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EXHIBIT 2.3
10-5-00
ASSET EXCHANGE AGREEMENT
BETWEEN
EMMIS COMMUNICATIONS CORPORATION
EMMIS 106.5 FM BROADCASTING CORPORATION OF ST. LOUIS
EMMIS 106.5 FM LICENSE CORPORATION OF ST. LOUIS
AND
BONNEVILLE INTERNATIONAL CORPORATION
BONNEVILLE HOLDING COMPANY
OCTOBER __, 2000
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TABLE OF CONTENTS
RECITALS 1
ARTICLE I TERMINOLOGY 1
1.1 Defined Terms. 1
1.2 Additional Defined Terms. 5
ARTICLE II EXCHANGE OF ASSETS 6
2.1 Description of Assets. 7
2.2 Excluded Assets. 8
2.3 Emmis Entities' Assumption of Liabilities. 9
2.4 Bonneville Entities' Assumption of Liabilities. 10
2.5 Exchange of Assets. 10
2.6 Allocation of Asset Values. 10
2.7 Proration Adjustment. 11
2.8 Accounts Receivable. 13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE EMMIS ENTITIES 14
3.1 Organization, Good Standing and Requisite Power. 14
3.2 Authorization and Binding Effect of Documents. 15
3.3 Absence of Conflicts. 15
3.4 Consents. 15
3.5 Emmis Assets; Title. 15
3.6 Emmis FCC Licenses. 15
3.7 Station Agreements. 17
3.8 Tangible Personal Property. 18
3.9 Emmis Real Property. 18
3.10 Intellectual Property. 19
3.11 [INTENTIONALLY OMITTED]
3.12 Absence of Certain Changes or Events. 20
3.13 Litigation. 21
3.14 Labor Matters 21
3.15 [INTENTIONALLY OMITTED]
3.16 Compliance with Law 22
3.17 [INTENTIONALLY OMITTED.] 22
3.18 Environmental Matters 22
3.19 Broker's or Finder's Fees 23
3.20 Insurance 23
3.21 Transactions with Affiliates 24
3.22 Emmis Subsidiaries' Qualification 24
3.23 WARN Act 24
3.24 Emmis Rights Under Xxxxxxxx Agreement. 24
3.25 Exclusivity of Representations. 24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BONNEVILLE ENTITIES 25
4.1 Organization, Good Standing and Requisite Power. 25
4.2 Authorization and Binding Effect of Documents. 25
4.3 Absence of Conflicts. 25
4.4 Consents. 26
4.5 Bonneville Assets; Title. 26
4.6 Bonneville FCC Licenses. 26
4.7 Station Agreements. 27
4.8 Tangible Personal Property. 29
4.9 Bonneville Real Property. 29
4.10 Intellectual Property. 30
4.11 [INTENTIONALLY OMITTED]
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4.12 Absence of Certain Changes or Events. 30
4.13 Litigation. 31
4.14 Labor Matters 32
4.15 [INTENTIONALLY OMITTED]
4.16 Compliance with Law 32
4.17 [INTENTIONALLY OMITTED.] 33
4.18 Environmental Matters 33
4.19 Broker's or Finder's Fees 34
4.20 Insurance 34
4.21 Transactions with Affiliates 34
4.22 Bonneville Entities' Qualification 34
4.23 WARN Act 34
4.24 Exclusivity of Representations. 35
ARTICLE V OTHER COVENANTS 35
5.1 Conduct of Each Station's Business Prior to the Closing Date 35
5.2. Notification of Certain Matters 37
5.3 HSR Filings 37
5.4 FCC Filing 37
5.5 Title; Additional Documents 38
5.6 Other Consents 38
5.7 Inspection and Access; Financial Information 38
5.8 Confidentiality 38
5.9 Publicity 39
5.10 Material Adverse Effect 39
5.11 Commercially Reasonable Efforts 39
5.12 FCC Reports and Applications 39
5.13 Tax Returns and Payments 40
5.14 No Solicitation 40
5.15 Audited Financial Statements 40
5.16 Disclosure Schedules. 40
5.17 Bulk Sales Law. 41
5.18 Multi-Station Agreements. 41
5.19 Emmis Station Real Estate. 41
5.20 Xxxxxxxx Closing. 42
ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATION OF THE EMMIS ENTITIES TO CLOSE 42
6.1 Accuracy of Representations and Warranties; Closing Certificate. 42
6.2 Performance of Agreement 43
6.3 FCC Order 43
6.4 HSR Act 43
6.5 Opinions of Bonneville Entities' Counsel 43
6.6 Required Consents 44
6.7 Delivery of Closing Documents 44
6.8 No Adverse Proceedings. 44
6.9 Concurrent Conveyances. 44
6.10 Closing Under Xxxxxxxx Agreement. 44
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATION OF THE BONNEVILLE ENTITIES TO CLOSE 44
7.1 Accuracy of Representations and Warranties; Closing Certificate. 44
7.2 Performance of Agreement 45
7.3 FCC Order 45
7.4 HSR Act 45
7.5 Opinions of Emmis Entities' Counsel 45
7.6 Required Consents 46
7.7 Delivery of Closing Documents 46
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7.8 No Adverse Proceedings. 46
7.9 Concurrent Conveyances. 46
7.10 Closing Under the Xxxxxxxx Agreement. 46
ARTICLE VIII CLOSING 46
8.1 Time and Place. 46
8.2 Deliveries by the Bonneville Entities 47
8.3 Deliveries by the Emmis Entities 48
ARTICLE IX INDEMNIFICATION 49
9.1 Survival 49
9.2 Indemnification by the Emmis Entities 49
9.3 Indemnification by the Bonneville Entities 50
9.4 Administration of Indemnification 50
9.5 Mitigation and Limitation of Damages 51
ARTICLE X TERMINATION 51
10.1 Right of Termination 51
10.2 Obligations Upon Termination 52
10.3 Termination Notice 52
10.4 Single Party 52
ARTICLE XI CONTROL OF STATIONS 52
ARTICLE XII EMPLOYMENT MATTERS 53
12.1 KZLA Employees 53
12.2 Emmis Stations' Employees 53
ARTICLE XIII MISCELLANEOUS 54
13.1 Further Actions 54
13.2 Payment of Expenses 54
13.3 Specific Performance 54
13.4 Notices 55
13.5 Entire Agreement 56
13.6 Binding Effect; Benefits 56
13.7 Assignment 56
13.8 Governing Law 56
13.9 Amendments and Waivers 56
13.10 Severability 56
13.11 Headings 56
13.12 Counterparts 57
13.13 References 57
13.14 Schedules and Exhibits 57
13.15 Joint and Several Liability 57
13.16 Bonneville Entities Not Responsible for Emmis Entities'
Actions Under TBA. 57
SCHEDULES
Emmis Entities:
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Schedule 2.2(n) WKKX Morning Show Excluded Property
Schedule 2.2(o) WKKX Excluded Equipment
Schedule 2.2(r) Excluded Contracts and Employees
Schedule 3.1 Qualification to Do Business
Schedule 3.3 Absence of Conflicts
Schedule 3.5(b) Liens to be Released Prior to Closing
Schedule 3.6 FCC Licenses
Schedule 3.7(a) Trade Agreements
Schedule 3.7(b) Station Agreements
Schedule 3.7(c) Affiliate Agreements
Schedule 3.8 Tangible Personal Property
Schedule 3.9 Real Property Interests
Schedule 3.10 Intellectual Property
Schedule 3.12 Absence of Certain Changes or Events
Schedule 3.13 Litigation
Schedule 3.14(a) Labor Matters
Schedule 3.14(c) List of Employees
Schedule 3.16 Compliance with Law
Schedule 3.18 Environmental Matters
Schedule 3.19 Broker's or Finder's Fees
Schedule 3.21 Transactions with Affiliates
Schedule 3.22 Emmis Subsidiaries' Qualification
Schedule 12.2(a) Excluded Employees
Bonneville Entities:
Schedule 4.3 Absence of Conflicts
Schedule 4.6 FCC Licenses
Schedule 4.7(a) Trade Agreements
Schedule 4.7(b) Station Agreements
Schedule 4.7(c) Affiliate Agreements
Schedule 4.7(d) Station Agreement Details
Schedule 4.8 Tangible Personal Property
Schedule 4.9 Real Property Interests
Schedule 4.10 Intellectual Property
Schedule 4.11 Financial Statements
Schedule 4.12 Absence of Certain Changes or Events
Schedule 4.13 Litigation
Schedule 4.14(a) Labor Matters
Schedule 4.14(c) List of Employees
Schedule 4.16 Compliance with Law
Schedule 4.18 Environmental Matters
Schedule 4.19 Broker's or Finder's Fees
Schedule 4.21 Transactions with Affiliates
Schedule 4.22 Bonneville Entities' Qualification
Schedule 12.2(c) Bonneville Severance Cap
Schedule 12.2(e) Bonneville Prior Service Credit Policy
EXHIBITS
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Exhibit A Sublease
Exhibit B KIHT Sublease
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (the "Agreement"), dated as of October ,
2000, among EMMIS COMMUNICATIONS CORPORATION, an Indiana corporation ("Emmis"),
EMMIS 106.5 FM BROADCASTING CORPORATION OF ST. LOUIS, an Indiana corporation
("Emmis Operating Subsidiary"), and EMMIS 106.5 FM LICENSE CORPORATION OF ST.
LOUIS, a California corporation ("Emmis License Subsidiary", and together with
Emmis Operating Subsidiary, the "Emmis Subsidiaries"; and Emmis together with
the Emmis Subsidiaries, the "Emmis Entities"); and BONNEVILLE INTERNATIONAL
CORPORATION, a Utah corporation ("Bonneville International"), and BONNEVILLE
HOLDING COMPANY, a Utah corporation ("Bonneville Holding", and together with
Bonneville International, the "Bonneville Entities").
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RECITALS
WHEREAS, Emmis has entered into an Asset Purchase Agreement dated June
21, 2000 (the "Xxxxxxxx Agreement") with Xxxxxxxx Broadcast Group, Inc. and two
of its indirect subsidiaries (collectively, the "Xxxxxxxx Entities") pursuant to
which Emmis has agreed to buy, and the Xxxxxxxx Entities have agreed to sell,
among other assets, substantially all of the assets used in the operation of
radio stations WRTH (AM), St. Louis, Missouri ("WRTH"), WIL-FM, St. Louis,
Missouri ("WIL"), and WVRV (FM), East St. Louis, Illinois ("WVRV", and
collectively with WRTH and WIL, the "Xxxxxxxx Stations");
WHEREAS, Emmis will (i) assign to Emmis License Subsidiary the right
under the Xxxxxxxx Agreement to acquire the broadcast licenses used in the
operation of the Xxxxxxxx Stations, and (ii) assign to Emmis Operating
Subsidiary the right under the Xxxxxxxx Agreement to acquire substantially all
the assets (other than the broadcast licenses) used in the operation of the
Xxxxxxxx Stations;
WHEREAS, Emmis Operating Subsidiary owns and operates radio station
WKKX (FM), Granite City, Illinois ("WKKX", and together with the Xxxxxxxx
Stations, the "Emmis Stations"), and Emmis License Subsidiary holds the
broadcast licenses used in the operation of WKKX;
WHEREAS, Bonneville International owns and operates radio station KZLA
(FM), Los Angeles, California ("KZLA"), and Bonneville Holding holds the
broadcast licenses used in the operation of KZLA;
WHEREAS, Emmis Operating Subsidiary, BIC and BHC have entered into a
Time Brokerage Agreement ("TBA") dated as of July 31, 2000, pursuant to which
Emmis Operating Subsidiary purchases airtime on KZLA and provides programming on
KZLA;
WHEREAS, subject to the terms and conditions of this Agreement, the
Emmis Entities desire that the Emmis Subsidiaries convey to the Bonneville
Entities all of the Emmis Subsidiaries' right, title and interest in
substantially all of the assets of the Emmis Stations, and the Bonneville
Entities desire to convey to the Emmis Subsidiaries all of the Bonneville
Entities' right, title and interest in substantially all of the assets of KZLA;
and
WHEREAS, the Emmis Entities and the Bonneville Entities desire that the
reciprocal conveyances of like-kind assets contemplated by this Agreement shall
constitute like-kind exchanges (collectively, the "Like-Kind Exchange")
qualifying for nonrecognition of gain treatment under Section 1031 of the
Internal Revenue Code of 1986, as amended, provided that, subject to complying
with the terms of this Agreement, no party to this Agreement shall be
responsible for the tax consequences of any other party arising from the
transactions contemplated by this Agreement.
ARTICLE I
TERMINOLOGY
1.1 DEFINED TERMS.
As used herein, the following terms shall have the meanings indicated:
Affiliate: With respect to any specified Person, another Person which,
directly or indirectly controls, is controlled by, or is under common control
with, the specified Person.
Appraisal Firm: BIA Consulting, Inc.
Assets: When used with respect to the Emmis Entities as the
Transferring Party, the Emmis Assets; and when used with respect to the
Bonneville Entities as the Transferring Party, the Bonneville Assets.
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Assumed Obligations: Either the Emmis Assumed Obligations or the
Bonneville Assumed Obligations.
Benefit Plans: All compensation or benefit plans, policies, practices,
arrangements and agreements covering any employee or former employee of any
Emmis Station or KZLA, as applicable, or the beneficiaries or dependents of such
employee or former employee, which are or have been established or maintained
and are currently in effect, or to which contributions are being made by the
owner of such Station or by any other trade or business, whether or not
incorporated, which is or has been treated as a single employer together with
such owner under Section 414 of the Code (such other trades and businesses
referred to collectively as the "Related Persons") or to which any owner or any
Related Person is obligated to contribute, including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of ERISA,
employment, retention, change of control, severance, stock option or other
equity based, bonus, incentive compensation, deferred compensation, retirement,
fringe benefit and welfare plans, policies, practices, arrangements and
agreements.
Bonneville Assets: The Bonneville Operating Assets and the Bonneville
License Assets collectively, but excluding the Bonneville Excluded Assets.
Bonneville Excluded Assets: The assets excluded from the Bonneville
Operating Assets pursuant to Section 2.2.
Bonneville License Assets: The FCC Licenses used or held for use in the
operation of KZLA.
Bonneville Operating Assets: All of the tangible and intangible assets
used or held for use in the operation of KZLA as operated on June 21, 2000,
other than the Bonneville License Assets and the Bonneville Excluded Assets.
Code: The Internal Revenue Code of 1986, as amended, together with all
regulations and rulings thereunder by any governmental authority.
Documents: This Agreement, all Exhibits and Schedules hereto, the TBA
and each other agreement, side letter, certificate or instrument delivered in
connection with this Agreement.
Emmis Assets: The Emmis Operating Assets and the Emmis License Assets
collectively, but excluding the Emmis Excluded Assets.
Emmis Excluded Assets: The assets excluded from the Emmis Operating
Assets pursuant to Section 2.2.
Emmis License Assets: The FCC Licenses used or held for use in the
operation of the Emmis Stations.
Emmis Operating Assets: All of the tangible and intangible assets used
or held for use in the operation of the Emmis Stations as operated on June 21,
2000, other than the Emmis License Assets and the Emmis Excluded Assets.
FCC: Federal Communications Commission.
FCC Licenses: The licenses, permits and other authorizations issued by
the FCC (including associated call signs), all applications for modification,
extension or renewal thereof, and any applications pending for any new licenses,
permits or authorizations.
FCC Order: The order or decision of the FCC (or its delegatee) granting
its consent to the assignment of all the Emmis FCC Licenses to Bonneville
Holding and the assignment of all the Bonneville FCC Licenses to Emmis License
Subsidiary.
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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
normally applicable 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.
Knowledge (or any derivative thereof): In the case of the Emmis
Entities, exclusively, (i) with respect to the Xxxxxxxx Stations, the actual
knowledge of the President and Chief Executive Officer or the Chief Financial
Officer of Xxxxxxxx Broadcast Group, Inc. ("SBGI") or Xxxxxxxx Communications,
Inc. ("SCI"), any other current or former employee of SBGI or SCI designated as
"vice president" or any higher office, any other officer of SBGI, SCI or their
subsidiaries that are parties to the Xxxxxxxx Agreement, the current or former
General Manager, Sales Manager or Chief Engineer of any of the Xxxxxxxx
Stations, the current or former President and Chief Executive Officer or the
Chief Financial Officer of Emmis, any other current or former employee of Emmis
designated as "vice president" or any higher office, any other officer of the
Emmis Subsidiaries, or any employee, representative or agent of Emmis who
conducted due diligence on behalf of Emmis with respect to the Xxxxxxxx
Stations, and (ii) with respect to WKKX, the actual knowledge of the President
and Chief Executive Officer or the Chief Financial Officer of Emmis, any other
current or former employee of Emmis designated as "vice president" or any higher
officer, any other officer of the Emmis Subsidiaries, and the General Manager,
Sales Manager or Chief Engineer of WKKX; and in the case of the Bonneville
Entities, exclusively, the actual knowledge of the President and Chief Executive
Officer or the Chief Financial Officer of either Bonneville Entity, any other
employee of either Bonneville Entity designated as corporate "vice president," a
"group vice president" or a "vice president" of the KZLA division, any other
corporate officer of either Bonneville Entity, and the General Manager, Sales
Manager or Chief Engineer of KZLA; provided, however, that any reference to a
"former" employee or officer herein shall mean only those persons whose
employment with an Emmis Entity or a Xxxxxxxx Entity has been terminated since
January 1, 2000.
Liabilities: As to any Person, all debts, adverse claims, liabilities
and obligations, direct, indirect, absolute or contingent of such Person,
whether accrued, vested or otherwise, whether in contract, tort, strict
liability or otherwise and whether or not actually reflected, or required by
generally accepted accounting principles to be reflected, in such Person's
balance sheets or other books and records.
Lien: Any mortgage, deed of trust, pledge, hypothecation, title defect,
right of first refusal, security interest or other similar adverse interest,
encumbrance, easement, restriction, claim, option, lien or charge of any kind
(including any liens of the Pension Benefit Guaranty Corporation, Internal
Revenue Service or any governmental agency), whether voluntarily incurred or
arising by operation of law or otherwise, affecting any assets or property,
including any agreement to give or grant any of the foregoing, any conditional
sale, financing lease 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.
Loss: With respect to any Person, any and all losses, costs,
obligations, liabilities, demands, claims, settlement payments, awards,
judgments, fines, penalties, damages and reasonable out-of-pocket expenses,
including court costs and reasonable attorney fees, whether or not arising out
of a third party claim.
Material Adverse Condition: A condition which would adversely affect or
impair, in any material respect, the right of a Recipient Party to the
ownership, use, control or operation of any Station to be transferred to the
Recipient pursuant to this Agreement; provided, however, that any condition
which requires (i) that the Recipient Party or any of its subsidiaries file
periodic reports with the FCC regarding compliance with rules and policies of
the FCC pertaining to affirmative action and equal opportunity employment, or
(ii) that a Station be operated in accordance with conditions similar to and not
more adverse than those contained in the present FCC Licenses issued for
operation of such Station, shall not be a Material Adverse Condition.
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Material Adverse Effect: A material adverse effect on the assets,
business, operations, financial condition or results of operations, in the case
of the Emmis Stations, of the Emmis Stations taken as a whole, and in the case
of KZLA, of KZLA, except in either case for any such effect resulting from (i)
general economic conditions applicable to the radio broadcast industry, (ii)
general conditions in the markets in which the applicable Station or Stations
operate, or (iii) circumstances that are not likely to recur and either have
been substantially remedied or can be substantially remedied without substantial
cost or delay.
Permitted Lien: (i) Any Lien arising solely by statute (including
encumbrances of a landlord) which secures a payment not yet due that arises, and
is customarily discharged, in the ordinary course of the applicable Station's
business; (ii) Liens arising in connection with operating leases (but not as to
financing leases) under the terms of any Station Agreement; or (iii) any other
Liens or imperfections in a Transferring Party's title to any Assets or
properties that, individually and in the aggregate, are not material in
character or amount to the assets or current or future operations of any Station
of the Transferring Party and are not reasonably likely to materially detract
from the value or materially interfere with the existing or future use of any of
such assets in the current or future operation of the applicable Station.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Recipient Party: When used in relation to the Bonneville Entities as
the Transferring Party, the Emmis Subsidiaries; and when used in relation to the
Emmis Subsidiaries as the Transferring Party, the Bonneville Entities (or
Bonneville International or Bonneville Holding, as the case may be).
Station, each Station, the Station, a Station or any Station: When used
in reference to the Bonneville Entities as the Transferring Party, KZLA; and
when used in reference to the Emmis Subsidiaries as the Transferring Party, any
of the Emmis Stations.
Subsidiary: With respect to any Person, a corporation, partnership,
limited liability company, or other entity of which shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
directors of such corporation, or other Persons performing similar functions for
such entity, are owned, directly or indirectly, by such Person.
Taxes: All federal, state, local and foreign taxes including, without
limitation, income, gains, transfer, unemployment, withholding, payroll, social
security, real property, personal property, excise, sales, use and franchise
taxes, levies, assessments, imposts, duties, licenses and registration fees and
charges of any nature whatsoever, including interest, penalties and additions
with respect thereto and any interest in respect of such additions or penalties.
Tax Return: Any return, filing, report, declaration, questionnaire or
other document required to be filed for any period with any taxing authority
(whether domestic or foreign) in connection with any Taxes (whether or not
payment is required to be made with respect to such document).
TBA Contracts: The contracts and agreements that Bonneville
International assigned to Emmis Operating Subsidiary pursuant to the TBA.
TBA Effective Date: The Commencement Date of the TBA as defined in
Section 1 of the TBA.
Trade Agreements: Station Agreements providing for the sale of time on
a Station for other than monetary consideration.
Transfer Taxes: All sales, use, conveyance, recording and other similar
transfer taxes and fees applicable to, imposed upon or arising out of the
conveyance by the Transferring Party and the receipt by
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the Recipient of Assets whether now in effect or hereinafter adopted and
regardless of which party such Transfer Tax is imposed upon. Transfer Taxes
shall in no event include any net or gross income taxes.
Transferring Party: Either (i) the Emmis Subsidiaries collectively in
their capacity as the transferors of the Emmis Assets under this Agreement, or
(ii) the Bonneville Entities collectively in their capacity as the transferors
of the Bonneville Assets under this Agreement.
1.2 ADDITIONAL DEFINED TERMS.
As used herein, the following terms shall have the meanings defined in
the introduction, recitals or section indicated below:
Acquisition Proposal Section 5.14
Act Section 3.6(b)
Adjustment Amount Section 2.7(a)
Agreement Introduction
Appraisal Section 2.6(a)
Appraisal Report Section 2.6(a)
Arbitrating Firm Section 2.7(e)
Bonneville Assumed Obligations Section 2.4(c)
Bonneville Cap Section 9.2(b)
Bonneville FCC Licenses Section 4.6(a)
Bonneville Entities Introduction
Bonneville Entities' Loss Section 9.2(a)
Bonneville Holding Introduction
Bonneville Intellectual Property Section 4.10
Bonneville International Introduction
Bonneville Leased Real Property Section 4.9(c)
Bonneville Owned Real Property Section 4.9(b)
Bonneville Real Property Lease Section 4.9(c)
Bonneville Severance Cap Section 12.2(c)
Bonneville Threshold Section 9.2(b)
CERCLA Section 3.18(f)
Closing Section 8.1
Closing Date Section 8.1
Collection Period Section 2.8(b)
Dispute Notice Section 2.7(d)
Emmis Introduction
Emmis Assumed Obligations Section 2.3(a)
Emmis Cap Section 9.3(b)
Emmis Employees Section 12.2(a)
Emmis Entities Introduction
Emmis Entities' Loss Section 9.3(a)
Emmis FCC Licenses Section 3.6(a)
Emmis Intellectual Property Section 3.10
Emmis License Subsidiary Introduction
Emmis Operating Subsidiary Introduction
Emmis Leased Real Property Section 3.9(c)
Emmis Owned Real Property Section 3.9(b)
Emmis Real Property Lease Section 3.9(c)
Emmis Stations Recitals
Emmis Subsidiaries Introduction
Emmis Threshold Section 9.3(b)
ERISA Section 3.15(a)
Excluded Assets Section 2.2
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Excluded Employees Section 12.2(a)
FCC Section 4.22
FTC Section 3.22
Final Proration Notice Section 2.7(d)
HSR Act Section 5.3
HSR Filings Section 5.3
Indemnified Party Section 9.4(a)
Indemnifying Party Section 9.4(a)
Intellectual Property Section 2.1(e)
KIHT Sublease Section 5.19(d)
KZLA Recitals
Like-Kind Exchange Recitals
Manchester Road Premises Section 5.19(a)
New Premises Section 5.19(c)
New Premises Lease Section 5.19(c)
Party Section 13.13
Permits Section 2.1(c)
Preliminary Adjustment Report Section 2.7(d)
Real Property Section 2.1(b)
Retained Receivables Section 2.8(a)
Section 1031 Schedule Section 2.6(b)
Xxxxxxxx Agreement Recitals
Xxxxxxxx Entities Recitals
Xxxxxxxx Lawsuit Section 3.13(b)
Xxxxxxxx Stations Recitals
Station Agreements Section 2.1(d)
Sublease Section 5.19(b)
Survival Period Section 9.1
Tangible Personal Property Section 2.1(a)
TBA Recitals
Transferred Employees Section 12.2(a)
WIL Recitals
WKKX Recitals
WRTH Recitals
WVRV Recitals
ARTICLE II
EXCHANGE OF ASSETS
2.1 DESCRIPTION OF ASSETS.
Upon and subject to the terms and conditions of this Agreement and as
set forth in Section 2.5, and except to the extent already effected pursuant to
the TBA, on the Closing Date, each Transferring Party shall assign, transfer and
convey to the Recipient Party all of the Transferring Party's right, title and
interest in, to and under the Assets of the Transferring Party, which shall
include any right, title and interest in, to and under the following assets and
properties of the Transferring Party:
(a) Tangible Personal Property. All transmitter, antenna and other
broadcast equipment, studio equipment, furniture, fixtures, parts, computers and
office equipment, materials and supplies, inventories, programming library and
other tangible personal property (including all promotional, sales, marketing
and format specific programming materials and supplies, operating manuals, and
warranties from third parties relating to any such tangible personal property)
owned or leased by the Transferring Party and used or held for use in connection
with any Station of the Transferring Party, including but not
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limited to the items listed on Schedule 3.8 for the Emmis Stations, and the
items listed on Schedule 4.8 for KZLA, together with such modifications,
replacements, improvements and additional items, and subject to such deletions
therefrom, made or acquired collectively between the date hereof and the Closing
Date in accordance with the terms and provisions of this Agreement and the TBA
that are used in the operation of any Station of the Transferring Party
(collectively, the "Tangible Personal Property").
(b) Real Property. The real property listed (together with the
interest therein) on Schedule 3.9 for the Emmis Stations, and the real property
listed (together with the interest therein) on Schedule 4.9 for KZLA, including
in each case all fixtures and improvements thereon and such additional
improvements and interests in real property made or acquired by or for the
benefit of the Transferring Party between the date hereof and the Closing Date
that are used or held for use in the operation of any Station of the
Transferring Party, and all easements or other appurtenances for the benefit of
such real property (collectively, the "Real Property").
(c) Permits. The FCC Licenses, and all other governmental permits,
licenses and authorizations (and any renewals, extensions, amendments or
modifications thereof or applications therefor) currently in effect and now held
by the Transferring Party, including, but not limited to, those listed on
Schedule 3.6 for the Emmis Stations and Schedule 4.6 for KZLA, or hereafter
obtained by the Transferring Party between the date hereof and the Closing Date,
that are necessary for or related to the operation of any Station of the
Transferring Party (the "Permits").
(d) Station Agreements. All contracts, leases (including, but not
limited to, real estate use licenses or occupancy agreements), agreements,
commitments and other arrangements, and any amendments or modifications, used or
held for use in the operation of such any Station of the Transferring Party as
of the date hereof (including, but not limited to, those listed on Schedules
3.7(a), 3.7(b) or 3.9 for the Emmis Stations and those listed on Schedule 4.4 of
the TBA and Schedules 4.7(a), 4.7(b), or 4.9 for KZLA) or made or entered into
by the Transferring Party between the date hereof and the Closing Date in
compliance with this Agreement and used or held for use in the operation of any
Station of the Transferring Party (collectively, the "Station Agreements").
(e) Intellectual Property. All trade names, trademarks, service marks,
copyrights, patents, jingles, slogans, symbols, logos, the applicable call
letters, internet addresses, e-mail addresses, websites and domain names,
inventions, and any other proprietary material, process, trade secret or trade
right principally used by the Transferring Party in the operation of any Station
of the Transferring Party, and all registrations, applications and licenses for
any of the foregoing, including, without limitation, those set forth on Schedule
3.10 for any of the Emmis Stations, and those set forth on Schedule 4.10 for
KZLA; any additional such items acquired or used or held for use by the
Transferring Party in connection with the operation of any Station between the
date hereof and the Closing Date; and all goodwill associated with any of the
foregoing (collectively, the "Intellectual Property").
(f) Records. The originals or true and complete copies of all of the
books, records, accounts, files, logs, ledgers, journals, data, plans, maps,
engineering records, technical drawings and FCC applications pertaining to or
used or held for use in the operation of any Station of the Transferring Party,
including, but not limited to, computer-readable disk or tape copies of any of
such items stored on computer disks or tapes.
(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 before Closing owned or used or held for use by the
Transferring Party principally in connection with the operation of any Station
of the Transferring Party, including but not limited to all goodwill of each
Station, and including all studio and office equipment of KIHT as described in
Section 5.19(a).
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2.2 EXCLUDED ASSETS.
Notwithstanding any provision of this Agreement to the contrary, the
Assets of each Transferring Party shall not include the following assets or
property (the "Excluded Assets"):
(a) Any and all cash, bank deposits and other cash equivalents,
certificates of deposit, securities, cash deposits made on behalf of any Station
of the Transferring Party to secure contract obligations (except to the extent
the Transferring Party receives a credit therefor in determining the Adjustment
Amount under Section 2.7), and all accounts receivable (other than non-cash
receivables under Trade Agreements of the Transferring Party) for services
performed or for goods sold or delivered by any Station of the Transferring
Party prior to the Closing Date;
(b) All rights and claims of the Transferring Party whether mature,
contingent or otherwise, against third parties with respect to, or which are
made under or pursuant to, other Excluded Assets of the Transferring Party or
which relate to the period prior to the Closing;
(c) All prepaid expenses of the Transferring Party (and rights arising
therefrom or related thereto) except to the extent the Transferring Party is
given a credit therefor in determining the Adjustment Amount under Section 2.7;
(d) All Benefit Plans of the Transferring Party;
(e) All Tax Returns (and supporting materials), and all claims of the
Transferring Party with respect to any Tax refunds, relating to any Station of
the Transferring Party;
(f) All of the Transferring Party's rights under or pursuant to this
Agreement or the TBA, or any other rights in favor of the Transferring Party
pursuant to the other Documents;
(g) All loan agreements, letters of credit and other instruments
evidencing indebtedness for borrowed money;
(h) All contracts of insurance, all coverages and proceeds thereunder
and all rights in connection therewith, including, without limitation, rights
arising from any refunds due with respect to insurance premium payments to the
extent they relate to such insurance policies;
(i) All tangible personal property disposed of or consumed between the
date hereof and the Closing Date in accordance with and pursuant to the terms
and provisions of this Agreement;
(j) The Transferring Party's corporate minute books, ownership transfer
records and other entity records, and any records relating to other Excluded
Assets of the Transferring Party and to Liabilities of the Transferring Party
other than the Recipient Party's Assumed Obligations;
(k) In the case of the Emmis Assets, all rights to the names
"Xxxxxxxx," "Xxxxxxxx Broadcast Group," "Xxxxxxxx Communications," "Emmis" and
any logo or variation thereof and goodwill associated therewith; and in the case
of the Bonneville Assets, all rights to the name "Bonneville" and any logo or
variation thereof and goodwill associated therewith;
(l) Subject to Section 5.19(b), in the case of the Emmis Assets, the
traffic system used in the operation of WVRV at 0000 Xxxx Xxxxxx, Xx. Xxxxx,
Xxxxxxxx, and the real property and other tangible personal property located at
0000 Xxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx, other than such tangible personal
property used in the operation of WVRV that is specifically listed in Schedule
3.8;
(m) In the case of the Emmis Assets, the lease of the studio and office
space now used in the operation of WKKX;
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(n) The assets and rights principally related to the Xxxxx and D.C.
Morning Show on WKKX as listed on Schedule 2.2(n), including the talent
agreements with Xxxxx Xxxxxxx and D.C. Chymes, syndication contracts for the
syndication of such Morning Show, and the website, e-mail addresses, internet
addresses, domain names and other intellectual property rights principally
related to such Morning Show as listed on Schedule 2.2(n);
(o) Subject to Section 5.19(a), the studio and office equipment used in
the operation of WKKX as identified on Schedule 2.2(o);
(p) All shares of capital stock, partnership interests, interests in
limited liability companies or other equity interest, including, but not limited
to, any options, warrants or voting trusts relating thereto which are owned by
the Transferring Party and not expressly specified in Section 2.1; and
(q) All financial, accounting, management information and network
software used or held for use at KZLA or the Emmis Stations; and
(r) The contracts and employees listed on Schedule 2.2(r).
2.3 EMMIS ENTITIES' ASSUMPTION OF LIABILITIES.
(a) To the extent not already assumed pursuant to the TBA, the Emmis
Entities shall at Closing assume and agree to pay, discharge and perform the
following Liabilities of the Bonneville Entities (collectively, the "Emmis
Assumed Obligations"):
(i) All Liabilities arising under all Station Agreements and
the Permits assigned and transferred to the Emmis Subsidiaries in
accordance with this Agreement to the extent such Liabilities arise
during and relate to any period on or after the Closing Date
(excluding, however, any Liability arising from or under (A) the breach
of any Station Agreement by reason of its assignment to the Emmis
Subsidiaries without a required consent, (B) any other breach or
default by any Bonneville Entity upon or prior to Closing under any
Station Agreement unless caused by any Emmis Entity's action or failure
to perform under the TBA or (C) any Station Agreement relating to the
use of any item of property unless possession of such item and
ownership or the right to the use of such item in accordance with the
terms of such Station Agreement, are conveyed to an Emmis Entity as
part of the Bonneville Assets).
(ii) Other Liabilities of the Bonneville Entities to the
extent, and only to the extent, the amount thereof is properly included
as a credit to the Emmis Subsidiaries in calculating the Adjustment
Amount for KZLA pursuant to Section 2.7.
(b) Except for the Emmis Assumed Obligations, the Emmis Entities shall
not assume or in any manner be liable for any Liabilities of either Bonneville
Entity of any kind or nature, all of which each Bonneville Entity shall pay,
discharge and perform when due; provided, however, that the Bonneville Entities
shall have the right to contest in good faith any Liability of the Bonneville
Entities.
2.4 BONNEVILLE ENTITIES' ASSUMPTION OF LIABILITIES.
(a) Bonneville International shall at Closing assume and agree to pay,
discharge and perform the following Liabilities of the Emmis Entities:
(i) All Liabilities arising under all Station Agreements and
the Permits (excluding the Emmis FCC Licenses) assigned and transferred
to the Bonneville Entities in accordance with this Agreement to the
extent such Liabilities arise during and relate to any period on or
after the Closing Date (excluding, however, any Liability arising from
or under (A) the breach of any Station Agreement by reason of its
assignment to Bonneville International without a required consent, (B)
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any other breach or default by any Emmis Entity upon or prior to
Closing under any Station Agreement or (C) any Station Agreement
relating to the use of any item of property unless possession of such
item, and ownership or the right to use of such item in accordance with
the terms of such Station Agreement, are conveyed to a Bonneville
Entity as part of the Emmis Assets).
(ii) Other Liabilities of the Emmis Entities to the extent,
and only to the extent, the amount thereof is properly included as a
credit to the Bonneville Entities in calculating the Adjustment Amount
for the Emmis Stations pursuant to Section 2.7.
(b) Bonneville Holding shall at Closing assume and agree to pay,
discharge and perform when due the Liabilities arising under the Emmis FCC
Licenses assigned and transferred to Bonneville Holding in accordance with this
Agreement to the extent such Liabilities arise during and relate to any period
on or after the Closing Date (excluding, however, any Liability arising from any
breach or default by any Emmis Entity upon or prior to Closing under the Emmis
FCC Licenses).
(c) The Liabilities assumed by the Bonneville Entities under this
Section 2.4 are collectively referred to herein as the "Bonneville Assumed
Obligations."
(d) Except for the Bonneville Assumed Obligations, the Bonneville
Entities shall not assume or in any manner be liable for any Liabilities of any
Emmis Entity of any kind or nature, all of which each Emmis Entity shall pay,
discharge and perform when due; provided, however, that the Emmis Entities shall
have the right to contest in good faith any Liability of the Emmis Entities.
2.5 EXCHANGE OF ASSETS.
(a) In consideration of the Bonneville Entities' conveyance of the
Bonneville Assets to the Emmis Subsidiaries and the assumption by the Bonneville
Entities of the Bonneville Assumed Obligations, the Emmis Entities agree that at
the Closing (i) Emmis Operating Subsidiary shall assign, transfer and convey to
Bonneville International, free and clear of any Liens other than Permitted
Liens, and Bonneville International shall acquire and accept from Emmis
Operating Subsidiary, all right, title and interest of Emmis Operating
Subsidiary in, to and under all Emmis Operating Assets, and (ii) Emmis License
Subsidiary shall assign, transfer and convey to Bonneville Holding, free and
clear of any Liens other than Permitted Liens, and Bonneville Holding shall
acquire and accept from Emmis License Subsidiary, all right, title and interest
of Emmis License Subsidiary in, to and under all Emmis License Assets.
(b) In consideration of the Emmis Subsidiaries' conveyance of the Emmis
Assets to the Bonneville Entities and the assumption by the Emmis Entities of
the Emmis Assumed Obligations, the Bonneville Entities agree that, to the extent
not already effected pursuant to the TBA, at the Closing (i) Bonneville
International shall assign, transfer and convey to Emmis Operating Subsidiary,
free and clear of any Liens other than Permitted Liens, and Emmis Operating
Subsidiary shall acquire and accept from Bonneville International, all right,
title and interest of Bonneville International in, to and under all Bonneville
Operating Assets, and (ii) Bonneville Holding shall assign, transfer and convey
to Emmis License Subsidiary, free and clear of any Liens other than Permitted
Liens, and Emmis License Subsidiary shall acquire and accept from Bonneville
Holding, all right, title and interest of Bonneville Holding in, to and under
all Bonneville License Assets.
(c) The parties agree that the value of the Emmis Assets is
$185,000,000, and the value of the Bonneville Assets is $185,000,000.
2.6 ALLOCATION OF ASSET VALUES.
(a) The fair market value of the Emmis Assets and the Bonneville Assets
shall be determined and allocated on the basis of an appraisal (the "Appraisal")
prepared by the Appraisal Firm. The
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Appraisal Firm shall be instructed to perform an appraisal of the classes of
Assets of each Station and to deliver a report to the Emmis Entities and
Bonneville Entities as soon as reasonably practicable (the "Appraisal Report").
The Appraisal Report shall be subject to the approval of the Emmis Entities and
Bonneville Entities, which shall cooperate in good faith to resolve any issues
relating to the Appraisal Report. The Emmis Entities and Bonneville Entities
shall each pay one-half of the fees, costs and expenses of the Appraisal Firm
regardless of whether the transactions contemplated by this Agreement are
consummated.
(b) Within thirty (30) days of receipt of the Appraisal Report, the
Emmis Entities and Bonneville Entities shall prepare a schedule setting forth
the respective Emmis Assets and Bonneville Assets in each "exchange group" and
"residual group" (as each such term is defined in Treas. Reg. Section
1.1031(j)-1(b)(2)) for the Like-Kind Exchange (the "Section 1031 Schedule"). The
Emmis Entities and Bonneville Entities shall cooperate in good faith to resolve
any issues relating to the Section 1031 Schedule to be filed with their
respective federal income Tax Returns.
(c) Each party, as necessary, shall prepare IRS Form 8594 and IRS Form
8824 reflecting the fair market value of the Assets that such party has
transferred and received as determined in accordance with this Section and shall
forward each such form to the other parties within thirty (30) days after
reaching agreement with the other parties on the Section 1031 Schedule. Each
party shall file its respective federal income Tax Return, if any, required for
the tax year in which the Closing occurs with the IRS Form 8594 and IRS Form
8824 as prepared in accordance with this Section. Each party covenants and
agrees that such party will not take a position on any income Tax Return that is
inconsistent with the terms of this Section.
2.7 PRORATION ADJUSTMENT.
(a) All operating revenue and operating expenses of the Emmis Stations
shall be adjusted and allocated, and all operating revenue and operating
expenses of KZLA shall be adjusted and allocated, in each case between the
Transferring Party and the Recipient Party, and an adjustment shall be made as
provided in this Section to the extent necessary to reflect the principle that
all such revenue and expenses attributable to the operation of the Emmis
Stations or KZLA on or before the date preceding the Closing Date shall be for
the account of the corresponding Transferring Party, and all such revenue and
expenses attributable to the operation of the Emmis Stations or KZLA on and
after the Closing Date shall be for the account of the corresponding Recipient
Party. As to KZLA, this Section 2.7 shall only apply to the extent the
applicable proration or adjustment is not addressed by the provisions included
in Section 4.5 of the TBA. The net adjustment amount determined in accordance
with this Section with respect to the Emmis Stations, and the separate net
amount determined in accordance with this Section with respect to KZLA, is each
referred to as an "Adjustment Amount". Notwithstanding the foregoing, the
operating revenue to which the Emmis Entities are entitled under the TBA, and
the operating expenses required to be paid by the Emmis Entities under the TBA,
shall not be taken into account in determining the Adjustment Amount with
respect to KZLA. Similarly, the monthly fixed fee payments to be paid to
Bonneville International by the Emmis Entities under the TBA shall not be taken
into account in determining the Adjustment Amount with respect to KZLA.
(b) Without limiting the generality of the foregoing:
(i) The Transferring Party shall receive a credit for the
unapplied portion, as of Closing, of the security deposits made by the
Transferring Party under those Stations Agreements assumed by the
Recipient Party at Closing in accordance with Section 2.3 or 2.4.
(ii) The Recipient Party shall be given a credit in the
amount, if any, by which the contracted value of all advertising time
required to be broadcast on the Transferring Party's Station, in the
case of KZLA, or Stations, in the case of the Emmis Stations, on or
after the Closing Date under the Trade Agreements of the Transferring
Party's Station or Stations exceeds by more than $50,000, the
contracted value of the goods and services to be received on or after
the Closing Date under such Trade Agreements. The Transferring Party
shall be given a credit in the amount, if any, by which the contracted
value of the goods or services to be received on or after
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the Closing Date under the Trade Agreements of the Transferring Party's
Station or Stations exceeds by more than $50,000 the contracted value
of any advertising time required to be broadcast under such Trade
Agreements on or after the Closing Date.
(iii) The Recipient Party shall be given a credit equal to the
amount of cash consideration that the Transferring Party has not paid
prior to the Closing Date for programming acquired from third parties
and run by the Transferring Party's Station or Stations prior to the
Closing Date.
(iv) With respect to each vacation day or portion thereof
earned but not taken before the Closing Date by the employee of the
Transferring Party's Station or Stations hired by the Recipient Party,
the Recipient Party shall receive a credit equal to the compensation
equivalent thereof.
(v) An adjustment and proration shall be made in favor of the
Transferring Party for the amount, if any, of prepaid expenses, the
benefit of which accrues to the Recipient Party, and other current
assets acquired by the Recipient Party which are paid by the
Transferring Party to the extent such prepaid expenses and other
current assets relate to the period after the Closing, provided that
the credit given the Transferring Party for each prepaid expense shall
not exceed an amount commensurate with the benefit therefrom to be
received by the Recipient Party after Closing.
(vi) Sales persons' commissions, chargebacks and allocated
bonuses shall be prorated.
(vii) There shall be no proration for sick leave.
(viii) There shall be no proration for any payments made by
Interep in connection with obtaining the right to serve as the national
sales representative of any of the Emmis Stations.
(ix) There shall be no proration for any payments made by
Sentry in connection with obtaining the right to serve as the national
sales representative of KZLA.
(x) There shall be no proration of any FCC regulatory fees
applicable to either the Emmis Stations or KZLA.
(xi) There shall be no proration of any increase in salary for
union employees of a Station that becomes effective after Closing for
any period prior to Closing.
(c) To the extent not inconsistent with the express provisions of this
Agreement, the allocations made pursuant to this Section shall be made in
accordance with generally accepted accounting principles, except with regard to
any materiality limitations or qualifications imposed thereby.
(d) Within sixty (60) days after the Closing Date, each Transferring
Party shall provide the Recipient Party with a statement setting forth a
detailed computation of the Transferring Party's reasonable and good faith
estimate of the Adjustment Amount as of the Closing Date with respect the
Transferring Party's Station or Stations (each, a "Preliminary Adjustment
Report"). If the Adjustment Amount reflected on the Preliminary Adjustment
Report is a credit to the Recipient Party, the Transferring Party shall pay the
Recipient Party the amount of the preliminary Adjustment Amount within ten (10)
business days of receipt of such Preliminary Adjustment Report, and if the
Adjustment Amount reflected on the Preliminary Adjustment Report is a charge to
the Recipient Party, the Recipient Party shall pay the Transferring Party the
amount of such preliminary Adjustment Amount within ten (10) business days of
receipt of such Preliminary Adjustment Report. Within ninety (90) days after the
Closing Date, each
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Recipient Party shall deliver to the Transferring Party in writing and in
reasonable detail a good faith final determination of the Adjustment Amount
determined as of the Closing Date with respect to the Station or Stations
transferred by the Transferring Party ("Final Proration Notice"). The
Transferring Party shall assist the Recipient Party in making such
determination, and the Recipient Party shall provide the Transferring Party with
reasonable access to the properties, books and records relating to the
applicable Station or Stations for the purpose of determining the applicable
Adjustment Amount. The Transferring Party shall have the right to review the
computations and workpapers used in connection with the Recipient Party's
preparation of the Adjustment Amount. If the Transferring Party disagrees with
the amount of the Adjustment Amount determined by the Recipient Party, the
Transferring Party shall so notify the Recipient Party in writing (the "Dispute
Notice") within thirty (30) days after the date of receipt of the Recipient
Party's Final Proration Notice, specifying in detail any point of disagreement.
After the receipt of any Dispute Notice, the Recipient Party and the
Transferring Party shall negotiate in good faith to resolve any disagreements
regarding the applicable Adjustment Amount. If agreement is reached within
thirty (30) days after the Recipient Party's receipt of the Dispute Notice, then
upon reaching such agreement, the Transferring Party shall pay to the Recipient
Party or the Recipient Party shall pay to the Transferring Party, as the case
may be, within five (5) days an amount equal to the difference between (i) the
agreed Adjustment Amount and (ii) the preliminary Adjustment Amount indicated in
the applicable Preliminary Adjustment Report. Any such payment shall be made as
provided in Section 2.7(f). If agreement is not reached within such 30-day
period with respect to a disputed Adjustment Amount, then the dispute
resolutions of Section 2.7(e) shall apply.
(e) If the Transferring Party and its auditors and the Recipient Party
and its auditors do not, within the 30-day period specified in Section 2.7(d),
reach an agreement on an Adjustment Amount as of the Closing Date, then Ernst &
Young, LLP (the "Arbitrating Firm") shall resolve the disputed items. The
Recipient Party and the Transferring Party shall each inform the Arbitrating
Firm in writing as to their respective positions concerning the disputed
Adjustment Amount as of the Closing Date, and each shall make readily available
to the Arbitrating Firm any books and records and work papers relevant to the
preparation of such firm's computation of the disputed Adjustment Amount. The
Arbitrating Firm shall be instructed to complete its analysis within thirty (30)
days from the date of its engagement and upon completion to inform the parties
in writing of its own determination of the disputed Adjustment Amount and the
basis for its determination. Any determination by the Arbitrating Firm in
accordance with this Section shall be final and binding on the parties for
purposes of this Section. Within five (5) days after the Arbitrating Firm
delivers to the parties its written determination of the disputed Adjustment
Amount, the Transferring Party shall pay to the Recipient Party, or the
Recipient Party shall pay to the Transferring Party, as the case may be, an
amount equal to the difference between (i) such Adjustment Amount as determined
by the Arbitrating Firm and (ii) the preliminary Adjustment Amount indicated in
the applicable Preliminary Adjustment Report. Any such payment shall be made as
provided in Section 2.7(f).
(f) Each payment required under Section 2.7(d) or (e) shall be paid by
wire transfer in immediately available funds to the account of the payee at a
financial institution in the United States. Any payment not received by the
Party entitled thereto within the applicable period provided for in Section
2.7(d) or (e) shall bear interest from such date until paid in full at a rate
per annum equal to the prime rate in effect at the end of such period (as
published in the Money Rates column of the Eastern Edition of The Wall Street
Journal).
(g) Solely for purposes of calculating each Adjustment Amount under
this Section 2.7, the Closing Date shall be deemed to be October 1, 2000 at
12:01 a.m. For all other purposes under or in connection with this Agreement,
including, but not limited to, representations, warranties, covenants, rights to
indemnification, risk of loss (other than with respect to operating income and
operating expenses allocated in accordance with this Section 2.7), conveyancing
documents and closing certificates, the Closing Date shall be, and the Closing
shall occur on, the date of this Agreement.
2.8 ACCOUNTS RECEIVABLE.
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(a) Subject to the TBA with respect to KZLA, within ten (10) business
days after the Closing Date, each Transferring Party shall furnish to the
Recipient Party a true and complete list of the Transferring Party's accounts
receivable (other than non-cash receivables under Trade Agreements, which are
included as part of the Assets pursuant to Section 2.1(d)) arising from the
operation of the Transferring Party's Station or Stations prior to the Closing
Date (for each Transferring Party, the "Retained Receivables"), which shall set
forth for each Retained Receivable the name of the debtor, the date of the
invoice, the amount of any payments previously received on account and the
balance due.
(b) For a period of one hundred eighty (180) days after the Closing
Date (the "Collection Period"), each Recipient Party will, without charge to the
Transferring Party, use its usual and customary procedures (which may include
referral to a collection agency) to collect the Retained Receivables as the
Transferring Party's agent (but Recipient Party shall not have any fiduciary
obligations with respect thereto) for collection, provided that (i) the
Recipient Party shall not be required to commence litigation, employ legal
counsel or make any other extraordinary collection efforts, and (ii) the
Recipient Party's obligation to act as the Transferring Party's agent in the
collection of the Retained Receivables shall terminate upon expiration of the
Collection Period. For the purpose of determining amounts collected by the
Recipient Party with respect to the Retained Receivables of the Transferring
Party, each payment by an account debtor shall be applied to the older or oldest
accounts receivable of such account debtor unless the account debtor in writing
(a copy of which the Recipient Party shall provide to the Transferring Party)
identifies such an account as being in dispute and directs that a particular
payment be applied to a specific newer account receivable.
(c) Every four (4) weeks during the Collection Period (and within
fifteen (15) days after the end of the Collection Period), each Recipient Party
shall deliver to the Transferring Party a statement showing all collections of
Retained Receivables made on behalf of the Transferring Party since the last
previous report and shall pay such collections to the Transferring Party by
check, or by wire transfer, as specified by the Transferring Party, at the time
such statement is delivered. A Recipient Party shall have no right to setoff
amounts owed under this Agreement by the Recipient Party to the Transferring
Party against any amounts owed under this Agreement by such Transferring Party
to the Recipient Party.
(d) No Transferring Party shall engage in any collection efforts
against account debtors under its Retained Receivables during the first ninety
(90) days of the Collection Period, other than with respect to accounts
receivable identified as in dispute as provided in foregoing Section 2.8(b).
After the first ninety (90) days of the Collection Period, a Transferring Party
shall have the right, at its expense, to assist and participate with the
Recipient Party in the collection of such unpaid Retained Receivables, provided,
however, that the Transferring Party's collection efforts shall be commercially
reasonable and consistent with its past practices.
(e) A Recipient Party shall not, without the Transferring Party's prior
written consent, compromise or settle for less than full value any of the
Transferring Party's Retained Receivables unless the Recipient Party pays the
Transferring Party the full amount of any deficiency. A Recipient Party shall be
entitled to purchase any Retained Receivable from the Transferring Party for the
full amount thereof at any time during or at the expiration of the Collection
Period.
(f) At the end of the Collection Period, each Recipient Party shall
return to the Transferring Party all files concerning the collection or attempts
to collect the Retained Receivables of the Transferring Party and the Recipient
Party's responsibility for the collection of such Retained Receivables shall
cease, provided that the Recipient Party shall promptly pay over to the
Transferring Party any amounts received with respect to the Retained Receivables
of the Transferring Party after the Collection Period, together with a statement
setting forth the components of such amounts. Any payment not received by the
Party entitled thereto by the payment date specified in Section 2.8(c) shall
bear interest from such date until paid in full at a rate per annum equal to the
prime rate in effect on such date plus three percent (3.0%) (as published in the
Money Rates column of the Eastern Edition of The Wall Street Journal).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE EMMIS ENTITIES
The Emmis Entities, jointly and severally, represent and warrant to the
Bonneville Entities as follows:
3.1 ORGANIZATION, GOOD STANDING AND REQUISITE POWER.
Each of the Emmis Entities is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has all requisite power to own, operate and lease those Emmis Assets which
it owns or at Closing will own and to carry on its business. Each Emmis Entity
is duly licensed, qualified to do business and in good standing as a foreign
entity under the laws of the jurisdiction listed beside the Emmis Entity's name
in Schedule 3.1.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.
Each Emmis Entity has all requisite corporate power and authority to
enter into this Agreement and the other Documents and to consummate the
transactions contemplated by this Agreement and each of the other Documents. The
execution and delivery of this Agreement and each of the other Documents by each
Emmis Entity (as appropriate) and the consummation by each Emmis Entity of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action (including all necessary shareholder approvals, if
any) on the part of each Emmis Entity. This Agreement has been, and each of the
other Documents at or prior to Closing will be, duly executed and delivered by
each Emmis Entity. This Agreement constitutes (and each of the other Documents,
when executed and delivered, will constitute) the valid and binding obligation
of each Emmis Entity enforceable against each Emmis Entity in accordance with
its terms except as the enforceability of this Agreement or of any of the other
Documents may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and by judicial discretion in the enforcement of
equitable remedies.
3.3 ABSENCE OF CONFLICTS.
Except as set forth on Schedule 3.3, and except for necessary
clearances or approvals under the HSR Act or the Act, the execution, delivery
and performance by each Emmis Entity of this Agreement and the other Documents,
and consummation by each Emmis Entity of the transactions contemplated hereby
and thereby, do not and will not (i) conflict with or result in any breach of
any of the terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in a violation of, (iv) give any third party the right to modify,
terminate or accelerate any obligation under, or (v) result in the creation of
any Lien upon the Emmis Assets under, the provisions of the organizational
documents of such Emmis Entity, any indenture, mortgage, lease, loan agreement
or other agreement or instrument to which such Emmis Entity is bound or
affected, or any law, statute, rule, judgment, order or decree to which such
Emmis Entity is subject.
3.4 CONSENTS.
Except as set forth on Schedule 3.7(b) and Schedule 3.9, and except for
any necessary clearances or approvals under the HSR Act or the Act, the
execution, delivery and performance by each Emmis Entity of this Agreement and
the other Documents, and consummation by each Emmis Entity of the transactions
contemplated hereby and thereby, do not and will not require the authorization,
consent, approval, exemption, clearance or other action by or notice or
declaration to, or filing with, any court, any administrative or other
governmental body, or any other third party.
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3.5 EMMIS ASSETS; TITLE.
(a) The Emmis Assets constitute all of the assets, properties and
rights of every type and description, real, personal and mixed, tangible and
intangible, that are currently used in, material to, or necessary for, the
operation of the Emmis Stations, with the exception of the Emmis Excluded Assets
and personnel.
(b) Together, the Emmis Subsidiaries at Closing will own and have good
(and in the case of real property, marketable) title to, or a valid lessee's or
licensee's interest (pursuant to one or more Station Agreements) in, all of the
Emmis Assets free and clear of all Liens except (i) Liens described on Schedule
3.5(b) (which the Emmis Subsidiaries shall cause to be released prior to Closing
and released of record promptly after Closing) and lack of vehicular access to
the WVRV main tower site as noted on Schedule 3.9 and (ii) Permitted Liens.
3.6 EMMIS FCC LICENSES.
Except as set forth on Schedule 3.6:
(a) At Closing, Emmis License Subsidiary will be the valid and legal
holder of each of the FCC Licenses listed on Schedule 3.6 (together as to all
Emmis Stations, the "Emmis FCC Licenses"), and any action of the FCC with
respect to each Emmis FCC License is a Final Action with the exception of the
FCC Order. The expiration date of the term of each main Emmis FCC License is
shown on Schedule 3.6.
(b) The Emmis FCC Licenses (i) are valid and in full force and effect,
and constitute all of the licenses, permits and authorizations used in or
required for the current operation of the Emmis Stations under the
Communications Act of 1934, as amended, and the rules, regulations and policies
of the FCC thereunder (collectively, the "Act"), and (ii) constitute all the
currently in effect licenses and authorizations, including amendments and
modifications thereto, issued by the FCC for the operation of the Emmis
Stations.
(c) Other than as set forth in the Emmis FCC Licenses or restrictions
applicable to the radio broadcast industry generally, none of the Emmis FCC
Licenses is subject to any restriction or condition which limits in any material
respect the full operation of the applicable Emmis Station as now conducted, and
as of the Closing Date, none of the Emmis FCC Licenses shall be subject to any
restriction or condition which would limit in any material respect the full
operation of such Emmis Station as currently operated.
(d) Each Emmis Station is being operated in all material respects in
accordance with the terms and conditions of the Emmis FCC Licenses and the Act,
including but not limited to those pertaining to RF emissions; and, to the
Knowledge of the Emmis Entities, none of the Emmis Stations is causing material
interference to other stations, or is experiencing material interference from
other stations, in violation of the Act.
(e) No applications, complaints or proceedings are pending or, to the
Knowledge of any Emmis Entity, are threatened which may result in the
revocation, modification, non-renewal or suspension of any of the Emmis FCC
Licenses, the denial of any pending applications, the issuance of any cease and
desist order or the imposition of any material fines, forfeitures or other
administrative actions by the FCC with respect to any Emmis Station or its
operation, other than actions or proceedings affecting the radio broadcasting
industry in general.
(f) To the Knowledge of any Emmis Entity, the Emmis Stations are in
compliance in all material respects with all requirements to file registrations,
reports, applications and other documents with the FCC with respect to each
Emmis Station, and all such registrations, reports, applications and documents
are true, correct and complete in all material respects.
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(g) Other than actions or proceedings affecting the radio broadcasting
industry in general or facts relating to the Bonneville Entities, no Emmis
Entity has Knowledge of matters (i) which might reasonably be expected to result
in the adverse modification, suspension or revocation of or the refusal to renew
any of the Emmis FCC Licenses or the imposition of any material fines or
forfeitures by the FCC against any Emmis Entity or any Emmis Station's owner or
operator thereof, or (ii) which might reasonably be expected to result in the
FCC's denial or delay of approval of the assignment to the Bonneville Entities
of any Emmis FCC License or the imposition of any Material Adverse Condition in
connection with approval of the transfer to the Bonneville Entities of any Emmis
FCC License.
(h) There are no unsatisfied or otherwise outstanding citations issued
by the FCC with respect to any Emmis Station or its operation.
(i) True, complete and accurate copies of all Emmis FCC Licenses
material to the operation of each Emmis Station have been delivered by the Emmis
Subsidiaries to the Bonneville Entities.
(j) Except for the Emmis FCC Licenses and the Emmis Permits identified
on Schedule 3.6,there are no material licenses, permits or authorizations from
governmental or regulatory authorities required for the lawful operation and
conduct of the Emmis Stations as previously and currently operated by the Emmis
Subsidiaries.
3.7 STATION AGREEMENTS.
(a) Schedule 3.7(a) lists all Trade Agreements of the Emmis Stations as
of the date indicated on such Schedule, and sets forth the parties thereto, the
contracted value of the remaining time required to be provided from and after
the date of such Schedule and the contracted value of the goods or services to
be received by the Emmis Stations from and after the date of such Schedule. True
and complete copies of all such written Trade Agreements in effect as of such
date involving broadcast time of more than $25,000, including all amendments,
modifications and supplements thereto, have been delivered to the Bonneville
Entities, and each Trade Agreement involving broadcast time on the Emmis
Stations of more than $25,000 entered into between the date of this Agreement
and Closing shall be promptly delivered to the Bonneville Entities.
(b) Schedule 3.7(b) lists all the following types of agreements used in
or relating to the operation of each Emmis Station:
(i) Agreements for sale of broadcast time on such Emmis
Station for monetary consideration that (A) are not terminable by the
owner or operator thereof without charge or penalty upon thirty (30)
days or less prior written notice and (B) involve broadcast time of
more than Twenty-Five Thousand Dollars ($25,000);
(ii) All network affiliation agreements;
(iii) All sales agency or advertising representation
contracts;
(iv) Each lease of any Emmis Asset (including a description of
the property leased thereunder) other than such agreements not
requiring expenditures of more than $25,000 in any calendar year and
having a term (after taking into account any cancellation right of the
Emmis Station without charge or penalty) of one (1) year or less except
for the Emmis Real Property Leases listed on Schedule 3.9;
(v) All collective bargaining agreements;
(vi) All severance agreements, employment agreements, talent
agreements and agreements with independent contractors, other than such
agreements that (A) do not provide for any severance payments or
benefits, (B) do not require expenditures of more than $25,000 in any
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calendar year and (C) have a term (after taking into account any
cancellation right of the Emmis Station without charge or penalty) of
one (1) year or less;
(vii) All agreements requiring such Emmis Station or the owner
or operator thereof, to acquire goods or services exclusively from a
single supplier or provider, or prohibiting such Emmis Station or the
owner or operator thereof from providing certain goods or services to
any Person other than a specified Person;
(viii) All agreements that have a remaining term (after taking
into account any cancellation rights of the Emmis Station without
charge or penalty) of more than one (1) year or involve a commitment of
more than $25,000; and
(ix) Any other agreement that is material to the business,
operations, financial condition or results of operations of any Emmis
Station.
True and complete copies of all the foregoing Station Agreements that are in
writing, and true and accurate summaries of all the foregoing Station Agreements
that are oral, including all amendments, modifications and supplements, have
been delivered to the Bonneville Entities. The Station Agreements included in
the Emmis Assets that are not described in Section 3.7(a) or in the foregoing
clauses (i) through (ix) of this Section 3.7(b) (without regard to the monetary
thresholds set forth in Section 3.7(a) or in such clauses of Section 3.7(b)) do
not involve commitments by parties thereto with an aggregate fair market value
of more than One Hundred Fifty Thousand Dollars ($150,000).
(c) Schedule 3.7(c) lists all of the contracts and agreements used in
or relating to the operation of the Emmis Stations to which an Affiliate of any
Emmis Entity or Xxxxxxxx Entity is a party. True and complete copies of those in
writing have been delivered to the Bonneville Entities, and summaries of those
that are oral are set forth on Schedule 3.7(c).
(d) With respect to the Station Agreements which are, individually or
in the aggregate, material to the assets, business, operations, financial
condition or results of operations of an Emmis Station, except as set forth in
the Schedules, (i) such Station Agreements are valid, binding, in full force and
effect, and enforceable against the relevant Emmis Entity or Xxxxxxxx Entity in
accordance with their terms except as the enforceability of such Station
Agreements may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and by judicial discretion in the enforcement of
equitable remedies; (ii) neither the Emmis Entities or Xxxxxxxx Entities nor, to
the Knowledge of any Emmis Entity, any other party is in material default under,
and no event has occurred which (after the giving of notice or the lapse of time
or both) would constitute a material default under, any such Station Agreements;
(iii) neither the Emmis Entities or Xxxxxxxx Entities nor any Affiliate of the
Emmis Entities or Xxxxxxxx Entities has granted or been granted any material
waiver or forbearance with respect to any such Station Agreement not reflected
in an amendment or modification; (iv) the Emmis Entities or Xxxxxxxx Entities
hold the right to enforce and receive the benefits under all such Station
Agreements, free and clear of Liens (other than Permitted Liens) but subject to
the terms and provisions of each such agreement; (v) none of the rights of any
Emmis Entity or Xxxxxxxx Entity or any Affiliate thereof under any such Station
Agreement is subject to termination or modification as a result of the
consummation of the transactions contemplated by this Agreement; and (vi) except
as set forth on Schedule 3.7(b) or 3.9, no consent or approval by each party to
any such Station Agreement is required thereunder for the consummation of the
transactions contemplated hereby.
3.8 TANGIBLE PERSONAL PROPERTY.
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(a) Schedule 3.8 lists, as of the date noted on such Schedule, all
Tangible Personal Property (other than Emmis Excluded Assets, office supplies
and other incidental items) necessary for the conduct of the business and
operations of each Emmis Station as now operated.
(b) Except as specified on Schedule 3.8, the equipment constituting a
part of the Tangible Personal Property used in or necessary for the operation of
each Emmis Station as now operated has been properly maintained in all material
respects in accordance with industry practices, is in a good state of repair and
operating condition (subject to ordinary wear and tear), and complies in all
material respects with the Act and other applicable material laws, rules,
regulations and ordinances.
(c) The Emmis Assets include all assets necessary to operate the Emmis
Stations other than personnel and the Emmis Excluded Assets.
3.9 EMMIS REAL PROPERTY.
(a) The list of Real Property set forth on Schedule 3.9 is a correct
and complete list of all of the interests in real estate which are used or held
for use by any Xxxxxxxx Entity or Emmis Entity to any material extent in the
operation of any Emmis Station.
(b) Emmis Operating Subsidiary holds or at Closing will hold good and
marketable fee simple title to each parcel of Real Property listed in Schedule
3.9 as owned by an Emmis Entity or a Xxxxxxxx Entity (the "Emmis Owned Real
Property") free and clear of any Liens except (i) Liens described on Schedule
3.5(b) (which the Emmis Subsidiaries shall cause to be released prior to Closing
and released of record promptly after Closing) and lack of vehicular access to
the WVRV main tower site as noted on Schedule 3.9 and (ii) Permitted Liens. To
each Emmis Entity's Knowledge, except as set forth on Schedule 3.9, there is no
pending, threatened or contemplated action to take by eminent domain or to
condemn any of the Real Property used in the operation of any of the Emmis
Stations.
(c) Each lease (including all amendments, modifications and
supplements) under which any Emmis Subsidiary leases or at Closing will lease an
interest in any Real Property (each, an "Emmis Real Property Lease") is
specified, and each leased Real Property, including but not limited to studio
and office space and each transmitter or antenna site (the "Emmis Leased Real
Property"), and its use by any Emmis Station are identified, on Schedule 3.9.
Except as set forth on such Schedule, such Emmis Subsidiary holds or at Closing
will hold good title to the lessee's interest under each Emmis Real Property
Lease free and clear of all Liens except Permitted Liens. True and complete
copies of all Emmis Real Property Leases, including all amendments,
modifications and supplements, together with all surveys, title policies and
real property records in possession of any Emmis Entity or to the Knowledge of
any Emmis Entity, after request therefore, any Xxxxxxxx Entity related to any
Emmis Real Property, have been delivered to the Bonneville Entities.
(d) Except as set forth on the Schedule 3.9 hereto, (i) each Emmis Real
Property Lease is legal, valid, binding and enforceable against the appropriate
Emmis Entity or Xxxxxxxx Entity in accordance with its terms; (ii) neither the
Emmis Entities nor, to the Knowledge of any Emmis Entity, any other party is in
material default under any Emmis Real Property Lease; (iii) to the Knowledge of
each Emmis Entity, 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 Emmis Real Property Lease, nor has any
Emmis Entity received written notice alleging any such event has occurred; (iv)
none of the rights of an Emmis Entity under any Emmis Real Property Lease is
subject to termination or modification as a result of the consummation of the
transactions contemplated by this Agreement; (v) no consent or approval by any
party to any Emmis Real Property Lease is required for the consummation of the
transactions contemplated hereby; and (vi) no Emmis Entity has granted or been
granted any waiver or forbearance with respect to any Emmis Real Property Lease
except as contained in amendments or modifications.
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(e) Except for the crumbling walls of and other structural defects
relating thereto in the building on the WVRV main broadcast antenna site at 532
DeBaliviere Avenue, St. louis, Missouri, and the deteriorated condition of the
paint on the broadcast tower at such site, (i) all improvements on the Emmis
Owned Real Property or Emmis Leased Real Property are in compliance in all
material respects with applicable federal, state and local laws, building codes,
ordinances and regulations, including but not limited to zoning and land use
laws, ordinances and regulations, and the use by any Emmis Station of each
portion of the Emmis Owned Real Property or Emmis Leased Real Property complies
in all material respects with applicable zoning and land use laws, ordinances
and regulations, and (ii) all improvements on the Emmis Owned Real Property and
all improvements owned by the lessee on the Emmis Leased Real Property are in
good working condition and repair (subject to ordinary wear and tear).
3.10 INTELLECTUAL PROPERTY.
Other than Emmis Excluded Assets, Schedule 3.10 lists all material
trade retail names, trademarks, service marks, copyrights and patents
principally used in the operation of the Emmis Stations, including all
registrations, applications and licenses for any of the Intellectual Property
(the "Emmis Intellectual Property"). Except as disclosed on Schedule 3.10:
(a) To the Knowledge of each Emmis Entity, the Emmis Entities own or at
Closing will own, free and clear of Liens other than Permitted Liens, all right
and interest in, and right and authority to use, or have or will have a valid
license to use, in connection with the conduct of the business of the applicable
Emmis Station as presently conducted, all of the Emmis Intellectual Property
listed on Schedule 3.10, and all of the rights and properties constituting a
part of the Emmis Intellectual Property are in full force and effect.
(b) There are no outstanding or, to the Knowledge of any Emmis Entity,
threatened judicial or adversary proceedings with respect to any of the Emmis
Intellectual Property.
(c) No Emmis Entity or Xxxxxxxx Entity has granted to any other person
or entity any license or other right or interest in or to any of the Emmis
Intellectual Property or to the use thereof.
(d) No Emmis Entity has Knowledge of any infringement or unlawful use
of any of the Emmis Intellectual Property.
(e) To each Emmis Entity's Knowledge, no Emmis Subsidiary or Xxxxxxxx
Entity has violated any provisions of the Copyright Act of 1976, 17 U.S.C.
Section 101, et seq., in any material respect.
(f) The Emmis Subsidiaries have delivered to the Bonneville Entities
copies of all state and federal registrations and other material documents, if
any, establishing any of the rights and properties constituting a part of the
Emmis Intellectual Property.
3.11 [INTENTIONALLY OMITTED]
3.12 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since April 30, 2000 and through the date hereof, other than as
described on Schedule 3.12:
(a) There has not been any damage, destruction or other casualty loss
with respect to the Emmis Assets (whether or not covered by insurance) which,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect.
(b) None of the Emmis Entities or the Emmis Stations has suffered any
adverse change or development which, individually or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect.
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(c) With respect to the Emmis Stations, no Emmis Entity or Xxxxxxxx
Entity has:
(i) amended, terminated, renewed or taken any action or
inaction that would result in a renewal of any Station Agreement except
in the ordinary course of business consistent with past practices, or
any Emmis Real Property Lease (other than any amendment, noted on
Schedule 3.9 hereto);
(ii) mortgaged, pledged or subjected to any Lien, any of the
Emmis Assets, except for Permitted Liens;
(iii) acquired or disposed of any Emmis Assets or entered into
any agreement or other arrangement for such acquisition or disposition,
except for immaterial amounts in the ordinary course of business
consistent with past practices;
(iv) entered into any agreement, commitment or other
transaction except those that (A) were entered into in the ordinary
course of business consistent with past practice or (B) are not
material to the assets, business, operations, results of operations or
financial condition of any Emmis Station;
(v) paid any bonus to any officer, director or employee or
granted to any officer, director or employee any other increase in
compensation in any form, except in the ordinary course of business
consistent with past practices;
(vi) adopted, amended or renewed any collective bargaining,
bonus, profit-sharing, compensation, stock option, pension, retirement,
deferred compensation, severance or other plan, agreement, trust, fund
or arrangement for the benefit of employees (whether or not legally
binding) or made any material changes in its policies of employment;
(vii) entered into any agreement (other than agreements that
will be terminated prior to Closing) with any Affiliate of any Emmis
Entity or Xxxxxxxx Entity; or
(viii) operated its business other than in the ordinary course
consistent with past practices.
3.13 LITIGATION.
(a) Except as described in Schedule 3.13, (i) there are no actions,
suits, claims, investigations or administrative or arbitration proceedings
pending or, to the Knowledge of any Emmis Entity, threatened against any Emmis
Entity or any Xxxxxxxx Entity before or by any court, arbitration tribunal or
governmental department or agency, domestic or foreign, that relates to any
Emmis Station or the Emmis Assets; (ii) neither any Emmis Entity nor, to the
Knowledge of any Emmis Entity, any of the officers or employees of any Emmis
Entity, has been charged with, or to the Knowledge of any Emmis Entity, is under
investigation with respect to, any violation of any provision of any federal,
state, foreign or other applicable law or administrative regulation in respect
of such officer's or employee's employment at any Emmis Station or with any
Emmis Entity; and (iii) neither any Emmis Entity, any properties or assets of
any Emmis Entity nor, to the Knowledge of any Emmis Entity, any officer or
employee of any Emmis Entity is a party to or bound by any order, arbitration
award, judgment or decree of any court, arbitration tribunal or governmental
department or agency, domestic or foreign, in respect of any business practices,
the acquisition of any property, or the conduct of any business of any Emmis
Entity which, individually or in the aggregate, has had or is reasonably likely
to have a Material Adverse Effect or materially impair the ability of any Emmis
Entity to perform its obligations hereunder and consummate the transactions
contemplated hereby.
(b) The lawsuit entitled Xxxxxxxx Broadcast Group, Inc. v. Emmis
Communications Corporation and Xxxxx Xxxxx, Civil Action No. 03-C-00-00475 filed
in the Circuit Court for Baltimore
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County, Maryland (the "Xxxxxxxx Lawsuit"), has been settled. As part of such
settlement, Emmis and the Xxxxxxxx Entities have entered into the Xxxxxxxx
Agreement pursuant to which Emmis has agreed to buy, and the Xxxxxxxx Entities
have agreed to sell, among other stations, the Xxxxxxxx Stations. The Xxxxxxxx
Agreement contemplates and permits the divestiture by the Emmis Entities of
stations purchased by the Emmis Entities under the Xxxxxxxx Agreement. Neither
the Xxxxxxxx Lawsuit nor the manner in which the Xxxxxxxx Lawsuit has been
settled shall have any adverse effect on the Emmis Stations or the Bonneville
Entities as the owners of the Emmis Stations.
3.14 LABOR MATTERS.
(a) Except as listed on Schedule 3.14(a):
(i) To each Emmis Entity's Knowledge, no present or former
employee or independent contractor of any Emmis Station has a pending
claim or charge which has been asserted or threatened against any Emmis
Subsidiary for (A) overtime pay; (B) wages, salaries or profit sharing;
(C) vacations, time off or pay in lieu of vacation or time off; (D) any
material violation of any statute, ordinance, contract or regulation
relating to minimum wages, maximum hours of work or the terms or
conditions of employment; (E) discrimination against employees on any
basis; (F) unlawful or wrongful employment or termination practices;
(G) unlawful retirement, termination or labor relations practices or
breach of contract; or (H) any material violation of occupational
safety or health standards.
(ii) There is not pending or, to the Knowledge of any Emmis
Entity, threatened any labor dispute, strike or work stoppage that
affects or interferes or is reasonably likely to affect or interfere
with the operation of any Emmis Station, and no Emmis Entity has
Knowledge of any organizational effort currently being made or
threatened by or on behalf of any labor union with respect to employees
of any Emmis Station. There are no material unresolved unfair labor
charges against any Emmis Station, and no Emmis Station has experienced
any strike, work stoppage or other similar significant labor
difficulties within the preceding twelve (12) months.
(b) Except as set forth on Schedule 3.7(b), (i) no Emmis Entity is a
signatory or a party to, or otherwise bound by, a collective bargaining
agreement now in effect which covers employees or former employees of any Emmis
Station, (ii) no Emmis Entity or Xxxxxxxx Entity has agreed to recognize any
union or other collective bargaining unit with respect to any employees of any
Emmis Station, and (iii) no union or other collective bargaining unit has been
certified as representing any employees of any Emmis Station.
(c) Schedule 3.14(c) sets forth a true and complete list, as of the
date set forth on such list, of all persons employed in connection with the
operation of an Emmis Station who earn more than $15,000 per year, and states
for each such employee the date hired, the level of compensation (including any
projected bonus) payable to such employee (limited in the case of each employee
who is compensated on a commission basis to a description of the manner in which
such commissions are determined and the specification of compensation earned by
such employee in 1999), and whether such employee is employed under a written
contract or is covered by a written severance agreement. Except pursuant to
written employment agreements and written severance agreements listed on
Schedule 3.7(b), the only severance obligations with respect to Employees at the
Emmis Stations are set forth on Schedule 3.14(c). A true and complete copy of
any handbook, policy manual or similar written guidelines furnished to employees
of any Emmis Station has been delivered to the Bonneville Entities.
3.15 [INTENTIONALLY OMITTED]
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3.16 COMPLIANCE WITH LAW.
Except as specified on Schedule 3.16, the Emmis Stations have been
operated and are operating in all material respects in compliance with the Act
and all other material federal, state and local laws, statutes, ordinances,
regulations, licenses, permits or exemptions therefrom and all applicable
orders, writs, injunctions and decrees of any court, commission, board, agency
or other instrumentality, and no owner or operator of any Emmis Station has
received any written notice of material noncompliance pertaining to any
ownership or operation of any Emmis Station that has not been cured.
3.17 [INTENTIONALLY OMITTED]
3.18 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 3.18, all environmental, health and
safety permits necessary for the operation of each Emmis Station have been
obtained, all such permits are valid and in full force and effect, and the Emmis
Stations are in compliance in all material respects with all terms and
conditions of such permits.
(b) Except as set forth on Schedule 3.18, there is no proceeding
pending or, to any Emmis Entity's 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
Emmis Stations, and to each Emmis Entity's Knowledge, there is no basis for any
such proceeding.
(c) Except as set forth on Schedule 3.18, to each Emmis Entity's
Knowledge, each Emmis Station has operated and is operating in all material
respects in compliance with all material federal, state, local and other laws,
statutes, ordinances and regulations, and licenses, permits, exemptions, orders,
writs, injunctions and decrees of any court, commission, board, agency or other
governmental instrumentality, applicable to such Emmis Station relating to
environmental matters.
(d) Except as set forth on Schedule 3.18, to each Emmis Entity's
Knowledge, there are no conditions or circumstances associated with the Emmis
Assets which may give rise to any material liability or material cost under
applicable environmental law. Except as listed on Schedule 3.18, no Emmis
Station owns or uses any electrical or other equipment containing
polychlorinated biphenyls.
(e) For the purposes of this Section 3.18, (i) "hazardous materials"
shall mean any waste, substance, materials, smoke, gas, emissions or particulate
matter designated as hazardous or toxic under any applicable environmental law,
including but not limited to, friable asbestos, urea formaldehyde,
polychlorinated biphenyls, regulated substances and wastes, radioactive
materials, radon, lead and petroleum and petroleum byproducts, including oil or
any fraction thereof, but excluding any such substances below applicable
governmental action levels, or small quantities of maintenance, cleaning and
emergency generator fuel supplies customary for the operation of radio stations,
and (ii) "environmental law" shall mean any federal, state, local or other laws,
statutes, ordinances, regulations, licenses, permits or any order, writ,
injunction or decree of any court, commission, board, agency or other
instrumentality relating to the regulation of hazardous materials.
(f) Except as set forth on Schedule 3.18, with respect to the operation
of any Emmis Station, no notice has been filed or, to any Emmis Entity's
Knowledge, been required to be filed under any applicable material law, rule,
regulation, order, judgment, injunction, decree or ruling reporting a release of
a hazardous material into the environment, and no notice pursuant to Section
103(a) or (c) of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.A. Section 9601, et seq. ("CERCLA") or any other
applicable environmental law or regulation has been or, to any Emmis Entity's
Knowledge, was required to be filed.
(g) Except as set forth on Schedule 3.18, no Emmis Entity or Xxxxxxxx
Entity has received any notice letter under CERCLA or any other written notice,
and, to each Emmis Entity's Knowledge, there is
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no investigation pending or threatened, to the effect that any Emmis Entity has
or may have material liability for or as a result of the release or threatened
release of a hazardous material into the environment or for the suspected
unlawful presence of hazardous material thereon nor, to any Emmis Entity's
Knowledge, does there exist any basis for such investigation.
(h) To each Emmis Entity's Knowledge, except as disclosed on Schedule
3.18, or in the environmental site assessments identified in Schedule 3.18, none
of the Emmis Operating Assets contains any hazardous materials or underground
storage tanks; and no underground storage tank disclosed on Schedule 3.18 leaks
or has leaked. The Emmis Entities have furnished to the Bonneville Entities
copies of the environment reports, studies or analyses related to the Emmis
Operating Assets which are listed on Schedule 3.18. The Emmis Entities are not
aware of the existence of any other environmental reports, studies or analyses
related to the Emmis Operating Assets.
3.19 BROKER'S OR FINDER'S FEES.
Except as set forth on Schedule 3.19, no agent, broker, investment
banker or other person or firm acting on behalf of or under the authority of any
Emmis Entity or any Affiliate of any Emmis Entity 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.
The Emmis Entities have in full force adequate insurance covering the
Emmis Operating Assets relating to the Emmis Stations. The Emmis Entities also
have in full force adequate workers compensation insurance and general liability
insurance in amounts consistent with broadcasting industry standards for similar
stations. All of such insurance policies are in full force and effect, and no
person is in default with respect to its obligations under any such insurance
policy and has not been denied insurance coverage thereunder.
3.21 TRANSACTIONS WITH AFFILIATES.
Except as described on Schedule 3.21, no Emmis Entity or Xxxxxxxx
Entity has been involved in any business arrangement or relationship relating to
any Emmis Station with any Affiliate of any Emmis Entity or Xxxxxxxx Entity, and
no Affiliate of any Emmis Entity or Xxxxxxxx Entity owns any property or right,
tangible or intangible, which is used in the operation of any Emmis Station or
is material to the Emmis Assets or the business, operations, financial condition
or results of operations of any Emmis Station.
3.22 EMMIS SUBSIDIARIES' QUALIFICATION.
Except as disclosed in Schedule 3.22, the Emmis Subsidiaries are, and
at all times between the date hereof and up until and including Closing will be,
legally, financially and otherwise qualified under the Act, HSR Act and all
rules, regulations and policies of the FCC, the Department of Justice, the
Federal Trade Commission (the "FTC") and any other governmental agency, to
acquire and operate KZLA. Except as disclosed in Schedule 3.22, to the Knowledge
of the Emmis Entities, there are no facts or proceedings which would reasonably
be expected to disqualify the Emmis Subsidiaries under the Act or HSR Act or
otherwise from acquiring or operating KZLA or would cause the FCC not to approve
the assignment of the Bonneville FCC Licenses to Emmis License Subsidiary or the
Department of Justice and the FTC not to allow the waiting period under the HSR
Act to terminate within thirty (30) days of the filing provided for in Section
5.3. Except as disclosed in Schedule 3.22, the Emmis Entities have no knowledge
of any fact or circumstance relating to the Emmis Subsidiaries or any of the
Emmis Subsidiaries' Affiliates that would reasonably be expected to (a) cause
the filing of any objection to the assignment of the Bonneville FCC Licenses to
Emmis License Subsidiary, (b) lead to a material delay in the processing by the
FCC of the applications for such assignment or (c) lead to a material delay in
the termination of the waiting period required by the HSR Act. Except as
disclosed in Schedule 3.22, no waiver of any FCC rule or policy is necessary to
be obtained for the grant of the applications for the
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assignment of the Bonneville FCC Licenses to Emmis License Subsidiary, nor will
processing pursuant to any exception or rule of general applicability be
requested or required in connection with the consummation of the transactions
herein.
3.23 WARN ACT.
The Emmis Subsidiaries are not planning or contemplating and have not
made or taken any decisions or actions concerning the employees of KZLA after
the Closing Date that would require the service of notice under the Worker
Adjustment and Retraining Notification Act of 1988, as amended, or any similar
state law.
3.24 EMMIS RIGHTS UNDER XXXXXXXX AGREEMENT.
The Emmis Entities have not waived any of their rights under the
Xxxxxxxx Agreement. The Emmis Entities have no Knowledge of any breach or
misrepresentation by the Xxxxxxxx Entities under the Xxxxxxxx Agreement. No
provision of the Xxxxxxxx Agreement has been waived by Emmis and no consents
pursuant to the Xxxxxxxx Agreement have been given or requested by Emmis.
3.25 EXCLUSIVITY OF REPRESENTATIONS.
THE REPRESENTATIONS AND WARRANTIES MADE BY THE EMMIS ENTITIES IN THIS
AGREEMENT OR PURSUANT TO THIS AGREEMENT IN WRITING (AND IN THE TBA) ARE IN LIEU
OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING ANY
IMPLIED WARRANTIES. THE EMMIS ENTITIES HEREBY DISCLAIM ANY SUCH OTHER IMPLIED
REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE
BONNEVILLE ENTITIES OR THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING, WITHOUT
LIMITATION, ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA). EXCEPT AS SET
FORTH IN THIS AGREEMENT, ALL OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE
EMMIS OPERATING ASSETS IS TO BE TRANSFERRED TO BONNEVILLE INTERNATIONAL WITHOUT
ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR OTHERWISE,
ALL OF WHICH IS HEREBY DISCLAIMED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE BONNEVILLE ENTITIES
The Bonneville Entities, jointly and severally, represent and warrant
to the Emmis Entities as follows:
4.1 ORGANIZATION, GOOD STANDING AND REQUISITE POWER.
Each Bonneville Entity is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has all requisite power to own, operate and lease those Bonneville Assets
which it owns and carry on its business. Bonneville International is duly
licensed, qualified to do business and in good standing as a foreign entity
under the laws of California, Missouri and Illinois.
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4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.
Each Bonneville Entity has all requisite corporate power and authority
to enter into this Agreement and the other Documents and to consummate the
transactions contemplated by this Agreement and each of the other Documents. The
execution and delivery of this Agreement and each of the other Documents by each
Bonneville Entity (as appropriate) and the consummation by each Bonneville
Entity of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action (including all necessary
shareholder approvals, if any) on the part of each Bonneville Entity. This
Agreement has been, and each of the other Documents at or prior to Closing will
be, duly executed and delivered by the appropriate Bonneville Entity. This
Agreement constitutes (and each of the other Documents, when executed and
delivered, will constitute) the valid and binding obligation of the appropriate
Bonneville Entity enforceable against such Bonneville Entity in accordance with
its terms except as the enforceability of this Agreement or of any of the other
Documents may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and by judicial discretion in the enforcement of
equitable remedies.
4.3 ABSENCE OF CONFLICTS.
Except as set forth on Schedule 4.3, and except for necessary
clearances or approvals under the HSR Act or the Act, the execution, delivery
and performance by each Bonneville Entity of this Agreement and the other
Documents, and consummation by each Bonneville Entity of the transactions
contemplated hereby and thereby, do not and will not (i) conflict with or result
in any breach of any of the terms, conditions or provisions of, (ii) constitute
a default under, (iii) result in a violation of, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, or (v) result in
the creation of any Lien upon the Bonneville Assets under, the provisions of the
organizational documents of such Bonneville Entity, any indenture, mortgage,
lease, loan agreement or other agreement or instrument to which such Bonneville
Entity is bound or affected, or any law, statute, rule, judgment, order or
decree to which such Bonneville Entity is subject.
4.4 CONSENTS.
Except as set forth on Schedule 4.3, Schedule 4.7(d) or Schedule 4.9,
and except for any necessary clearances or approvals under the HSR Act or the
Act, the execution, delivery and performance by each Bonneville Entity of this
Agreement and the other Documents, and consummation by each Bonneville Entity of
the transactions contemplated hereby and thereby, do not and will not require
the authorization, consent, approval, exemption, clearance or other action by or
notice or declaration to, or filing with, any court, any administrative or other
governmental body, or any other third party.
4.5 BONNEVILLE ASSETS; TITLE.
(a) The Bonneville Assets constitute all of the assets, properties and
rights of every type and description, real, personal and mixed, tangible and
intangible, that are currently used in, material to, or necessary for, the
operation of KZLA, with the exception of the Bonneville Excluded Assets and
personnel.
(b) Together, the Bonneville Entities own and have good (and in the
case of real property, marketable) title to, or a valid lessee's or licensee's
interest (pursuant to one or more Station Agreements included in the Bonneville
Assets) in, all of the Bonneville Assets free and clear of all Liens except
Permitted Liens. With respect to Bonneville Assets that are TBA Contracts, the
representations contained in this Section 4.5(b) shall speak only as of the end
of the day prior to the TBA Effective Date.
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4.6 BONNEVILLE FCC LICENSES.
Except as set forth on Schedule 4.6:
(a) Bonneville Holding is the valid and legal holder of each of the FCC
Licenses listed on Schedule 4.6 (collectively, the "Bonneville FCC Licenses"),
and any action of the FCC with respect to each Bonneville FCC License is a Final
Action with the exception of the FCC Order. The expiration date of the term of
each main Bonneville FCC License is shown on Schedule 4.6.
(b) The Bonneville FCC Licenses (i) are valid and in full force and
effect, and constitute all of the licenses, permits and authorizations used in
or required for the current operation of KZLA under the Act, and (ii) constitute
all the currently in effect licenses and authorizations, including amendments
and modifications thereto, issued by the FCC for the operation of KZLA.
(c) Other than as set forth in the Bonneville FCC Licenses or
restrictions applicable to the radio broadcast industry generally, none of the
Bonneville FCC Licenses is subject to any restriction or condition which limits
in any material respect the full operation of KZLA as now conducted, and as of
the Closing Date, none of the Bonneville FCC Licenses shall be subject to any
restriction or condition which would limit in any material respect the full
operation of KZLA as currently operated.
(d) Subject to the TBA, KZLA is being operated by Bonneville
International in all material respects in accordance with the terms and
conditions of the Bonneville FCC Licenses and the Act, including but not limited
to those pertaining to RF emissions; and, to the Knowledge of the Bonneville
Entities, KZLA is not causing material interference to other stations, and is
not experiencing material interference from other stations, in violation of the
Act.
(e) No applications, complaints or proceedings are pending or, to the
Knowledge of any Bonneville Entity, are threatened which may result in the
revocation, modification, non-renewal or suspension of any of the Bonneville FCC
Licenses, the denial of any pending applications, the issuance of any cease and
desist order or the imposition of any material fines, forfeitures or other
administrative actions by the FCC with respect to KZLA or its operation, other
than actions or proceedings affecting the radio broadcasting industry in
general.
(f) To the Knowledge of any Bonneville Entity, the Bonneville Entities
have complied in all material respects with all requirements to file
registrations, reports, applications and other documents with the FCC with
respect to KZLA, and all such registrations, reports, applications and documents
are true, correct and complete in all material respects.
(g) Other than actions or proceedings affecting the radio broadcasting
industry in general or facts relating to the Emmis Entities, no Bonneville
Entity has Knowledge of matters (i) which might reasonably be expected to result
in the adverse modification, suspension or revocation of or the refusal to renew
any of the Bonneville FCC Licenses or the imposition of any material fines or
forfeitures by the FCC against any Bonneville Entity, or (ii) which might
reasonably be expected to result in the FCC's denial or delay of approval of the
assignment to the Emmis Entities of any Bonneville FCC License or the imposition
of any Material Adverse Condition in connection with approval of the transfer to
the Emmis Entities of any Bonneville FCC License.
(h) There are no unsatisfied or otherwise outstanding citations issued
by the FCC with respect to KZLA or its operation.
(i) True, complete and accurate copies of all Bonneville FCC Licenses
material to the operation of KZLA have been delivered by the Bonneville Entities
to the Emmis Entities.
(j) Except for the Bonneville FCC Licenses and the Bonneville Permits
identified on Schedule 4.6, there are no material licenses, permits or
authorizations from governmental or regulatory
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authorities required for the lawful operation and conduct of KZLA as previously
and currently operated by the Bonneville Entities.
4.7 STATION AGREEMENTS.
(a) Schedule 4.7(a) lists all Trade Agreements of KZLA as of the date
indicated on such Schedule, and sets forth the parties thereto, the contracted
value of the remaining time required to be provided from and after the date of
such Schedule and the contracted value of the goods or services to be received
by Bonneville International from and after the date of such Schedule. True and
complete copies of all such written Trade Agreements in effect as of such date
involving broadcast time of more than $25,000, including all amendments,
modifications and supplements thereto, have been delivered to the Emmis
Entities, and each Trade Agreement involving KZLA broadcast time of more than
$25,000 entered into by any Bonneville Entity between the date of this Agreement
and Closing shall be promptly delivered to the Emmis Entities.
(b) Schedule 4.7(b), together with Schedule 4.4 to the TBA, lists all
the following types of agreements used in or relating to the operation of KZLA
as of the TBA Effective Date (except with respect to Section 4.7(b)(i) which is
as of July 18, 2000):
(i) Agreements for sale of broadcast time on KZLA for monetary
consideration that (A) are not terminable by the Bonneville Entities
without charge or penalty upon thirty (30) days or less prior written
notice and (B) involve broadcast time of more than Twenty-Five Thousand
Dollars ($25,000);
(ii) All network affiliation agreements;
(iii) All sales agency or advertising representation
contracts;
(iv) Each lease of any Bonneville Asset (including a
description of the property leased thereunder) other than such
agreements not requiring expenditures of more than $25,000 in any
calendar year and having a term (after taking into account any
cancellation right of the Bonneville Entities without charge or
penalty) of one (1) year or less except for the Bonneville Real
Property Leases listed on Schedule 4.9;
(v) All collective bargaining agreements;
(vi) All severance agreements, employment agreements, talent
agreements and agreements with independent contractors, other than such
agreements that (A) do not provide for any severance payments or
benefits, (B) do not require expenditures of more than $25,000 in any
calendar year and (C) have a term (after taking into account any
cancellation right of the Bonneville Entities without charge or
penalty) of one (1) year or less;
(vii) All agreements requiring KZLA or either Bonneville
Entity to acquire goods or services exclusively from a single supplier
or provider, or prohibiting KZLA or either Bonneville Entity from
providing certain goods or services to any Person other than a
specified Person;
(viii) All agreements that have a remaining term (after taking
into account any cancellation rights of the Bonneville Entities without
charge or penalty) of more than one (1) year or involve a commitment of
more than $25,000; and
(ix) Any other agreement that is material to the business,
operations, financial condition or results of operations of KZLA.
True and complete copies of all the foregoing Station Agreements that are in
writing, and true and accurate summaries of all the foregoing Station Agreements
that are oral, including all amendments,
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modifications and supplements, have been delivered to the Emmis Entities. The
Station Agreements that are not described in Section 4.7(a) or in the foregoing
clauses (i) through (ix) of this Section 4.7(b) (without regard to the monetary
thresholds set forth in Section 4.7(a) or in such clauses of Section 4.7(b)) do
not involve commitments by parties thereto with an aggregate fair market value
of more than One Hundred Fifty Thousand Dollars ($150,000).
(c) Schedule 4.7(c), together with Schedule 4.4 to the TBA, lists all
of the contracts and agreements used in or relating to the operation of KZLA
immediately prior to the TBA Effective Date to which an Affiliate of any
Bonneville Entity is a party. True and complete copies of those in writing have
been delivered to the Emmis Entities, and summaries of those that are oral are
set forth on Schedule 4.7(c) or Schedule 4.4 of the TBA.
(d) Except as set forth on Schedule 4.7(d) and any other Schedule that
relates to any Bonneville Station Agreement, with respect to the Station
Agreements which are, individually or in the aggregate, material to the assets,
business, operations, financial condition or results of operations of KZLA, (i)
such Station Agreements are valid, binding, in full force and effect, and
enforceable against the relevant Bonneville Entity in accordance with their
terms except as the enforceability of such Station Agreements may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies; (ii)
neither the Bonneville Entities nor, to the Knowledge of any Bonneville Entity,
any other party is in material default under, and no event has occurred which
(after the giving of notice or the lapse of time or both) would constitute a
material default under, any such Station Agreements; (iii) neither the
Bonneville Entities nor any Affiliate of the Bonneville Entities has granted or
been granted any material waiver or forbearance with respect to any such Station
Agreements not reflected in an amendment or modification; (iv) the Bonneville
Entities hold the right to enforce and receive the benefits under all such
Station Agreements, free and clear of Liens (other than Permitted Liens) but
subject to the terms and provisions of each such agreement; (v) none of the
rights of any Bonneville Entity or any Affiliate of any Bonneville Entity under
any such Station Agreements is subject to termination or modification as a
result of the consummation of the transactions contemplated by this Agreement;
and (vi) except as set forth on Schedule 4.7(a), 4.7(b) or 4.9, no consent or
approval by each party to any such Station Agreement is required thereunder for
the consummation of the transactions contemplated hereby. The foregoing to the
contrary notwithstanding, with respect to Station Agreements that are TBA
Contracts, the representations contained in this Section 4.5(d) shall speak only
as of the end of the day prior to the TBA Effective Date.
(e) During the period commencing on the TBA Effective Date, neither
Bonneville Entity has entered into, modified, amended, renewed, extended or
terminated any Station Agreement to be assigned to and assumed by the Emmis
Entities pursuant to this Agreement.
4.8 TANGIBLE PERSONAL PROPERTY.
(a) Schedule 4.8 lists, as of the date noted on such Schedule, all
Tangible Personal Property (other than the Bonneville Excluded Assets, office
supplies and other incidental items) necessary for the conduct of the business
and operations of KZLA as now operated.
(b) Except as specified on Schedule 4.8, the equipment constituting a
part of the Tangible Personal Property used in or necessary for the operation of
KZLA as now operated by any Bonneville Entity has been properly maintained in
all material respects in accordance with industry practices, is in a good state
of repair and operating condition (subject to ordinary wear and tear), and
complies in all material respects with the Act and other applicable material
laws, rules, regulations and ordinances.
(c) The Bonneville Assets include all assets necessary to operate KZLA
other than personnel and the Bonneville Excluded Assets.
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4.9 BONNEVILLE REAL PROPERTY.
(a) The list of Real Property set forth on Schedule 4.9 is a correct
and complete list of all of the interests in real estate which any Bonneville
Entity holds or which are used or held for use by any Bonneville Entity to any
material extent in the operation of KZLA.
(b) Each Bonneville Entity holds good and marketable fee simple title
to each parcel of Real Property listed in Schedule 4.9 as owned by the
Bonneville Entity (the "Bonneville Owned Real Property") free and clear of any
Liens except Permitted Liens. To each Bonneville Entity's Knowledge, except as
set forth on Schedule 4.9, there is no pending, threatened or contemplated
action to take by eminent domain or to condemn any of the Real Property used in
the operation of KZLA.
(c) Each lease (including all amendments, modifications and
supplements) under which any Bonneville Entity leases an interest in any Real
Property (each, a "Bonneville Real Property Lease") is specified, and each
leased Real Property, including but not limited to studio and office space and
each transmitter or antenna site (the "Bonneville Leased Real Property"), and
its use by any Bonneville Entity are identified, on Schedule 4.9. Except as set
forth on such Schedule, such Bonneville Entity holds good title to the lessee's
interest under each Bonneville Real Property Lease free and clear of all Liens
except Permitted Liens. True and complete copies of all Bonneville Real Property
Leases, including all amendments, modifications and supplements, together with
all surveys, title policies and real property records in possession of any
Bonneville Entity related to any Bonneville Real Property, have been delivered
to the Emmis Entities.
(d) Except as set forth on the Schedules hereto, (i) each Bonneville
Real Property Lease is legal, valid, binding and enforceable against the
appropriate Bonneville Entity in accordance with its terms; (ii) neither the
Bonneville Entities nor, to the Knowledge of any Bonneville Entity, any other
party is in material default under any Bonneville Real Property Lease; (iii) to
the Knowledge of each Bonneville Entity, 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 Bonneville Real
Property Lease, nor has any Bonneville Entity received written notice alleging
any such event has occurred; (iv) none of the rights of the Bonneville Entities
under any Bonneville Real Property Lease is subject to termination or
modification as a result of the consummation of the transactions contemplated by
this Agreement; (v) no consent or approval by any party to any Bonneville Real
Property Lease is required for the consummation of the transactions contemplated
hereby; and (vi) no Bonneville Entity has granted or been granted any waiver or
forbearance with respect to any Bonneville Real Property Lease except as
contained in amendments or modifications.
(e) All improvements on the Bonneville Owned Real Property and all
improvements owned by either Bonneville Entity on the Bonneville Leased Real
Property are in compliance in all material respects with applicable federal,
state and local laws, building codes, ordinances and regulations, including but
not limited to zoning and land use laws, ordinances and regulations, and the use
by any Bonneville Entity of each portion of the Bonneville Owned Real Property
or Bonneville Leased Real Property complies in all material respects with
applicable zoning and land use laws, ordinances and regulations. Each Bonneville
Entity's improvements on the Bonneville Owned Real Property or Bonneville Leased
Real Property are in good working condition and repair (subject to ordinary wear
and tear).
4.10 INTELLECTUAL PROPERTY.
Other than Bonneville Excluded Assets, Schedule 4.10 lists all material
trade names, trademarks, service marks, copyrights and patents principally used
in the operation of KZLA, including all registrations, applications and licenses
for any of the Intellectual Property (the "Bonneville Intellectual Property").
Except as disclosed on Schedule 4.10:
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(a) To the Knowledge of each Bonneville Entity, the Bonneville Entities
own, free and clear of Liens other than Permitted Liens, all right and interest
in, and right and authority to use, or has a valid license to use, in connection
with the conduct of the business of KZLA as presently conducted, all of the
Bonneville Intellectual Property listed on Schedule 4.10, and all of the rights
and properties constituting a part of the Bonneville Intellectual Property are
in full force and effect.
(b) There are no outstanding or, to the Knowledge of any Bonneville
Entity, threatened judicial or adversary proceedings with respect to any of the
Bonneville Intellectual Property.
(c) No Bonneville Entity has granted to any other person or entity any
license or other right or interest in or to any of the Bonneville Intellectual
Property or to the use thereof.
(d) No Bonneville Entity has Knowledge of any infringement or unlawful
use of any of the Bonneville Intellectual Property.
(e) To each Bonneville Entity's Knowledge, no Bonneville Entity has
violated any provisions of the Copyright Act of 1976, 17 U.S.C. Section 101, et
seq., in any material respect.
(f) The Bonneville Entities have delivered to the Emmis Entities copies
of all state and federal registrations and other material documents, if any,
establishing any of the rights and properties constituting a part of the
Bonneville Intellectual Property.
4.11 [INTENTIONALLY OMITTED]
4.12 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since April 30, 2000, and through the date hereof, other than as
described on Schedule 4.12 or caused by or arising from any Emmis Entity's
action or failure to perform under the TBA:
(a) There has not been any damage, destruction or other casualty loss
with respect to the Bonneville Assets (whether or not covered by insurance)
which, individually or in the aggregate, has had or is reasonably likely to have
a Material Adverse Effect.
(b) None of the Bonneville Entities or KZLA has suffered any adverse
change or development which, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect.
(c) With respect to KZLA, no Bonneville Entity has:
(i) amended, terminated, renewed or taken any action or
inaction that would result in a renewal of any Station Agreement except
in the ordinary course of business consistent with past practices, or
any Bonneville Real Property Lease (other than any amendment, noted on
Schedule 4.9 hereto);
(ii) mortgaged, pledged or subjected to any Lien, any of the
Bonneville Assets, except for Permitted Liens;
(iii) acquired or disposed of any Bonneville Assets or entered
into any agreement or other arrangement for such acquisition or
disposition, except for immaterial amounts in the ordinary course of
business consistent with past practices and except pursuant to the TBA;
(iv) entered into any agreement, commitment or other
transaction except the TBA and those that (A) were entered into in the
ordinary course of business consistent with past practice or (B) are
not material to the assets, business, operations, results of operations
or financial condition of KZLA;
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(v) paid any bonus to any officer, director or
employee or granted to any officer, director or employee any
other increase in compensation in any form, except in the
ordinary course of business consistent with past practices;
(vi) adopted, amended or renewed any collective
bargaining, bonus, profit-sharing, compensation, stock option,
pension, retirement, deferred compensation, severance or other
plan, agreement, trust, fund or arrangement for the benefit of
employees (whether or not legally binding) or made any material
changes in its policies of employment;
(vii) entered into any agreement (other than
agreements that will be terminated prior to Closing) with any
Affiliate of any Bonneville Entity; or
(viii) operated its business other than as
contemplated by the TBA and in the ordinary course consistent
with past practices.
4.13 LITIGATION.
Except as described in Schedule 4.13 or caused by or arising from
any Emmis Entity's action or failure to perform under the TBA, (i) there are no
actions, suits, claims, investigations or administrative or arbitration
proceedings pending or, to the Knowledge of any Bonneville Entity, threatened
against any Bonneville Entity before or by any court, arbitration tribunal or
governmental department or agency, domestic or foreign, that relates to KZLA or
the Bonneville Assets; (ii) neither any Bonneville Entity nor, to the Knowledge
of any Bonneville Entity, any of the officers or employees of any Bonneville
Entity, has been charged with, or to the Knowledge of any Bonneville Entity, is
under investigation with respect to, any violation of any provision of any
federal, state, foreign or other applicable law or administrative regulation in
respect of such officer's or employee's employment at KZLA; and (iii) neither
any Bonneville Entity, any properties or assets of any Bonneville Entity nor, to
the Knowledge of any Bonneville Entity, any officer or employee of any
Bonneville Entity is a party to or bound by any order, arbitration award,
judgment or decree of any court, arbitration tribunal or governmental department
or agency, domestic or foreign, in respect of any business practices, the
acquisition of any property, or the conduct of any business of any Bonneville
Entity which, individually or in the aggregate, has had or is reasonably likely
to have a Material Adverse Effect or materially impair the ability of any
Bonneville Entity to perform its obligations hereunder and consummate the
transactions contemplated hereby.
4.14 LABOR MATTERS.
(a) Except as listed on Schedule 4.14(a), as of the end of the
day immediately preceding the TBA Effective Date:
(i) To each Bonneville Entity's Knowledge, no
present or former employee or independent contractor of KZLA has
a pending claim or charge which has been asserted or threatened
against any Bonneville Entity for (A) overtime pay; (B) wages,
salaries or profit sharing; (C) vacations, time off or pay in
lieu of vacation or time off; (D) any material violation of any
statute, ordinance, contract or regulation relating to minimum
wages, maximum hours of work or the terms or conditions of
employment; (E) discrimination against employees on any basis;
(F) unlawful or wrongful employment or termination practices; (G)
unlawful retirement, termination or labor relations practices or
breach of contract; or (H) any material violation of occupational
safety or health standards.
(ii) There is not pending or, to the Knowledge of
any Bonneville Entity, threatened against any Bonneville Entity
any labor dispute, strike or work stoppage that affects or
interferes or is reasonably likely to affect or interfere with
the operation of KZLA, and no Bonneville Entity has Knowledge of
any organizational effort currently being made or threatened by
or on behalf of any labor union with respect to employees of
KZLA. There are no material unresolved unfair
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labor charges against any Bonneville Entity, and no Bonneville Entity
has experienced any strike, work stoppage or other similar significant
labor difficulties within the preceding twelve (12) months with respect
to KZLA.
(b) Except as set forth on Schedule 4.7(b), (i) no Bonneville Entity is
a signatory or a party to, or otherwise bound by, a collective bargaining
agreement now in effect which covers employees or former employees of KZLA, (ii)
no Bonneville Entity has agreed to recognize any union or other collective
bargaining unit with respect to any employees of KZLA, and (iii) no union or
other collective bargaining unit has been certified as representing any
employees of KZLA.
(c) Schedule 4.14(c) sets forth a true and complete list, as of the
date set forth on such list, of all persons employed by a Bonneville Entity in
connection with the operation of KZLA who earn more than $15,000 per year, and
states for each such employee the date hired, the level of compensation
(including any projected bonus) payable to such employee (limited in the case of
each employee who is compensated on a commission basis to a description of the
manner in which such commissions are determined and the specification of
compensation earned by such employee in 1999), and whether such employee is
employed under a written contract or is covered by a written severance
agreement. Except pursuant to written employment agreements and written
severance agreements listed on Schedule 4.7(b), and in the schedule referred to
in Section 12(c) of the TBA, the only severance obligations of the Bonneville
Entities with respect to employees at KZLA are set forth on Schedule 4.14(c). A
true and complete copy of any handbook, policy manual or similar written
guidelines furnished to employees of KZLA has been delivered to the Emmis
Entities.
4.15 [INTENTIONALLY OMITTED]
4.16 COMPLIANCE WITH LAW.
Subject to the TBA, and except as specified on Schedule 4.16, the
Bonneville Entities have operated and are operating KZLA in all material
respects in compliance with the Act and all other material federal, state and
local laws, statutes, ordinances, regulations, licenses, permits or exemptions
therefrom and all applicable orders, writs, injunctions and decrees of any
court, commission, board, agency or other instrumentality, no Bonneville Entity
has received any written notice of material noncompliance pertaining to any
operation of KZLA that has not been cured.
4.17 [INTENTIONALLY OMITTED]
4.18 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 4.18, the Bonneville Entities have
obtained all environmental, health and safety permits necessary for the
operation of KZLA, all such permits are valid and in full force and effect, and
the Bonneville Entities are in compliance in all material respects with all
terms and conditions of such permits.
(b) Except as set forth on Schedule 4.18, there is no proceeding
pending or, to any Bonneville Entity's 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 KZLA,
and to each Bonneville Entity's Knowledge, there is no basis for any such
proceeding.
(c) Except as set forth on Schedule 4.18, to each Bonneville Entity's
Knowledge, each Bonneville Entity has operated and is operating in all material
respects in compliance with all material federal, state, local and other laws,
statutes, ordinances and regulations, and licenses, permits, exemptions, orders,
writs, injunctions and decrees of any court, commission, board, agency or other
governmental instrumentality, applicable to such Bonneville Entity relating to
environmental matters.
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(d) Except as set forth on Schedule 4.18, to each Bonneville Entity's
Knowledge, there are no conditions or circumstances associated with the
Bonneville Assets which may give rise to any material liability or material cost
under applicable environmental law. Except as listed on Schedule 4.18, no
Bonneville Entity owns or uses any electrical or other equipment containing
polychlorinated biphenyls.
(e) For the purposes of this Section 4.18, (i) "hazardous materials"
shall mean any waste, substance, materials, smoke, gas, emissions or particulate
matter designated as hazardous or toxic under any applicable environmental law,
including but not limited to, friable asbestos, urea formaldehyde,
polychlorinated biphenyls, regulated substances and wastes, radioactive
materials, radon, lead and petroleum and petroleum byproducts, including oil or
any fraction thereof, but excluding any such substances below applicable
governmental action levels, or small quantities of maintenance, cleaning and
emergency generator fuel supplies customary for the operation of radio stations,
and (ii) "environmental law" shall mean any federal, state, local or other laws,
statutes, ordinances, regulations, licenses, permits or any order, writ,
injunction or decree of any court, commission, board, agency or other
instrumentality relating to the regulation of hazardous materials.
(f) Except as set forth on Schedule 4.18, with respect to the operation
of KZLA, no Bonneville Entity has filed or, to any Bonneville Entity's
knowledge, been required to file any notice under any applicable material law,
rule, regulation, order, judgment, injunction, decree or ruling reporting a
release of a hazardous material into the environment, and no notice pursuant to
Section 103(a) or (c) of CERCLA or any other applicable environmental law or
regulation has been or, to any Bonneville Entity's Knowledge, was required to be
filed.
(g) Except as set forth on Schedule 4.18, no Bonneville Entity has
received any notice letter under CERCLA or any other written notice, and, to
each Bonneville Entity's Knowledge, there is no investigation pending or
threatened, to the effect that any Bonneville Entity has or may have material
liability for or as a result of the release or threatened release of a hazardous
material into the environment or for the suspected unlawful presence of
hazardous material thereon nor, to any Bonneville Entity's Knowledge, does there
exist any basis for such investigation.
(h) To each Bonneville Entity's Knowledge, except as identified on
Schedule 4.18, none of the Bonneville Operating Assets contains any hazardous
materials or underground storage tanks; and no underground storage tank
disclosed on Schedule 4.18 leaks or has leaked. The Bonneville Entities have
furnished to the Emmis Entities copies of the environment reports, studies or
analyses related to the Bonneville Operating Assets which are listed on Schedule
4.18. The Bonneville Entities are not aware of the existence of any other
environmental reports, studies or analyses related to the Bonneville Operating
Assets.
4.19 BROKER'S OR FINDER'S FEES.
Except as set forth on Schedule 4.19, no agent, broker, investment
banker or other person or firm acting on behalf of or under the authority of any
Bonneville Entity or any Affiliate of any Bonneville Entity 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.
4.20 INSURANCE.
Bonneville International has in full force adequate insurance covering
the Bonneville Operating Assets relating to KZLA. Bonneville International also
has in full force adequate workers compensation insurance and general liability
insurance in amounts consistent with broadcasting industry standards for similar
stations. All of such insurance policies are in full force and effect, and no
Bonneville Entity is in default with respect to its obligations under any such
insurance policy and has not been denied insurance coverage thereunder.
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4.21 TRANSACTIONS WITH AFFILIATES.
Except as described on Schedule 4.21, no Bonneville Entity has been
involved in any business arrangement or relationship relating to KZLA with any
Affiliate of any Bonneville Entity, and no Affiliate of any Bonneville Entity
owns any property or right, tangible or intangible, which is used in the
operation of KZLA or is material to the Bonneville Assets or the business,
operations, financial condition or results of operations of KZLA.
4.22 BONNEVILLE ENTITIES' QUALIFICATION.
Except as disclosed in Schedule 4.22 and as provided for in Section
5.3, the Bonneville Entities are, and at all times between the date hereof and
up until and including Closing will be, legally, financially and otherwise
qualified under the Act, HSR Act and all rules, regulations and policies of the
FCC, the Department of Justice, the FTC and any other governmental agency, to
acquire and operate the Emmis Stations. Except as disclosed in Schedule 4.22, to
the Knowledge of the Bonneville Entities, there are no facts or proceedings
which would reasonably be expected to disqualify the Bonneville Entities under
the Act or HSR Act or otherwise from acquiring or operating the Emmis Stations
or would cause the FCC not to approve the assignment of the Emmis FCC Licenses
to the Bonneville Entities or the Department of Justice and the FTC not to allow
the waiting period under the HSR Act to terminate within thirty (30) days of the
filing provided for in Section 5.3. Except as disclosed in Schedule 4.22, the
Bonneville Entities have no knowledge of any fact or circumstance relating to
the Bonneville Entities or any of the Bonneville Entities' Affiliates that would
reasonably be expected to (a) cause the filing of any objection to the
assignment of the Emmis FCC Licenses to the Bonneville Entities, (b) lead to a
material delay in the processing by the FCC of the applications for such
assignment or (c) lead to a material delay in the termination of the waiting
period required by the HSR Act. Except as disclosed in Schedule 4.22, no waiver
of any FCC rule or policy is necessary to be obtained for the grant of the
applications for the assignment of the Emmis FCC Licenses to the Bonneville
Entities, nor will processing pursuant to any exception or rule of general
applicability be requested or required in connection with the consummation of
the transactions herein.
4.23 WARN ACT.
The Bonneville Entities are not planning or contemplating and has not
made or taken any decisions or actions concerning the employees of the Emmis
Stations after the Closing Date that would require the service of notice under
the Worker Adjustment and Retraining Notification Act of 1988, as amended, or
any similar state law.
4.24 EXCLUSIVITY OF REPRESENTATIONS.
THE REPRESENTATIONS AND WARRANTIES MADE BY THE BONNEVILLE ENTITIES IN
THIS AGREEMENT OR PURSUANT TO THIS AGREEMENT IN WRITING (AND IN THE TBA) ARE IN
LIEU OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING
ANY IMPLIED WARRANTIES. THE BONNEVILLE ENTITIES HEREBY DISCLAIM ANY SUCH OTHER
IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO THE EMMIS ENTITIES OR THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS
OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING, WITHOUT
LIMITATION, ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA). EXCEPT AS SET
FORTH IN THIS AGREEMENT, ALL OF THE TANGIBLE PERSONAL PROPERTY INCLUDED IN THE
BONNEVILLE OPERATING ASSETS IS TO BE TRANSFERRED TO EMMIS OPERATING SUBSIDIARY
WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR INTENDED USE OR
OTHERWISE, ALL OF WHICH IS HEREBY DISCLAIMED.
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ARTICLE V
OTHER COVENANTS
5.1 CONDUCT OF EACH STATION'S BUSINESS PRIOR TO THE CLOSING DATE.
Subject to the TBA, each Transferring Party covenants and agrees with
the Recipient Party that from the date of this Agreement through the Closing
Date, or the termination of this Agreement if earlier, unless the Recipient
Party otherwise consents in writing (which consent shall not be unreasonably
withheld, delayed or conditioned), the Transferring Party shall (and in the case
of the Xxxxxxxx Stations, Emmis shall cause the Xxxxxxxx Entities to):
(a) Operate or cause to be operated each Station of the Transferring
Party in the ordinary course of business consistent with past practices,
including (i) incurring promotional expenses substantially consistent with the
amount currently budgeted, (ii) making capital expenditures prior to the Closing
Date as are necessary to repair or replace assets that are damaged or destroyed,
(iii) using commercially reasonable efforts to preserve the Station's present
business operations, inventory levels, organization and goodwill and its
relationships with customers, employees, advertisers, suppliers and other
contractors (including independent contractors providing on-air or production
services) and to maintain programming for the Station consistent in all material
respects with the type and quantity of the Station's programming consistent with
past practice, and (iv) continuing the Station's usual and customary policy with
respect to extending credit, writing of sales orders and collection of accounts
receivable and the maintenance of its facilities and equipment;
(b) Operate or cause to be operated each Station and otherwise conduct
business of the Stations in all material respects in compliance with the terms
or conditions of the Station's FCC Licenses, the Act, and all other material
rules, regulations, laws and orders of all governmental authorities having
jurisdiction over any aspect of the operation of the Station;
(c) Maintain or cause to be maintained each Station's books and records
in accordance with generally accepted accounting principles on a basis
consistent with prior periods;
(d) Promptly notify the Recipient Party in writing of any event or
condition which, with notice or the lapse of time or both, would constitute an
event of material default under any of the Station Agreements which are,
individually or in the aggregate, material to the assets, business, operations,
financial condition or results of operations of any Station;
(e) Timely comply in all material respects with the Station Agreements
which are, individually or in the aggregate, material to the assets, business,
operations, financial condition or results of operations of any Station;
(f) Not sell, lease, or grant any rights in or to or otherwise dispose
of, or agree to sell, lease or otherwise dispose of, any of the Assets used or
held for use in connection with any Station except for dispositions of assets
that (i) are in the ordinary course of business consistent with past practice
and (ii) if material, are replaced by similar assets of substantially equal or
greater value or utility;
(g) Not amend, enter into, renew or extend, except in the ordinary
course of business consistent with past practice, any Trade Agreement; any
personal property lease that would cause the aggregate rent required to be paid
under personal property leases (including amendments) entered into after the
date of this Agreement that would constitute Station Agreements related to any
relevant Station to exceed in the aggregate Twenty-Five Thousand Dollars
($25,000.00); any studio or office lease; antenna or transmitter space lease;
network affiliation agreement; programming agreement; or any agreement described
in Section 3.7(b)(vii) or Section 4.7(b)(vii);
(h) Not enter into, amend, renew or extend any employment or talent
contracts or other Station Agreements related to any relevant Station except on
terms comparable to those of the
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Transferring Party's Station Agreements now in existence and otherwise in the
ordinary course of business consistent with past practices;
(i) Maintain or cause to be maintained in good operating condition and
repair (except for ordinary wear and tear) the technical equipment that
constitutes part of the Assets related to the Station and is currently in use;
(j) Not increase in any manner the compensation (including severance
pay or plans) or benefits of any employees, independent contractors, consultants
or commission agents of any Station, except in the ordinary course of business
consistent with past practice or as required by an employment or consulting
agreement or in connection with and commensurate with a change in
responsibility;
(k) Not enter into any agreement relating to any Station (other than
agreements that will be terminated prior to Closing) with any Affiliate of the
owner or operator of the Station;
(l) Except as required by law, not voluntarily enter into or amend any
collective bargaining agreement applicable to any employees of any Station or
otherwise voluntarily recognize any union as the bargaining representative of
any such employees; and not enter into or amend any collective bargaining
agreement applicable to any employees of any Station to provide that it shall be
binding upon any "successor" employer or such employees; and
(m) Not take or agree to take any action that would materially delay
the consummation of the Closing as contemplated by this Agreement.
The foregoing covenants of the Bonneville Entities shall be subject to
the TBA and any Emmis Entity's action or failure to perform under the TBA.
The Emmis Entities covenant and agree to use, and the foregoing
covenants and agreements of the Emmis Entities in this Section shall, to the
extent relating to the Xxxxxxxx Stations, be interpreted to require the Emmis
Entities to enforce the Xxxxxxxx Agreement. Emmis shall not waive any of its
rights under the Xxxxxxxx Agreement without the prior written consent of the
Bonneville Entities, which shall not be unreasonably withheld, conditioned, or
delayed.
5.2. NOTIFICATION OF CERTAIN MATTERS.
Each party to this Agreement shall give prompt notice to the other
parties of (a) the occurrence, or failure to occur, of any event that would be
likely to cause any of their respective representations and warranties contained
in this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Closing Date, and (b) any failure on their
respective parts to comply with or satisfy, in any material respect, any
covenant, condition or agreement to be complied with or satisfied by any party
under this Agreement. The Emmis Entities shall give prompt notice to the
Bonneville Entities of any of the above matters or events with respect to the
Xxxxxxxx Agreement promptly after acquiring knowledge thereof.
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5.3 HSR FILINGS.
The Emmis Entities and Bonneville Entities have previously made the
filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended ("HSR Act"), in connection with the transactions contemplated by this
Agreement (the "HSR Filings"). The Xxxxxxxx Entities have previously made the
filings required under the HSR Act in connection with the transactions
contemplated by the Xxxxxxxx Agreement. The HSR Filings were made based on and
as prescribed in the letter of intent dated June 21, 2000 between the Emmis
Entities and the Bonneville Entities. The Emmis Entities and Bonneville Entities
shall use their commercially reasonable efforts to diligently take, or to fully
cooperate in the taking of, all necessary and proper steps, and provide any
additional information reasonably requested, in order to comply with the
requirements of the HSR Act; provided, however, that the Bonneville Entities
shall not be required to disclose financial information regarding the
Corporation of the President of the Church of Xxxxx Xxxxxx of Latter-Day Saints
and its subsidiaries and affiliates (other than the Bonneville Entities) to any
regulatory agency.
5.4 FCC FILING.
(a) The Emmis Entities and the Bonneville Entities have previously
filed all applications with the FCC necessary to obtain the FCC Order, and shall
cooperate in taking all commercially reasonable action necessary and proper to
promptly obtain the FCC Order without a Material Adverse Condition and to cause
the FCC Order to become a Final Action as soon as practicable, provided that
commercially reasonable action shall not include payment or providing of
material consideration to settle with an objecting party. The Emmis Entities and
Bonneville Entities shall oppose and file such papers and pleadings with the FCC
or other appropriate forum opposing and objecting to any petitions to deny or
other objections filed with respect to the application for the FCC Order and any
requests for reconsideration or judicial review of the FCC Order.
(b) If the Closing shall not have occurred for any reason within the
original effective period of the FCC Order, and neither party shall have
terminated this Agreement under Article X, the parties shall jointly request an
extension of the effective period of the FCC Order. No extension of the
effective period of the FCC Order shall limit the exercise by either party of
its right to terminate the Agreement under Article X.
(c) The Emmis Entities and the Xxxxxxxx Entities have previously filed
all applications with the FCC for the transactions contemplated by the Xxxxxxxx
Agreement and the Emmis Entities shall take all actions set forth in Sections
5.4(a) and (b) above with respect to such applications of the Emmis Entities.
5.5 TITLE; ADDITIONAL DOCUMENTS.
Except to the extent already effected pursuant to the TBA, at the
Closing, each Transferring Party shall transfer and convey to the Recipient
Party good (and, in the case of real property, marketable) title to all of the
Assets of the Transferring Party free and clear of any Liens except Permitted
Liens. Each Transferring Party shall, upon request of the Recipient Party,
execute or cause to be executed such documents, in addition to those delivered
at the Closing, or in connection with the TBA, as may be necessary to confirm in
the Recipient Party such title to the Assets of the Transferring Party and to
carry out the purposes and intent of this Agreement, which documents shall be in
a form reasonably acceptable to the Transferring Party and the Recipient Party.
Each Recipient Party shall execute or cause to be executed such documents, in
addition to those delivered at Closing, or in connection with the TBA, as may be
necessary to confirm the Recipient Party's assumption of the Recipient Party's
Assumed Obligations, which documents shall be in a form reasonably acceptable to
the Transferring Party and the Recipient Party.
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5.6 OTHER CONSENTS.
Each Transferring Party shall use its commercially reasonable efforts
to obtain the consents or waivers to the transactions contemplated by this
Agreement required under the Station Agreements relating to the relevant Station
without any condition or modification adverse to the Recipient Party or any
Station to be conveyed to the Recipient Party pursuant to this Agreement, and
each Recipient Party shall cooperate as reasonably requested by the Transferring
Party in assisting the Transferring Party to obtain such consents. Neither the
Transferring Party nor the Recipient Party shall be required to pay or grant any
material consideration or divulge any confidential information or otherwise
unduly prejudice itself in order for the Transferring Party to obtain any such
consent or waiver except that the Transferring Party shall be required to obtain
releases of Liens (other than Permitted Liens) which encumber any of the
Transferring Party's Assets.
5.7 INSPECTION AND ACCESS; FINANCIAL INFORMATION.
Each Transferring Party shall, prior to the Closing Date, make
available the assets, books, accounting records, correspondence and files of the
Emmis Stations and KZLA (to the extent related to the operation thereof) for
examination by the Recipient Party, its officers, attorneys, accountants and
agents, with the right to make copies of all or portions of such books, records
and files. Such access will be available during normal business hours upon
reasonable notice and in such manner as will not unreasonably interfere with the
conduct of the business of any Station. If Closing occurs, the books, records
and files that are not part of but relate to the Assets conveyed by a
Transferring Party shall be preserved and maintained by the Transferring Party
for four (4) years after the Closing, and the books, records and files that are
part of the Assets conveyed to a Recipient Party shall be maintained and
preserved by the Recipient Party for a period of four (4) years after the
Closing. Each such Party shall give the other Party and its authorized
representatives, during normal business hours, such access to, and the
opportunity at the other Party's expense to copy, such books and records
retained by it as reasonably requested by the other Party.
The Emmis Entities covenant and agree, and the foregoing covenants and
agreements of the Emmis Entities in this Section shall, to the extent relating
to the Xxxxxxxx Stations, be interpreted to require the Emmis Entities to
enforce the Xxxxxxxx Agreement.
5.8 CONFIDENTIALITY.
Subject to Section 5.15, all information delivered or made available to
a Recipient Party or a Recipient Party's representatives or otherwise disclosed
in writing by the Transferring Party (or its representatives) before or after
the date of this Agreement, in connection with the transactions contemplated by
this Agreement, shall be kept confidential by the Recipient Party and its
representatives and shall not be used other than as contemplated by this
Agreement, except to the extent (i) such information was otherwise publicly
available when received, (ii) is or hereafter becomes lawfully obtainable from
third parties not related to the Recipient Party or its Affiliates, (iii) such
information is required to be disclosed by law, judicial or other governmental
rule or order, or the rules of any stock exchange, or (iv) such duty as to
confidentiality is waived in writing by the Transferring Party. The Bonneville
Entities shall continue to be bound by the terms and provisions of the
confidentiality letter dated June 21, 2000 executed and delivered by Bonneville
International to Emmis; and the Emmis Entities shall continue to be bound by the
terms and provisions of the Confidentiality Agreement dated June 21, 2000
executed and delivered by Emmis in favor of the Bonneville Entities.
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5.9 PUBLICITY.
The Parties agree that no public release or announcement concerning the
transactions contemplated hereby shall be issued by any Party without the prior
written consent of the other Party (which will not be unreasonably withheld),
except as required by law or applicable regulations, in which case the Party
issuing the press release or announcement shall provide the other Party with a
copy thereof sufficiently in advance of such issuance to permit the other Party
to comment thereon.
5.10 MATERIAL ADVERSE EFFECT.
The Emmis Entities and the Bonneville Entities will promptly notify the
other Party of any event of which the Emmis Entities or the Bonneville Entities,
as the case may be, obtain knowledge which has had or could reasonably be
expected to have Material Adverse Effect with respect to either the Emmis
Stations or KZLA.
5.11 COMMERCIALLY REASONABLE EFFORTS.
Subject to the terms and conditions of this Agreement, each Party will
use its commercially reasonable efforts to take all action and to do all things
necessary, proper or advisable to satisfy any condition hereunder in its power
to satisfy and to consummate and make effective as soon as practicable the
transactions contemplated by this Agreement. Subject to the terms and conditions
of the Xxxxxxxx Agreement, Emmis will use its commercially reasonable efforts to
take all action and to do all things necessary, proper or advisable to satisfy
any condition of the Xxxxxxxx Agreement in its power to satisfy and to
consummate and make effective as soon as practicable the transactions
contemplated by the Xxxxxxxx Agreement.
5.12 FCC REPORTS AND APPLICATIONS.
Each Transferring Party shall file or cause to be filed, on a current
and timely basis and in all material respects in a truthful and complete fashion
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to each Station of the Transferring Party. In addition, each
Transferring Party shall timely file or cause to be filed all applications
necessary for renewal of any of the FCC Licenses used in the operation of any
Station of the Transferring Party, shall prosecute or cause to be prosecuted
each such application with diligence, shall in each case seek or cause to be
sought renewal for a full term, and shall diligently oppose or cause to be
opposed any objection to, appeal from or petition to reconsider the grant of any
such renewal application.
The Emmis Entities covenant and agree, and the foregoing covenants and
agreements of the Emmis Entities in this Section shall, to the extent relating
to the Xxxxxxxx Stations, be interpreted to require the Emmis Entities to
enforce the Xxxxxxxx Agreement.
5.13 TAX RETURNS AND PAYMENTS.
Each Transferring Party will timely file or cause to be filed with the
appropriate governmental agencies all Tax Returns required to be filed with
respect to each Station of the Transferring Party prior to Closing and timely
pay or cause to be paid all Taxes reflected on such Tax Returns as owing.
5.14 NO SOLICITATION.
From the date hereof until the earlier of Closing or termination of
this Agreement, no Transferring Party or any Affiliate of a Transferring Party
shall directly or indirectly (i) knowingly discuss, solicit or encourage any
proposal or offer from any Person relating specifically to the acquisition or
purchase of any interest in the Transferring Party or any material assets of any
Station of the Transferring Party, or any merger, consolidation or other
business combination with the Transferring Party (each an "Acquisition
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Proposal"), or (ii) otherwise knowingly assist or negotiate with any Person with
respect to an Acquisition Proposal.
5.15 AUDITED FINANCIAL STATEMENTS.
The Bonneville Entities recognize that Emmis is a publicly reporting
company and agrees that Emmis shall be entitled at Emmis' expense to cause
audited and unaudited financial statements of KZLA to be prepared for such
periods and filed with the Securities and Exchange Commission, and included in a
prospectus distributed to prospective investors, as required by laws and
regulations applicable to Emmis as a publicly reporting company or registrant.
The Bonneville Entities agree to cooperate with Emmis and the auditing
accountants as reasonably requested by Emmis in connection with the preparation
and filing of such financial statements, including providing a customary
management representation letter (to the best of the signatory's knowledge and
belief) in the form prescribed by generally accepted auditing standards and
using their commercially reasonable efforts to obtain the consent of the
Bonneville Entities' independent accounting firm to permit Emmis and Emmis'
auditors to have access to such firm's workpapers as they relate solely to KZLA
operations. Under no circumstance shall the preparation of any financial
statements pursuant to such audit (i) require a Bonneville Entity to change or
modify any accounting policy, (ii) cause any unreasonable disruption in the
business or operations of KZLA, or (iii) cause any delay that is more than de
minimis in any internal reporting requirements of either Bonneville Entity.
5.16 DISCLOSURE SCHEDULES.
(a) Each Party will use its commercially reasonable efforts to promptly
supplement or amend its Schedules hereto with respect to any matter arising
after the date of this Agreement that would have been required to be set forth
or described in a Schedule or that is necessary to correct any information in a
Schedule or in any representation or warranty; provided that if the other Party
fails to object within fifteen (15) days after receipt of such supplement or
amendment, such other Party shall be deemed to have waived its rights to object
to such proposed supplement or amendment. If such other Party makes a timely
objection pursuant to this Section 5.16(a), any such proposed supplement or
amendment will not be permitted, except as thereafter mutually agreed.
(b) Each Recipient Party acknowledges and agrees that the Transferring
Party shall not be liable for the failure of the Transferring Party's Schedules
to be accurate as a result of the operation of the Station or Stations of the
Transferring Party prior to a Closing in accordance with Section 5.1 of this
Agreement. The inclusion of any fact or item on a Schedule referenced by a
particular section in this Agreement shall, should the existence of the fact or
item or its contents be relevant to any other section, be deemed to be disclosed
with respect to such other section whether or not an explicit cross-reference
appears in the Schedules if such relevance is readily apparent from examination
of such Schedules.
5.17 BULK SALES LAW.
Each Recipient Party hereby waives compliance by the Transferring Party
with the provisions of any applicable bulk transfer laws in connection with the
Transferring Party's conveyances to the Recipient Party as contemplated by this
Agreement.
5.18 MULTI-STATION AGREEMENTS.
To the extent Station Agreements used in the operation of a
Transferring Party's Station or Stations are part of multi-station group
contracts with beneficial rates and terms, the Transferring Party shall use its
commercially reasonable efforts (excluding, however, the incurrence of material
cost or expense) to provide the Recipient Party such beneficial rates and terms,
except for the rate payable to any national sales representative which shall be
separately negotiated by the Recipient Party and the national sales
representative.
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5.19 EMMIS STATION REAL ESTATE.
(a) The Emmis Assets will include the Lease Agreement dated as of March
15, 1994 (the "Initial Manchester Road Lease" and the Lease dated September 15,
1995 (the "Supplemental Manchester Road Lease" and together with the Initial
Manchester Road Lease, the "Manchester Road Leases") with respect to studio and
office space at 0000 Xxxxxxxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx (the "Manchester Road
Premises") now used in the operation of WIL and WRTH. The Manchester Road
Premises are also used in the operation of radio station KIHT(FM) which the
Emmis Entities are to acquire pursuant to the Xxxxxxxx Agreement. Immediately
before the Closing under this Agreement, Emmis will cause the studio and office
equipment used in the operation of KIHT and located at the Manchester Road
Premises to be conveyed to Emmis Operating Subsidiary, and in exchange for such
equipment, shall cause Emmis Operating Subsidiary to convey the studio and
office equipment located at 000 Xxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx and now used
in operation of WKKX, to the Subsidiary of Emmis that will acquire the assets
(other than FCC licenses) of KIHT. The studio and office equipment of KIHT that
is conveyed to Emmis Operating Subsidiary will be included in the Emmis Assets
to be conveyed to the Bonneville Entities as provided in this Agreement. The
result of this exchange of equipment will be that upon Closing, the studio and
office equipment of WKKX will be located at the Manchester Road Premises for use
in the operation of WKKX pursuant to the terms of the lease of the Manchester
Road Premises. Any cost associated with the actions contemplated by this Section
5.19 shall be borne by the Emmis Entities.
(b) At Closing, Emmis and Bonneville International will enter into a
sublease for a term of eighteen (18) months, terminable by Bonneville
International upon thirty (30) days prior written notice, and at the rent
specified in and otherwise in the form and substance of Exhibit A, under which
Bonneville International will be entitled to use, possession and enjoyment of
the portion described in such sublease of the premises at 0000 Xxxx Xxxxxx, Xx.
Xxxxx, Xxxxxxxx for the studio and offices of WVRV (the "Sublease").
(c) Before or after Closing, the Emmis Entities will identify premises
in the St. Louis metropolitan area (which may consist of the Manchester Road
Premises plus additional space at such location) available for rent and suitable
for use as studio and offices for the operation of all the Emmis Stations (the
"New Premises") and will negotiate a lease of the New Premises (the "New
Premises Lease"), under which Bonneville International will be the tenant, for
use as the studio and offices of all the Emmis Stations for a term of at least
eight (8) years at a fair market rent for space in the St. Louis metropolitan
area suitable for use as studios and offices for the operation of the Emmis
Stations. The New Premises, including the configuration, size and location, and
the provisions of the New Premises Lease (other than an eight-year (8) term)
will be subject to the approval of Bonneville International which will not be
unreasonably withheld, conditioned or delayed. The Emmis Entities will use their
good faith efforts to negotiate a nondisturbance agreement on commercially
reasonable terms with each holder of a mortgage lien superior to the Tenant's
rights under the New Premises Lease. Bonneville International will be entitled
to participate in the negotiation of the New Premises Lease and any such
nondisturbance agreement. The Emmis Entities will diligently perform the
foregoing covenants under this Section 5.19(c), and subject to receiving
Bonneville International's reasonable cooperation and assistance (which will
not, however, include payment by Bonneville International of any cost or expense
for which the Emmis Entities are responsible under this Section 5.19(c)), the
Emmis Entities will complete such performance no later than necessary to permit
Bonneville International to occupy and use the New Premises, within eighteen
(18) months after the Closing Date, as the studios and offices for the operation
of all the Emmis Stations. In addition, the Emmis Entities shall (i) pay the
reasonable cost of tenant finish and leasehold improvements necessary to make
the New Premises suitable, within Bonneville International's reasonable
judgment, for use as the studios and offices of all the Emmis Stations, and (ii)
contemporaneously with the payment thereof by Bonneville International,
reimburse Bonneville International for (A) the amount by which the aggregate
rent paid by Bonneville International per month under Sections 4 and 6 of the
Initial Manchester Road Lease and Sections 4.1 and 9 of the Supplemental
Manchester Road Lease exceeds $13,815 per month (in each case prorated for any
partial month), (B)
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the cost of terminating the Manchester Road Leases prior to their expiration
date, including any termination penalties payable to the landlord, and (C) the
reasonable costs to move the studios and offices of all the Emmis Stations to
the New Premises, including, but not limited to, any fees and costs incurred for
permits and approvals and the reasonable fees and expenses of architects,
engineers, brokers, attorneys and other professionals in connection therewith.
Subject to the foregoing, Bonneville International shall cooperate as reasonably
requested by the Emmis Entities in effecting the termination of the Manchester
Road Leases at such time and upon such terms and conditions as approved by the
Emmis Entities and Bonneville International, which approval shall not be
unreasonably withheld, conditioned or delayed. Such cooperation by Bonneville
International shall not require Bonneville International to pay any additional
cost or expense or incur any additional obligations.
(d) At Closing, Emmis and Bonneville International will enter into a
sublease, subject to the consent of the lessor which consent must be obtained by
Emmis, at a rent of $1,200 per month for the term specified in and otherwise
substantially in the form and substance of Exhibit B, under which Emmis will be
entitled to use, possession and enjoyment of an antenna location and a
transmitter room for KIHT located at the Manchester Road Premises (the "KIHT
Sublease").
(e) The WIL auxiliary broadcast antenna (the "WIL Auxiliary Antenna")
is now located at the Manchester Road Premises. In the event the Manchester Road
Leases are terminated prior to their current expiration date, Emmis shall use
its commercially reasonable efforts to relocate, at Emmis' expense, the WIL
Auxiliary Antenna prior to such termination to a location that will permit the
broadcast quality of, and the area covered by, the WIL signal to be
substantially as adequate for WIL as now provided by the WIL Auxiliary Antenna
and auxiliary transmitter at the Manchester Road Premises. The new location for
the WIL Auxiliary Antenna, and the terms (including rent at a fair market rate)
of the new lease for such location, shall be subject to Bonneville
International's prior written approval which will not be unreasonably withheld,
conditioned or delayed. At Bonneville's election, Emmis' obligations in
connection with such relocation of the WIL Auxiliary Antenna shall include using
its commercially reasonable efforts to obtain the necessary FCC license for the
new location or Emmis' reimbursement of Bonneville for the reasonable
out-of-pocket expenses incurred by Bonneville in obtaining such FCC license.
Emmis shall not be obligated to pay any rent or otherwise be liable for any
obligations under the new lease for the new location.
(f) The lease between Xxxxx Properties, Inc. and Bonneville
International dated as of May 29, 1998 and listed as Item 1 on Schedule 4.9 (the
"Xxxxx Properties Lease") constitutes one of the KZLA Station Agreements that is
being assigned to and assumed by the Emmis Entities as part of the Emmis Assumed
Obligations; provided, however, that notwithstanding such assumption by the
Emmis Entities, Bonneville International agrees to reimburse the Emmis Entities
contemporaneously with the payment thereof by the Emmis Entities for one-half of
all rent and other amounts paid by the Emmis Entities pursuant to the terms of
the Xxxxx Properties Lease (but not for any period that the Emmis Entities are
making use of the properties leased pursuant to the Xxxxx Properties Lease) and
any amount paid by the Emmis Entities to the Landlord under the Xxxxx Properties
Lease in connection with termination of the Xxxxx Properties Lease. In the event
the Emmis Entities sublease the premises under the Xxxxx Properties Lease or
otherwise derive revenue from such premises, Bonneville International's
reimbursement obligation shall be reduced by one-half of the rent or other
revenue received by the Emmis Entities under any such sublease or otherwise
derived from the premises under the Xxxxx Properties Lease. In the event such
rent or other revenue received by the Emmis Entities exceeds the rent and other
amounts paid by the Emmis Entities pursuant to the terms of the Xxxxx Properties
Lease, Bonneville International shall be entitled to one-half of such excess.
5.20 XXXXXXXX CLOSING.
Emmis shall exercise commercially reasonable efforts to close the
transactions contemplated in the Xxxxxxxx Agreement and shall fully exercise all
of its rights under the Xxxxxxxx Agreement so as to require Xxxxxxxx to close
the transactions contemplated in the Xxxxxxxx Agreement in accordance with the
terms and conditions of the Xxxxxxxx Agreement.
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ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE EMMIS ENTITIES TO CLOSE
The Emmis Entities' obligation under this Agreement to proceed with the
Closing is subject to the satisfaction, on or prior to the Closing Date, of each
of the following conditions, unless waived by the Emmis Entities in writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
(a) The representations and warranties of the Bonneville Entities
contained in this Agreement or in any other Document shall be true and correct
in all material respects on the date of this Agreement, and on and as of the
Closing Date (except for representations and warranties that speak as of a
specific date or time which need only be true and complete as of such date or
time) with the same effect as though made on and as of the Closing Date, except
for changes permitted under this Agreement or caused by any Emmis Entity's
action or failure to perform under the TBA, and except where the failure to be
true and complete (determined without regard to any materiality or Knowledge
qualifications therein) does not have a Material Adverse Effect with respect to
KZLA.
(b) The Bonneville Entities shall have delivered to the Emmis Entities
on the Closing Date an officer's certificate that the conditions specified in
Sections 6.1(a), 6.2, and 6.8 are satisfied as of the Closing Date.
6.2 PERFORMANCE OF AGREEMENT.
Each Bonneville Entity shall have performed in all respects all of its
covenants, agreements and obligations required by this Agreement to be performed
or complied with by it prior to or at Closing.
6.3 FCC ORDER.
(a) The FCC Order shall have been granted without any Material Adverse
Condition with respect to KZLA notwithstanding that it may not have become a
Final Action; provided that if a petition to deny or other third-party objection
is filed with the FCC prior to the date on which the FCC Order is issued and
becomes effective, and such petition or objection is not withdrawn as of such
date and in the reasonable judgment of the Emmis Entities' counsel such
objection would reasonably be expected to result in a reversal or rescission of
the FCC Order, then the Emmis Entities' obligation to effect the Closing shall
be subject to the further condition that the FCC Order shall have become a Final
Action.
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body specifies and requires to be satisfied prior
to transfer of the Bonneville FCC Licenses to Emmis License Subsidiary shall
have been satisfied.
(c) All of the Bonneville FCC Licenses material to the operation of
KZLA as conducted as of the date hereof shall be in full force and effect.
6.4 HSR ACT.
The waiting period (including any extensions) under the HSR Act
applicable to the transactions contemplated by this Agreement shall have expired
or been terminated.
6.5 OPINIONS OF BONNEVILLE ENTITIES' COUNSEL.
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The Emmis Entities shall have received (a) the written opinion or
opinions of the Bonneville Entities' counsel, dated as of the Closing Date, that
(i) each Bonneville Entity is a corporation duly formed and in good standing
under the laws of the State of Utah and Bonneville International is in good
standing and is duly authorized to transact business as a foreign corporation
under the laws of California, Illinois and Missouri, (ii) the execution,
delivery and performance of the Agreement and each of the other Documents have
been duly authorized by all requisite corporate action (including any necessary
shareholder approval) on the part of each Bonneville Entity, and (iii) the
Agreement and other Documents have been duly and validly executed and delivered
by each Bonneville Entity and constitute valid and legally binding obligations
enforceable against each Bonneville Entity in accordance with their terms,
subject to bankruptcy, insolvency and other laws affecting the enforcement of
creditors' rights generally and general principles of equity; and (b) the
written opinion of the Bonneville Entities' FCC counsel, dated as of the Closing
Date, that except as set forth in Schedule 4.6, (i) Bonneville Holding holds the
Bonneville FCC Licenses listed in a schedule to such legal opinion, and the
Bonneville FCC Licenses (A) are in full force and effect and constitute all of
the licenses, permits and authorizations required by the FCC for the operation
of KZLA and (B) constitute all of the licenses and authorizations issued by the
FCC to the Bonneville Entities for, or in connection with, the operation of
KZLA, (ii) all authorizations, approvals and consents of the FCC required under
the Act to permit the assignment of the Bonneville FCC Licenses by Bonneville
Holding to Emmis License Subsidiary have been obtained, are in effect, and have
not been reversed, stayed, enjoined, set aside, annulled or suspended, and (iii)
there is no FCC or judicial order, judgment, decree, notice of apparent
liability or order of forfeiture outstanding, and to counsel's knowledge, no
action, suit, notice of apparent liability, order of forfeiture, investigation
or other proceeding pending, by or before the FCC or any court of competent
jurisdiction against any Bonneville Entity that might result in a revocation,
cancellation, suspension, non-renewal, short-term renewal or materially adverse
modification of the Bonneville FCC Licenses, except FCC proceedings generally
affecting the radio industry. Each opinion may be subject to customary
qualifications and limitations.
6.6 REQUIRED CONSENTS.
The Bonneville Entities shall have obtained prior to Closing the
written consents or waivers to the transactions contemplated by this Agreement,
in form reasonably satisfactory to the Emmis Entities' counsel and without any
adverse modification or condition that is material to the Emmis Subsidiaries or
KZLA, which are required under each Station Agreement indicated with an asterisk
on Schedule 4.9.
6.7 DELIVERY OF CLOSING DOCUMENTS.
The Bonneville Entities shall have delivered or caused to be delivered
to the Emmis Entities on the Closing Date each of the Documents to be delivered
pursuant to Section 8.2.
6.8 NO ADVERSE PROCEEDINGS.
No judgment or order shall have been rendered and remain in effect, and
no action or proceeding by any governmental entity shall be pending, against any
of the Bonneville Entities that would make unlawful the purchase and sale of the
Bonneville Assets as contemplated by this Agreement.
6.9 CONCURRENT CONVEYANCES.
The Bonneville Entities shall have conveyed the Bonneville Assets to
the Emmis Subsidiaries as provided in this Agreement concurrently with the Emmis
Subsidiaries' conveyance of the Emmis Assets to the Bonneville Entities as
provided in this Agreement.
6.10 CLOSING UNDER XXXXXXXX AGREEMENT.
The Emmis Subsidiaries shall have acquired the Xxxxxxxx Stations,
including the FCC Licenses (as defined in the Xxxxxxxx Agreement) used in the
operation of the Xxxxxxxx Stations, in accordance with the terms of the Xxxxxxxx
Agreement.
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ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE BONNEVILLE ENTITIES TO CLOSE
The Bonneville Entities' obligation under this Agreement to proceed
with the Closing is subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions, unless waived by the Bonneville
Entities in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
(a) The representations and warranties of the Emmis Entities in this
Agreement or in any other Document and the material representations and
warranties of the Xxxxxxxx Entities contained in the Xxxxxxxx Agreement, shall
be true and correct in all material respects on the date of this Agreement and
on and as of the Closing Date (except for representations and warranties that
speak as of a specific date or time which need only be true and complete as of
such date or time) with the same effect as though made on and as of the Closing
Date except for changes permitted under this Agreement and except where the
failure to be true and complete (determined without regard to any materiality or
Knowledge qualifications therein) does not have a Material Adverse Effect with
respect to the Emmis Stations.
(b) The Emmis Entities shall have delivered to the Bonneville Entities
on the Closing Date an officer's certificate that the conditions specified in
Sections 7.1(a), 7.2, and 7.8 are satisfied as of the Closing Date and that all
documents described in Section 8.3(l) have been delivered.
7.2 PERFORMANCE OF AGREEMENT.
Each Emmis Entity and Xxxxxxxx Entity shall have performed in all
respects all of its covenants, agreements and obligations required by this
Agreement and the Xxxxxxxx Agreement to be performed or complied with by it
prior to or at Closing.
7.3 FCC ORDER.
(a) The FCC Order shall have been granted without any Material Adverse
Condition with respect to any of the Emmis Stations notwithstanding that it may
not have become a Final Action; provided that if a petition to deny or other
third-party objection is filed with the FCC prior to the date on which the FCC
Order is issued and becomes effective, and such petition or objection is not
withdrawn as of such date and in the reasonable judgment of the Bonneville
Entities' counsel such objection would reasonably be expected to result in a
reversal or rescission of the FCC Order, then the Bonneville Entities'
obligation to effect the Closing shall be subject to the further condition that
the FCC Order shall have become a Final Action.
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body specifies and requires to be satisfied prior
to transfer of the Emmis FCC Licenses to Bonneville Holding shall have been
satisfied.
(c) All of the Emmis FCC Licenses material to the operation of any of
the Emmis Stations as conducted as of the date hereof shall be in full force and
effect.
7.4 HSR ACT.
The waiting period (including any extensions) under the HSR Act
applicable to the transactions contemplated by this Agreement shall have expired
or been terminated.
7.5 OPINIONS OF EMMIS ENTITIES' COUNSEL.
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The Bonneville Entities shall have received (a) the written opinion or
opinions of the Emmis Entities' counsel, dated as of the Closing Date, that (i)
each Emmis Entity is a corporation duly formed and in good standing under the
laws of the state of its formation and is in good standing and is duly
authorized to transact business as a foreign corporation under the laws of each
applicable jurisdiction, (ii) the execution, delivery and performance of the
Agreement and each of the other Documents have been duly authorized by all
requisite corporate action (including any necessary shareholder approval) on the
part of each Emmis Entity, and (iii) the Agreement and other Documents have been
duly and validly executed and delivered by each Emmis Entity and constitute
valid and legally binding obligations enforceable against each Emmis Entity in
accordance with their terms, subject to bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally and general principles
of equity; and (b) the written opinion of the Emmis Entities' FCC counsel, dated
as of the Closing Date, that except as set forth in Schedule 3.6, (i) Emmis
License Subsidiary holds the Emmis FCC Licenses listed in a schedule to such
legal opinion, and the Emmis FCC Licenses (A) are in full force and effect and
constitute all of the licenses, permits and authorizations required by the FCC
for the operation of the Emmis Stations and (B) constitute all of the licenses
and authorizations issued by the FCC to Emmis License Subsidiary for, or in
connection with, the operation of the Emmis Stations, (ii) all authorizations,
approvals and consents of the FCC required under the Act to permit the
assignment of the Emmis FCC Licenses by Emmis License Subsidiary to Bonneville
Holding have been obtained, are in effect, and have not been reversed, stayed,
enjoined, set aside, annulled or suspended, and (iii) there is no FCC or
judicial order, judgment, decree, notice of apparent liability or order of
forfeiture outstanding, and to counsel's knowledge, no action, suit, notice of
apparent liability, order of forfeiture, investigation or other proceeding
pending, by or before the FCC or any court of competent jurisdiction against any
Emmis Entity that might result in a revocation, cancellation, suspension,
non-renewal, short-term renewal or materially adverse modification of the Emmis
FCC Licenses, except FCC proceedings generally affecting the radio industry.
Each opinion may be subject to customary qualifications and limitations.
7.6 REQUIRED CONSENTS.
The Emmis Entities shall have obtained prior to Closing the written
consents or waivers to the transactions contemplated by this Agreement, in form
reasonably satisfactory to the Bonneville Entities' counsel and without any
adverse modification or condition that is material to the Bonneville Entities or
any of the Emmis Stations, which are required under each Station Agreement
indicated with an asterisk on Schedule 3.9.
7.7 DELIVERY OF CLOSING DOCUMENTS.
The Emmis Entities shall have delivered or caused to be delivered to
the Bonneville Entities on the Closing Date each of the Documents to be
delivered pursuant to Section 8.3.
7.8 NO ADVERSE PROCEEDINGS.
No judgment or order shall have been rendered and remain in effect, and
no action or proceeding by any governmental entity shall be pending, against any
of the Emmis Entities that would make unlawful the purchase and sale of the
Emmis Assets as contemplated by this Agreement.
7.9 CONCURRENT CONVEYANCES.
The Emmis Subsidiaries shall have conveyed the Emmis Assets to the
Bonneville Entities as provided in this Agreement concurrently with the
Bonneville Entities' conveyance of the Bonneville Assets to the Emmis
Subsidiaries as provided in this Agreement.
7.10 CLOSING UNDER XXXXXXXX AGREEMENT.
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The Emmis Subsidiaries shall have acquired the Xxxxxxxx Stations,
including the FCC Licenses (as defined in the Xxxxxxxx Agreement) used in the
operation of the Xxxxxxxx Stations, in accordance with the terms of the Xxxxxxxx
Agreement, and Emmis shall not have waived any of its rights under, or amended
or modified in any manner, the Xxxxxxxx Agreement.
ARTICLE VIII
CLOSING
8.1 TIME AND PLACE.
The closing of the exchange of Assets pursuant to this Agreement (the
"Closing") shall take place on the date of this Agreement (the "Closing Date").
8.2 DELIVERIES BY THE BONNEVILLE ENTITIES.
At the Closing, the Bonneville Entities shall deliver to, or cause to
be delivered to, the Emmis Entities the following, in each case in form and
substance reasonably satisfactory to the Emmis Entities:
(a) The opinions of the Bonneville Entities' counsel and FCC counsel,
dated the Closing Date, to the effect set forth in Section 6.5;
(b) To the extent available from applicable jurisdictions, governmental
certificates, dated as of a date as near as reasonably practicable to the
Closing Date, showing that each Bonneville Entity is duly organized and in good
standing in the State of Utah and, as to Bonneville International, is authorized
to transact business as a foreign corporation and in good standing in the States
of California, Illinois and Missouri;
(c) A certificate of a Secretary or Assistant Secretary of each
Bonneville Entity attesting as to the incumbency of each officer of such
Bonneville Entity who executes this Agreement and any of the other Documents and
to similar customary matters;
(d) A xxxx of sale, special warranty deed, assignments and other
instruments of transfer and conveyance transferring the Bonneville Assets (other
than those transferred at the Commencement of the TBA) to the Emmis
Subsidiaries, in form acceptable to the Emmis Entities in their reasonable
judgment;
(e) The certificate described in Section 6.1(b);
(f) The consents or waivers prescribed in Section 6.6;
(g) A certificate for each of the Bonneville Entities dated as of the
Closing Date and executed by the Secretary of the Bonneville Entity certifying
that the resolutions, as attached to such certificate, were duly adopted by the
Bonneville Entity's Board of Directors to duly authorize and approve the
execution of this Agreement and the consummation of the transaction contemplated
hereby and that such resolutions remain in full force and effect;
(h) Affidavits executed by the appropriate Bonneville Entity regarding
mechanic's liens sufficient to allow deletion of such liens as a standard
exception in final title insurance policies to be issued pursuant to any title
insurance commitments which Emmis Operating Subsidiary shall have obtained to
insure fee simple title to any of the Bonneville Owned Real Property or
leasehold title to any of the Bonneville Leased Real Property;
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(i) An assumption agreement, in form acceptable to the Emmis Entities
within their reasonable judgment, pursuant to which the Bonneville Entities
shall assume and agree to perform the Bonneville Assumed Obligations;
(j) The Sublease and the KIHT Sublease;
(k) All keys to and actual possession of all of the Bonneville
Operating Assets (other than the Bonneville Excluded Assets); and
(l) Such additional information and materials as the Emmis Entities
shall have reasonably requested in writing to evidence the satisfaction of the
conditions to their obligation to close hereunder, including without limitation,
any documents expressly required by this Agreement to be delivered by the
Bonneville Entities at Closing.
8.3 DELIVERIES BY THE EMMIS ENTITIES.
At the Closing, the Emmis Entities shall deliver to, or cause to be
delivered to, the Bonneville Entities the following, in each case in form and
substance reasonably satisfactory to the Bonneville Entities:
(a) The opinions of the Emmis Entities' counsel and FCC counsel, dated
the Closing Date, to the effect set forth in Section 7.5;
(b) To the extent available from applicable jurisdictions, governmental
certificates, dated as of a date as near as reasonably practicable to the
Closing Date, showing that each Emmis Entity is duly organized and in good
standing in its state of formation and, as to Emmis Operating Subsidiary, is
authorized to transact business as a foreign corporation and in good standing in
the States of California and Missouri;
(c) A certificate of a Secretary or Assistant Secretary of each Emmis
Entity attesting as to the incumbency of each officer of such Emmis Entity who
executes this Agreement and any of the other Documents and to similar customary
matters;
(d) A xxxx of sale, special warranty deed, assignments and other
instruments of transfer and conveyance transferring the Emmis Assets to the
Bonneville Entities, and evidence of the termination or release of all Liens
(other than Permitted Liens) on the Emmis Assets, in each case in form
acceptable to the Bonneville Entities in their reasonable judgment;
(e) The certificate described in Section 7.1(b);
(f) The consents or waivers prescribed in Section 7.6;
(g) A certificate for each of the Emmis Entities dated as of the
Closing Date and executed by the Secretary of the Emmis Entity certifying that
the resolutions, as attached to such certificate, were duly adopted by the Emmis
Entity's Board of Directors to duly authorize and approve the execution of this
Agreement and the consummation of the transaction contemplated hereby and that
such resolutions remain in full force and effect;
(h) Affidavits executed by the appropriate Emmis Entity or Xxxxxxxx
Entity regarding mechanic's liens sufficient to allow deletion of such liens as
a standard exception in final title insurance policies to be issued pursuant to
any title insurance commitments which the Bonneville Entities shall have
obtained to insure fee simple title to any of the Emmis Owned Real Property or
leasehold title to any of the Emmis Leased Real Property;
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(i) An assumption agreement, in form acceptable to the Bonneville
Entities within their reasonable judgment, pursuant to which the Emmis Entities
shall assume and agree to perform the Emmis Assumed Obligations;
(j) The Sublease and the KIHT Sublease;
(k) All keys to and actual possession of all of the Emmis Operating
Assets (other than the Emmis Excluded Assets);
(l) Copies of all material documents delivered to or by the Emmis
Entities pursuant to Sections 8.2 and 8.3 of the Xxxxxxxx Agreement; and
(m) Such additional information and materials as the Bonneville
Entities shall have reasonably requested in writing to evidence the satisfaction
of the conditions to their obligation to close hereunder, including without
limitation, any documents expressly required by this Agreement to be delivered
by the Emmis Entities at Closing.
ARTICLE IX
INDEMNIFICATION
9.1 SURVIVAL.
All representations, warranties, covenants and agreements in this
Agreement or any other Document shall survive the Closing regardless of any
investigation, inquiry or knowledge on the part of any Party, and the Closing
shall not be deemed a waiver by any Party of the representations, warranties,
covenants or agreements of any other Party in this Agreement or any other
Documents; provided, however, that the period of survival shall, (i) with
respect to the representations and warranties in Sections 3.18 and 4.18
(Environmental Matters), end eighteen (18) months after the Closing Date, and
(ii) in the case of any other representation or warranty, end twelve (12) months
after the Closing Date (in each case, the "Survival Period"). The survival of
covenants and agreements shall not end. No claim for breach of any
representation or warranty 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 applicable
Survival Period. In the event such notice of a claim is so given, the right to
indemnification with respect to such claim shall survive the applicable Survival
Period until the claim is finally resolved and any obligations with respect to
the claim are fully satisfied.
9.2 INDEMNIFICATION BY THE EMMIS ENTITIES.
(a) Subject to Section 9.2(b), the Emmis Entities shall, jointly and
severally, indemnify, defend, and hold harmless the Bonneville Entities and
their officers, directors, employees, Affiliates, successors and assigns from
and against, and pay or reimburse each of them for and with respect to, any Loss
(each, a "Bonneville Entities' Loss") relating to, arising out of or resulting
from:
(i) Any breach, misrepresentation, failure or omission to
perform, or other violations by any Emmis Entity of any of its
representations, warranties, covenants or agreements in this Agreement,
the TBA or any other Document; or
(ii) Any obligation, indebtedness or Liability of any Emmis
Entity or Xxxxxxxx Entity (other than the Bonneville Assumed
Obligations), regardless of whether disclosed to the Bonneville
Entities and regardless of whether constituting a breach,
misrepresentation, failure or omission to perform, or other violation
by an Emmis Entity of any representation, warranty, covenant or
agreement hereunder or under any other Document; or
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(iii) Noncompliance by any Emmis Entity with the provisions of
any bulk sales act, if applicable, in connection with the transactions
contemplated by this Agreement; or
(iv) The Xxxxxxxx Lawsuit; or
(v) An event of default arising solely under and by reason of
Section 23(e) of the Initial Manchester Road Lease; or
(vi) Any breach, misrepresentation, failure or omission to
perform, or other violation by any Emmis Entity or Xxxxxxxx Entity of
any of their representations, warranties, covenants or agreements in
the Xxxxxxxx Agreement.
(b) If Closing occurs, notwithstanding anything to the contrary
contained herein, the Emmis Entities shall not be obligated to indemnify,
defend, hold harmless, pay or reimburse the Bonneville Entities except to the
extent that (i) the aggregate amount of the Bonneville Entities' Losses exceeds
Five Hundred Thousand Dollars ($500,000) (the "Bonneville Threshold") (and then
only to the extent the aggregate amount of the Bonneville Entities' Losses
exceed Two Hundred Fifty Thousand Dollars ($250,000)) and (ii) the aggregate
amount of the Bonneville Entities' Losses is less than Twenty-Two Million
Dollars ($22,000,000) (the "Bonneville Cap"), provided that any payment owed by
the Emmis Entities to the Bonneville Entities for any of the Bonneville
Entities' Losses pursuant to, under or relating to Xxxxxxx 0.0, Xxxxxxx
0.0(x)(xx), (xxx), (xx), or (v), Section 13.1, Section 13.2, the Emmis Assumed
Obligations, Taxes owed by any Emmis Entity or any Xxxxxxxx Entity or
constituting a Lien on any Emmis Asset, or Section 12(b) or (c) of the TBA,
shall not be counted in determining whether the Bonneville Threshold limitation
is satisfied or the Bonneville Cap is reached, and the Bonneville Entities shall
have the right to recover any such Bonneville Entities' Losses without regard to
the Bonneville Threshold limitation or the Bonneville Cap limitation. No Emmis
Entity shall have any indemnification liability for those environmental
conditions disclosed on Schedule 3.18 or disclosed pursuant to the reports
listed on such schedule.
9.3 INDEMNIFICATION BY THE BONNEVILLE ENTITIES.
(a) Subject to Section 9.3(b), the Bonneville Entities shall, jointly
and severally, indemnify, defend, and hold harmless the Emmis Entities and their
officers, directors, employees, Affiliates, successors and assigns from and
against, and pay or reimburse each of them for and with respect to, any Loss
(each, an "Emmis Entities' Loss") relating to, arising out of or resulting from:
(i) Any breach, misrepresentation, failure or omission to
perform, or other violation by any Bonneville Entity of any of its
representations, warranties, covenants or agreements in this Agreement,
the TBA or any other Document; or
(ii) Any obligation, indebtedness or Liability of any
Bonneville Entity (other than the Emmis Assumed Obligations),
regardless of whether disclosed to the Emmis Entities and regardless of
whether constituting a breach, misrepresentation, failure or omission
to perform, or other violation by a Bonneville Entity of any
representation, warranty, covenant or agreement hereunder or under any
other Document; or
(iii) Noncompliance by any Bonneville Subsidiary with the
provisions of any bulk sales act, if applicable, in connection with the
transactions contemplated by this Agreement.
(b) If Closing occurs, notwithstanding anything to the contrary
contained herein, the Bonneville Entities shall not be obligated to indemnify,
defend, hold harmless, pay or reimburse the Emmis Entities except to the extent
that (i) the aggregate amount of the Emmis Entities' Losses exceeds Five Hundred
Thousand Dollars ($500,000) (the "Emmis Threshold") (and then only to the extent
the aggregate amount of the Emmis Entities' Losses exceed Two Hundred Fifty
Thousand Dollars ($250,000)) and (ii) the aggregate amount of the Emmis
Entities' Losses is less than Twenty-Two Million
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Dollars ($22,000,000) (the "Emmis Cap"), provided that any payment owed by the
Bonneville Entities to the Emmis Entities for any of the Emmis Entities' Losses
pursuant to, under or relating to Section 2.7, Section 9.3(a)(ii) or (iii),
Section 12.2(b) or (c), Section 13.1, Section 13.2, the Bonneville Assumed
Obligations, or Taxes owed by any Bonneville Entity or constituting a Lien on
any Bonneville Asset, shall not be counted in determining whether the Emmis
Threshold limitation is satisfied or the Emmis Cap is reached, and the Emmis
Entities shall have the right to recover any such Emmis Entities' Losses without
regard to the Emmis Threshold limitation or the Emmis Cap limitation. No
Bonneville Entity shall have any indemnification liability for those
environmental conditions disclosed on Schedule 4.18 or disclosed pursuant to the
reports listed on such schedule.
9.4 ADMINISTRATION OF INDEMNIFICATION.
For purposes of administering the indemnification, defense, hold
harmless, payment and reimbursement provisions set forth in Sections 9.2 and
9.3, the following procedure shall apply:
(a) Whenever a claim shall arise for indemnification, defense, hold
harmless, payment or reimbursement under this Article, the party entitled to
indemnification, defense, hold harmless, payment, or reimbursement (the
"Indemnified Party") shall reasonably promptly give written notice to the party
from whom indemnification, defense, hold harmless, payment, or reimbursement is
sought (the "Indemnifying Party") setting forth in reasonable detail, to the
extent then available, the facts concerning the nature of such claim and the
basis upon which the Indemnified Party believes that it is entitled to
indemnification, defense, hold harmless payment, or reimbursement hereunder.
(b) In the event of any claim for indemnification, defense, hold
harmless, payment, or reimbursement resulting from or in connection with any
claim by a third party, the Indemnifying Party shall be entitled, at its sole
expense, either (i) to participate in defending against such claim or (ii) to
assume the entire defense with counsel which is selected by it and which is
reasonably satisfactory to the Indemnified Party provided that no settlement
shall be made and no judgment consented to without the prior written consent of
the Indemnified Party which shall not be unreasonably withheld, conditioned or
delayed; provided, however, that such defense may be subject to the Indemnifying
Party's right to contest the obligation to indemnify, defend, hold harmless, pay
or reimburse. If, however, (i) the claim, action, suit or proceeding would, if
successful, result in the imposition of damages for which the Indemnifying Party
would not be solely responsible, or (ii) representation of both parties by the
same counsel would otherwise be inappropriate due to actual or potential
differing interests between them, then the Indemnifying Party shall not be
entitled to assume the entire defense and each party shall be entitled to retain
counsel (at each such party's own expense) who shall cooperate with one another
in defending against such claim.
(c) If the Indemnifying Party does not choose to defend against a claim
by a third party, the Indemnified Party may defend in such manner as it
reasonably determines is appropriate or settle the claim (after giving notice
thereof to the Indemnifying Party) on such terms as the Indemnified Party may
deem appropriate, and the Indemnified Party shall be entitled to periodic
reimbursement of defense expenses incurred and prompt indemnification from the
Indemnifying Party in accordance with this Article; provided, however, that the
Indemnifying Party shall have the right to contest through appropriate
proceedings its obligation to provide indemnification, defense, hold harmless,
payment or reimbursement hereunder.
(d) Failure or delay by an Indemnified Party to give a reasonably
prompt notice of any claim (if given prior to expiration of any applicable
Survival Period) shall not release, waive or otherwise affect an Indemnifying
Party's obligations with respect to the claim, except to the extent that actual
loss or prejudice occurs as a result of such failure or delay. A Recipient Party
shall not be deemed to have notice of any claim solely by reason of any
knowledge acquired on or prior to the Closing Date by an employee of any Station
acquired by the Recipient Party pursuant to this Agreement.
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(e) Any indemnification, defense, hold harmless, payment or
reimbursement amounts not paid when due under this Article IX shall bear
interest from such due date until paid in full at a rate per annum equal to the
prime rate at such due date plus three percent (3.0%) (as published in the Money
Rates column of the Eastern Edition of The Wall Street Journal).
(f) The right to indemnification, defense, hold harmless, payment or
reimbursement hereunder shall be the exclusive remedy of any Party after the
Closing in connection with any breach by any other Party of its representations,
warranties, covenants or agreements.
9.5 MITIGATION AND LIMITATION OF DAMAGES.
Each Party hereto agrees to use reasonable efforts to mitigate any
Losses which form the basis for any claim for indemnification, defense, hold
harmless, payment, or reimbursement hereunder. Notwithstanding anything
contained in this Agreement to the contrary, no Party shall be entitled to lost
profits, punitive damages or other special or consequential damages regardless
of the theory of recovery.
ARTICLE X
TERMINATION
10.1 RIGHT OF TERMINATION.
This Agreement may be terminated prior to Closing:
(a) By written agreement of the Emmis Entities and the Bonneville
Entities; or
(b) By written notice from a Party that is not then in material breach
of this Agreement if:
(i) The other Party has continued in material breach of this
Agreement for thirty (30) days after written notice of such breach from
the terminating Party is received by the other Party; or
(ii) On the date that would otherwise be the Closing Date if
any of the conditions precedent to the obligations of the Emmis
Entities (in the case of termination by the Emmis Entities) set forth
in Sections 6.1(a), 6.1(b), 6.2, 6.5, 6.6 and 6.7 of this Agreement, or
any of the conditions precedent to the obligations of the Bonneville
Entities (in the case of termination by the Bonneville Entities) set
forth in Sections 7.1(a), 7.1(b), 7.2, 7.5, 7.6 and 7.7 of this
Agreement, have not been satisfied or waived in writing by the Party
with respect to which satisfaction is a condition precedent to its
obligation to close (whether or not occurring as the result of the
other Party's material breach of any provision of this Agreement); or
(iii) Closing does not occur on or before June 20, 2001; or
(iv) That Party has terminated the TBA because of a material
breach by the other Party thereunder.
10.2 OBLIGATIONS UPON TERMINATION.
Sections 5.8, 5.9, 13.2 and 13.4 through 13.15 and Articles IX and X
shall survive the termination of this Agreement and remain in full force and
effect. Each Party to this Agreement shall remain liable after termination for
breach of this Agreement prior to termination.
10.3 TERMINATION NOTICE.
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If the terminating Party is entitled to terminate this Agreement
pursuant to the Subsection of Section 10.1 specified in the termination notice,
then termination will be deemed effected pursuant to the specified Subsection
notwithstanding that termination could be effected pursuant to more than one
such Subsection.
10.4 SINGLE PARTY.
For purposes of this Article X, (i) no Emmis Entity shall in any event
constitute an "other Party" in relation to any other Emmis Entity, (ii) neither
Bonneville Entity shall in any event constitute an "other Party" in relation to
the other Bonneville Entity, (iii) all Emmis Entities shall together constitute
but a single Party, (iv) both Bonneville Entities shall together constitute but
a single Party, (v) any breach of this Agreement by one Emmis Entity shall be
deemed to constitute a breach of this Agreement by all Emmis Entities, and (vi)
any breach of this Agreement by one Bonneville Entity shall be deemed to
constitute a breach of this Agreement by both Bonneville Entities.
ARTICLE XI
CONTROL OF STATIONS
Between the date of this Agreement and the Closing Date, (i) the Emmis
Entities shall not control, manage or supervise the operation of KZLA or the
conduct of its business, all of which shall remain the sole responsibility and
under the control of the Bonneville Entities, subject to the Bonneville
Entities' compliance with this Agreement and the TBA; and (ii) the Bonneville
Entities shall not control, manage or supervise the operation of the Emmis
Stations or the conduct of their business, all of which shall remain the sole
responsibility and under the control of the Emmis Entities, subject to the Emmis
Entities' compliance with this Agreement.
ARTICLE XII
EMPLOYMENT MATTERS
12.1 KZLA EMPLOYEES.
Section 12 of the TBA shall govern employment matters as to employees
at KZLA.
12.2 EMMIS STATIONS' EMPLOYEES.
(a) Except for the employees listed on Schedule 12.2(a) (the "Excluded
Employees"), on the Closing Date, Bonneville International shall offer
employment to all employees who perform services for an Emmis Station at a
comparable salary, position and place as held by each such employee immediately
prior to the Closing Date or in accordance with the expired terms of the two (2)
union contracts covering certain of such employees (such contracts being listed
on Schedule 3.7(b)). The employees who perform services for and are employed at
an Emmis Station immediately prior to the Closing Date (excluding, however, the
Excluded Employees) are herein referred to as the "Emmis Employees." The Emmis
Entities will cooperate with Bonneville International in its efforts to hire the
Emmis Employees. Those Emmis Employees who accept such offer are herein referred
to as the "Transferred Employees." Bonneville International shall comply with
the terms of any employment contract relating to any Transferred Employee to the
extent expressly assumed or required to be assumed by Bonneville International
hereunder.
(b) Bonneville International will assume responsibility for any
severance that may be owed to any Transferred Employee under the two (2) expired
union contracts (including credit for prior employment service) and the
employment contracts listed on Schedule 3.7(b) in connection with Bonneville
International's termination without cause of such Transferred Employee. If the
union or any union Emmis Employee makes any demand upon any Emmis Entity
(directly or indirectly) for severance
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pay pursuant to either expired union contract, applicable law or any agreement
entered into by Bonneville International for (i) any union Transferred Employee
terminated by Bonneville International or (ii) for any union Emmis Employee who
(A) is terminated by any Emmis Entity or Xxxxxxxx Entity as of the Closing Date
in connection with this Agreement and (B) does not accept Bonneville
International's offer of employment, Bonneville International will defend,
indemnify and hold harmless the Emmis Entities against such demand. In addition,
Bonneville International shall assume the obligation to bargain with the
designated collective bargaining representatives of the Emmis Employees and the
operative terms that under applicable law continue in effect under the two (2)
expired union contracts listed on Schedule 3.7(b), and promptly after Closing,
Bonneville International will notify the relevant unions of its agreement to
assume such obligations as provided in this subsection.
(c) Bonneville International shall pay the severance described in
Schedule 3.14(c) for any (i) other Transferred Employees who are terminated by
Bonneville International without cause within one (1) year after being hired by
Bonneville International or (ii) except for the Excluded Employees, any other
employees that perform services at any Emmis Station to whom Bonneville
International either does not offer employment to or to whom Bonneville
International offers employment, but such offer is not for a comparable salary,
position and place and such offer is rejected by such employee; provided,
however, that Bonneville International's total amount of severance obligations
in the aggregate shall not exceed the amount of the Bonneville Severance Cap as
set forth on Schedule 12.2(c).
(d) Bonneville International shall not assume any obligation to pay
bonuses to any Excluded Employees (or any other employee whom Bonneville
International is not obligated under this Agreement to hire) who are not hired
by Bonneville International pursuant to any "Severance/Retention Agreements" or
other similar agreements listed on Schedule 3.7(b)(vi) entered into with such
employees by any Emmis Entity or Xxxxxxxx Entity; provided, however, that
Bonneville International shall assume such obligation with respect to each Emmis
Employee to whom Bonneville International does not offer employment or to whom
Bonneville International offers employment but such offer is not for a
comparable salary, position and place and such offer is rejected by such Emmis
Employee.
(e) Bonneville International shall cause all Transferred Employees to
be eligible as of the Closing Date to participate in Bonneville International's
employee benefit plans in which similarly situated employees of Bonneville
International are generally eligible to participate from time to time; provided,
however, Bonneville International represents and agrees that all transferred
employees and their spouses and dependents shall be eligible for coverage
immediately after the Closing Date under Bonneville International's health
insurance plan in accordance with the terms and provisions of such plan and
shall not be excluded from coverage under such plan on account of any
pre-existing condition except as otherwise provided in Schedule 12.2(e). Each
Transferred Employee shall be given credit, to the extent permitted by law, for
prior service with any Emmis Entity or Xxxxxxxx Entity, any affiliate of such
Emmis Entity or Xxxxxxxx Entity or any prior owner of the applicable Emmis
Station to the extent provided in Schedule 12.2(e) for purposes of determining
eligibility to participate in Bonneville International's 401(k) plan, vesting
under Bonneville International's Profit Sharing Plan, and vacation earned under
Bonneville International's vacation plan.
(f) No provisions of this Agreement shall create any third party
beneficiary rights of any employees or former employee (including any
beneficiary or dependent thereof) of the Emmis Stations in respect of continued
employment (or resumed employment) with Bonneville International or Emmis or in
respect of any other matter.
(g) Except as set forth in Schedule 12.2(a), there are no employees
performing services for both an Emmis Station and any other station(s) who will
remain employed at such other station(s) and whose services are reasonably
necessary for the operation of such Emmis Station.
(h) Notwithstanding any other provision herein, Bonneville
International does not assume any obligation in any employment contract for
Transferred Employees (or any other employees of the Emmis Stations) relating to
stock options.
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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 as reasonably requested by the other party in order more effectively
to consummate the transactions contemplated hereby. Without limiting the
generality of the foregoing, the Transferring Party shall use commercially
reasonable efforts after closing to obtain any required consents to the
assignment of any Station Agreement used in the operation of a Transferring
Party's Station or Stations and to be transferred to the Recipient Party
pursuant to this Agreement, and shall keep the Recipient Party informed of any
problems or delays in obtaining such required consents. The Emmis Entities
acknowledge that Bonneville International will assume any Station Agreement
which is indicated on Schedule 3.7 as relating in part to any station other than
an Emmis Station only to the extent such Station Agreement relates to an Emmis
Station and is not an Emmis Excluded Asset. Emmis and Bonneville International
agree to use commercially reasonable efforts to separate each such multi-station
Station Agreement into two replacement agreements, with one relating only to the
Emmis Stations and one relating only to one or more stations owned by an Emmis
Entity or its Affiliates. The Emmis Entities agree to indemnify Bonneville from
any expenses, loss, damage, liability or other adverse consequence suffered by
Bonneville resulting from breach of any multi-station Station Agreement by
stations(s) other than the Emmis Stations, excluding, however, consequential
damages. Bonneville agrees to indemnify the Emmis Entities from any expense,
loss, damage, liability or other adverse consequence suffered by the Emmis
Entities or their Affiliates from breach of any multi-station Station Agreement
by Bonneville, excluding, however, consequential damages.
13.2 PAYMENT OF EXPENSES.
(a) The fees for the HSR Filings, the fees for filing the applications
with the FCC under Section 5.4, and the Transfer Taxes payable in connection
with the transactions contemplated by this Agreement shall be paid fifty percent
(50%) by the Emmis Entities and fifty percent (50%) by the Bonneville Entities.
(b) 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 the transactions
contemplated by this Agreement.
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13.3 SPECIFIC PERFORMANCE.
Each Transferring Party acknowledges that the Station or Stations of
the Transferring Party are of a special, unique and extraordinary character, and
that damages alone are an inadequate remedy for a breach of this Agreement by
the Transferring Party. Accordingly, as an alternative to termination of this
Agreement under Section 10.1, if the Recipient Party is not then in material
default hereunder, the Recipient Party shall be entitled, in the event of the
Transferring Party's breach, to enforcement of this Agreement (subject to
obtaining any required approval of the FCC or the Department of Justice) by a
decree of specific performance or injunctive relief requiring the Transferring
Party to fulfill its obligations under this Agreement. Such right of specific
performance or injunctive relief shall be in addition to, and not in lieu of,
the Recipient Party's right to recover damages and to pursue any other remedies
available to the Recipient Party for the Transferring Party's breach. In any
action to specifically enforce the Transferring Party's obligation to close the
transactions contemplated by this Agreement, the Transferring Party shall waive
the defense that there is an adequate remedy at law or in equity and any
requirement that the Recipient Party prove actual damages. As a condition to
seeking specific performance, the Recipient Party shall not be required to
tender the Recipient Party's Assets as contemplated by Section 2.5 but shall be
required to demonstrate that the Recipient Party is ready, willing and able to
tender the Recipient Party's Assets as contemplated by such Section.
13.4 NOTICES.
All notices, payments (unless otherwise specified herein), demands or
other communications given hereunder shall be in writing and shall be
sufficiently given if delivered by courier (including overnight delivery
service), sent by telecopy (with receipt personally confirmed by telephone) or
sent by registered or certified mail, first class, postage prepaid, addressed as
follows:
(a) If to the Emmis Entities, to:
Emmis Communications Corporation
One Emmis Plaza
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Chairman
Attention: J. Xxxxx Xxxxxxx, Esq.
Emmis Communications Corporation
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx, Esq.
Copy to:
Bose XxXxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxx
000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
(b) If to the Bonneville Entities, to:
Bonneville Holding Company
55 North 000 Xxxx, Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: President
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Bonneville International Corporation
55 North 000 Xxxx, Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: President
Copy to:
Bonneville International Corporation
55 North 000 Xxxx, Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: General Counsel
or to such other address as a Party may from time to time give notice to the
other Party in writing (as provided above). Any such notice, payment, demand or
communication shall be deemed to have been given or made (i) if so mailed, on
the date indicated on the return receipt, and (ii) if delivered by courier or
telecopy, on the date received.
13.5 ENTIRE AGREEMENT.
This Agreement, the Schedules, the Exhibit, the TBA and the other
Documents executed contemporaneously herewith constitute the entire agreement
and understanding between the parties 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.
13.6 BINDING EFFECT; BENEFITS.
Except as otherwise expressly provided in this Agreement, (i) the terms
and provisions of this Agreement shall inure to the benefit of and be binding
upon the Parties to this Agreement and their respective successors or permitted
assigns, and (ii) nothing in this Agreement, express or implied, shall confer on
any person other than the Parties hereto and their respective successors or
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
13.7 ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by either Party without the prior written consent of
the other Party, such consent not to be unreasonably withheld, provided that (i)
either Party may assign its rights under this Agreement as collateral security
to any lender providing financing to the Party or any of its Affiliates, and
(ii) no such assignment shall relieve any Party of its obligations hereunder.
13.8 GOVERNING LAW.
This Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of New York without regard to its
principles of conflicts of laws.
13.9 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, but any such waiver or failure to insist upon
strict compliance with any obligation, representation, warranty, covenant,
agreement or condition under this Agreement shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
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13.10 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.
13.11 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.
13.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and by
any Party on separate counterparts, each of which shall be an original, and all
of which together shall constitute one and the same instrument.
13.13 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. References herein to a "Party" shall mean the Bonneville
Entities on one hand and the Emmis Entities on the other.
13.14 SCHEDULES AND EXHIBITS.
Unless otherwise specified in this Agreement, each Schedule and Exhibit
referenced in this Agreement is attached to, and is incorporated by reference
into, this Agreement.
13.15 JOINT AND SEVERAL LIABILITY.
The Emmis Entities shall be jointly and severally liable for each
representation, warranty, covenant, agreement, liability or obligation of all or
any one of the Emmis Entities under this Agreement or any other Document whether
or not otherwise indicated in this Agreement or any other Document. The
Bonneville Entities shall be jointly and severally liable for each
representation, warranty, covenant, agreement, liability or obligation of all or
any one of the Bonneville Entities under this Agreement or any other Document
whether or not otherwise indicated in this Agreement or any other Document.
13.16 BONNEVILLE ENTITIES NOT RESPONSIBLE FOR EMMIS ENTITIES' ACTIONS
UNDER TBA.
Notwithstanding anything contained herein to the contrary, the
Bonneville Entities shall not be deemed to have breached any representation,
warranty, covenant or agreement of the Bonneville Entities contained herein or
to have failed to satisfy any condition precedent to the Emmis Entities'
obligations under this Agreement (nor shall the Bonneville Entities have any
liability or responsibility to the Emmis Entities in respect of any such
representation, warranty, covenant, agreement or condition precedent), in each
case to the extent that the inaccuracy of any such representation, the breach of
any such warranty, covenant or agreement or the inability to satisfy any such
condition precedent arises out of or otherwise relates to (i) any actions taken
by or under the authorization of any Emmis Entity (or any of its officers,
directors, employees, affiliates, agents or representatives) in connection with
any Emmis Entity's performance of its obligations under the TBA or (ii) the
failure of any Emmis Entity to perform any of its
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obligations under the TBA. The Emmis Entities acknowledge and agree that the
Bonneville Entities shall not be deemed to be responsible for, or to have
authorized or consented to, any action or failure to act on the part of any
Emmis Entity (or any of its officers, directors, employees, affiliates, agents
or representatives) in connection with the TBA by reason of the fact that prior
to Closing the Bonneville Entities shall have the legal right to control, manage
or supervise the operation of KZLA or the conduct of its business.
[Signature Page Follows]
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Executed as of the date first written above.
BONNEVILLE HOLDING COMPANY
By:_________________________________
Printed:____________________________
Its:________________________________
BONNEVILLE INTERNATIONAL COMPANY
By:_________________________________
Printed:____________________________
Its:________________________________
"Bonneville Entities"
EMMIS COMMUNICATIONS CORPORATION
By:_________________________________
Printed: ___________________________
Its:________________________________
EMMIS 000.0 XX XXXXXXXXXXXX XXXXXXXXXXX
XX XX. XXXXX
By:_________________________________
Printed: ___________________________
Its:________________________________
EMMIS 000.0 XX XXXXXXX XXXXXXXXXXX
XX XX. XXXXX
By:_________________________________
Printed: ___________________________
Its:________________________________
"Emmis Entities"
63
