity, defend and hold Lessee (or any of Lessee's Employees, agents, officers, representatives, affiliates, parent, subsidiaries and their affiliated companies, and their employees, agents, officers and representatives) or liability in connection with such a violation. ARTICLE XXI ----------- MISCELLANEOUS PROVISIONS ------------------------ 21.1 Severability. If any one or more of the provisions contained in this ------------- Agreement is, for any reason, held to be unenforceable in any respect under applicable state law or laws of the United States of America, such unenforceability will not affect any other provision of this Agreement, but this Agreement will then be construed in such a way as will achieve the intent of such unenforceable provision or provisions to the extent permitted by law. Lease Agreement - Hibernia Page 19 21.2 ASSIGNMENT BY LESSOR. Notwithstanding any of the provisions of this --------------------- Agreement, Lessor may assign, in whole or in part, Lessor's interest in this Lease. In the event Lessor assigns this Agreement, Lessor shall be and is hereby relieved of all liability under any and all covenants and obligations contained in or derived from this Agreement or arising out of any act, occurrence or omission relating to the Leased Space occurring after the consummation or such assignment, but only upon the condition that, as part of such Assignment, Lessor will cause the assignee to agree, in writing to carry out any and all of the covenants and obligations of Lessor under this Agreement occurring after the consummation of Lessor's assignment of its interest in and to this Agreement. 21.3 ASSIGNMENT BY LESSEE. Lessee may not assign this Agreement or sublet --------------------- the Leased Space or any portion thereof without the prior written consent of Lessor, which consent shall be given or withheld in Lessor's sole discretion and election, and shall be expressly conditioned on the payment of fifty percent (50%) of the net proceeds of the assignment or sublease; provided consent of Lessor shall not be required hereunder if the assignment is made to an entity contemporaneously acquiring the Station and the financial condition of the assignee is reasonably acceptable to Lessor. Under no circumstance shall this Lease be assigned or sublet by Lessee to any party which does not agree in writing to be bound by all terms and conditions contained herein. In the event of Lessee's total assignment of this Agreement to an entity contemporaneously acquiring the Station, Lessee shall be and is hereby relieved of all liability under any and all covenants and obligations contained in or derived from this Agreement or arising out of any act, occurrence or omission relating to the Leased Space occurring after the consummation of such assignment, but only upon the condition that, as part of such Assignment, Lessee will cause the assignee to agree, in writing, to carry out any and all of the covenants and obligations of Lessee under this Agreement occurring after the consummation of Lessee's assignment of its interest in and to this Agreement. 21.4 CONDEMNATION. In the event Lessor's Property or any portion thereof is ------------- taken pursuant to a condemnation proceeding or by eminent domain such that Lessor or Lessee can no longer operate telecommunications equipment on Lessor's Property, this Agreement shall terminate without liability to either party and Lessee shall not be entitled to any portion of any award arising out of such proceedings. 21.5 RULES AND REGULATIONS. Lessor agrees that it shall not enforce any ---------------------- unreasonable rules or regulations which would unduly prejudice Lessee's use of the Leased Space, or which would prevent full and free access to the Leased Space by Lessee, as herein provided. 21.6 SURRENDER OF PREMISES. Upon the expiration of the Term hereof, Lessee ---------------------- shall surrender the Leased Premises to Lessor in good order and condition, reasonable wear and tear excepted. Any equipment, fixtures, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. Lease Agreement - Hibernia Page 20 21.7 RESTORATION ON TERMINATION. Upon the termination of the Agreement for --------------------------- any reason, Lessee will restore the Leased Space to its original condition, normal wear and tear excepted, at Lessee's sole cost and expense. Any fixtures, including without limitation all Antenna, Cabling and Equipment, goods or other property of Lessee not removed within ten (10) days after any quitting, vacating or abandonment of the Leased Premises, or upon Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall have the right, without notice to Lessee, to sell or otherwise dispose of same without having to account to Lessee for any part of the proceeds of such sale. 21.8 NOTICES. All notices, demands, and requests required or permitted to be -------- given hereunder shall be in writing and sent certified mail, return receipt requested. If to Lessor: Jonathan L. Block, Esq. c/o Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, CA 93012 If to Lessee: Hibernia Communications, Inc. 42 West Lancaster Drive, Suite 200 Ardmore, Pennsylvania 19003 Either party hereto may change the place for notice to it by sending like written notice to the other party hereto. 21.9 ESTOPPEL CERTIFICATE. Lessee and Lessor will each execute, acknowledge --------------------- and deliver to the other, promptly upon request, a certificate certifying that (i) this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the Agreement is in full force and effect, as modified, and stating the modifications), (ii) the dates, if any, to which rent and other sums payable hereunder have been paid, and (iii) no notice has been received by such party of any default which has not been cured, except as to defaults specified in said certificate. Any such certificate may be relied upon by any prospective purchaser or mortgagee of Lessor's Property or any part thereof or by a lender, other creditor, investor or prospective buyer of Lessee or any of its assets. 21.10 SUBORDINATION, NONDISTURBANCE AND ATTORNMENT. This Agreement shall not --------------------------------------------- be a lien against Lessor's Property in respect to any mortgages and security agreements placed or hereafter to be placed by Lessor upon Lessor's Property. The recording of such mortgages and security agreements shall have preference and precedence and be superior and prior in lien to this Lease Agreement - Hibernia Page 21 Agreement, irrespective of the date of recording, and Lessee agrees to execute any instruments, without cost, which may be deemed necessary or desirable to further effect the subordination of this Agreement. Lessor shall make a reasonable effort to obtain from any mortgagees or lenders holding an interest in the nature of a mortgage in Lessor's Property an agreement that the mortgagee or lender shall not disturb Lessee's quiet possession in the event of foreclosure. If any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Lessor encumbering Lessor's Property, Lessee shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease. 21.11 BINDING EFFECT. The provisions of this Agreement shall apply to, bind --------------- and inure to the benefit of Lessor and Lessee, their respective successors, legal representatives or assigns. 21.12 ENTIRE AGREEMENT/MODIFICATIONS. This Agreement contains the entire ------------------------------- understanding and agreement between the parties. No representative, agent or employee of Lessor has been authorized to make any representations or promises with reference to the within agreement or to vary, alter or modify the terms hereof. No additions, changes or modifications shall be binding unless reduced to writing and signed by the parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. LESSOR: LESSEE: ATSINGER FAMILY TRUST HIBERNIA COMMUNICATIONS, INC. By: By: ------------------------------- -------------------------- Edward G. Atsinger III, Trustee Michael R. Craven By: ------------------------------- Mona J. Atsinger, Trustee By Edward G. Atsinger III, Attorney-in-fact for Mona J. Atsinger By: -------------------------------- Stuart W. Epperson General Partner Lease Agreement - Hibernia Page 22 Salem Communications Corporation, a California corporation, hereby guarantees all obligations and liabilities of Lessor under this Agreement. SALEM COMMUNICATION CORPORATION - --------------------------- Eric H. Halvorson Executive Vice President Lease Agreement - Hibernia Page 23 Schedule 1.3 ------------ AM Towers. Lease Agreement - Hibernia Page 24 Schedule 1.14 ------------- Legal and Street Address. Schedule 1.3 ------------ [MAP OF WOLLASTON GOLF CLUB GROUNDS] SCHEDULE 3.13 ------------- Serafin Bros. has acted as the exclusive broker in this transaction and shall be paid by Seller pursuant to a separate agreement between Seller and Serafin Bros. EX-10.06.08 35 OPTION TO PURCHASE EXHIBIT 10.06.08 OPTION TO PURCHASE ------------------ THIS OPTION AGREEMENT ("Option Agreement") is made and entered into as of August 18, 1997, by and between SONSINGER, INC. (collectively refered to herein as "Optionor"), and INSPIRATION MEDIA, INC. ("Optionee"). WHEREAS Optionor is the licensee of radio station KKOL(AM) Seattle, Washington (the "Station"); WHEREAS Optionor and Optionee have on entered into a Local Programming and Marketing Agreement (the "LMA") by which Optionee provides certain programming to the Station; WHEREAS Optionee desires to acquire from Optionor and Optionor is willing to grant to Optionee, upon the terms and conditions hereinafter set forth, the exclusive option to purchase certain assets of the Station (the "Assets"), subject to the approval of the Federal Communications Commission ("FCC"), at a future date. NOW, THEREFORE, in consideration of the mutual covenants contained herein, Optionor and Optionee agree as follows: 1. PURCHASE OPTION. ---------------- 1.1 GRANT OF OPTION. Optionor hereby grants to Optionee the exclusive --------------- option (the "Option") to purchase the Assets on the terms and conditions set forth in the Asset Purchase Agreement attached hereto as Exhibit "A" and incorporated herein by reference (the "Asset Purchase Agreement"). 1.2 OPTION CONSIDERATION. This Option is granted in consideration of -------------------- the payment of One Hundred Dollars ($100) by Optionee to Optionor, the receipt and sufficiency of which are hereby acknowledged. 1.3 TERM OPTION. Provided this Option Agreement shall not have first ----------- terminated, the Option may be exercised at any time after the execution hereof This Option Agreement terminates and the Option shall expire, if not yet exercised, on December 31, 1999. 1.4 OPTION PRICE. In the event Optionee shall exercise its option ------------ hereunder, the consideration to be paid by Optionee to Optionor for purchase of the assets of the Station shall be an amount equal to the lesser of (i) the purchase price paid by Seller for the Station (less any amounts allocated to real estate simultaneously purchased) being an amount equal to One Million Three Hundred Twenty Five Thousand Dollars ($1,325,000); or (ii) the fair market value of the radio station at the time the option is exercised as reasonably determined by Gary Stevens & Co., 1 or, if then unavailable, a recognized national media brokerage company reasonably selected by Optionee and Optionor. 1.5 MANNER OF EXERCISING OPTION. Unless this Option Agreement shall --------------------------- have previously terminated, the Option may be exercised by the Optionee's delivery to the Optionor of written notice of Optionee's election to exercise the Option ("Exercise Notice") together with a written valuation of the Station as provided in Section 1.4 hereof, if any. The Exercise Notice shall state that ----------- the Option is exercised without condition or qualification other than (i) the receipt by Optionee of updated schedules to the Asset Purchase Agreement reasonably satisfactory to Optionee, (ii) the receipt of any required approval of the FCC for the assignment of the Station's FCC licenses, and (iii) the satisfaction of all conditions set forth in the Asset Purchase Agreement. Within five (5) business days following receipt by the Optionor of the Exercise Notice, Optionor shall deliver updated schedules to the Asset Purchase Agreement to Optionee, and Optionee shall have five (5) business days thereafter to review such schedules. In the event the updated schedules disclose information that Optionee reasonably determines would have a material adverse effect on the Station after Optionee's acquisition of the Station, Optionee may elect not to proceed with the purchase; provided however, that Optionee's election not to proceed may be made only after Optionor has been given a reasonable period of time to remedy or cure the matters at issue and such matters cannot be remedied or cured to the reasonable satisfaction of Optionee. If Optionee elects to proceed with the purchase, Optionor and Optionee shall execute the Asset Purchase Agreement and diligently proceed pursuant to the provisions contained therein. 2. OPTIONOR'S REPRESENTATIONS & WARRANTIES. Optionor warrants and ----------------------------------------- represents to Optionee that: (a) Except for any Liens, as defined in the Asset Purchase Agreement, created by the recording of this Option Agreement or the Promissory Note, Optionor has and at Closing, as provided in the Asset Purchase Agreement, will have good, marketable and indefensible title to and full power of disposition over the Assets, and the full right to sell and transfer to Optionee all of the Assets without the requirement of obtaining the consent or approval of any other person, entity, agency or authority except the FCC. (b) Except for any Liens created by the recording of this Option Agreement or the Promissory Note, the Assets are and at Closing, as set forth in the Asset Purchase Agreement, will be free of all Liens, claims, debts or other encumbrances. (c) The representations and warranties of Seller, contained in Article III of the Asset Purchase Agreement are complete and correct in all - ----------- material respects on the date hereof and shall be at dosing except for changes that are not materially adverse to the Station or the Sale Assets, as defined in the Asset Purchase Agreement. 3. The representations and warranties of Buyer, contained in Article IV ---------- of the Asset Purchase Agreement are complete and correct in all material respects on the date hereof and shall be at closing. 2 4. OPTIONOR'S COVENANTS. Optionor covenants that, commencing on the date ---------------------- hereof and continuing through the term of this Option the Station shall be operated in accordance with the covenants set forth in Section 5.1 of the Asset ------------ Purchase Agreement, which covenants are incorporated herein by reference. 5. WAIVER. No waiver by a party of any provision of this Option Agreement -------- shall be considered a waiver of any other provision or any subsequent breach of the same or any other provision, The exercise by a party of any remedy provided for in this Option Agreement or at law shall not prevent the exercise by that party of any other remedy provided for in this Option Agreement or at law. 6. INTERPRETATION. --------------- 6.1 ENTIRE AGREEMENT. This Option Agreement and the LMA constitute ---------------- the entire agreement between the parties and supersede all prior discussions, negotiations and agreements, whether oral or written, between them concerning the Station. Any amendment to this Option Agreement, including an oral modification supported by new consideration, must be reduced to writing and signed by all parties before it will be effective. 6.2 COUNTERPARTS. This Option Agreement and all amendments and ------------ supplements to it may be executed in counterparts and all counterparts together shall be construed as one document. 6.3 BINDING ON SUCCESSORS. This Option Agreement inures to the --------------------- benefit of, and is binding on, the parties, their respective heirs, personal representatives, successors and assigns. Neither party may assign its right and obligations hereto without the prior written consent of the other party. 6.4 CAPTIONS. The captions heading the various paragraphs of this -------- Option Agreement are for convenience only and shall not be considered to limit, expand, or define the contents of the respective paragraphs. 6.5 CONTROLLING LAW. This Option Agreement shall be interpreted under ---------------- California law and according to its fair meaning and not in favor of or against any party. 6.6 NOTICES. Any notice required hereunder shall be in writing and ------- shall be sufficiently given if delivered by overnight delivery service or sent by registered or certified mail, first class postage prepaid, or by telegram, facsimilie machine or similar means of communication, addressed as follows: If to the Optionee, TO: c/o Salem Communications Corporation 3 4880 Santa Rosa Road, Suite 300 Camarillo, CA 93012 Attn: Eric H. Halvorson If to the Optionor, to: c/o Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, CA 93012 Attn: Jonathan L. Block IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement as of the date first above written. OPTIONOR: OPTIONEE: SONSINGER, INC. INSPIRATION MEDIA, INC. By: /s/ Edward G. Atsinger III By: /s/ Eric H. Halvorson --------------------------- -------------------------- Edward G. Atsinger III Eric H. Halvorson President Vice President 4 EX-10.07.01 36 TOWER PURCHASE AGREEMENT EXHIBIT 10.07.01 TOWER PURCHASE AGREEMENT This Agreement ("Agreement") is made this 22/nd/ day of August, 1997 by and between SALEM COMMUNICATIONS CORPORATION ("Seller"), and SONSINGER BROADCASTING COMPANY OF HOUSTON, LP. ("Buyer"). RECITALS: --------- 1. Seller is currently constructing a tower ("Tower") on certain real property ("Real Property") located in the State of Texas and the Counties of Liberty and Montgomery and in conjunction therewith has entered into certain contracts and expended certain amounts; and 2. Seller desires to sell and Buyer desires to acquire the Tower and assume the contracts and other obligations of Seller relating thereto on the terms and conditions set forth in this Agreement. NOW THEREFORE, in consideration of the mutual covenants contained herein, Seller and Buyer hereby agree as follows: ARTICLE I --------- TERMINOLOGY ----------- 1.1 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in -------------------- Section 2.2. - ----------- 1.2 CONSTRUCTION AGREEMENTS. The agreements, commitments, contracts, ------------------------ leases and other items described in Section 2.1(b) which relate to construction -------------- of the Tower. 1.3 INDEMNIFIED PARTY. Any party described in Section 6.3(a) or 6.4(a) ------------------ ------------------------ against which any claim or liability may be asserted by a third party which would give rise to a claim for indemnification under the provisions of this Agreement by such party. 1.4 INDEMNIFYING PARTY. The party to the Agreement (not the Indemnified ------------------- Party) that, in the event of a claim or liability asserted by a third party against the Indemnified Party which would give rise to a claim for indemnification under the provisions of this Agreement, may at its own expense, and upon written notice to the Indemnified Party, compromise or defend such claim. 1.5 LIEN. Any mortgage, deed of trust, pledge, hypothecation, security ----- interest, encumbrance, lien, lease or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, affecting any assets or property, including any written or oral agreement to give or grant any of the foregoing, any conditional sale or other title retention agreement, and the filing of or agreement to give any financing statement with respect to any assets or property under the Uniform Commercial Code or comparable law of any jurisdiction. 1 1.6 MATERIAL ADVERSE CONDITION. A condition which would materially --------------------------- restrict, limit, increase the cost or burden of or otherwise adversely affect or materially impair the right of Buyer to the ownership, use, control, enjoyment or operation of the Tower or the proceeds therefrom. 1.7 PURCHASE PRICE. The consideration, in addition to the assumption --------------- of the Assumed Obligations, to be paid by Buyer to Seller for the purchase of the Sale Assets in an amount equal to all amounts expended by Seller for the construction of the Tower, as set forth on Schedule 3.3. ------------ 1.8 SALE ASSETS. All of the tangible and intangible assets to be ------------ transferred by Seller to Buyer as set forth in Section 2.1. ----------- 1.9 SURVIVAL PERIOD. The term following the Closing Date during which all ---------------- representations, warranties, covenants and agreements of the parties under this Agreement shall survive. The term shall be thirty (30) days. 1.10 TANGIBLE PERSONAL PROPERTY. The personal property identified on --------------------------- Schedule 3.6 together with any improvements constructed on the Real Property and - ------------ all warranties, if any, now existing on said personal property, or any portion thereof. ARTICLE II ---------- PURCHASE AND SALE ----------------- 2.1 SALE ASSETS. Upon the execution of this Agreement, Seller will ------------ transfer, assign and convey to Buyer, and Buyer will purchase from Seller, all of Seller's right, title and interest, legal and equitable, in and to the following assets: (a) TANGIBLE PERSONAL PROPERTY: All of Seller's right title and interest --------------------------- in and to the Tangible Personal Property, together with such modifications, replacements, improvements and additional items, and subject to such deletions therefrom, made or acquired between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement; (b) CONSTRUCTION AGREEMENTS: All agreements to which Seller is a ------------------------ party or by which it is bound and which are listed on Schedule 3.4; any ------------ renewals, extensions, amendments or modifications of those agreements which are made in the ordinary course of Seller's operation of the Station and in accordance with the terms and provisions of this Agreement; and any additional such agreements, contracts, leases, commitments or orders (and any renewals, extensions, amendments or modifications thereof) made or entered into between the date hereof and the Closing Date in accordance with the terms and provisions of this Agreement. (c) RECORDS: The originals (where available) or true and complete -------- copies (if originals are not available) of all of the records, files, logs and ledgers pertaining to the Sale 2 Assets or used or useful in the construction of the Tower. Seller shall have the right to retain a copy of all books, records and other items provided by Seller to Buyer. (d) MISCELLANEOUS ASSETS: Any other tangible or intangible assets, --------------------- properties or rights of any kind or nature not otherwise described above in this Section 2.1 and now or hereafter owned or used by Seller in the construction of - ----------- the Tower. 2.2 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume and -------------------------- agree to perform, without duplication of Seller's performance, the liabilities and obligations arising under the Construction Agreements assumed by and transferred to Buyer in accordance with this Agreement (the "Assumed Obligations"). 2.3 NO OTHER ASSUMPTIONS. Except for the Assumed Obligations, Buyer shall --------------------- not assume or in any manner be liable for any duties, responsibilities, obligations or liabilities of Seller of any kind or nature, whether express or implied, known or unknown, contingent or absolute including, without limitation any liabilities to or in connection with Seller's employees whether arising in connection with the transaction contemplated hereunder or otherwise. 2.4 PURCHASE PRICE. The Purchase Price shall be paid by Buyer to Seller --------------- at Closing by wire transfer of immediately available funds. ARTICLE III ----------- REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Seller hereby represents and warrants to Buyer as follows: 3.1 SALE ASSETS. The Sale Assets include all of the assets, properties ------------ and rights of every type and description, real, personal and mixed, tangible and intangible, that are used to a material extent in the conduct of the business of owning and constructing the Tower in the manner in which it has been and is now conducted. 3.2 TANGIBLE PERSONAL PROPERTY. Except for supplies and other incidental --------------------------- items which in the aggregate are not of material value, the list of Tangible Personal Property set forth on Schedule 3.2 is a complete and correct list of ------------ all of the items of tangible personal property used to a material extent in the construction of the Tower. 3.3 EXPENDITURES. Schedule 3.3, as it may be amended from time to time ------------- ------------ prior to Closing, is a complete and correct itemization of all amounts expended by Seller in the construction of the Tower. 3.4 CONSTRUCTION AGREEMENTS. Attached hereto as Schedule 3.4 are ------------------------ ------------ complete and correct copies of the contracts to be assigned to Buyer under this Agreement. 3 ARTICLE IV ---------- TRANSACTIONS PRIOR TO THE CLOSING DATE -------------------------------------- Seller covenants and agrees with Buyer that between the date hereof and the Closing Date, unless the Buyer otherwise agrees in writing (which agreement shall not be unreasonably withheld), Seller shall: (a) Use reasonable efforts to continue the construction of the Tower; (b) Use reasonable commercial efforts to maintain insurance upon all of the tangible Sale Assets in such amounts and of such kind comparable to that in effect on the date hereof with respect to such Sale Assets, with insurers of substantially the same or better financial condition; (c) Conduct its business in all material respects in accordance with any rules and regulations, statutes, ordinances and orders of all governmental authorities having jurisdiction over any aspect of the operation of the Sale Assets, except where the failure to so would not have a material adverse effect on the Sale Assets or on the ability of Seller to consummate the transactions contemplated hereby; (d) Comply in all material respects with all Construction Agreements now or hereafter existing which are material, individually or in the aggregate, to the operation of the Sale Assets; (e) Not sell, lease or otherwise dispose of, nor agree to sell, lease or otherwise dispose of, any of the Sale Assets, except for dispositions in the ordinary course of business; (f) Not acquire or lease any goods or services or enter into, amend or terminate any license, lease of real or personal property or any other Station Agreement, other than in the ordinary course of business; (g) Not introduce any material change with respect to the architectural or engineering plans for the construction of the Tower; provided, Seller shall be entitled to make such changes, at the discretion of Seller exercised in good faith after consultation with Buyer, as do not materially and adversely affect the Sale Assets; 4 ARTICLE V --------- CLOSING ------- 5.1 TIME. The closing (the "Closing") shall take place on or before ----- October 15, 1997. 5.2 DELIVERIES TO BUYER BY SELLER. At the Closing, Seller shall deliver ------------------------------ or cause to be delivered to Buyer, the following: (a) A Bill of Sale conveying the Tangible Personal Property; (b) An instrument or instruments assigning to Buyer all right, title and interest of Seller in and to the Construction Agreements; (c) Such additional information and materials as Buyer shall have reasonably requested. 5.3 DELIVERIES TO SELLER BY BUYER. At the Closing, Buyer shall deliver or ------------------------------ cause to be delivered to Seller: (a) The Purchase Price; (b) An instrument or instruments signed by Buyer assuming the Assumed Obligations. (c) Such additional information and materials as Seller shall have reasonably requested. ARTICLE VI ----------- SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ------------------------------------------- INDEMNIFICATION --------------- 6.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations, ------------------------------------------ warranties, covenants and agreements contained in this Agreement shall survive the Closing for the Survival Period and the Closing shall not be deemed a waiver by either party of the representations, warranties, covenants or agreements of the other party contained herein. No claim may be brought under this Agreement or any other document unless written notice describing in reasonable detail the nature and basis of such claim is given on or prior to the last day of the Survival Period. In the event such a notice is so given, the right to indemnification with respect thereto under this Article shall survive the Survival Period until such claim is finally resolved and any obligations with respect thereto are fully satisfied. Notwithstanding the foregoing, the 5 provisions for survival and the making of claims shall not apply to the agreements whereby Buyer assumes the obligations under Section 4.2. ----------- 6.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the rights to --------------------------- indemnification and to be held harmless set forth in this Agreement shall, as between the parties hereto and their respective successors and assigns, be exclusive of all rights to indemnification and to be held harmless that such party (or its successors or assigns) would otherwise have by statute, common law or otherwise. 6.3 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold harmless -------------------------- Buyer and any officer, director and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: (i) Any breach or nonperformance by Seller of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other document; or (ii) The ownership or operation of the Sale Assets by Seller prior to the Closing; or (iii) All other liabilities and obligations of Seller other than the Assumed Obligations; or (iv) Noncompliance by Seller with the provisions of the Bulk Sales Act, if applicable, in connection with the transactions contemplated by this Agreement. 6.4 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold harmless ------------------------- Seller and any officer, director and affiliate thereof with respect to any and all demands, claims, actions, suits, proceedings, assessments, judgments, costs, losses, damages, liabilities and expenses (including reasonable attorneys' fees) relating to or arising out of: (i) Any breach or nonperformance by Buyer of any of its representations, warranties, covenants or agreements set forth in this Agreement or any other document; or (ii) The ownership by Buyer of the assets to be conveyed and assigned hereunder from and after the Closing; or (iii) Any other liabilities and obligations of Buyer, including liabilities and obligations arising after the Closing under the Assumed Obligations. 6.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified Party -------------------------- may be entitled to indemnification hereunder with respect to any asserted claim of, or obligation or 6 liability to, any third party, such party shall notify the Indemnifying Party thereof, describing the matters involved in reasonable detail, and the Indemnifying Party shall be entitled to assume the defense thereof upon written notice to the Indemnified Party with counsel reasonably satisfactory to the Indemnified Party; provided that once the defense thereof is assumed by the Indemnifying Party, the Indemnifying Party shall keep the Indemnified Party advised of all developments in the defense thereof and any related litigation, and the Indemnified Party shall be entitled at all times to participate in the defense thereof at its own expense. If the Indemnifying Party fails to notify the Indemnified Party of its election to defend or contest its obligation to indemnify under this Article IX, the Indemnified Party may pay, compromise, or ---------- defend such a claim without prejudice to any right it may have hereunder. ARTICLE VII ----------- MISCELLANEOUS ------------- 7.1 FURTHER ACTIONS. From time to time before, at and after the Closing, ---------------- each party, at its expense and without further consideration, will execute and deliver such documents to the other party as the other party may reasonably request in order more effectively to consummate the transactions contemplated hereby. 7.2 PAYMENT OF EXPENSES. Each of the parties shall bear its own expenses, -------------------- including the fees of any attorneys and accountants engaged by such party, in connection with this Agreement and the consummation of the transactions contemplated herein. 7.3 NOTICES. All notices, demands or other communications given hereunder -------- shall be in writing and shall be sufficiently given if delivered by overnight delivery service or sent by registered or certified mail, first class, postage prepaid, or by telegram, facsimile machine or similar written means of communication, addressed as follows: (a) if to Seller, to: Eric H. Halvorson Vice President Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Facsimile No.: (805) 482-8570 7 (b) if to Buyer, to: Jonathan L. Block, Esq. Corporate Counsel Salem Communications Corporation 4880 Santa Rosa Road, Suite 300 Camarillo, California 93012 Facsimile No.: (805) 384-4505 or such other address with respect to any party hereto as such party may from time to time notify (as provided above) to the other party hereto. Any such notice, demand or communication shall be deemed to have been given (i) if so mailed, as of the close of the third business day following the date so mailed, and (ii) if personally delivered or otherwise sent as provided above, on the date received. 7.4 ENTIRE AGREEMENT. This Agreement, the Schedules and the Exhibits ----------------- hereto constitute the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede any prior negotiations, agreements, understandings or arrangements between the parties hereto with respect to the subject matter hereof. 7.5 BINDING EFFECT: BENEFITS. Except as otherwise provided herein, this ------------------------- Agreement and all other documents to be executed in connection herewith shall inure to the benefit of and be binding upon the parties hereto and their respective successors or assigns. Except to the extent specified herein, nothing in this Agreement, express or implied, shall confer on any person other than the parties hereto and their respective successors or assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 7.6 ASSIGNMENT. This Agreement and any rights hereunder shall not be ----------- assignable by either party hereto without the prior written consent of the other party; provided that Buyer may assign this Agreement to an entity controlled by Edward G. Atsinger III and Stuart W. Epperson. 7.7 GOVERNING LAW. This Agreement shall in all respects be governed by -------------- and construed in accordance with the laws of the State of Texas including all matters of construction, validity and performance. 7.8 AMENDMENTS AND WAIVERS. No term or provision of this Agreement may be ----------------------- amended, waived, discharged or terminated orally but only by an instrument in writing signed by the party against whom the enforcement of such amendment, waiver, discharge or termination is sought. Any waiver shall be effective only in accordance with its express terms and conditions. 7.9 SEVERABILITY. Any provision of this Agreement which is unenforceable ------------- in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability 8 without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction. To the extent permitted by applicable law, the parties hereto hereby waive any provision of law now or hereafter in effect which renders any provision hereof unenforceable in any respect. 7.10 HEADINGS. The captions in this Agreement are for convenience of --------- reference only and shall not define or limit any of the terms or provisions hereof. 7.11 COUNTERPARTS. This Agreement may be executed in any number of ------------- counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.12 REFERENCES. All references in this Agreement to Articles and ----------- Sections are to Articles and Sections contained in this Agreement unless a different document is expressly specified. 7.13 CONTINGENCY. Buyer's obligations hereunder, including its obligation ------------ to Close hereunder, are expressly conditioned upon its ability to obtain financing for 100% of the Purchase Price at a favorable rate of interest and with favorable terms. In the event Buyer is unable, for any reason, to obtain such financing, Buyer, upon written notice to Seller, may terminate this Agreement without obligation to Seller. IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed as of the date first written above. SONSINGER BROADCASTING COMPANY OF SALEM COMMUNICATIONS CORPORATION HOUSTON, LP. By: Sonsinger Management, Inc., Its General Partner By: /s/ Jonathan L. Block By: /s/ Eric H. Halvorson ---------------------- ---------------------- Jonathan L. Block Eric H. Halvorson Secretary Executive Vice President 9 SCHEDULE 3.2 ------------ TANGIBLE PERSONAL PROPERTY See attached. 10 SCHEDULE 3.3 ------------ EXPENDITURES See attached. 11 SCHEDULE 3.4 ------------ CONSTRUCTION AGREEMENTS See attached. 12 EX-10.07.04 37 PROMISORY NOTE (EDWARD G. ATSINGER III) EXHIBIT 10.07.04 PRINCIPAL AMOUNT: REVOLVING Loan Date: December 24, 1997 Interest Rate: Credit Agreement Base Rate Maturity Date: December 31, 2002 less 1% PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned, SALEM COMMUNICATIONS CORPORATION ("Maker") and EDWARD G. ATSINGER III ("Payee") agree as follows: 1. Maker promises to pay to Payee at 4880 Santa Rosa Road, Suite 300, Camarillo, California, or at such other place as Payee shall direct, Two Million Five Hundred Thousand Dollars ($2,500,000) or such amount as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance. (a) The rate of interest ("Interest Rate") on this Promissory Note ("Note") shall be the rate payable by the Maker pursuant to the Credit Agreement ("Credit Agreement") dated as of September 25, 1997 by and among Maker, the Bank of New York, as Administrative Agent, and Bank of America NT&SA, as Documentation Agent, less one percent (1%). Under no circumstances will the interest rate on this Note be greater than the maximum amount of interest allowed by applicable law. (b) This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing by Maker. Payee may, but need not, require that all oral requests be confirmed in writing. Payee shall have no obligation to advance funds under this Note if: (i) Maker is in default under the terms of this Note; (ii) Maker ceases to do business or becomes insolvent; (iii) Payee, in good faith, deems itself insecure under this Note or any other agreement between Payee and Maker. (c) Subject to the terms and conditions of the Credit Agreement, Maker will pay this loan upon demand, or, if no demand is made, in one payment of all outstanding principal plus accrued unpaid interest on December 31, 2002. In addition, Maker will pay regular monthly payments of accrued unpaid interest beginning the first day of each month following the execution hereof. The inclusion of specific default provisions or rights of Payee shall not preclude Payee's right to declare payment of all principal and interest under this Note due upon Payee's demand. 2. The unpaid principal amount of this Note, together with all interest accrued thereon shall, at the option of Payee, become immediately due and payable in case any one of the following events occur (an "Event of Default"): 2.1. Maker shall commence any case, proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, composition, arrangement, readjustment of debt, dissolution, liquidation of relief or debtors. 2.2. Maker shall commence any case, proceeding or other action seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets; or (ii) Maker shall make a general assignment for the benefit of its creditors; or (iii) there shall be commenced against Maker any case, proceeding or other action of a nature referred to in clause (i), above, which (A) results in an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unhanded for a period of sixty (60) days; or (iv) there shall be commenced against Maker any case, proceeding or other action seeking issuance of a warrant of attachment, execution or similar process against all or any substantial part of its assets which results in the entry of an order or any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (b) Maker shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), (iii) or (iv) above; or (vi) Maker shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (vii) Maker shall conceal, remove, or permit to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of them, or make or suffer a transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law, or shall make any transfer of its property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid, or shall suffer or permit, while insolvent, any creditor to obtain a lien upon any of its property through legal proceedings which is not vacated within sixty (60) days from the date thereof. 3. No delay or omission on the part of Payee in exercising any right or option herein given to it shall impair such right or option or be considered as a waiver thereof or acquiescence in any default hereunder. 4. Maker waives presentment, demand, notice of dishonor and protest and consents to any and all extensions and renewals hereof without notice. 5. This instrument shall be construed in accordance with the laws of the State of California. 6. This instrument may be prepaid in whole or in part at any time without penalty. 7. Maker, its directors, officers, employees, members, and agents will have no personal liability for any deficiency under this instrument. 8. In the event a suit or action is filed to enforce this Note or with respect to this Note, the prevailing party shall be reimbursed by the other party for all costs and expenses incurred in connection with the suit or action, including without limitation reasonable attorneys' fees at the trial level and on appeal. IN WITNESS WHEREOF, the parties have executed this instrument as of this 24th day of December, 1997. PAYEE: EDWARD G. ATSINGER III SALEM COMMUNICATIONS CORPORATION /s/ EDWARD G. ATSINGER III /s/ DIRK GASTALDO - ---------------------------------- ------------------------------- Edward G. Atsinger III Dirk Gastaldo Vice President