EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
STC BROADCASTING, INC.
AND
STC LICENSE COMPANY
AS SELLER
AND
XXXXX TELEVISION OF NORTH DAKOTA, INC.
AND
XXXXX TELEVISION OF NORTH DAKOTA LICENSE HOLDINGS, INC.
AS BUYER
DATED AS OF FEBRUARY 8, 2002
TABLE OF CONTENTS
PAGE
Article 1. Definitions and References...........................................1
Article 2. Sale and Purchase of Assets; Purchase Price; Assumption of
Liabilities...............................................................2
2.1. Asset Sale and Purchase of Assets................................2
2.1.1. FCC Licenses.........................................2
2.1.2. Real and Leased Property Interests...................2
2.1.3. Tangible Personal Property...........................3
2.1.4. Intellectual Property................................3
2.1.5. Program Contracts....................................3
2.1.6. Trade-out Agreements.................................3
2.1.7. Broadcast Time Sales Agreement.......................4
2.1.8. Operating Contracts..................................4
2.1.9. Vehicles.............................................4
2.1.10. Files and Records....................................4
2.1.11. Auxiliary Facilities.................................4
2.1.12. Permits and Licenses.................................4
2.1.13. Goodwill.............................................5
2.1.14. Accounts Receivable..................................5
2.1.15. Deposits and Prepaid Expenses........................5
2.2. Excluded Assets..................................................5
2.2.1. Cash.................................................5
2.2.2. Personal Property Disposed Of........................5
2.2.3. Insurance............................................5
2.2.4. Employee Plans and Assets............................5
2.2.5. Right to Tax Refunds.................................5
2.2.6. Certain Books and Records............................6
2.2.7. Rights Under this Agreement..........................6
2.2.8. Securities...........................................6
2.2.9. Excluded Contracts and Unrelated Assets..............6
2.2.10. Excluded Intellectual Property.......................6
2.3. Purchase Price...................................................6
2.4. Payment of Purchase Price........................................6
2.5. Allocation of Purchase Price.....................................7
2.6. Assumption of Liabilities........................................8
ARTICLE 3. Representations and Warranties by Seller.............................9
3.1. Organization and Standing........................................9
3.2. Authorization....................................................9
3.3. Compliance with Laws.............................................9
3.4. Consents and Approvals; No Conflicts.............................10
3.5. Financial Statements.............................................10
ii
TABLE OF CONTENTS
PAGE
3.6. Absence of Certain Changes.......................................11
3.7. Absence of Litigation............................................11
3.8. Assets...........................................................11
3.9. FCC Matters......................................................11
3.10. Real Property....................................................12
3.11. Condition of Tangible Assets.....................................13
3.12. Intellectual Property............................................13
3.13. Reports and Records..............................................14
3.14. Station Contracts................................................14
3.15. Taxes............................................................14
3.16. Employee Benefit Plans...........................................15
3.17. Employees........................................................15
3.18. Environmental Matters............................................15
3.19. Insurance........................................................16
3.20. Digital Television...............................................16
3.21. Non-Reliance.....................................................16
ARTICLE 4. Representations and Warranties by Buyer..............................16
4.1. Organization and Standing........................................16
4.2. Authorization....................................................17
4.3. Compliance with Laws.............................................17
4.4. Consents and Approvals; No Conflicts.............................17
4.5. Qualification of Buyer...........................................18
4.6. Non-Reliance.....................................................18
ARTICLE 5. Pre-Closing Filings..................................................18
5.1. Applications for FCC Consent.....................................18
ARTICLE 6. Covenants and Agreements of Seller...................................19
6.1. Negative Covenants...............................................19
6.1.1. Dispositions.........................................19
6.1.2. Accounting Principles and Practices..................19
6.1.3. Trade-out Agreements.................................19
6.1.4. Broadcast Time Sales Agreements......................19
6.1.5. Network Affiliation Agreements and Local Marketing
Arrangements.........................................20
6.1.6. Additional Agreements................................20
6.1.7. Breaches.............................................20
6.1.8. Employee Matters.....................................20
6.1.9. Actions Affecting FCC Licenses.......................20
6.1.10. Affiliated Transactions..............................21
6.1.11. Collection of Accounts Receivable....................21
6.1.12. Payment of Accounts Payable..........................21
6.2. Affirmative Covenants............................................21
6.2.1. Preserve Existence...................................21
6.2.2. Normal Operations....................................21
iii
TABLE OF CONTENTS
PAGE
6.2.3. Maintain FCC Licenses................................22
6.2.4. Station Contracts....................................22
6.2.5. Taxes................................................22
6.2.6. Access...............................................22
6.2.8. Insurance............................................22
6.3. Confidentiality..................................................23
6.4. No Shopping......................................................23
ARTICLE 7. Covenants and Agreements of Buyer....................................24
7.1. Confidentiality..................................................24
7.2. Access...........................................................24
7.3. Notice of Breaches of Representations and Warranties.............25
7.4. Financing........................................................25
ARTICLE 8. Mutual Covenants and Understandings of Seller and Buyer..............26
8.1. Possession and Control...........................................26
8.2. Risk of Loss.....................................................26
8.3. Public Announcements.............................................27
8.4. Employee Matters.................................................27
8.4.1. Transferred Employees................................27
8.4.2. COBRA Obligations....................................28
8.5. Consents.........................................................29
ARTICLE 9. Conditions Precedent to Buyer's Obligation to Close..................29
9.1. Representations and Covenants....................................29
9.2. Required Consents................................................30
9.3. Delivery of Documents............................................30
9.4. FCC Matters......................................................30
9.5. Legal Proceedings................................................30
ARTICLE 10. Conditions Precedent to Seller's Obligation to Close................30
10.1. Representations and Covenants....................................31
10.2. Delivery by Buyer................................................31
10.3. FCC Order........................................................31
10.4. Legal Proceedings................................................31
ARTICLE 11. Closing.............................................................31
11.1. Closing..........................................................31
11.2. Time and Place of Closing........................................32
11.3. Delivery by Seller...............................................32
11.3.1. Agreements and Instruments...........................33
11.3.2. Consents.............................................33
11.3.3. Certified Resolutions................................33
11.3.4. Officers' Certificates...............................34
11.3.5. Organizational Documents.............................34
11.3.6. Releases.............................................34
iv
TABLE OF CONTENTS
PAGE
11.3.7. FIRPTA Certificate...................................34
11.3.8. Title Insurance Documents............................34
11.3.9. Domain Name Transfer.................................34
11.3.10. Good Standing........................................35
11.4. Delivery by Buyer................................................35
11.4.1. Purchase Price Payment...............................35
11.4.2. Agreements and Instruments...........................35
11.4.3. Certified Resolutions................................35
11.4.4. Officers' Certificate................................35
11.4.5. Consents.............................................36
ARTICLE 12. Survival; Indemnification...........................................36
12.1. Survival of Representations......................................36
12.2. Indemnification by Seller........................................36
12.3. Indemnification by Buyer.........................................37
12.4. Limitations on Indemnification...................................38
12.5. Conditions of Indemnification....................................38
ARTICLE 13. Termination.........................................................40
13.1. Termination......................................................40
13.2. Effect of Termination............................................41
ARTICLE 14. Remedies............................................................42
14.1. Default by Buyer.................................................42
14.2. Default by Seller................................................43
14.3. Liquidated Damages...............................................43
14.4. Specific Performance.............................................44
14.5. Remedies After Non-License Closing...............................44
ARTICLE 15. General Provisions..................................................44
15.1. Additional Actions, Documents and Information....................44
15.2. Brokers..........................................................45
15.3. Expenses and Taxes...............................................45
15.4. Notices..........................................................45
15.5. Waiver...........................................................47
15.6. Benefit and Assignment...........................................47
15.7. Entire Agreement; Amendment......................................47
15.8. Severability.....................................................48
15.9. Headings.........................................................48
15.10. Governing Law; Jurisdiction......................................48
15.11. Signature in Counterparts........................................48
15.12. STNY Guaranty....................................................48
v
SCHEDULES
Schedule 2.1.1 FCC Licenses
Schedule 2.1.2 Real Property Interests
Schedule 2.1.3 Tangible Personal Property
Schedule 2.1.4 Intellectual Property
Schedule 2.1.5 Program Contracts
Schedule 2.1.6 Trade-out Agreements
Schedule 2.1.8 Operating Contracts
Schedule 2.1.9 Vehicles
Schedule 2.2.9 Excluded Contracts and Unrelated Assets
Schedule 3.7 Litigation
Schedule 3.8 Encumbrances on Assets
Schedule 3.9 FCC Matters
Schedule 3.10 Encumbrances on Real Property and Leasehold Interests
Schedule 3.10.3 Third Party Leases
Schedule 3.10.6 Condition of Real Property
Schedule 3.11 Condition of Tangible Assets
Schedule 3.16 Employee Benefit Plans
Schedule 3.17.1 Collective Bargaining Agreements
Schedule 3.18 Environmental Matters
Schedule 3.19 Insurance
Schedule 4.4 Buyer Consents and Approvals
Schedule 6.1 Actions
Schedule 9.2 List of Required Consents
vi
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into
as of February 8, 2002, by and between STC Broadcasting, Inc., a Delaware
corporation ("STC"), and STC License Company, a Delaware corporation and a
wholly-owned subsidiary of STC ("STC LICENSE CO." and together with STC,
"SELLER"), Xxxxx Television of North Dakota, Inc., a Delaware corporation
("STND"), and Xxxxx Television of North Dakota License Holdings, Inc., a
Delaware corporation and a wholly-owned subsidiary of STND ("STLH" and together
with STND, "BUYER").
WHEREAS, STC License Co. is the licensee of television broadcast
Stations KVLY-TV, Fargo, North Dakota, KFYR-TV, Bismarck, North Dakota plus
three satellite stations, KMOT-TV, licensed to Minot, North Dakota, KUMV-TV
licensed to Williston, North Dakota and KQCD-TV licensed to Dickinson, North
Dakota (collectively, the "STATIONS"), pursuant to certain authorizations issued
by the FCC; and
WHEREAS, Seller desires to sell, assign and transfer the assets
and business of the Stations as described below, and Buyer desires to acquire
the assets and business of the Stations as described below, and to assume
certain liabilities of Seller and the Stations as described below, all on the
terms described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Capitalized terms used herein without definition shall have the
respective meanings assigned thereto in Annex I attached hereto and incorporated
herein for all purposes of this Agreement (such definitions to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise specified, all references herein to "Articles" or "Sections" are to
Articles or Sections of this Agreement. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
1
ARTICLE 2.
SALE AND PURCHASE OF ASSETS;
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.1. ASSET SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions hereof and in reliance upon
the representations, warranties and agreements contained herein, Seller shall
sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase,
acquire, pay for and accept from Seller, all right, title and interest of Seller
in, to and under all real, personal and mixed assets, rights, benefits and
privileges, both tangible and intangible, wheresoever located, owned, leased,
used or held for use by Seller in connection with the business or operations of
the Stations (collectively, the "ASSETS"); but excluding (a) the Excluded Assets
described in Section 2.2 and (b) any asset that is retired, disposed of or
extinguished prior to the Non-License Closing Date or the Closing Date, as
applicable, in accordance with the terms of this Agreement.
The Assets shall include all right, title and interest of Seller
in, to and under the following:
2.1.1. FCC LICENSES.
All licenses, permits and other authorizations issued by
the FCC to Seller for the operation of the Stations (the "FCC LICENSES"),
including those listed in Schedule 2.1.1, and all applications therefor,
together with any renewals, extensions or modifications thereof and additions
thereto.
2.1.2. REAL AND LEASED PROPERTY INTERESTS.
(a) All the real property which is used or held for use
in connection with the business and operations of the Stations, including all
land, fee interests, easements and other interests of every kind and description
in real property, buildings, structures, fixtures, appurtenances, towers and
antennae, and other improvements thereon owned by Seller which are used or held
for use in connection with the business and operations of the Stations ("REAL
PROPERTY"), including all of those items listed or described in Schedule 2.1.2.
(b) All the real property leasehold interests which are
used or held for use in connection with the business and operations of the
Stations, including leases and subleases of any land, easements, rights of way
and other real property leasehold interests of every kind and description in
real property, buildings, structures, fixtures, appurtenances, towers and
antennae, and other improvements thereon leased by Seller in connection with the
business and
2
operations of the Stations ("LEASED PROPERTY"), including all of those items
listed or described in Schedule 2.1.2.
2.1.3. TANGIBLE PERSONAL PROPERTY.
All of the furniture, fixtures, furnishings,
machinery, computers, equipment, inventory, spare parts, supplies, office
materials and other tangible property of every kind and description maintained,
owned, leased, used or held for use by Seller in connection with the business
and operations of the Stations, including those items which are set forth and
identified in Schedule 2.1.3 (which consists of a list from the Best Software,
Inc. FAS Asset Accounting System), together with any replacements thereof and
additions thereto made before the Non-License Closing Date or the Closing Date,
as applicable.
2.1.4. INTELLECTUAL PROPERTY.
Except as provided in Section 2.2.10, all of the
service marks, copyrights, franchises, trademarks, trade names, domain names,
jingles, slogans, logotypes, trade secrets, confidential information, technical
and computer data, documentation and software, business and marketing plans and
all other intangible assets maintained, owned, used or held for use by Seller in
connection with the business and operations of the Stations (including any and
all applications, registrations, extensions and renewals relating thereto)
(collectively, the "INTELLECTUAL PROPERTY"), and all of the rights, benefits and
privileges associated therewith, including those set forth and identified in
Schedule 2.1.4 and the right to use the "KVLY", "KFYR", "KMOT" "KUMV", and
"KQCD" call letters for the Stations.
2.1.5. PROGRAM CONTRACTS.
The program licenses and contracts under which
Seller is authorized to broadcast programs on the Stations (collectively the
"PROGRAM CONTRACTS"), including (a) all program (cash and non-cash) licenses and
contracts listed on Schedule 2.1.5, and (b) any other such program contracts
that are entered into between the date of this Agreement and the Non-License
Closing Date or the Closing Date, as applicable, in accordance with the terms of
this Agreement.
2.1.6. TRADE-OUT AGREEMENTS.
All contracts and agreements (excluding Program
Contracts) pursuant to which Seller has sold, traded or bartered commercial air
time on the Stations in consideration for any property or services in lieu of or
in addition to cash (collectively, the "TRADE-OUT AGREEMENTS"), including those
set forth and identified in Schedule 2.1.6.
3
2.1.7. BROADCAST TIME SALES AGREEMENT.
All contracts and agreements pursuant to which
Seller has sold commercial air time on the Stations for cash (collectively the
"TIME SALES AGREEMENTS").
2.1.8. OPERATING CONTRACTS.
The other contracts and agreements entered into
by Seller in connection with the business and operations of the Stations,
including those listed on Schedule 2.1.8 (including employment agreements and
talent contracts, collective bargaining agreements, network affiliation
agreements and national and local advertising representation agreements for the
Stations), together with all contracts and agreements that will be entered into
between the date of this Agreement and the Non-License Closing Date or the
Closing Date, as applicable, in accordance with the terms of this Agreement
(collectively, the "OPERATING CONTRACTS" and together with the Program
Contracts, the Trade-out Agreements and the Time Sales Agreements, the "STATION
CONTRACTS").
2.1.9. VEHICLES.
All automotive equipment and motor vehicles
maintained, owned, leased, used or held for use by Seller in connection with the
business and operations of the Stations, including those set forth and described
in Schedule 2.1.9.
2.1.10. FILES AND RECORDS.
All engineering, business and other books,
papers, logs, files, and accounting, financial and other records relating solely
to the business and operations of the Stations, but not the documents, books and
records described in Section 2.2.6.
2.1.11. AUXILIARY FACILITIES.
All translators, earth stations, and other
auxiliary facilities, and all applications therefor, owned, leased, used or held
for use by Seller in connection with the business and operations of the
Stations.
2.1.12. PERMITS AND LICENSES.
To the extent transferable, all permits,
approvals, orders, authorizations, consents, licenses, certificates, franchises,
exemptions of, or filings or registrations with, any court or Governmental
Authority (other than the FCC) in any jurisdiction, which have been issued or
granted to or are owned, used or held for use by Seller in connection with the
business and operations of the Stations and all pending applications therefor
(the "PERMITS").
4
2.1.13. GOODWILL.
The business of the Stations as a "going
concern," customer relationships and goodwill.
2.1.14. ACCOUNTS RECEIVABLE.
All Accounts Receivable of the Stations, except
for any intercompany receivable reflected on the Current Balance Sheet and any
additional intercompany receivables incurred after the date hereof and prior to
the Non-License Closing or the Closing, as applicable, in the ordinary course of
business consistent with past practice of the Stations.
2.1.15. DEPOSITS AND PREPAID EXPENSES.
All deposits and prepaid expenses of the
Stations.
2.2. EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this
Agreement, there shall be excluded from the Assets and retained by Seller, the
following assets (collectively, the "EXCLUDED ASSETS"):
2.2.1. CASH.
All cash and cash equivalents owned by Seller
and on hand immediately prior to the Non-License Closing or the Closing, as
applicable.
2.2.2. PERSONAL PROPERTY DISPOSED OF.
All tangible personal property disposed of or
consumed.
2.2.3. INSURANCE.
All contracts of insurance and all insurance
plans and the assets thereof.
2.2.4. EMPLOYEE PLANS AND ASSETS.
All Plans and the assets thereof, and the
contracts relating thereto.
2.2.5. RIGHT TO TAX REFUNDS.
Any and all claims of Seller with respect to any
Tax refunds.
5
2.2.6. CERTAIN BOOKS AND RECORDS.
All of (a) Seller's organizational documents and
other corporate records, and originals of account books of original entry, (b)
duplicated copies of any books, records, accounts, checks, payment records, Tax
records (including payroll, unemployment, real estate and other Tax records) and
other similar books, records and information of Seller relating to the business
or operations of the Stations prior to the Non-License Closing Date or the
Closing Date, as applicable, (c) books, records and information that relates
both to the Stations and other stations of Seller, (d) all records prepared by
or on behalf of Seller in connection with the sale of the Stations, and (e) all
records and documents to the extent relating to any Excluded Assets.
2.2.7. RIGHTS UNDER THIS AGREEMENT.
All of the rights of Seller under or pursuant to
this Agreement or any other rights in favor of Seller pursuant to the other
agreements contemplated hereby or thereby.
2.2.8. SECURITIES.
All capital stock or other securities of any
direct or indirect subsidiary of Seller.
2.2.9. EXCLUDED CONTRACTS AND UNRELATED ASSETS.
The contracts, agreements and any other assets
listed on Schedule 2.2.9.
2.2.10. EXCLUDED INTELLECTUAL PROPERTY.
Any and all Intellectual Property that relates
both to the Stations and other stations of Seller.
2.3. PURCHASE PRICE.
For and in consideration of the conveyances and assignments
described herein and in addition to the assumption of the Assumed Liabilities as
set forth in Section 2.6, Buyer agrees to pay to Seller, and Seller agrees to
accept from Buyer, an amount equal to Thirty-Eight Million, Five Hundred
Thousand Dollars ($38,500,000) (the "PURCHASE PRICE").
2.4. PAYMENT OF PURCHASE PRICE.
2.4.1. In the event of a Non-License Closing, Buyer shall
pay to Seller at the Non-License Closing Thirty-Seven Million, Five Hundred
Thousand
6
Dollars ($37,500,000) as follows: (a) Twenty-Eight Million, One Hundred
Twenty-Five Thousand Dollars ($28,125,000) by wire transfer of immediately
available funds to an account or accounts which will be identified by Seller
prior to the Non-License Closing Date, and (b) Buyer shall deliver to Seller a
subordinated promissory note in substantially the form of Exhibit A attached
hereto (the "NOTE") evidencing Buyer's obligation to pay Nine Million, Three
Hundred Seventy-Five Thousand Dollars ($9,375,000) to Seller.
2.4.2. The Purchase Price shall be paid by Buyer to Seller
at Closing as follows: (a) Twenty-Eight Million Eight Hundred Seventy-Five
Thousand Dollars ($28,875,000) by wire transfer of immediately available funds
to an account or accounts which will be identified by Seller prior to the
Closing Date, and (b) Buyer shall deliver the Note to Seller evidencing Buyer's
obligation to pay Nine Million Six Hundred Twenty-Five Thousand Dollars
($9,625,000) to Seller; provided, however, that in the event of the earlier
occurrence of the Non-License Closing, at Closing Buyer shall deliver to Seller
the portion of the Purchase Price not paid to Seller as part of the Non-License
Closing as follows: (a) a Note evidencing Buyer's obligation to pay Two Hundred
Fifty Thousand Dollars ($250,000) and (b) Seven Hundred Fifty Thousand Dollars
($750,000) by wire transfer of immediately available funds to an account or
accounts which will be identified by Seller prior to the Closing Date.
2.5. ALLOCATION OF PURCHASE PRICE.
As promptly as reasonably practicable following execution of
this Agreement, Seller and Buyer agree to retain Bond & Xxxxxx (the "APPRAISAL
FIRM") to appraise the classes of Assets of the Stations based on the
Consideration paid by Buyer for the Stations. The Appraisal Firm shall be
instructed to perform such appraisal and deliver a written report thereof to
Seller and Buyer as soon as reasonably practicable (the "APPRAISAL REPORT").
Seller, on the one hand, and Buyer, on the other hand, shall each pay one-half
(1/2) of the fees, costs and expenses of the Appraisal Firm whether or not the
transactions contemplated hereby are consummated. Seller and Buyer each
represent, warrant, covenant and agree with each other that the Consideration
shall be allocated (the "ALLOCATION") among the Assets as set forth in the
Appraisal Report, it being understood that such allocation is to be made in
accordance with the principles established under Section 1060 of the Code.
Seller and Buyer agree to report and file all Tax returns (including amended Tax
returns and claims for refund) consistently with the Allocation and shall take
no position contrary thereto or inconsistent therewith (including, without
limitation, in any audits or examinations by any taxing authority or any other
proceedings), unless otherwise required by applicable Law. Seller and Buyer
shall cooperate in the filing of any forms (including Form 8594) with respect to
the Allocation, including any amendments to such forms required with respect to
any subsequent adjustments to the Consideration. Notwithstanding any other
provision of this Agreement, the provisions of this Section 2.5 shall
7
survive the Closing Date without limitation. In the event that the Allocation is
disputed by any taxing authority, the party receiving notice of the dispute
shall promptly provide written notice thereof to the other parties hereto and
shall forward to such other parties copies of all correspondence with such
taxing authority in respect of the disputed Allocation.
2.6. ASSUMPTION OF LIABILITIES.
2.6.1 At the Non-License Closing, Buyer shall assume and
agree to pay and otherwise fully perform and discharge as and when the same
become due and payable or are required to be performed all of the following
liabilities of Seller or the Stations (collectively, the "NON-LICENSE CLOSING
ASSUMED Liabilities"): (a) all liabilities, obligations and duties of the
Stations related to or arising in connection with the business or operation of
the Stations on or after January 7, 2002, other than liabilities and obligations
for Seller's Taxes and liabilities and obligations under Environmental Laws
arising or relating to periods prior to the Non-License Closing Date; (b) all
liabilities, obligations and duties under the Station Contracts and the Permits,
arising on or after January 7, 2002 (other than liabilities, obligations or
duties arising from any breach of any Station Contract prior to January 7, 2002,
other than as a result of past due amounts thereunder), and (c) all current
liabilities of the Stations reflected in the Current Balance Sheet or arising in
the regular and ordinary course of business consistent with past practices of
the Stations between December 31, 2001 and the Non-License Closing Date,
including accounts payable (including past due accounts payable), accrued
expenses and film contracts payable. Buyer shall not assume nor become obligated
to pay in connection with the Non-License Closing any debt, obligation, or
liability of any kind incurred or accrued in connection with the business or
operation of the Stations, except for the Non-License Closing Assumed
Liabilities.
2.6.2. To the extent not previously assumed by Buyer upon
the Non-License Closing, at the Closing, Buyer shall assume and agree to pay and
otherwise fully perform and discharge as and when the same become due and
payable or are required to be performed all of the following liabilities of
Seller or the Stations (collectively, the "ASSUMED LIABILITIES"): (a) all
liabilities, obligations and duties of the Stations related to or arising in
connection with the business or operation of the Stations on or after January 7,
2002 other than liabilities and obligations for Seller's Taxes and liabilities
and obligations under Environmental Laws arising or relating to periods prior to
the Closing Date; (b) all liabilities, obligations and duties under the Station
Contracts, the FCC Licenses and the Permits, arising on or after January 7, 2002
(other than liabilities, obligations or duties arising from any breach of any
Station Contract prior to January 7, 2002, other than as a result of past due
amounts thereunder), and (c) all current liabilities of the Stations reflected
in the Current Balance Sheet or arising in the regular and ordinary course of
business consistent with past practices of the Stations between December 31,
2001 and the Closing Date, including accounts
8
payable (including past due accounts payable), accrued expenses and film
contracts payable. Buyer shall not assume nor become obligated to pay any debt,
obligation, or liability of any kind incurred or accrued in connection with the
business or operation of the Stations, except for the Assumed Liabilities.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY SELLER
Seller represents and warrants to Buyer as follows:
3.1. ORGANIZATION AND STANDING.
Seller is a Delaware corporation, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified to
do business and is in good standing in any jurisdiction where such qualification
is necessary, except for those jurisdictions where the failure to be so
qualified would not reasonably be expected to have a Material Adverse Effect.
Seller has the corporate power and authority to own, lease and otherwise to hold
and operate the Assets, to carry on the business of the Stations as now
conducted, and to enter into and perform the terms of this Agreement, the other
Seller Documents and the transactions contemplated hereby and thereby.
3.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement
and of the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate actions of Seller. Assuming this Agreement has been duly
executed by Buyer, this Agreement constitutes, and upon execution and delivery
each other Seller Document will constitute, a valid and binding agreement and
obligation of Seller, enforceable against Seller in accordance with its
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
3.3. COMPLIANCE WITH LAWS.
Seller is in compliance in all respects with all Laws
applicable to the Assets or the Stations, except where the failure to be in such
compliance would not reasonably be expected to have a Material Adverse Effect.
9
3.4. CONSENTS AND APPROVALS; NO CONFLICTS.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person in connection with any Station Contract where the
failure to make such filing or notification or to obtain such consent,
approvals, authorizations or other action would reasonably be expected to have a
Material Adverse Effect, except that the consent of Seller's lenders under the
Amended and Restated Credit Agreement dated as of July 2, 1998, among Sunrise
Television Corp., STC Broadcasting, Inc., The Chase Manhattan Bank, Salomon
Brothers Holding Company Inc. and NationsBank, N.A. ("BANK CONSENT") will be
required and certain of the Station Contracts may be assigned only with the
consent of third parties.
3.4.2. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority where the failure to make such
filing or notification or to obtain such consent, approvals, authorizations or
other action would reasonably be expected to have a Material Adverse Effect,
except as follows: (a) consents to the assignment of the FCC Licenses to Buyer
by the FCC, and (b) filings, if any, with respect to real estate transfers and
real estate transfer taxes.
3.4.3. Assuming all consents, approvals, authorizations and
other actions described in Section 3.4.1 and Section 3.4.2 have been obtained
and all filings and notifications described in Section 3.4.1 and Section 3.4.2
have been made, the execution, delivery and performance of this Agreement and
the other Seller Documents by Seller do not and will not (a) conflict with or
violate any material Law applicable to Seller, the Assets or the Stations or by
which any of the Assets or the Stations is subject or affected, (b) conflict
with or result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under any material
contract or agreement to which Seller is a party or by which Seller is bound or
to which any of the Assets or the Stations is subject or affected, (c) result in
the creation of any Encumbrance other than a Permitted Encumbrance upon the
Assets, or (d) conflict with or violate the organizational documents of Seller,
except, in each case, for such conflicts, violations, breaches, defaults or
Encumbrances that would not reasonably be expected to have a Material Adverse
Effect.
3.5. FINANCIAL STATEMENTS.
Seller has provided to Buyer the unaudited balance sheet of
the Stations and its related license assets as of December 31, 2001 (the
"CURRENT BALANCE SHEET"), and the unaudited statements of operations of the
Stations and its related license assets for the year ended December 31, 2001.
Seller has provided
10
or has made available to Buyer the Stations' internal financial statements for
1999, 2000 and 2001. The financial statements referred to in this Section 3.5
(a) present fairly the financial position of the Stations as of the respective
dates and the results of operations for the respective periods indicated, and
(b) have been prepared in accordance with GAAP (except that the financial
statements referred to in this Section 3.5 do not contain all footnotes required
under GAAP and do not include statements of cashflows.
3.6. ABSENCE OF CERTAIN CHANGES.
During the period commencing on December 31, 2001 and ending
on the date hereof, there has been no Material Adverse Effect.
3.7. ABSENCE OF LITIGATION.
Except as set forth on Schedule 3.7, there is no action,
suit, investigation, claim, arbitration or litigation pending or, to the actual
knowledge of Seller, threatened against Seller with respect to the Stations that
would reasonably be expected to have a Material Adverse Effect.
3.8. ASSETS.
The Assets and the Excluded Assets comprise all of the
assets or property owned, leased, used or held for use in the business or
operations of the Stations as presently conducted. Seller is the owner of, and
has good title to, or has a good and valid leasehold or license interest in and
to, the Assets free and clear of any Encumbrances, except for and subject only
to (a) the Permitted Encumbrances, (b) those Encumbrances listed in Schedule
3.8, which shall be discharged and removed on or prior to the Non-License
Closing Date or the Closing Date, as applicable, and (c) as to the Real
Property, those Encumbrances listed in Schedule 3.10 which, to the extent so
indicated in Schedule 3.10, shall be discharged and removed on or prior to the
Non-License Closing Date or the Closing Date, as applicable. At the Non-License
Closing or the Closing, as applicable, Buyer shall acquire good title to (or a
good and valid leasehold or license interest, as applicable) the Assets, free
and clear of all Encumbrances, except for the Permitted Encumbrances, and any
Encumbrances that may be created by Buyer.
3.9. FCC MATTERS.
Seller holds the FCC Licenses listed as held by Seller on
Schedule 2.1.1. The FCC Licenses constitute all of the licenses, permits and
authorizations from the FCC that are necessary or required for and/or used in
the business and operations of the Stations. The FCC Licenses are valid and in
full force and effect through the dates set forth on Schedule 2.1.1. The
Stations have been operated by
11
Seller in all material respects in accordance with the terms of the FCC Licenses
and the Communications Act, except where the failure to operate the Stations in
such manner would not reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 3.9, no application, action or proceeding is
pending for the renewal or modification of any of the FCC Licenses, and, except
for actions or proceedings affecting television broadcast stations generally, no
application, complaint, action or proceeding is pending or, to Seller's actual
knowledge, threatened that may result in the (a) revocation, modification,
non-renewal or suspension of any of the FCC Licenses, (b) issuance of a cease
and desist order, (c) imposition of any administrative or judicial sanction with
respect to the Stations or (d) denial of an application for renewal, except, in
each case, for those revocations, modifications, non-renewals, suspensions,
issuances, impositions or denials that would not reasonably be expected to have
a Material Adverse Effect. Seller has filed with the FCC all material reports,
forms and statements required by the FCC to be filed by Seller relating to the
Stations, except where the failure to file such reports, forms and statements
would not reasonably be expected to have a Material Adverse Effect.
3.10. REAL PROPERTY.
3.10.1. Seller has good and marketable title to the Real
Property listed in Schedule 2.1.2, free and clear of all Encumbrances, except
for (a) those items listed in Schedule 3.10 (which, to the extent so indicated
on Schedule 3.10, shall be discharged and removed on or prior to the Non-License
Closing Date or the Closing Date, as applicable), and (b) Permitted
Encumbrances. Schedule 2.1.2 sets forth the legal description of each parcel of
Real Property.
3.10.2. Seller has a valid leasehold interest in all Leased
Property listed as leased by Seller in Schedule 2.1.2. Schedule 2.1.2 lists all
leases, subleases and other occupancy agreements (the "Leases") pursuant to
which any of the Leased Property is leased by Seller. Except as would not
reasonably be expected to have a Material Adverse Effect or as set forth on
Schedule 3.10, each Lease is in full force and effect and constitutes a legal,
valid and binding obligation of, and is legally enforceable against Seller and,
to the actual knowledge of Seller, each other party thereto, and grants the
leasehold interest it purports to grant. Seller is in compliance with all of the
material provisions of the Leases and is not in default thereunder in any
material respect, and there has not occurred any event which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute such a default by Seller or, to the actual knowledge of Seller,
any other parties to the Leases, except for such defaults or events that would
not reasonably be expected to have a Material Adverse Effect.
3.10.3. Except as set forth on Schedule 3.10.3, Seller has
not leased any of the Real Property nor has Seller subleased any of the Leased
Property to any
12
third party, except for such leases or subleases as would not reasonably be
expected to have a Material Adverse Effect.
3.10.4. To the actual knowledge of Seller, no portion of the
Real Property or any building, structure, fixture or improvement thereon is the
subject of, or affected by, any condemnation, eminent domain or inverse
condemnation proceeding currently instituted or pending, except for such
proceedings that would not reasonably be expected to have a Material Adverse
Effect.
3.10.5. The Real Property and the Leased Property listed in
Schedule 2.1.2 constitute all of the real property owned, leased, used or held
for use in the business or operations of the Stations.
3.10.6. Except as set forth on Schedule 3.10.6, all
buildings, structures, fixtures and other improvements on the Real Property are
in sufficient operating condition and adequate repair (ordinary wear and tear
excepted) for the purposes to which they are currently devoted, except for such
conditions that would not reasonably be expected to have a Material Adverse
Effect.
3.10.7. Seller has delivered to Buyer copies of all material
title policies and surveys with respect to the Real Property which are in the
possession of Seller or any Affiliate of Seller.
3.11. CONDITION OF TANGIBLE ASSETS.
Except as set forth on Schedule 3.11, all tangible Assets
presently in use are in good operating condition and good repair (ordinary wear
and tear excepted) for the purposes to which they are currently devoted, except
where the failure to be in such condition would not reasonably be expected to
have a Material Adverse Effect.
3.12. INTELLECTUAL PROPERTY.
Seller owns or possesses pursuant to a valid and enforceable
license, all rights to use all such Intellectual Property material to the
conduct of the business of the Stations, except where the failure of Seller to
own or possess such rights would not reasonably be expected to have a Material
Adverse Effect. Seller has the right to the use of each of the call letters
"KVLY-TV", "KFYR-TV", "KMOT-TV", "KUMV-TV", and "KQCD-TV" pursuant to the rules
and regulations of the FCC. Seller has no actual knowledge of any claim by
another Person contesting the validity, enforceability, use or ownership of any
Intellectual Property or any grounds for the same, except for such claims as
would not reasonably be expected to have a Material Adverse Effect.
13
3.13. REPORTS AND RECORDS.
All material returns, reports and statements relating to the
Stations required to be filed by Seller with the FCC or any other Governmental
Authority have been filed and when filed were correct and complete in all
material respects, except where the failure to file such reports would not
reasonably be expected to have a Material Adverse Effect. All logs and business
records of every type and nature relating to the business and operations of the
Stations have been maintained in all material respects in accordance with the
rules and regulations of the FCC, except where the failure to maintain such
records would not reasonably be expected to have a Material Adverse Effect.
3.14. STATION CONTRACTS.
Except as set forth in Schedule 3.14, Seller represents and
warrants to Buyer that (a) each Station Contract is in full force and effect,
(b) none of the material rights of Seller under any Station Contract will be
subject to termination or modification, nor will a default occur, as a result of
the consummation of the transactions contemplated hereby, except to the extent
that failure to obtain the prior consent to assignment thereof of any party
thereto shall or could be interpreted to constitute a termination or
modification of or a default under any such Station Contract; and (c) to the
actual knowledge of Seller, no other party to any Station Contract is in
material breach or default of the terms thereunder, except, in each case, to the
extent that the failure of such Station Contract to be in full force and effect
or to the extent that such termination, modification, default or breach
described in this Section 3.14 would not reasonably be expected to have a
Material Adverse Effect.
3.15. TAXES.
Seller has filed or caused to be filed all Seller Tax
Returns that are required to have been filed by it in respect of the Assets or
the Stations; all Taxes shown as due on such Seller Tax Returns have been paid.
Except for Taxes not yet due and payable, none of the Assets is subject to any
Encumbrance arising in connection with the failure or alleged failure to pay any
material Tax. The charges, accruals and reserves for Taxes of Seller in respect
of the Assets or the Stations for any Tax period ending on or prior to the
Non-License Closing Date or the Closing Date, as applicable (including any Tax
period for which no Seller Tax Return has yet been filed) reflected on the books
of Seller, as disclosed to Buyer, are adequate to cover such Taxes.
14
3.16. EMPLOYEE BENEFIT PLANS.
Schedule 3.16 lists all employee benefit plans within the
meaning of Section 3(s) of ERISA and all bonus or other incentive compensation,
vacation, leave of absence, salary continuation, or severance plans, policies or
agreement ("PLANS"). Schedule 3.16 includes a copy of the Stations' employee
handbook which describes the employee benefit plans.
3.17. EMPLOYEES.
3.17.1. Except as set forth in Schedule 3.17.1, there are no
strikes, work stoppages, grievance proceedings, union organization efforts, or
other controversies pending or threatened between Seller and any union or
collective bargaining unit representing employees of any Station, except for
such matters as would not reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 3.17.1 hereto, there are no collective
bargaining agreements relating to the Stations or the business and operations
thereof and Seller has not agreed to recognize any union or other collective
bargaining unit, nor has any union or collective bargaining unit been certified
as representing any employees of the Stations.
3.17.2. Seller has provided to Buyer a true and complete
list dated as of December 31, 2001 of all employees of the Stations and each
such employee's position, salary and date of hire.
3.18. ENVIRONMENTAL MATTERS.
Seller has made available to Buyer copies of all material
environmental, health and safety assessments, audits, investigations, or other
such reports relating to the Stations in the possession of Seller (as set forth
on Schedule 3.18, the "ENVIRONMENTAL REPORTS"). Except as disclosed in the
Environmental Reports or otherwise in Schedule 3.18 hereto, (i) Seller, with
respect to the Stations, is in material compliance with Environmental Laws,
which compliance includes the possession and maintenance of all material
permits, approvals or consents required by such Environmental Laws to operate
the Stations as currently operated (collectively, "ENVIRONMENTAL PERMITS"); (ii)
there are no claims or proceedings pending or overtly threatened against the
Seller with respect to the Stations alleging the violation of or liability under
any Environmental Laws, which would reasonably be expected to result in the
owner or operator of the Stations incurring material liability under
Environmental Laws; and (iii) the Seller is not aware of any facts,
circumstances or conditions associated with the Stations that could reasonably
be expected to result in the owner or operator of the Stations incurring
material liabilities under Environmental Laws. Except as disclosed in the
Environmental Reports or otherwise in Schedule 3.18, to the knowledge of Seller,
the Real Property contains no underground storage tanks or underground piping
15
associated with such tanks and the Real Property has not been used as a dump or
landifill. Seller, with respect to the Stations, has not assumed or undertaken
any remedial obligation of any other Person relating to any Environmental Law.
3.19. INSURANCE.
Seller has provided Buyer with a list of all policies of
title, property, fire, casualty, liability, life, workmen's compensation, libel
and slander, and other forms of insurance of any kind relating to the Assets or
the business and operations of the Stations and held by Seller. All such
policies: (a) are in full force and effect, and (b) are valid, outstanding, and
enforceable policies, except where the failure of such policies to be in full
force and effect or valid, outstanding and enforceable would not reasonably be
expected to have a Material Adverse Effect.
3.20. DIGITAL TELEVISION.
Each of the Stations have been assigned a channel by the FCC
for the provision of digital television ("DTV") service. The FCC Licenses listed
in Schedule 2.1.1 include all other authorizations necessary to permit the
construction of a DTV station on each channel (a "DTV FACILITY").
3.21. NON-RELIANCE.
The representations and warranties of Buyer contained in
this Agreement and each other Buyer Document constitute the sole and exclusive
representations and warranties of Buyer to Seller in connection with this
Agreement and the transactions contemplated hereby, and Seller acknowledges that
all other representations and warranties are specifically disclaimed and may not
be relied upon or serve as a basis for a claim against Buyer.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Seller as
follows:
4.1. ORGANIZATION AND STANDING.
Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is duly qualified
to do business as a foreign corporation where such qualification is necessary,
unless the failure to be so qualified would not materially and adversely affect
Buyer's ability to consummate the transactions contemplated by this Agreement.
Buyer has the full power and authority to enter into and perform the terms of
this Agreement and the
16
other Buyer Documents and to carry out the transactions contemplated hereby and
thereby.
4.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement
and of the other Buyer Documents, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary actions of Buyer (none of which actions has been modified or rescinded
and all of which actions are in full force and effect). Assuming this Agreement
has been duly executed by Seller, this Agreement constitutes, and upon execution
and delivery each such other Buyer Document will constitute, a valid and binding
agreement and obligation of Buyer, enforceable against Buyer in accordance with
its respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity.
4.3. COMPLIANCE WITH LAWS.
Buyer has obtained and holds all material permits, licenses
and approvals (none of which will have been modified or rescinded and all of
which shall be in full force and effect) from all Governmental Authorities
necessary in order to conduct the operations of the Stations as presently
conducted and to own, use and maintain the Assets, except where the failure to
obtain or hold such material permits, licenses and approvals would not
reasonably be expected to have a material adverse effect on Buyer's ability to
consummate the transactions contemplated by this Agreement.
4.4. CONSENTS AND APPROVALS; NO CONFLICTS.
4.4.1. Except as set forth on Schedule 4.4, the execution
and delivery of this Agreement, and the performance of the transactions
contemplated herein by Buyer, will not require any consent, approval,
authorization or other action by, or filing with or notification to, any Person
or Governmental Authority where the failure to make such filing or obtain such
consent would reasonably be expected to have a material adverse effect on
Buyer's ability to consummate the transactions contemplated by this Agreement,
except as follows: (a) approvals of the assignment of the FCC Licenses to Buyer
by the FCC, and (b) based upon Seller's representations set forth in Section
3.4.1, certain of the Station Contracts may be assigned only with the consent of
third parties.
4.4.2. Assuming all consents, approvals, authorizations and
other actions described in Section 4.4.1 have been obtained and all filings and
17
notifications described in Section 4.4.1 have been made, the execution, delivery
and performance of this Agreement and the other Buyer Documents by Buyer do not
and will not (a) conflict with or violate any Law applicable to Buyer, (b)
conflict with or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) of any
contract or agreement to which Buyer is a party or by which Buyer is bound, or
(c) conflict with or violate the organizational documents of Buyer, except where
such conflict would not reasonably be expected to have a material adverse effect
on Buyer's ability to consummate the transactions contemplated by this
Agreement.
4.5. QUALIFICATION OF BUYER.
Buyer is legally, technically, financially and otherwise
qualified under the Communications Act and all rules, regulations and policies
of the FCC to acquire and operate the Stations. To Buyer's knowledge, there are
no facts or proceedings which would reasonably be expected to disqualify Buyer
under the Communications Act or otherwise from acquiring or operating the
Stations or would cause the FCC not to approve the assignment of the FCC
Licenses to Buyer. No waiver of any FCC rule or policy is necessary to be
obtained for the grant of the applications for the assignment of the FCC
Licenses to Buyer.
4.6. NON-RELIANCE.
The representations and warranties of Seller contained in
this Agreement constitute the sole and exclusive representations and warranties
of Seller to Buyer in connection with this Agreement and the transactions
contemplated hereby, and Buyer acknowledges that all other representations and
warranties are specifically disclaimed and may not be relied upon or serve as a
basis for a claim against Seller. BUYER ACKNOWLEDGES THAT SELLER DISCLAIMS ALL
WARRANTIES OTHER THAN THOSE EXPRESSLY CONTAINED IN THIS AGREEMENT AS TO THE
ASSETS, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 5.
PRE-CLOSING FILINGS
5.1. APPLICATIONS FOR FCC CONSENT.
Within three (3) business days following the execution of
this Agreement, Seller and Buyer shall jointly filed an application for the
Stations with the FCC requesting the consent of the FCC on FCC Form 316 to the
assignment of the FCC Licenses for the Stations to Buyer (the "APPLICATION").
Seller and Buyer
18
will diligently take, or fully cooperate in the taking of, all necessary and
proper steps, and provide any additional information reasonably requested in
order to obtain promptly the requested consents and approvals of the
applications by the FCC; provided, however, that none of the parties hereto
shall have any obligation to participate in any evidentiary hearing.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees with Buyer as follows:
6.1. NEGATIVE COVENANTS.
Pending and prior to the Non-License Closing Date (other
than with respect to Section 6.1.9) or the Closing Date, as applicable, except
for actions taken by SBG pursuant to the Management Agreement and for actions
set forth on Schedule 6.1, Seller will not, without the prior written consent of
Buyer, do or agree to do any of the following with respect to the Stations or
the Assets:
6.1.1. DISPOSITIONS.
Sell, assign, lease, license or otherwise
transfer or dispose of any Assets other than dispositions in the ordinary course
of business consistent with past practice.
6.1.2. ACCOUNTING PRINCIPLES AND PRACTICES.
Change or modify any of the accounting
principles or practices or any method of applying such principles or practices
currently employed with respect to the Stations, except as required by GAAP.
6.1.3. TRADE-OUT AGREEMENTS.
Enter into any Trade-out Agreement, except in
the ordinary course of business consistent with past practice.
6.1.4. BROADCAST TIME SALES AGREEMENTS.
Enter into any Time Sales Agreement, except in
the ordinary course of business consistent with past practice.
19
6.1.5. NETWORK AFFILIATION AGREEMENTS AND LOCAL
MARKETING ARRANGEMENTS.
Enter into any network affiliation agreements,
local marketing arrangements, joint operating agreements, time brokerage
agreements or other similar contracts or renew, extend, amend, alter, modify or
otherwise change any of such existing contracts.
6.1.6. ADDITIONAL AGREEMENTS.
Acquire or enter into any new Station Contracts
not referred to in Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend,
amend, alter, modify or otherwise change any existing Station Contract, except,
in any such case, for Station Contracts which require payments of less than
Twenty-Five Thousand Dollars ($25,000) per contract per year and no greater than
One Hundred Fifty Thousand Dollars ($150,000) per year in the aggregate
(collectively, "ADDITIONAL AGREEMENTS").
6.1.7. BREACHES.
Do or omit to do any act which will cause a
material breach of any Station Contract.
6.1.8. EMPLOYEE MATTERS.
(a) With respect to any past, current or future
employee of the Stations, enter into or become subject to any employment, labor,
union or professional service contract or agreement not terminable at will (or
renew, extend, amend, alter, modify or otherwise change any existing contract or
agreement) without cost or obligation than to pay accrued salary or wages at the
normally applicable rate through the time of termination, or any bonus, pension,
insurance, profit sharing, incentive, deferred compensation, severance pay,
retirement, hospitalization, employee benefit, or other similar plan.
(b) With respect to any past, current or future
employee of the Stations, increase the compensation payable or to become payable
to any employee, or pay or arrange to pay any bonus payment to any employee,
other than, in either case, as currently budgeted, except in the ordinary course
of business consistent with past practice.
6.1.9. ACTIONS AFFECTING FCC LICENSES.
Take any action, or fail to take any action,
which may jeopardize the validity or enforceability of or rights under the FCC
Licenses.
20
6.1.10. AFFILIATED TRANSACTIONS.
Enter into any transaction with respect to the
Stations with any Affiliate of Seller, other than Buyer or SBG, including any
renewal, extension, modification or other change in, any existing contract or
agreement to which an Affiliate of Seller is a party or any other transaction
involving an Affiliate of Seller which will have continued effectiveness after
the Non-License Closing Date or the Closing Date, as applicable.
6.1.11. COLLECTION OF ACCOUNTS RECEIVABLE.
Collect any accounts receivable of the Stations
other than in the ordinary course of business consistent with past practice.
6.1.12. PAYMENT OF ACCOUNTS PAYABLE.
Pay any accounts payable of the Stations other
than in the ordinary course of business consistent with past practice.
6.2. AFFIRMATIVE COVENANTS.
Pending and prior to the Non-License Closing Date (other
than with respect to Section 6.2.3) or the Closing Date, as applicable, Seller
will with respect to the Stations and the Assets:
6.2.1. PRESERVE EXISTENCE.
Preserve their respective corporate existences.
6.2.2. NORMAL OPERATIONS.
Subject to the terms and conditions of this
Agreement (including Section 6.1) and the Management Agreement (a) carry on the
business and activities of the Stations, including the sale of advertising time,
entering into other contracts and agreements, or purchasing and scheduling of
programming, in the ordinary course of business consistent with past practice;
(b) pay or otherwise satisfy all obligations (cash and barter) of the Stations
in the ordinary course of business consistent with past practice; (c) maintain
books of account, records, and files with respect to the Stations in
substantially the same manner as heretofore; and (d) maintain the Assets in
customary repair, maintenance and condition, except to the extent of normal wear
and tear, and repair or replace, consistently with the ordinary course of
business consistent with past practice, any Asset that may be damaged or
destroyed; notwithstanding the foregoing, Buyer acknowledges that Seller shall
not be obligated to spend any funds on capital expenditures after the date
hereof.
21
6.2.3. MAINTAIN FCC LICENSES.
Maintain the validity of the FCC Licenses, and
comply in all material respects with all requirements of the FCC Licenses and
the rules, policies and regulations of the FCC and all other applicable Laws.
6.2.4. STATION CONTRACTS.
Pay and perform its obligations in the ordinary
course of business consistent with past practice under the Station Contracts and
under any Additional Agreements that shall be entered into between the date
hereof and the Non-License Closing Date or the Closing Date, as applicable,
pursuant to Section 6.1.6, in accordance with the respective terms and
conditions of such Station Contracts.
6.2.5. TAXES.
Pay, discharge or create adequate reserves on
its books (in accordance with GAAP) for all material Taxes when due and payable
in the ordinary course of business consistent with past practice.
6.2.6. ACCESS.
(a) Give to Buyer and its representatives
reasonable access during normal business hours to all of the employees,
properties, books and records of Seller that relate to the Stations and furnish
Buyer and its representatives with such information concerning the Stations as
Buyer may reasonably require, including such access and cooperation as may be
necessary to allow Buyer and its representatives to interview the employees, to
examine the books and records of the Stations, and to inspect the Real Property
and other Assets (which right of access shall not be exercised in any way which
would unreasonably interfere with the normal operations, business or activities
of the Stations); and
(b) From time to time, furnish to Buyer such
additional information (financial or otherwise) concerning the Stations as Buyer
may reasonably request (which right to request information shall not be
exercised in any way which would unreasonably interfere with the normal
operations, business or activities of the Stations).
6.2.8. INSURANCE.
Maintain in full force and effect all of
Seller's existing casualty, liability and other insurance, or replacement
policies on substantially the same terms, with respect to the Stations in
amounts not less than those in effect on the date hereof.
22
6.3. CONFIDENTIALITY.
Seller shall, at all times, maintain the confidentiality with
respect to all documents and information furnished to Seller by or on behalf of
Buyer related to the business and operations of the Buyer, other than
information related to the Stations. Nothing shall be deemed to be confidential
information that: (a) is known to Seller at the time of its disclosure to
Seller; (b) becomes publicly known or available other than through disclosure by
Seller; (c) is received by Seller from a third party not actually known by
Seller to be bound by a confidentiality agreement with or obligation to Buyer;
or (d) is independently developed by Seller. Notwithstanding the foregoing
provisions of this Section 6.3, Seller may disclose such confidential
information (i) to the extent required or deemed advisable to comply with
applicable Laws; and (ii) to its officers, directors, employees,
representatives, financing sources, financial advisors, attorneys, accountants,
and agents with respect to the transactions contemplated hereby; provided,
however, Seller shall be liable for any disclosure by any such Person that such
Person would not have been permitted to make if such Person were a Seller
hereunder. In the event this Agreement is terminated, Seller will return to
Buyer all documents and other material prepared or furnished by Buyer relating
to the transactions contemplated hereunder, other than documents and materials
related to the Stations, whether obtained before or after the execution of this
Agreement and will maintain such documents, other materials and all information
contained therein confidential. In the event that Seller is required by Law
(including by oral question, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar legal process) to
disclose any confidential information, Seller will promptly notify Buyer of such
requirement so that Buyer may, as it may elect, either seek an appropriate
protective order or waive Seller's compliance with the provisions of this
Section 6.3. In the event that such protection or other remedy is not obtained
or that Buyer waives compliance, Seller agrees to furnish only that portion of
the confidential information which Seller is advised by counsel is legally
required and to exercise Seller's reasonable efforts to obtain assurance that
confidential treatment will be accorded such confidential information.
6.4. NO SHOPPING.
From and after the twentieth (20th) day after the date hereof
until the earlier to occur of the Closing Date or the termination of this
Agreement, Seller shall not, and shall cause its officers, directors and
Affiliates not to, (a) initiate contact with, solicit, encourage or respond to
any inquiries or proposals by, or (b) enter into any discussions or negotiations
with, or disclose, directly or indirectly, any information concerning the Assets
or the Stations to, or (c) afford any access to Seller's properties, books and
records to any Person other than Buyer in connection with any possible proposal
for the acquisition (directly or indirectly, whether by
23
purchase, merger, consolidation or otherwise) of all or any material portion of
the Assets or the Stations.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.1. CONFIDENTIALITY.
Buyer shall, at all times prior to the Non-License Closing or
the Closing, as applicable, maintain the confidentiality with respect to all
documents and information furnished to Buyer by or on behalf of Seller related
to the Stations. Nothing shall be deemed to be confidential information that:
(a) becomes publicly known or available other than through disclosure by Buyer
or any Affiliate of Buyer, including SBG; (b) is received by Buyer from a third
party not known by Buyer to be bound by a confidentiality agreement with or
obligation to Seller. Notwithstanding the foregoing provisions of this Section
7.1, Buyer may disclose such confidential information (i) to the extent required
to comply with applicable Laws; and (ii) to its officers, directors, partners,
employees, representatives, financing sources, financial advisors, attorneys,
accountants, agents, underwriters, lenders, investors and any other potential
sources of financing with respect to the transactions contemplated hereby;
provided, however, Buyer shall be liable for any disclosure by any such Person
that such Person would not have been permitted to make if such Person were Buyer
hereunder. In the event this Agreement is terminated, Buyer will return to
Seller all documents and other material prepared or furnished by Seller relating
to the transactions contemplated by this Agreement, whether obtained before or
after the execution of this Agreement and will maintain such documents, other
materials and all information contained therein confidential. In the event that
Buyer is required by Law (including by oral question, interrogatories, requests
for information or documents, subpoena, civil investigative demand or similar
legal process) to disclose any confidential information, Buyer will promptly
notify Seller of such requirement so that Seller may, as it may elect, either
seek an appropriate protective order or waive Buyer's compliance with the
provisions of this Section 7.1. In the event that such protection or other
remedy is not obtained or that the Seller waives compliance, Buyer agrees to
furnish only that portion of the confidential information which Buyer is advised
by counsel is legally required and to exercise Buyer's reasonable efforts to
obtain assurance that confidential treatment will be accorded such confidential
information.
7.2. ACCESS.
(a) For a period of five (5) years from and after the
earlier to occur of the Non-License Closing Date or the Closing Date, Buyer
shall cause to be afforded to representatives of Seller reasonable access during
normal business
24
hours to the offices, books and records, contracts and reports of the Stations
which relate to the operations of the Stations during the period during which
the Stations were owned by Seller and that are included in the Assets (the
"PRE-CLOSING DATE RECORDS"), as Seller shall from time to time reasonably
request for Seller's reasonable business purposes, and shall provide to Seller
copies of any Pre-Closing Date Records reasonably requested by Seller; provided,
however, that such investigation shall only be upon reasonable notice and shall
not disrupt the personnel or operations of Buyer or the Stations. Any costs
incurred by Seller in connection with any such copying shall be paid by Buyer.
(b) From and after the earlier to occur of the Non-License
Closing Date and the Closing Date, at Buyer's sole cost and expense, Seller
shall cooperate in all reasonable respects and provide Buyer all financial
information regarding the Stations requested by Buyer as reasonably necessary to
satisfy any reporting obligations Buyer may have with the Securities and
Exchange Commission or which is required by Buyer to prepare audited financial
statements meeting the requirements of Regulation S-X of the Securities and
Exchange Commission and any other requirements applicable to audited financial
statements required to be included in a registration statement on Form X-0, X-0
or any other applicable forms filed under the Securities Act of 1933, as
amended. Without limiting the generality of the foregoing, Seller agrees that it
will consent to the use of and execute documents, to the extent reasonable, in
support of audited financial statements relating to periods prior to the Closing
in any registration statement or other document which may be required to be
filed by Buyer under the Securities Act of 1933 and the Securities and Exchange
Act of 1934.
7.3. NOTICE OF BREACHES OF REPRESENTATIONS AND WARRANTIES.
Buyer shall, and shall cause SBG to, promptly notify Seller in
writing of any inaccuracy in any representation, warranty, agreement or covenant
made by Seller in this Agreement of which Buyer or SBG have knowledge.
7.4. FINANCING.
Buyer shall not enter into any definitive loan documentation
related to the financing of the transactions contemplated by this Agreement (the
"DEFINITIVE DOCUMENTATION"), other than on terms consistent with the following:
(a) the Note shall constitute permitted indebtedness under the
Definitive Documentation;
(b) the Definitive Documentation shall not prohibit an
increase in the principal amount of the Note, whether as a result of the payment
of interest by
25
adding accrued interest to the then-outstanding principal amount of the Note
("PIK INTEREST") or as a result of the operation of Section 1(b) of the Note;
(c) the Definitive Documentation shall unconditionally permit
the payment of PIK Interest;
(d) the Definitive Documentation shall permit the payment in
full of the Note after the payment of the Senior Obligations (as defined in the
Note) upon (i) the sale of the Stations and/or Licenses or (ii) the occurrence
of the Accelerated Condition (as defined in the Note);
(e) the security interest granted by Buyer to Seller pursuant
to the Note (the "SECURITY INTEREST") shall constitute a permitted encumbrance
under the Definitive Documentation;
(f) the Definitive Documentation shall not prohibit Seller's
foreclosure of the Security Interest (subject to the terms of the Note and the
Intercreditor Agreement referred to therein) or restrict Buyer from complying
with any covenant contained in the Note; and
(g) in the event of the sale of the Stations and/or the
Licenses, Seller shall not be subordinated to indebtedness of Buyer for amounts
in excess of $22,500,000.
ARTICLE 8.
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLER AND BUYER
8.1. POSSESSION AND CONTROL.
On and after the Closing Date, Seller shall have no control
over, or right to intervene, supervise, direct or participate in, the business
and operations of the Stations.
8.2. RISK OF LOSS.
(a) The risk of loss or damage by fire or other casualty to
the Assets until the earlier to occur of the Non-License Closing Date or the
Closing Date shall be upon Seller.
(b) In the event of any such loss or damage prior to the
earlier to occur of the Non-License Closing Date or the Closing Date that has a
Material Adverse Effect but shall not have been restored, replaced, or repaired
on or prior to the Non-License Closing Date or the Closing Date, as applicable,
Buyer shall, at its option, either:
26
(i) proceed with the Non-License Closing or the
Closing, as applicable, and receive the insurance proceeds or an assignment of
the right to receive such insurance proceeds to which Seller otherwise would be
entitled, whereupon Seller shall have no further liability to Buyer for such
loss or damage (pursuant to the indemnification provisions of this Agreement or
otherwise); or
(ii) terminate this Agreement by written notice to
Seller, whereupon no party to this Agreement shall have any liability to any
other party to this Agreement, and this Agreement in its entirety shall be
deemed null, void and of no further force and effect, except for the provisions
set forth in Section 13.2 (which shall survive such termination).
(c) In the event of any such loss or damage prior to the
earlier to occur of the Non-License Closing Date or the Closing Date that (i)
does not have a Material Adverse Effect, and (ii) shall not have been restored,
replaced, or repaired, Buyer shall receive the insurance proceeds or an
assignment of the right to receive such insurance proceeds to which Seller
otherwise would be entitled, whereupon Seller shall have no further liability to
Buyer for such loss or damage (pursuant to the indemnification provisions of
this Agreement or otherwise).
8.3. PUBLIC ANNOUNCEMENTS.
Between the date hereof and the Closing Date, Seller and
Buyer shall consult and cooperate with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
or the transactions contemplated herein and shall not issue any such press
release or make any such public statement without the prior written consent of
the other party, which shall not be unreasonably withheld.
8.4. EMPLOYEE MATTERS.
8.4.1. TRANSFERRED EMPLOYEES.
(a) Not less than ten (10) days prior to the
earlier to occur of the Non-License Closing Date or the Closing Date, Seller
shall provide a list to Buyer of all employees of the Stations. Prior to the
earlier to occur of the Non-License Closing Date or the Closing Date, Buyer
shall offer employment as of the earlier to occur of the Non-License Closing
Date and the Closing Date to all such employees of the Stations at the same
salary or wage rate (as applicable), and place of employment, as held by each
such employee immediately prior thereto, and with benefits no less favorable in
the aggregate than those provided by Buyer and Buyer's Affiliates to their
similarly situated employees (subject, in all cases, to the provisions of any
employment agreements that are Station Contracts).
27
(b) To the extent such employees accept
employment with Buyer (collectively, "TRANSFERRED EMPLOYEES"), such Transferred
Employees will be included in Buyer's employee benefit plans and will be subject
to Buyer's employment policies, as generally applicable to Buyer's employees who
are similarly situated. Buyer agrees that Transferred Employees shall be
credited under all of Buyer's applicable employee benefit plans covering such
employees with their service at the Station for purposes of determining any
period of eligibility to participate or to vest in benefits to the same extent
such service was counted under the Benefit Plans of Seller. After the earlier to
occur of the Non-License Closing Date and the Closing Date, subject to
applicable laws, Buyer shall have the right, at any time thereafter, to dismiss
any or all Transferred Employees at any time thereafter, with or without cause,
and to change the terms and conditions of their employment (including
compensation and employee benefit plans, policies or arrangements, provided to
them). Buyer further agrees that all amounts credited under the Seller's health
plans for purposes of limits on co-payments, deductibles and out of pocket
expenses during the calendar year that includes the Closing Date shall be
credited under the Buyer's corresponding health plans or policies, and no
pre-existing condition limitation shall apply to Transferred Employees under
such health plans or policies, except to the extent required by the plans.
(c) Buyer and Seller agree that, pursuant to the
"Alternative Procedure" provided in section 5 of Revenue Procedure 96-60, 1996-2
C.B. 399, (i) Buyer and Seller will report on a predecessor/successor basis as
set forth therein, (ii) Seller will be relieved from filing a Form W-2 with
respect to any Transferred Employee of Seller who accepts employment with Buyer
and (iii) Buyer will undertake to file (or cause to be filed) a Form W-2 for
each such Transferred Employee for the year that includes the Non-License
Closing Date or the Closing Date, as applicable (including the portion of such
year that such employee was employed by Seller). Seller agrees to provide Buyer
with all payroll and employment-related information with respect to each
Transferred Employee of Seller who accepts employment with Buyer.
(d) Buyer shall assume all accrued and unused
vacation.
8.4.2. COBRA OBLIGATIONS.
Seller shall satisfy and discharge any
obligations to provide health care continuation coverage as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985 and as described in
Section 4980B of the Code and Sections 601 through 608 of ERISA and as required
by any applicable state continuation of health coverage provisions
(collectively, "COBRA OBLIGATIONS") to any employee of the Stations whose
employment is terminated on or prior to the Non-License Closing Date or the
Closing Date, as applicable, to whom Seller has on-going COBRA Obligations (and
such employee's covered dependents) and to Transferred Employees (and such
employees' covered dependents). Seller and
28
Buyer shall reasonably cooperate in good faith to comply with their respective
COBRA Obligations hereunder.
8.5. CONSENTS.
Prior to the earlier to occur of the Non-License Closing or
the Closing, Seller and Buyer shall take all reasonable action required to
obtain all material consents, approvals and agreements of any third parties (the
initial requests for which shall be provided by Seller) necessary to authorize,
approve or permit the consummation of the transactions contemplated by this
Agreement, provided that neither Seller nor Buyer shall be required to make any
financial accommodations to any third party in order to obtain such consents and
approvals (other than payment of any amount otherwise due such third party);
provided, further, that although Seller may request release from any contract as
part of a request for any such consent, approval or agreement, the failure to
obtain such release will not be deemed to be a financial accommodation so long
as Buyer unconditionally agrees to indemnify the Seller Indemnified Parties for
any and Losses relating to such contract.
ARTICLE 9.
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to
proceed with the Non-License Closing, if applicable, and the Closing are subject
to the satisfaction (or waiver in writing by Buyer) at or prior to the
Non-License Closing or the Closing, as applicable, of each of the following
conditions:
9.1. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Seller made in this
Agreement shall be true and correct when made and on and as of the Non-License
Closing Date, or in the event that there is not a Non-License Closing, then on
the Closing Date (except for representations and warranties that speak as of a
specific date or time, which need only be true and correct as of such date or
time), with only such exceptions as would not, individually or in the aggregate,
be reasonably expected to have a Material Adverse Effect. The agreements and
covenants of Seller required to be performed on or before the Non-License
Closing Date or the Closing Date, as applicable, shall have been performed in
all respects, with only such exceptions as would not, individually or, in the
aggregate, be reasonably expected to have a Material Adverse Effect.
29
9.2. REQUIRED CONSENTS.
Seller shall have obtained prior to the earlier to occur of
the Non-License Closing Date or the Closing Date all consents listed on Schedule
9.2.
9.3. DELIVERY OF DOCUMENTS.
Seller shall have delivered (or stand ready to deliver) to
Buyer all contracts, agreements, instruments and documents required to be
delivered by Seller to Buyer pursuant to Section 11.3.
9.4. FCC MATTERS.
As a condition precedent to the obligation of Buyer to
consummate the Closing, but not the Non-License Closing:
(a) The FCC Order shall have been issued, and
(b) all of the FCC Licenses shall be in full force and
effect.
9.5. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of
any court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement; and
no action or proceeding by or before any Governmental Authority (other than an
action or proceeding instituted or threatened by Buyer) shall have been
instituted or threatened (and not subsequently dismissed, settled or otherwise
terminated) which, if determined adversely, would be reasonably likely to (a)
restrain, prohibit or invalidate the transactions contemplated by this Agreement
or any other Seller Document or Buyer Document, or (b) have a Material Adverse
Effect.
ARTICLE 10.
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey and
deliver the Assets and to proceed with the Non-License Closing and the Closing
are subject to the satisfaction (or waiver in writing by Seller) at or prior to
the Non-License Closing and Closing of each of the following conditions:
30
10.1. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects (but without regard
to any materiality qualifications or references contained in any specific
representation or warranty) when made and on and as of the Non-License Closing
Date and the Closing Date (except for representations and warranties that speak
as of a specific date or time, which need only be true and correct in all
material respects as of such date and time). The agreements and covenants of
Buyer required to be performed on or before the Non-License Closing Date or the
Closing Date, as applicable, shall have been performed in all material respects.
10.2. DELIVERY BY BUYER.
Buyer shall have delivered to Seller the Purchase Price in
accordance with Section 2.4, and all contracts, agreements, instruments and
documents required to be delivered by Buyer to Seller pursuant to Section 11.4.
10.3. FCC ORDER.
As a condition precedent to the obligation of Seller to
consummate the Closing, but not the Non-License Closing, the FCC Order shall
have been issued.
10.4. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of
any court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement; and
no action or proceeding by or before any Governmental Authority (other than an
action or proceeding instituted or threatened by Seller) shall have been
instituted or threatened (and not subsequently dismissed, settled or otherwise
terminated) which would be reasonably likely to restrain, prohibit or invalidate
the transactions contemplated by this Agreement or any other Seller Document or
Buyer Document.
ARTICLE 11.
CLOSING
11.1. NON-LICENSE CLOSING AND CLOSING.
11.1.1. Provided that the conditions set forth in Article 9
(except for Section 9.4) and Article 10 (except for Section 10.3) shall have
been satisfied or waived and the Closing shall not have occurred, the closing
(the "NON-LICENSE CLOSING") of the transactions contemplated hereby shall be
held on a date specified
31
by Buyer in writing that is not later than the forty-fifth (45th) day after the
date hereof, unless agreed to otherwise in writing by both Buyer and Seller;
provided, that such written notice shall be provided to Seller at least two (2)
business days prior to the Non-License Closing Date (the date on which the
Closing shall occur pursuant to this Section 11.1.1 is referred to herein as the
"NON-LICENSE CLOSING DATE").
11.1.2. At the Non-License Closing, Seller shall sell,
assign, transfer, convey and deliver to Buyer free and clear of any Encumbrances
other than Permitted Encumbrances, and Buyer shall purchase, acquire, pay for
and accept from Seller, all right, title and interest of Seller in, to and under
the Non-License Assets and shall assume the Non-License Closing Assumed
Liabilities.
11.1.3. To the extent not previously transferred pursuant to
the Non-License Closing, provided that the conditions set forth in Article 9 and
Article 10 shall have been satisfied or waived, the closing of the transactions
contemplated hereby (the "CLOSING") shall be held on a date specified by Buyer
in writing that is not later than the thirtieth (30th) day after the date on
which the FCC Order shall have been issued, unless agreed to otherwise in
writing by both Buyer and Seller; provided, that such written notice shall be
provided to Seller at least two (2) business days prior to the Closing Date (the
date on which the Closing shall occur pursuant to this Section 11.1.1 is
referred to herein as the "CLOSING DATE").
11.1.4. To the extent not previously transferred pursuant to
the Non-License Closing, at the Closing, Seller shall sell, assign, transfer,
convey and deliver to Buyer free and clear of any Encumbrances other than
Permitted Encumbrances, and Buyer shall purchase, acquire, pay for and accept
from Seller, all right, title and interest of Seller in, to and under the Assets
and shall assume the Assumed Liabilities.
11.2. TIME AND PLACE OF NON-LICENSE CLOSING AND CLOSING.
The Closing and Non-License Closing shall be held at 10:00
A.M. local time on the Closing Date and the Non-License Closing Date,
respectively, at the offices of Xxxxx & Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx,
Xxxxx 0000, XxXxxx, Xxxxxxxx, or at such other time and place as the parties may
agree in writing.
11.3. DELIVERY BY SELLER.
At the earlier to occur of the Non-License Closing or the
Closing, Seller shall deliver to Buyer the following:
32
11.3.1. AGREEMENTS AND INSTRUMENTS
The following bills of sale, assignments and
other instruments of transfer duly executed by Seller:
(a) the Xxxx of Sale;
(b) the Assignment of FCC Licenses (only with
respect to the Closing);
(c) the Assignment of Contracts and Leases;
(d) the Assumption Agreement;
(e) certificates of title with respect to the
motor vehicles listed on Schedule 2.1.9
or if any such motor vehicles are leased
by Seller, an assignment of such lease;
(f) special or limited warranty deeds for all
Real Property owned by Seller in a form
reasonably acceptable to Seller and
Buyer;
(g) real and personal property transfer tax
forms; and
(h) all other documents, instruments and
certificates required to be delivered by
Seller pursuant to this Agreement or
otherwise required or reasonably
requested by Buyer, including of
conveyance and transfer, as Buyer may
reasonably request in order to more
effectively convey and transfer the
Assets of the Stations to Buyer and to
put Buyer in operational control of the
Stations, or for aiding, assisting,
collecting and reducing to possession any
of the Assets of the Stations and
exercising rights with respect thereto
and to otherwise consummate the
transaction contemplated herein and as
otherwise contemplated by this Agreement.
11.3.2. CONSENTS.
Copies of all consents Seller has been able to
obtain to effect the assignment to Buyer of the Station Contracts.
11.3.3. CERTIFIED RESOLUTIONS.
A copy of the approval of the board of directors
of Seller, certified as being correct and complete and then in full force and
effect, authorizing
33
the execution, delivery and performance of this Agreement, and of the other
Seller Documents, and the consummation of the transactions contemplated hereby
and thereby.
11.3.4. OFFICERS' CERTIFICATES.
(a) A certificate of Seller certifying the
matters set forth in Section 9.1; and
(b) A certificate of Seller as to the incumbency
of the representatives of Seller executing this Agreement or any of the other
Seller Documents on behalf of Seller.
11.3.5. ORGANIZATIONAL DOCUMENTS.
Copies of the organizational documents of Seller
certified by an executive officer of Seller as being correct and complete.
11.3.6. RELEASES.
Duly executed releases, termination statements
and mortgage satisfactions to the extent necessary to release any Encumbrances
on the Assets required to be removed by Seller pursuant to the terms of this
Agreement.
11.3.7. FIRPTA CERTIFICATE.
A certificate of non-foreign status under
Section 1445 of the Code.
11.3.8. TITLE INSURANCE DOCUMENTS.
An owner's affidavit and estoppel certificates
executed by Seller and such other customary documents and certificates executed
by Seller reasonably acceptable to Seller and as may be reasonably required by
Buyer's title insurance company with respect to Buyer's title insurance of the
Real Property and Leased Property.
11.3.9. DOMAIN NAME TRANSFER.
Domain name transfer agreements in form and
substance reasonably satisfactory to Buyer to perfect the transfer to Buyer of
all the domain names of the Stations.
34
11.3.10. GOOD STANDING.
A certificate of the Secretary of State of
Delaware certifying the good standing of Seller in the State of Delaware and of
the Secretary of State of North Dakota certifying the good standing of Seller in
the State of North Dakota.
11.4. DELIVERY BY BUYER.
At the Non-License Closing, if applicable, and the Closing,
Buyer shall deliver to Seller the following:
11.4.1. PURCHASE PRICE PAYMENT.
The Purchase Price in the amount and manner set
forth in Section 2.4.
11.4.2. AGREEMENTS AND INSTRUMENTS.
The following agreements, documents and
instruments duly executed by Buyer:
(a) the Assumption Agreement;
(b) the Note (or Notes), in the amounts and
manner set forth in Section 2.4; and
(c) all other documents, instruments and
certificates required to be delivered by Buyer pursuant to this Agreement or
otherwise required, or reasonably requested by Seller in order to effectively
make Buyer responsible for all Assumed Liabilities and to otherwise consummate
the transaction contemplated herein and as otherwise contemplated by this
Agreement.
11.4.3. CERTIFIED RESOLUTIONS.
Copies of the resolutions of the board of directors of Buyer,
certified as being correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement and of the
other Buyer Documents, and the consummation of the transactions contemplated
hereby and thereby.
11.4.4. OFFICERS' CERTIFICATE.
(a) A certificate of Buyer signed by an
officer of Buyer certifying the matters set forth in Section 10.1; and
35
(b) a certificate signed by the Secretary
of Buyer as to the incumbency of the officers of Buyer executing this Agreement
or any of the other Buyer Documents on behalf of Seller.
11.4.5. CONSENTS.
Copies of all consents listed on Schedule 4.4.
ARTICLE 12.
SURVIVAL; INDEMNIFICATION
12.1. SURVIVAL OF REPRESENTATIONS.
Unless otherwise set forth herein, all representations and
warranties of Seller and Buyer contained in or made pursuant to this Agreement
or in any Seller Document or Buyer Document furnished pursuant hereto shall
survive the Non-License Closing Date or the Closing Date, as applicable, and
shall remain in full force and effect to the following extent: (a)
representations and warranties shall remain in full force and effect for a
period of one (1) year after the earlier to occur of the Non-License Closing
Date or the Closing Date (except for the representations and warranties set
forth in Section 3.15 and Section 3.18); and (b) representations and warranties
of Seller with respect to Taxes as set forth in Section 3.15 and environmental
matters as set forth in Section 3.18 shall remain in full force and effect until
thirty (30) days after the expiration of any applicable statute of limitations
with respect to claims relating to the matters set forth in Section 3.15 and
Section 3.18. Unless a specified period for performance is set forth in this
Agreement (in which case such specified period will control), the covenants and
agreements in this Agreement will survive the Non-License Closing and the
Closing and remain in effect indefinitely. In all cases, any representation,
warranty, covenant or agreement that is the subject of a claim which is asserted
by the party seeking indemnification hereunder in a reasonably detailed writing
delivered to the other party or parties, as the case may be, prior to the
expiration of the applicable survival period shall survive with respect to such
claim or dispute until the final resolution thereof. No claim for
indemnification may be made pursuant to this Article 12 after the expiration of
the applicable survival period set forth in this Section 12.1.
12.2. INDEMNIFICATION BY SELLER.
Subject to the conditions and provisions of Section 8.2,
Section 12.4 and Section 12.5, from and after the Non-License Closing Date and
the Closing Date, Seller agrees to indemnify, defend and hold harmless Buyer and
Buyer's officers, directors, employees, agents and shareholders ("BUYER
INDEMNIFIED PARTIES") from and against and in any respect of any and all Losses,
asserted
36
against, resulting to, imposed upon or incurred by any Buyer Indemnified
Parties, directly or indirectly, by reason of or resulting from: (a) any failure
by Seller to pay, perform or discharge any liability that is not an Assumed
Liability; (b) the business or operations of the Stations during the period
prior to January 7, 2002 (including any matters or liabilities with respect to
the employees of the Stations and any termination of any such employee on or
prior to the earlier to occur of the Non-License Closing and the Closing),
except for items specifically included in Assumed Liabilities; (c) any
misrepresentation or breach of the representations, warranties and
certifications of Seller contained in or made pursuant to this Agreement or any
other Seller Document; (d) any breach by Seller of any covenants of Seller
contained in or made pursuant to this Agreement or any other Seller Document or
(e) any matter disclosed on Schedule 3.7; provided, however, to the extent that
the officers, directors, agents, representatives or employees of Buyer have
knowledge of any inaccuracy of any representation, warranty, agreement or
covenant contained in this Agreement, or, in their respective capacities, should
have had such knowledge, or any such Losses are the result of the action or
inaction of Buyer or SBG or any of their respective officers, directors, agents
or representatives, whether prior to or following the Non-License Closing or the
Closing, including in connection with the performance of the Management
Agreement, Buyer shall not be entitled to seek indemnity for any such Losses
associated with such inaccuracy, action or inaction.
12.3. INDEMNIFICATION BY BUYER.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Non-License Closing Date and the Closing Date,
Buyer hereby agrees to indemnify, defend and hold harmless Seller, and its
respective officers, directors, employees, agents and partners ("SELLER
INDEMNIFIED PARTIES") from, against and with respect of any and all Losses,
asserted against, resulting to, imposed upon or incurred by any Seller
Indemnified Parties, directly or indirectly, by reason of or resulting from: (a)
any failure by Buyer to pay, perform or discharge any Assumed Liabilities; (b)
the business or operations of the Stations during the period after the earlier
to occur of the Non-License Closing Date and the Closing Date (including any
matters or liabilities with respect to the employees of the Stations and any
termination of any such employee after the earlier to occur of the Non-License
Closing and the Closing); (c) any misrepresentation or breach of the
representations, warranties and certifications of Buyer contained in or made
pursuant to this Agreement or any other Buyer Document; (d) any breach by Buyer
of any covenants of Buyer contained in or made pursuant to this Agreement or any
other Buyer Document; or (e) Seller's failure to comply with the Worker
Adjustment Retraining Notification Act as a result of layoffs of Stations
employees who are not given the required statutory notice under the Worker
Adjustment Retraining Notification Act because of Buyer's decision not to offer
employment to such Station's employees.
37
12.4. LIMITATIONS ON INDEMNIFICATION.
12.4.1. Seller shall not be liable to the Buyer Indemnified
Parties in respect of any indemnification under Section 12.2(c) and Section
12.2(d) except to the extent that the aggregate Losses of the Buyer Indemnified
Parties under such Sections exceeds Two Hundred Fifty Thousand Dollars
($250,000) (the "BASKET AMOUNT"), in which event, subject to Section 12.4.2
below, Seller shall be liable for all such Losses in excess of the Basket
Amount. Buyer shall not be liable to the Seller Indemnified Parties in respect
of any indemnification under Section 12.3(c) and Section 12.3(d) except to the
extent that the aggregate Losses of the Seller Indemnified Parties under such
Sections exceeds the Basket Amount, in which event, subject to Section 12.4.2
below, Buyer shall be liable for all such Losses in excess of the Basket Amount.
12.4.2. Buyer acknowledges and agrees that the maximum
aggregate liability of Seller pursuant to Section 12.2(c) and Section 12.2(d) to
the Buyer Indemnified Parties and any third parties for any and all Losses in
excess of the Basket Amount shall not exceed Seven Hundred Fifty Thousand
Dollars ($750,000); provided, however, nothing in this Section 12.4.2 shall be
construed to constitute a waiver or limitation of any claims by Buyer based on
fraud. Seller acknowledges and agrees that the maximum aggregate liability of
Buyer pursuant to Section 12.3(c), Section 12.3(d) and Section 12.3(e) of this
Agreement to the Seller Indemnified Parties and any third parties for any and
all Losses in excess of the Basket Amount shall not exceed Seven Hundred Fifty
Thousand Dollars ($750,000); provided, however, nothing in this Section 12.4.2
shall be construed to constitute a waiver or limitation of any claims by Seller
based on fraud.
12.5. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of Seller and of Buyer
hereunder with respect to their respective indemnities pursuant to this Article
12, resulting from any Losses, shall be subject to the following terms and
conditions:
12.5.1. The party seeking indemnification (the "INDEMNIFIED
PARTY") must give the other party or parties, as the case may be (the
"INDEMNIFYING PARTY"), notice of any such Losses promptly after the Indemnified
Party receives notice thereof; provided that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual damage by reason
of such failure.
12.5.2. The Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing (reasonably
acceptable to the Indemnified Party), the defense of such Losses at the
Indemnifying Party's risk and expense; provided, however, that as a condition to
the exercise of such right to undertake defense of such Losses, the Indemnifying
Party shall, as between the
38
Indemnifying Party and the Indemnified Party, assume the liability for such
Losses, without regard to the limitations set forth in Section 12.4.2.
12.5.3. In the event that the Indemnifying Party shall elect
not to undertake such defense, or, within a reasonable time after notice from
the Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof (with counsel reasonably
acceptable to the Indemnified Party)). In such event, the Indemnifying Party
shall pay to the Indemnified Party, in addition to the other sums required to be
paid hereunder, the costs and expenses incurred by the Indemnified Party in
connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.
12.5.4. Anything in this Section 12.5 to the contrary
notwithstanding, (a) if any third party alleges the right to or seeks any remedy
other than money damages or other money payments, the Indemnified Party shall
have the right, at the cost and expense of the Indemnifying Party, to
participate in and direct the defense, compromise or settlement of the Losses,
(b) the Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise any Losses or consent to entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Losses in form and substance reasonably
satisfactory to the Indemnified Party, and (c) in the event that the
Indemnifying Party undertakes defense of any Losses, the Indemnified Party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the Indemnifying Party and its
counsel or other representatives concerning such Losses and the Indemnifying
Party and the Indemnified Party and their respective counsel or other
representatives shall cooperate with respect to such Losses, (d) in the event
that the Indemnifying Party undertakes defense of any Losses, the Indemnifying
Party shall have an obligation to keep the Indemnified Party informed of the
status of the defense of such Losses and furnish the Indemnified Party with all
documents, instruments and information that the Indemnified Party shall
reasonably request in connection therewith, and (e) in the event that both the
Indemnified Party and the Indemnifying Party are parties (directly or through
interpleader) to any Losses giving rise to indemnification hereunder and the
Indemnified Party is advised by counsel that there is or may be a conflict of
interest in the representation of both the Indemnified Party and the
Indemnifying Party by one firm of counsel, the Indemnified Party shall be
entitled to assume, at the sole cost and expense of the Indemnifying Party, the
defense, compromise and settlement (subject to clause (b)
39
above) of such Loss with counsel (in addition to local counsel) reasonably
satisfactory to the Indemnifying Party.
12.5.5. In the event that an Indemnified Party has a good
faith basis for a claim for indemnification which does not involve a claim
against it by a third party (a "Direct Claim"), the Indemnified Party shall
notify the Indemnifying Party in writing of such Direct Claim with reasonable
promptness, specifying, to the extent known, the nature, circumstances and
amount of such Direct Claim (a "Direct Claim Notice"), including with
particularity the specific representation and warranty or covenant and agreement
alleged to have been breached; provided, that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual damage by reason
of such failure. If the Indemnifying Party notifies the Indemnified Party that
it disputes an Indemnified Party's right of indemnification with respect to a
particular Direct Claim, the parties shall use their reasonable efforts to
negotiate a resolution of such dispute promptly. Except to the extent of the
limitations on indemnification set forth in this Article 12, nothing in this
Section shall be deemed to prevent any Indemnified Party from initiating
litigation under this Agreement with respect to any Direct Claim disputed by the
Indemnifying Party for the purpose of establishing the Indemnified Party's right
to indemnification hereunder.
ARTICLE 13.
TERMINATION
13.1. TERMINATION.
This Agreement may be terminated at any time prior to the
Closing by:
13.1.1. the mutual consent of Seller and Buyer;
13.1.2. either Buyer or Seller, by written notice of
termination delivered to the other, if the Closing Date has not occurred on or
before the sixtieth (60th) day after the date of this Agreement (the "DROP DEAD
DATE"); provided, however, (a) that the failure of the Closing to have occurred
on or prior to such date shall not be attributable to the breach of this
Agreement by the party seeking termination pursuant to this Section 13.1.2
(including the failure of Buyer to obtain financing for the transactions
contemplated by this Agreement) and (b) Buyer shall not be entitled to terminate
this Agreement pursuant to this Section 13.1.2 if the Buyer has been unable to
obtain a binding commitment from a nationally recognized financial institution
to finance the transactions contemplated by this Agreement on terms consistent
with Section 7.4 (the "FINANCING COMMITMENT"), unless concurrently with such
termination Buyer makes a payment of One Million
40
Dollars ($1,000,000) to Seller; provided, further, that Seller shall not be
permitted to terminate this Agreement pursuant to this Section 13.1.2 after the
Non-License Closing;
13.1.3. either Buyer or Seller in the event that any court
or Governmental Authority of competent jurisdiction shall issue a final,
non-appealable injunction prohibiting the transactions contemplated by this
Agreement; provided, however, that the issuance of such final, non-appealable
injunction shall not be attributable to the breach of this Agreement by the
party seeking termination pursuant to this Section 13.1.3; provided, however,
that Seller shall not be permitted to terminate this Agreement pursuant to this
Section 13.1.3 after the Non-License Closing;
13.1.4. either Buyer or Seller in the event that the FCC
denies the Application by final order; provided, however, that Seller shall not
be permitted to terminate this Agreement pursuant to this Section 13.1.4 after
the Non-License Closing;
13.1.5. Buyer, by written notice of termination delivered to
Seller on or before the twentieth (20th) day after the date of this Agreement,
if Buyer has been unable to obtain the Financing Commitment;
13.1.6. Seller, by written notice of termination delivered
to Buyer on or before the twentieth (20th) day after the date of this Agreement,
if Seller has been unable to obtain the Bank Consent; or
13.1.7. either Buyer or Seller in accordance with the terms
and conditions of Article 14; provided, however, that Seller shall not be
permitted to terminate this Agreement pursuant to this Section 13.1.7 or Article
14 after the Non-License Closing, but still shall have the right to recover
liquidated damages as provided for in Section 14.1(b).
13.2. EFFECT OF TERMINATION.
13.2.1. In the event this Agreement is terminated as
provided in Sections 13.1.1, 13.1.2, 13.1.3, 13.1.4, 13.1.5 or 13.1.6, this
Agreement shall be deemed null, void and of no further force or effect, and the
parties hereto shall be released from all future obligations hereunder;
provided, however, that the obligations of Buyer and Seller set forth in
Sections 6.3 and 7.1 (which relate to confidentiality), and Section 15.3 (which
relates to payment of certain expenses), shall survive such termination and the
parties hereto shall have any and all remedies to enforce such obligations
provided at law or in equity or otherwise (including specific performance).
41
13.2.2. In the event this Agreement is terminated as
provided in Section 13.1.7, this Agreement shall be deemed null, void and of no
further force or effect, and the parties hereto shall be released from all
future obligations hereunder; provided, however, that the obligations of Buyer
and Seller set forth in Sections 6.3 and 7.1 (which relate to confidentiality),
Article 14 (which relates to exclusive remedies and the liquidated damages) and
Section 15.3 (which relates to payment of certain expenses), shall survive such
termination and, subject to Article 14 hereof, the parties hereto shall have any
and all remedies to enforce such obligations provided at law or in equity or
otherwise (including specific performance).
ARTICLE 14.
REMEDIES
14.1. DEFAULT BY BUYER.
(a) If each condition set forth in Article 9 with respect to
a Non-License Closing (other than any condition that has not been satisfied
solely as a result of an uncured misrepresentation or breach of representation
or warranty of Buyer set forth in this Agreement or a default by Buyer in the
performance of its obligations under this Agreement) has been satisfied or
waived, and Buyer has breached its obligation to effect the transactions to be
consummated on the Non-License Closing Date by the forty-fifth (45th) day after
the date hereof, then Seller shall be entitled, by written notice to Buyer, to
terminate this Agreement, and as Seller's sole and exclusive remedy under this
Agreement, to recover the amount of One Million Dollars ($1,000,000) from Buyer
as liquidated damages, and upon the receipt of such payment by Seller, Buyer
shall be discharged from all further liability under this Agreement; provided,
however, Buyer shall have a period of ten (10) business days after receipt of
Seller's written termination notice to cure any such misrepresentation, breach
or default, and if Buyer cures such misrepresentation, breach or default within
such ten (10) business day period, Seller shall have no right to terminate this
Agreement based on such misrepresentation, breach or default.
(b) If each condition set forth in Article 9 with respect to
the Closing (other than any condition that has not been satisfied solely as a
result of an uncured misrepresentation or breach of representation or warranty
of Buyer set forth in this Agreement or a default by Buyer in the performance of
its obligations under this Agreement) has been satisfied or waived, and Buyer
has breached its obligation to effect the transactions to be consummated on the
Closing Date by the thirtieth (30th) day after the date on which the FCC Order
shall have been issued, then Seller shall be entitled, by written notice to
Buyer, to terminate this Agreement, and as Seller's sole and exclusive remedy
under this Agreement, to recover the amount of One Million Dollars ($1,000,000)
from Buyer as liquidated
42
damages, and upon the receipt of such payment by Seller, Buyer shall be
discharged from all further liability under this Agreement; provided, however,
Buyer shall have a period of ten (10) business days after receipt of Seller's
written termination notice to cure any such misrepresentation, breach or
default, and if Buyer cures such misrepresentation, breach or default within
such ten (10) business day period, Seller shall have no right to terminate this
Agreement based on such misrepresentation, breach or default.
14.2. DEFAULT BY SELLER.
If there exists a material misrepresentation or breach of
representation or warranty of Seller set forth in this Agreement, or if Seller
shall default in any material respect in the performance of Seller's obligations
under this Agreement, or if, as a result of Seller's action or failure to act,
the conditions precedent to Buyer's or Seller's obligation to close specified in
Article 9 or Article 10 are not satisfied, and for such reason or reasons this
Agreement is not consummated, and provided that Buyer shall not then be in
material default in the performance of Buyer's obligations hereunder, Buyer
shall be entitled as Buyer's sole and exclusive remedy under this Agreement, to
either (a) seek specific performance as provided for in Section 14.4 or (b) by
written notice to Seller, to terminate this Agreement; provided, however, Seller
shall have a period of ten (10) business days after receipt of Buyer's written
termination notice to cure any such misrepresentation, breach or default, and if
Seller cures such misrepresentation, breach or default within such ten (10)
business day period, Buyer shall have no right to terminate this Agreement based
on such misrepresentation, breach or default.
14.3. LIQUIDATED DAMAGES.
Seller and Buyer have provided for the amount of the
liquidated damages as a remedy for Seller after having considered carefully the
anticipated and actual xxxxx and losses that would be incurred if Buyer defaults
and thus fails to perform its obligations to consummate the transactions
contemplated hereunder, the difficulty of ascertaining at this time the actual
amount of damages, special and general, that Seller will suffer in such event,
and the inconvenience or nonfeasibility of otherwise obtaining an adequate
remedy in such event. In any situation hereunder pursuant to which the
liquidated damages shall be payable to Seller, Buyer agrees to waive any defense
that there is an alternative adequate remedy available to Seller and/or that
payment of the liquidated damages to Seller would constitute a penalty.
43
14.4. SPECIFIC PERFORMANCE.
Seller hereby acknowledges that the Assets are unique, and
that the harm to Buyer resulting from Seller's failure to perform their
obligations hereunder cannot be adequately compensated by damages. Accordingly,
Seller agrees that Buyer shall have the right to have all obligations,
undertakings, agreements, covenants and other provisions of this Agreement
specifically performed by Seller. In any such specific performance action,
Seller agrees to waive the defense that there is an adequate remedy at law for
damages and agree that Buyer shall be entitled to obtain specific performance of
Seller's obligations hereunder without having to post any bond or other security
in any such proceeding.
14.5. REMEDIES AFTER NON-LICENSE CLOSING.
If the Non-License Closing has occurred and the Closing has
not occurred on or prior to the date which is twelve (12) months after the date
hereof (a) Buyer shall pay to Seller liquidated damages in the amount of One
Million Dollars ($1,000,000) and Buyer shall be discharged from all further
payment obligations under this Agreement (except for any indemnity obligations
set forth in Article 11), and (b) Seller may designate in writing any Person to
which/whom the FCC Licenses may be transferred and Buyer agrees to cooperate in
all respects with any such transfer and make any filings or applications with
the FCC to effect any such transfer.
ARTICLE 15.
GENERAL PROVISIONS
15.1. ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION.
Buyer agrees that it will, at any time, prior to, at or
after the Closing Date, take or cause to be taken such further actions, and
execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments and obtain such consents, as may be reasonably
requested by Seller in connection with the consummation of the transactions
contemplated by this Agreement. Seller agrees that it will, at any time, prior
to, at or after the Closing Date, take or cause to be taken such further
actions, and execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments and obtain such consents, as may be
reasonably requested by Buyer in connection with the consummation of the
transactions contemplated by this Agreement, including in the event that any
Assets are owned by any Affiliate of Seller, causing such Affiliate to transfer
the Assets to Buyer.
44
15.2. BROKERS.
Seller represents to Buyer that Seller has not engaged, or
incurred any unpaid liability (for any brokerage fees, finders' fees,
commissions or otherwise) to, any broker, finder or agent in connection with the
transactions contemplated by this Agreement; Buyer represents to Seller that
Buyer has not engaged, or incurred any unpaid liability (for any brokerage fees,
finders' fees, commissions or otherwise) to, any broker, finder or agent in
connection with the transactions contemplated by this Agreement; and Seller
agrees to indemnify Buyer, and Buyer agrees to indemnify Seller, against any
claims asserted against the other parties for any such fees or commissions by
any person purporting to act or to have acted for or on behalf of the
indemnifying party. Notwithstanding any other provision of this Agreement, this
representation and warranty shall survive the Closing Date without limitation
and shall not be subject to the Basket Amount contained in Section 12.4.1 or the
limitations of Section 12.4.2.
15.3. EXPENSES AND TAXES.
Each party hereto shall pay its own expenses incurred in
connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein. Notwithstanding the foregoing, (a) Buyer
and Seller shall each pay one-half (1/2) of all sales (including bulk sales),
use, documentary, stamp, gross receipts, registration, transfer (including in
respect of transfers of real and personal property), conveyance, excise,
recording, license, real estate transfer taxes and other similar Taxes and fees
("TRANSFER TAXES") applicable to, imposed upon or arising out of the
transactions contemplated hereby whether now in effect or hereinafter adopted
and regardless of which party such Transfer Tax is imposed upon and (b) Seller
and Buyer shall each pay one-half (1/2) of any FCC filing fees incurred in
connection with the assignment of the FCC Licenses. Each party agrees to
cooperate with such other party in the timely completion, execution and filing
of any documentation required by any local or state governmental agency in
connection with the Transfer Taxes.
15.4. NOTICES.
All notices, demands, requests, or other communications
which may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by overnight air courier, or transmitted by telegram,
telex, or facsimile transmission addressed as follows:
45
If to Buyer:
Xxxxx Television Group, Inc.
000 Xx Xxxxx
Xxxxx Xxxxxxx, XX 00000
Attention:
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
Telecopy No.: (000) 000-0000
If to Seller:
STC Broadcasting, Inc.
000 0xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxx
Telecopy No.: (000) 000-0000
with copies (which shall not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopy No.: (000) 000-0000
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall
be given or made in the manner described above shall be deemed sufficiently
given or made for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of messenger or
(with respect to a telex) the answerback being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
46
15.5. WAIVER.
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
15.6. BENEFIT AND ASSIGNMENT.
(a) No party hereto shall assign this Agreement, in whole or
in part, whether by operation of law or otherwise, without the prior written
consent of the other party hereto; provided, however, Buyer shall be permitted
to assign this Agreement at any time, in whole or in part, without the prior
written consent of Seller if the Non-License Closing has occurred.
(b) Any purported assignment contrary to the terms hereof
shall be null, void and of no force and effect. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No Person, other than the parties
hereto, is or shall be entitled to bring any action to enforce any provision of
this Agreement against any of the parties hereto, and the covenants and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall be enforceable only by, the parties hereto or their respective successors
and assigns as permitted hereunder. Without limiting the foregoing, no employee
of the Stations and no other Person shall be a third-party beneficiary under
this Agreement (including the provisions of Section 8.4), or any Seller Document
or Buyer Document.
15.7. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the Schedules and Exhibits hereto
and the other instruments and documents referred to herein or delivered pursuant
hereto contains the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior oral or written agreements,
commitments or understandings with respect to such matters. No amendment,
modification or discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by the party or parties against whom
enforcement of the amendment, modification or discharge is sought.
47
15.8. SEVERABILITY.
If any part of any provision of this Agreement or any other
contract, agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
15.9. HEADINGS.
The headings of the sections and subsections contained in
this Agreement are inserted for convenience only and do not form a part or
affect the meaning, construction or scope thereof.
15.10. GOVERNING LAW; JURISDICTION.
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed under and in accordance with the laws of the State of New York,
without giving effect to the conflicts of law principles thereof. The parties
hereto hereby waive personal service of any process in connection with any such
action, suit or proceeding and agree that the service thereof may be made by
certified or registered mail addressed to or by personal delivery to the other
party, at such other party's address set forth pursuant to Section 15.4 hereof.
In the alternative, in its discretion, any of the parties hereto may effect
service upon any other party in any other form or manner permitted by law.
15.11. SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts,
none of which need contain the signatures of all parties, each of which shall be
deemed to be an original, and all of which taken together constitute one and the
same instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
15.12. STNY GUARANTY.
Xxxxx Television of New York, Inc. ("STNY"), the ultimate
parent of each Buyer, hereby irrevocably and unconditionally guarantees to
Seller the prompt and complete payment and performance of each and every
obligation of the Buyer under Article 14 of this Agreement. The obligations of
STNY hereunder shall be absolute and unconditional and shall continue in full
force and effect until the
48
payment and performance of all of the obligations of the Buyer under Article 14
of this Agreement, and are in no way conditioned upon any event or contingency,
or upon any attempt to enforce Buyer's performance under this Agreement or to
collect from Buyer through the commencement of legal proceedings or otherwise.
The obligations of STNY hereunder shall not be affected, reduced, modified,
changed, released, limited or discharged in any manner whatsoever by reason of
any modification, change, release, or limitation of the liability of Buyer or
its estate in bankruptcy, resulting from the operation of any present or future
provision of the bankruptcy laws or other similar statute, or from the decision
of any court.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
49
IN WITNESS WHEREOF, each of the parties hereto has executed
this Asset Purchase Agreement, or has caused this Asset Purchase Agreement to be
duly executed and delivered in its name on its behalf, all as of the day and
year first above written.
SELLER
STC BROADCASTING, INC.
By:
---------------------------------------
Xxxxx X. Xxxx
Chief Financial Officer
STC LICENSE COMPANY
By:
---------------------------------------
Xxxxx X. Xxxx
Chief Financial Officer
BUYER
XXXXX TELEVISION OF NORTH DAKOTA, INC.
By:
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
XXXXX TELEVISION OF NORTH
DAKOTA LICENSE HOLDINGS, INC.
By:
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
50
For the purposes of Section
15.12 of the Agreement
XXXXX TELEVISION OF NEW YORK, INC.
By:
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
51
ANNEX I
DEFINITIONS
"ACCOUNTS RECEIVABLE" means all accounts receivable with
respect to the Stations as of the end of the broadcast day immediately preceding
the Closing Date on the Non-License Closing Date, as applicable.
"ADDITIONAL AGREEMENTS" shall have the meaning set forth in
Section 6.1.6.
"AFFILIATE" shall mean, with respect to any Person, any other
Person that, (a) directly or indirectly is in control of, is controlled by, or
is under common control with, the first Person, (b) is an officer, director,
trustee, partner (general or limited), employee or holder of five percent (5%)
or more of any class of any voting or non-voting securities or other equity in
the first Person, and (c) is an officer, director, trustee, partner (general or
limited), employee or holder of five percent (5%) or more of any class of the
voting or non-voting securities or other equity in any Person which directly or
indirectly is in control of, is controlled by, or is under common control with,
the first Person. For purposes of this definition, "control" (including with
correlative meanings "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of either (X) five percent (5%) or more of
the voting power of the securities having ordinary voting power for the election
of directors of the first Person, or (Y) the power to direct or cause the
direction of the management or policies of the first Person (whether through
ownership of securities, partnership interests or any other ownership or debt
interests, by contract or otherwise).
"APPLICATION" shall have the meaning set forth in Section 5.1.
"APPRAISAL FIRM" shall have the meaning set forth in Section
2.5.
"APPRAISAL REPORT" shall have the meaning set forth in Section
2.5.
"ASSETS" shall have the meaning set forth in Section 2.1.
"ASSIGNMENT OF CONTRACTS AND LEASES" means that certain
Assignment of Contracts and Leases executed by Seller, in the form attached
hereto as Exhibit B.
"ASSIGNMENT OF FCC LICENSES" means that certain Assignment of
FCC Licenses executed by Seller, in the form attached hereto as Exhibit C.
"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 2.6.
A-1
"ASSUMPTION AGREEMENT" means that certain Assumption Agreement
executed by Buyer and Seller, in the form attached hereto as Exhibit D.
"BANK CONSENT" shall have the meaning set forth in Section
3.4.1.
"BASKET AMOUNT" shall have the meaning set forth in Section
12.4.1.
"XXXX OF SALE" means that certain Xxxx of Sale and Assignment
of Assets, dated as of the Closing Date and executed by Seller, in the form
attached hereto as Exhibit E.
"BUYER DOCUMENTS" means, collectively, this Agreement, the
Note, the Assumption Agreement and the closing certificates and other deliveries
contemplated by Section 11.4.
"BUYER INDEMNIFIED PARTIES" shall have the meaning specified
in Section 12.2.
"CLOSING" shall have the meaning set forth in Section 11.1.3.
"CLOSING DATE" shall have the meaning specified in Section
11.1.3.
"CODE" means the Internal Revenue Code of 1986, as amended,
and all Laws promulgated pursuant thereto or in connection therewith.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended.
"CONSIDERATION" shall mean the aggregate amount of
consideration to be paid by Buyer to Seller in respect of the Assets acquired
pursuant to this Agreement, with such amount consisting of (i) the Purchase
Price and (ii) the Assumed Liabilities recognized as such for federal income tax
purposes.
"CURRENT BALANCE SHEET" shall have the meaning set forth in
Section 3.5.
"DEFINITIVE DOCUMENTATION" shall have the meaning set forth in
Section 7.4.
"DIRECT CLAIM" shall have the meaning set forth in Section
12.5.5.
"DIRECT CLAIM NOTICE" shall have the meaning set forth in
Section 12.5.5.
"DROP-DEAD DATE" shall have the meaning set forth in Section
13.1.2.
A-2
"DTV" shall have the meaning set forth in Section 3.20.
"DTV FACILITY" shall have the meaning set forth in Section
3.20.
"ENCUMBRANCES" means any mortgages, pledges, liens, security
interests, defects in title, easements, encumbrances or encroachments.
"ENVIRONMENTAL LAWS" means any applicable federal, state,
local, or foreign law (including common law), statute, code, ordinance, rule,
regulation, or other legal requirement relating to the environment or natural
resources, and includes, but is not limited to, any applicable provisions of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
ss. 9601 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 9601 et seq.; the Clean
Water Act, 33 U.S.C. ss. 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C.
ss. 300f et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; and the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 2701 et seq., as such
laws have been amended or supplemented, and the regulations promulgated pursuant
thereto, and all analogous state or local statutes.
"ENVIRONMENTAL PERMITS" shall have the meaning specified in
Section 3.18.
"ENVIRONMENTAL REPORTS" shall have the meaning specified in
Section 3.18.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"EXCLUDED ASSETS" shall have the meaning specified in Section
2.2.
"FCC" means the Federal Communications Commission.
"FCC LICENSES" shall have the meaning specified in Section
2.1.1.
"FCC ORDER" means an unconditional order or orders (except for
standard conditions imposed by the FCC on all assignments of licenses) of the
FCC, or of the Chief, Mass Media Bureau of the FCC, acting under delegated
authority, consenting to the assignment to Buyer of the FCC Licenses for the
Stations pursuant to the Application.
"FINANCING COMMITMENT" shall have the meaning specified in
Section 13.1.2.
A-3
"GAAP" means U.S. generally accepted accounting principles
consistently applied for the periods involved.
"GOVERNMENTAL AUTHORITY" means any agency, board, bureau,
court, commission, department, instrumentality or administration of the United
States government, any state government or any local or other governmental body
in a state, territory or possession of the United States or the District of
Columbia.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the
respective meanings set forth in Section 12.5.1.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 2.1.4.
"LAWS" means any federal, state or local law, statute, code,
ordinance, regulation, order, writ, injunction, judgment or decree applicable to
the specified Person and to the businesses and assets thereof.
"LEASES" shall have the meaning set forth in Section 3.10.2.
"LEASED PROPERTY" shall have the meaning set forth in Section
2.1.2.
"LIABILITIES" OR "LIABILITIES" means, 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 GAAP to be reflected, in such Person's balance sheets
or other books and records.
"LOSSES" means any liabilities, demands, claims, actions,
costs, damages, penalties, fines, judgments, settlements, arbitrations,
assessments, obligations (including those arising out of any action, such as any
settlement or compromise thereof of judgment or award therein or other loss or
expense, whether or not arising out of a third party claim, including all
interest, penalties, reasonably attorneys' fees and expenses, reasonable
accountants' fees and expenses and all amounts paid or incurred in connection
with any such action, demand, proceeding, investigation, preservation or
enforcement of rights to indemnification), or claim (including any governmental
entity or any department, agency or political subdivision thereof) and the
investigation, defense or settlement of any of the foregoing; provided that
Losses shall not include any indirect, consequential, incidental, exemplary or
punitive damages or other special damages or lost profits.
"MANAGEMENT AGREEMENT" means that certain Management Services
Agreement by and between Seller and SBG dated January 7, 2002.
A-4
"MARKET CABLE SYSTEMS" shall mean all U.S. cable systems
located within any particular station's market, as defined in Section 76.55 of
the FCC regulations.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the Assets, taken as a whole, provided, however, that any material adverse
effect caused by Buyer or any material adverse effect within the knowledge of
the directors, agents, representatives or employees of Buyer, or which should
have been within their knowledge, in their respective capacities, as of the date
hereof shall not be deemed a Material Adverse Effect.
"NON-LICENSE CLOSING" shall have the meaning set forth in
Section 11.1.1.
"NON-LICENSE CLOSING DATE" shall have the meaning set forth in
Section 11.1.1.
"NON-LICENSE ASSETS" means the Assets, other than the FCC
Licenses.
"NOTE" shall have the meaning set forth in Section 2.4.
"OPERATING CONTRACTS" shall have the meaning set forth in
Section 2.1.8.
"PERMITS" shall have the meaning set forth in Section 2.1.
"PERMITTED ENCUMBRANCES" means (a) Encumbrances on Real
Property and Leased Property that do not materially interfere with the value,
marketability or use of the Real Property and Leased Property in the operations
of the Stations, (b) Encumbrances for Taxes not yet due and payable or which are
being contested in good faith and by appropriate proceedings for which adequate
reserves have been established on Seller's books in accordance with GAAP; (c)
Encumbrances which do not secure monetary liabilities of any Person and that,
individually or in the aggregate, do not and would not materially detract from
the value or marketability of any of the Assets or materially interfere with the
use thereof as currently used; and (d) Encumbrances of record on Real Property
or Leased Property, other than Encumbrances which pursuant to this Agreement or
Schedule hereto will be removed prior to Closing or other Encumbrances for
borrowed money.
"PERSON" or "PERSON" means any individual, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization, other form of business or legal entity or Governmental Authority.
"PIK INTEREST" shall have the meaning set forth in Section
7.4.
A-5
"PLAN" shall have the meaning set forth in Section 3.16.
"PRE-CLOSING DATE RECORDS" shall have the meaning set forth in
Section 7.2.
"PROCEEDING" shall mean any action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, whether
public or private) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Authority or arbitrator.
"PROGRAM CONTRACTS" shall have the meaning set forth in
Section 2.1.5.
"PURCHASE PRICE" shall have the meaning set forth in Section
2.3.
"REAL PROPERTY" shall have the meaning set forth in Section
2.1.2.
"RELEASE" has the meaning set forth in CERCLA.
"SBG" shall mean Xxxxx Broadcasting Group, Inc.
"SECURITY INTEREST" shall have the meaning set forth in
Section 7.4.
"SCHEDULES" means the disclosure schedules delivered by Seller
to Buyer in connection herewith.
"SELLER DOCUMENTS" means, collectively, this Agreement, the
Assignment of Contracts and Leases, the Xxxx of Sale, the Assignment of FCC
Licenses, the Assumption Agreement and the closing certificates and other
deliveries contemplated by Section 11.3.
"SELLER INDEMNIFIED PARTIES" shall have the meaning set forth
in Section 12.3.
"SELLER TAX RETURNS" means all material federal, state, local,
foreign and other applicable Tax returns or declarations of estimated Tax
reports required to be filed by Seller (without regard to extensions of time
permitted by law or otherwise).
"STATIONS" shall have the meaning set forth in the Recitals.
"STATION CONTRACTS" shall have the meaning set forth in
Section 2.1.8.
"TAXES" means all federal, state and local taxes (including
income, profit, franchise, sales, use, real property, personal property, ad
valorem, excise,
A-6
employment, social security and wage withholding taxes) and installments of
estimated taxes, assessments, deficiencies, levies, imports, duties, license
fees, registration fees, withholdings, or other similar charges of every kind,
character or description imposed by any Governmental Authorities.
"TIME SALES AGREEMENTS" shall have the meaning set forth in
Section 2.1.7.
"TRADE-OUT AGREEMENTS" shall have the meaning set forth in
Section 2.1.6.
"TRANSFER TAXES" shall have the meaning set forth in Section
15.3.
A-7
