EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of May 5,
2006 among Emmis Television Broadcasting, L.P., an Indiana limited
partnership, and Emmis Television License, LLC, an Indiana limited liability
company (collectively, "Seller"), Emmis Operating Company, an Indiana
corporation ("Guarantor") and Hearst-Argyle Television, Inc., a Delaware
corporation ("Buyer").
RECITALS
A. Seller owns and operates the following television broadcast
station (the "Station") pursuant to certain authorizations issued by the
Federal Communications Commission (the "FCC"):
WKCF(TV), Clermont, Florida (including WKCF-DT)
B. Pursuant to the terms and subject to the conditions set
forth in this Agreement, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Station Assets (defined below).
C. Guarantor desires to unconditionally guarantee any and all
obligations and liabilities of Seller, or Seller's permitted assignees, under
this Agreement, as an inducement to Buyer to enter into this Agreement.
D. References to the Schedules herein shall constitute
references to Schedules delivered from Seller to Buyer attached to the letter
of even date herewith (the "Disclosure Letter").
AGREEMENT
NOW, THEREFORE, taking the foregoing into account, and in
consideration of the mutual covenants and agreements set forth herein, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1: PURCHASE OF ASSETS
1.1. STATION ASSETS. On the terms and subject to the conditions
hereof, at Closing (defined below), except as set forth in Sections 1.2 and
1.3, Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase and acquire from Seller, all right, title and interest of
Seller in and to all assets and properties of Seller, real and personal,
tangible and intangible, that are owned, leased, licensed, used or held for
use in the operation of the Station (the "Station Assets"), as and to the
extent existing on the Closing Date (defined below), free and clear of all
Liens (defined below) except Permitted Liens (defined below) including without
limitation the following:
(a) all licenses, permits and other authorizations
issued to Seller by the FCC with respect to the Station (the "FCC Licenses"),
including those described on SCHEDULE 1.1(a), and including any renewals or
modifications thereof between the date hereof and Closing,
together with all other governmental licenses, permits and regulatory
approvals pertaining to the Station (collectively with the FCC Licenses, the
"Licenses");
(b) all of Seller's equipment, transmitters, antennas,
cables, towers, vehicles, furniture, fixtures, machinery and spare parts,
notebook and other computers (including operating software licenses) and other
tangible personal property of every kind and description that are used or held
for use in the operation of the Station, including without limitation those
listed on SCHEDULE 1.1(b), except for any retirements or dispositions thereof
made between the date hereof and Closing in the ordinary course of business in
accordance with Article 4 (the "Tangible Personal Property");
(c) all of Seller's leased real property used or held
for use in the operation of the Station (including any appurtenant easements
and improvements located thereon), including without limitation those listed
on SCHEDULE 1.1(c) (the "Real Property");
(d) all agreements for the sale of advertising time on
the Station, and all other contracts, agreements and leases used in the
Station's business, including without limitation those listed on SCHEDULE
1.1(d), together with all contracts, agreements and leases made between the
date hereof and Closing in accordance with Article 4 (the "Station
Contracts");
(e) all of Seller's rights in and to the Station's call
letters and Seller's rights in and to the trademarks, trade names, service
marks, internet domain names, copyrights, programs and programming material,
jingles, slogans, logos, and other intangible property, including applications
for any of the foregoing, which are used or held for use in the operation of
the Station, including without limitation those listed on SCHEDULE 1.1(e) (the
"Intangible Property");
(f) Seller's rights in and to all the files, documents,
records, and books of account (or copies thereof) relating to the operation of
the Station, including the Station's local public files, programming
information and studies, engineering data, advertising studies, marketing and
demographic data, sales correspondence, lists of advertisers, credit and sales
reports, and logs, traffic system history records, and general, financial and
personnel records, but excluding records relating primarily to Excluded Assets
(defined below);
(g) all of Seller's goodwill in the Station and its
business;
(h) subject to Section 1.6 below, assets, properties
and rights set forth in the February 28, 2006 balance sheet included in the
Financial Statements (defined below); and
(i) all claims, causes of action, rights of recovery
and rights of set-off of Seller, whether mature, contingent or otherwise,
arising primarily out of the business of the Station as and to the extent
attributable to any period after the Effective Time.
1.2. EXCLUDED ASSETS. Notwithstanding anything to the contrary
contained herein, the Station Assets shall not include the following assets or
any rights, title and interest therein (the "Excluded Assets"):
(a) all cash and cash equivalents of Seller, including
without limitation certificates of deposit, commercial paper, treasury bills,
marketable securities, money market accounts and all such similar accounts or
investments;
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(b) all tangible and intangible personal property of
Seller retired or disposed of between the date of this Agreement and Closing
in accordance with Article 4;
(c) all Station Contracts that are terminated or expire
prior to Closing in accordance with Article 4;
(d) Seller's corporate and trade names not used
primarily in the operation of the Station (including the name "Emmis"),
charter documents, and books and records relating to the organization,
existence or ownership of Seller, duplicate copies of the records of the
Station, and all records not relating to the operation of the Station;
(e) all contracts of insurance, all coverages and
proceeds thereunder and all rights in connection therewith, including without
limitation rights arising from any refunds due with respect to insurance
premium payments to the extent related to such insurance policies;
(f) all pension, profit sharing plans and trusts and
the assets thereof and any other employee benefit plan or arrangement and the
assets thereof, if any, maintained by Seller;
(g) the Station's accounts receivable and any other
rights to payment of cash consideration (including without limitation all
rights to payments under the Station's network affiliation agreements, whether
or not offset) for goods or services sold or provided prior to the Effective
Time (defined below) or otherwise attributable to any period prior to the
Effective Time (the "A/R");
(h) any non-transferable shrinkwrapped computer
software and any other non-transferable computer licenses that are not
material to the operation of the Station;
(i) all claims, causes of action, rights of recovery
and rights of set-off of Seller, whether mature, contingent or otherwise,
against third parties with respect to the Station and the Station Assets, to
the extent attributable to any period prior to the Effective Time;
(j) all deposits and prepaid expenses (and rights
arising therefrom or related thereto), except to the extent Seller receives a
credit therefor under Section 1.6;
(k) all claims of Seller with respect to any tax
refunds;
(l) computers and other assets located at the Emmis
Communications Corporation headquarters, and the centralized server facility,
data links, payroll system and other operating systems and related assets that
are primarily used in the operation of multiple stations;
(m) the Station's owned studio site located at 00
Xxxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxx (the "Studio Site");
(n) all assets primarily used or held for use in the
operation of "The Daily Buzz" and Seller's ownership interest in The Daily
Buzz, LLC;
(o) the assets described in Section 1.3(c);
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(p) the assets listed on SCHEDULE 1.2, and the slogan
"Great Media, Great People, Great Service;" and
(q) the Tolling Agreement with the FCC referenced on
SCHEDULE 1.1(a).
1.3. SHARED ASSETS.
(a) Some of the Station Contracts may be used in the
operation of multiple stations or other business units (the "Shared
Contracts"). The rights and obligations under the Shared Contracts shall be
equitably allocated among stations and/or such other business units in a
manner reasonably determined by Seller in accordance with the following
equitable allocation principles:
(i) any allocation set forth in the Shared
Contract shall control;
(ii) if none, then any allocation previously
made by Seller in the ordinary course of Station operations shall control;
(iii) if none, then the quantifiable
proportionate benefit to be received by the parties after Closing shall
control;
(iv) if not quantifiable, then reasonable
accommodation shall control; and
(v) notwithstanding the foregoing, in the case
of any Shared Contract which is a retransmission consent agreement, Buyer
shall only assume such agreement as it relates to the Station and Buyer shall
have no obligation to assume (and the Assumed Obligations (defined below)
shall exclude) any liabilities or obligations under such agreement as they
could apply to any other assets or businesses owned by Buyer or its affiliates
now or in the future.
(b) Buyer shall cooperate with Seller (and any third
party designated by Seller) in such allocation, and the Station Contracts (and
Assumed Obligations) will include only Buyer's allocated portion of the rights
and obligations under the Shared Contracts (without need for further action
and whether such allocation occurs before or after Closing). If designated by
Seller, such allocation will occur by termination of the Shared Contract and
execution of new contracts. Buyer's allocated portion of the Shared Contracts
will not include any group discounts or similar benefits specific to Seller or
its affiliates. Completion of documentation of any such allocation is not a
condition to Closing.
(c) The Tangible Personal Property located at the
Studio Site shall be allocated and conveyed as follows:
(i) the equipment used in the master control
facility and the other items of Tangible Personal Property that are used
primarily in the operation of the Station are Station Assets;
(ii) the items listed on SCHEDULE 1.2 and the
other items of tangible personal property at such site not described in clause
(i) above are Excluded Assets;
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(iii) the items used in the master control
facility and included in the Station Assets shall be conveyed on the
Transition Date (defined below) rather than Closing; and
(iv) upon the Transition Date, Seller shall
make such items available to Buyer, and within ten (10) Business Days (defined
below) thereafter, Buyer shall remove such items from the Studio Site. As used
herein, "Transition Date" means the date WVUE(TV), New Orleans, Louisiana
discontinues use of the Station's master control facility, but not later than
December 31, 2006. Seller shall give Buyer notice of the Transition Date.
(d) Prior to Closing, if requested by Buyer, Seller
shall make available to Buyer appropriate Station employees for traffic system
training at reasonable times during normal business hours, provided that such
training does not interfere in any material respect with such employee's
performance of services for the Station or WVUE.
1.4. ASSUMPTION OF OBLIGATIONS.
(a) ASSUMPTION OF OBLIGATIONS. On the Closing Date,
Buyer shall assume the obligations of Seller arising during, or attributable
to, any period of time on or after the Closing Date under the Station
Contracts and the FCC Licenses, the obligations described in Section 5.6 and
any other liabilities of Seller to the extent Buyer receives a credit therefor
under Section 1.6 (collectively, the "Assumed Obligations").
(b) LIABILITIES NOT ASSUMED. Except for the Assumed
Obligations, Buyer does not assume, and will not be deemed by the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby to have assumed, any other liabilities or obligations of
Seller of any kind or nature whatsoever, regardless of whether required by
generally accepted accounting principles to be reflected on a balance sheet or
disclosed in the related notes (the "Retained Obligations"). Without limiting
the generality of the foregoing, the Retained Obligations include and Buyer
shall not assume nor shall Buyer be liable for: (i) any liabilities or
obligations of Seller relating to the Excluded Assets; (ii) all obligations
and liabilities of Seller arising out of the violation by Seller of any
Environmental Laws (as defined below) or for the Release (as defined below) of
any Hazardous Materials (as defined below) (including, without limitation
those arising out of or related to the Studio Site or leased real property);
(iii) any liabilities or obligations of Seller to any employees of Seller or
its affiliates not employed by Buyer; (iv) any liability relating to the
employment of current or former employees of the Station prior to the Closing,
including but not limited to any liabilities or obligations of Seller for
severance, accrued vacation or sick leave except as set forth in Section 5.6
hereof or any liabilities under or in respect of any Employee Benefit Plan (as
hereinafter defined); (v) except for the Station Contract with The Daily Buzz,
LLC and any other Station Contracts listed on SCHEDULE 1.1(D), any obligations
or liabilities of Seller to any other business unit of Seller, any affiliate
of Seller, any director or officer of Seller or any of its affiliates, or the
holder of any equity or ownership interest in Seller or any of its affiliates;
(vi) any litigation, proceeding, or claim by any Person (defined below) to the
extent relating to the business or operations of the Station prior to the
Effective Time, whether or not such litigation or proceeding or claim is
pending, threatened or asserted before, on or after the Effective Time; (vii)
any
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liability for income or other taxes relating to the Station pertaining to the
period prior to the Effective Time; (viii) any liability in respect of any
note, bond or indebtedness for borrowed money; or (ix) any liability or
sanctions imposed by the FCC resulting from violation(s) by the Station of FCC
rule(s) prior to the Effective Time.
As used in this Agreement, "Environmental Laws" means any law, rule,
regulation, judgment, decree, stipulation, or injunction pertaining to land
use, air, soil, surface water, groundwater (including the protection, cleanup,
removal, remediation or damage thereof), Hazardous Materials, wetlands, public
or employee health or safety or any other environmental matter, including,
without limitation, the following laws: (i) Clean Air Act (42 U.S.C. ss.7401,
et seq.); (ii) Clean Water Act (33 U.S.C. ss.1251, et seq.); (iii) Emergency
Planning and Community Right-to-Know Act (42 U.S.C. ss.11001, et seq.); (iv)
Resource Conservation and Recovery Act (42 U.S.C. ss.6901, et seq.); (v) Toxic
Substances Control Act (15 U.S.C. ss.2601, et seq.); (vi) Occupational Safety
and Health Act (29 U.S.C. ss.651, et seq.); (vii) Comprehensive Environmental
Response Compensation and Liability Act (42 U.S.C. ss.9601, et seq.); (viii)
Safe Drinking Water Act (42 U.S.C. ss.300f, et seq.); (ix) Toxic Substances
Control Act (15 U.S.C. ss.2601, et seq.); (x) Rivers and Harbors Act (33
U.S.C. ss.401, et seq.), (xi) Endangered Species Act (16 U.S.C. ss.1531, et
seq.); (xii) Hazardous Material Transportation Act (49 U.S.C. ss.1801, et
seq.); (xiii) any similar or applicable environmental state law, rule or
regulation; and (xiv) any other law, rule or regulation relating to Hazardous
Materials; and (xv) any law, rule or regulation relating to radio radiation.
As used in this Agreement, "Hazardous Materials" means any wastes,
substances, chemicals, or materials (whether solids, liquids or gases) that
are defined as "hazardous wastes," "hazardous substances," "toxic substances,"
"radioactive materials," or other similar designations in, or otherwise
subject to prohibition or regulation under, any Environmental Laws. "Hazardous
Materials" includes polychlorinated biphenyls (PCBs), asbestos,
asbestos-related products, radioactive materials and wastes, and petroleum and
petroleum products (including crude oil or any fraction thereof) and other
pollutants and contaminants.
As used in this Agreement, "Release" means to pump, pour, empty,
eject, spill, leak, emit, deposit, discharge, disseminate, xxxxx, migrate,
dispose, dump, inject, or place into the environment, or to cause any of the
foregoing.
1.5. PURCHASE PRICE. In consideration for the sale of the Station
Assets to Buyer, at Closing Buyer shall pay Seller, by wire transfer of
immediately available funds, the sum of Two Hundred Seventeen Million Five
Hundred Thousand Dollars ($217,500,000), subject to adjustment pursuant to
Section 1.6 (the "Purchase Price").
1.6. PRORATIONS AND ADJUSTMENTS.
(a) All prepaid and deferred income and expenses
relating to the Station Assets and arising from the operation of the Station
shall be prorated between Buyer and Seller in accordance with accounting
principles generally accepted in the United States ("GAAP") as of 12:01 a.m.
on the day of Closing (the "Effective Time"). Such prorations shall include
without limitation all ad valorem, real estate and other property taxes
(except transfer taxes as provided by Section 11.1), music and other license
fees, make good advertising to be provided by Buyer, employee performance
incentives set forth in employment agreements or annual compensation
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plans, any vacation for Transferred Employees (defined below) (except accruals
for the fiscal year of Seller in which Closing occurs for which there shall be
no adjustment), utility expenses, rent and other amounts under Station
Contracts and similar prepaid and deferred items. Seller shall receive a
credit for the unapplied portion of all of the Station's deposits and prepaid
expenses. Sales commissions related to the sale of advertisements broadcast on
the Station prior to the Effective Time shall be the responsibility of Seller,
and sales commissions related to the sale of advertisements broadcast on the
Station after the Effective Time shall be the responsibility of Buyer. All
revenue and operating expenses of the Station shall be further adjusted and
allocated between Seller and Buyer to the extent necessary to effect the
principle that all such income and expenses attributable to the operation of
the Station on and after the Closing Date shall be for the account of Buyer
and all such income and expenses attributable to the operation of the Station
prior to the Closing Date shall be for the account of Seller
(b) With respect to trade, barter or similar agreements
for the sale of time for goods or services assumed by Buyer pursuant to
Section 1.1(d), if at Closing the Station has an aggregate negative or
positive barter balance (I.E., the amount by which the value of air time to be
provided by the Station after the Effective Time exceeds, or conversely, is
less than, the fair market value of corresponding goods and services), there
shall be no proration or adjustment, unless the negative or positive barter
balance of the Station as an aggregate exceeds $20,000, in which event such
excess or deficiency, as the case may be, shall be treated either as prepaid
time sales or a receivable of Seller, and adjusted for as a proration in
Buyer's or Seller's favor, as applicable. In determining barter balances, the
value of air time shall be based upon Seller's rates as of Closing, and
corresponding goods and services shall include those to be received by the
Station after Closing plus those received by the Station before Closing to the
extent conveyed by Seller to Buyer as a part of the Station Assets.
(c) No later than three (3) Business Days prior to the
scheduled Closing date, Seller shall provide Buyer with a statement setting
forth a reasonably detailed computation of Seller's reasonable and good faith
estimate of the Adjustment Amount (defined below) as of Closing (the
"Preliminary Adjustment Report"). As used herein, the "Adjustment Amount"
means the net amount by which the Purchase Price is to be increased or
decreased in accordance with this Section 1.6. If the Adjustment Amount
reflected on the Preliminary Adjustment Report is a credit to Buyer, then the
Purchase Price payable at Closing shall be reduced by the amount of the
preliminary Adjustment Amount, and if the Adjustment Amount reflected on the
Preliminary Adjustment Report is a charge to Buyer, then the Purchase Price
payable at Closing shall be increased by the amount of such preliminary
Adjustment Amount. For a period of ninety (90) days after Closing, Seller and
its auditors and Buyer and its auditors may review the Preliminary Adjustment
Report and the related books and records of Seller with respect to the
Station, and Buyer and Seller will in good faith seek to reach agreement on
the final Adjustment Amount. If agreement is reached within such 90-day
period, then promptly thereafter Seller shall pay to Buyer or Buyer shall pay
to Seller, as the case may be, an amount equal to the difference between (i)
the agreed Adjustment Amount and (ii) the preliminary Adjustment Amount
indicated in the Preliminary Adjustment Report. If agreement is not reached
within such 90-day period, then the dispute resolutions of Section 1.6(d)
shall apply.
(d) If the parties do not reach an agreement on the
Adjustment Amount within the 90-day period specified in Section 1.6(c), then
Seller and Buyer shall select an independent accounting firm of recognized
national standing (the "Arbitrating Firm") to resolve the disputed
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items. If Seller and Buyer do not agree on the Arbitrating Firm within five
(5) calendar days after the end of such 90-day period, then the Arbitrating
Firm shall be a nationally recognized independent accounting firm selected by
lot (after excluding one firm designated by Seller and one firm designated by
Buyer). Buyer and Seller shall each inform the Arbitrating Firm in writing as
to their respective positions with respect to the Adjustment Amount, and each
shall make available to the Arbitrating Firm any books and records and work
papers relevant to the preparation of the Arbitrating Firm's computation of
the Adjustment Amount. The Arbitrating Firm shall be instructed to complete
its analysis within thirty (30) days from the date of its engagement and upon
completion to inform the parties in writing of its own determination of the
Adjustment Amount, the basis for its determination and whether its
determination is within the Mid-Range (defined below) or if not, whether it is
closer to Buyer's or Seller's written determination of the Adjustment Amount.
Any determination by the Arbitrating Firm in accordance with this Section
shall be final and binding on the parties. Within five (5) calendar days after
the Arbitrating Firm delivers to the parties its written determination of the
Adjustment Amount, Seller shall pay to Buyer, or Buyer shall pay to Seller, as
the case may be, an amount equal to the difference between (i) the Adjustment
Amount as determined by the Arbitrating Firm and (ii) the preliminary
Adjustment Amount indicated in the Preliminary Adjustment Report.
(e) If the Arbitrating Firm's determination of the
Adjustment Amount is within the Mid-Range, then Seller and Buyer shall each
pay one-half of the fees and disbursements of the Arbitrating Firm in
connection with its analysis. If not, then (i) if the Arbitrating Firm
determines that the written position of Buyer concerning the Adjustment Amount
is closer to its own determination, then Seller shall pay the fees and
disbursements of the Arbitrating Firm in connection with its analysis, or (ii)
if the Arbitrating Firm determines that the written position of Seller
concerning the Adjustment Amount is closer to its own determination, then
Buyer shall pay the fees and disbursements of the Arbitrating Firm in
connection with its analysis. As used herein, the term "Mid-Range" means a
range that (i) equals twenty percent (20%) of the absolute difference between
the written positions of Buyer and Seller as to the Adjustment Amount and (ii)
has a midpoint equal to the average of such written positions of Buyer and
Seller.
(f) Concurrently with the payment of any amount
required to be paid under Section 1.6(c) or (d), the payor shall pay the payee
interest on such amount for the period from the Closing Date until the date
paid at a rate equal to the prime rate charged by XX Xxxxxx Chase. All
payments to be made under Section 1.6 shall be paid by wire transfer in
immediately available funds to the account of the payee at a financial
institution in the United States and shall for all purposes constitute an
adjustment to the Purchase Price.
1.7. ALLOCATION. After Closing, Buyer and Seller will allocate
the Purchase Price in accordance with the respective fair market values of the
Station Assets and the goodwill being purchased and sold in accordance with
the requirements of Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code"). Buyer and Seller shall file its federal income tax
returns and its other tax returns reflecting the allocation made pursuant to
this Section.
1.8. CLOSING. The consummation of the sale and purchase of the
Station Assets provided for in this Agreement (the "Closing") shall take place
on the fifth Business Day after the last to occur of the date of public notice
of the FCC Consent (defined below), satisfaction or
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waiver of the condition set forth on SCHEDULE 11.2, HSR Clearance (defined
below) and delivery of the last of the Required Consents (defined below) (or
on such earlier day as Buyer and Seller may mutually agree), in any event
subject to satisfaction or waiver of the conditions set forth in Articles 6
and 7 below. The date on which the Closing is to occur is referred to herein
as the "Closing Date." "Business Day," whether or not capitalized, shall mean
every day of the week except Saturday, Sunday and days on which banks are
closed in the State of New York.
1.9. GOVERNMENTAL CONSENTS.
(a) Within five (5) Business Days of the date of this
Agreement, Buyer and Seller shall file an application with the FCC (the "FCC
Application") requesting FCC consent to the assignment of the FCC Licenses to
Buyer. Public notice of FCC consent to the assignment of the main station
(both analog and digital) FCC Licenses to Buyer without any material adverse
conditions other than those of general applicability is referred to herein as
the "FCC Consent." Buyer and Seller shall diligently prosecute the FCC
Application and otherwise use their commercially reasonable efforts to obtain
the FCC Consent as soon as possible. Seller shall timely publish and/or
broadcast the notices required by FCC rules and regulations pertaining to the
FCC Application. In the event that the FCC imposes any condition upon Buyer or
Seller with respect to the FCC Application, the party subject to such
condition shall use its commercially reasonable efforts to comply therewith,
provided, however, that the party subject to such condition shall not be
required to take any action if (i) the condition was imposed on it as the
result of a circumstance the existence of which does not constitute a breach
by the party of any of its representations, warranties, or covenants under
this Agreement, and (ii) compliance with the condition would, in its
reasonable judgment, be unduly burdensome on it in any material respect
(financial or otherwise). If the Closing shall not have occurred for any
reason within the original effective period of the FCC Consent, and neither
party shall have terminated this Agreement under Article 10, the parties shall
jointly request an extension of the effective period of the FCC Consent. No
extension of the effective period of the FCC Consent shall limit the right of
a party to exercise its rights under Article 10.
(b) It is acknowledged and agreed that, for purposes of
this Section 1.9 and any other provision of this Agreement, any condition
imposed by the FCC or any other governmental authority (including, without
limitation, any court or judicial body) requiring the divestiture of any
assets, properties or businesses, including but not limited to television
broadcast station WESH(TV), Daytona Beach, Florida ("WESH"), by Buyer or any
of its affiliates would be unduly burdensome in a material respect and
therefore not required. Buyer shall not enter into any agreement or
transactions to acquire any other media properties or stations in the
Orlando-Daytona-Melbourne, Florida DMA, nor shall Buyer enter into any
operating agreement, time brokerage agreement, local marketing agreement,
joint sales agreement, joint venture or other similar agreement, in each case
which could reasonably be expected to have the effect of delaying action by
the FCC upon the FCC Application or the consummation of the transactions
contemplated hereby.
(c) Within ten (10) Business Days after the date of
this Agreement, Buyer and Seller shall make any required filings with the
Federal Trade Commission and the United States Department of Justice pursuant
to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act") with respect to the transactions contemplated hereby (including a
request for early termination of the waiting period thereunder), and shall
thereafter promptly
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respond to all requests received from such agencies for additional information
or documentation. Expiration or termination of any applicable waiting period
under the HSR Act is referred to herein as "HSR Clearance."
(d) Buyer and Seller shall notify each other and
provide copies of all petitions, pleadings and other documents and
correspondence filed with or received from any governmental agency with
respect to this Agreement or the transactions contemplated hereby. Buyer and
Seller shall furnish each other with such information and assistance as the
other may reasonably request in connection with their preparation of any
governmental filing hereunder. The FCC Consent and HSR Clearance are referred
to herein collectively as the "Governmental Consents."
ARTICLE 2: SELLER REPRESENTATIONS AND WARRANTIES
Seller makes the following representations and warranties to Buyer:
2.1. ORGANIZATION. Seller is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, and
is qualified to do business in each jurisdiction in which the Station Assets
are located. Seller has the requisite power and authority to execute, deliver
and perform this Agreement and all of the other agreements and instruments to
be made by Seller pursuant hereto (collectively, the "Seller Ancillary
Agreements") and, to its knowledge, to consummate the transactions
contemplated hereby.
2.2. AUTHORIZATION. The execution, delivery and performance of
this Agreement and the Seller Ancillary Agreements by Seller have been duly
authorized and approved by all necessary action of Seller and do not require
any further authorization or consent of Seller. This Agreement is, and each
Seller Ancillary Agreement when made by Seller and the other parties thereto
will be, a legal, valid and binding agreement of Seller enforceable in
accordance with its terms, except in each case as such enforceability may be
limited by bankruptcy, moratorium, insolvency, reorganization or other similar
laws affecting or limiting the enforcement of creditors' rights generally and
except as such enforceability is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
2.3. NO CONFLICTS. Except for the Governmental Consents and
consents to assign certain of the Station Contracts as set forth on SCHEDULE
1.1(C) and SCHEDULE 1.1(D), the execution, delivery and performance by Seller
of this Agreement and the Seller Ancillary Agreements and the consummation by
Seller of any of the transactions contemplated hereby and thereby does not and
will not conflict with or violate any organizational documents of Seller or
any law, judgment, order, or decree to which Seller is subject, or require the
consent or approval of, or a filing by Seller with, any governmental or
regulatory authority or any third party or any contract, mortgage or
instrument to which Seller is a party or is bound or subject.
2.4. FCC LICENSES. SCHEDULE 1.1(A) lists all FCC Licenses and all
other material Licenses relating to the operation of the Station or required
for the lawful conduct of the business of the Station as now conducted. Except
as set forth on SCHEDULE 1.1(a):
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(a) Seller is the valid and legal holder of the
Licenses described on SCHEDULE 1.1(a). The Licenses are valid and in full
force and effect and have not been revoked, suspended, canceled, rescinded or
terminated and have not expired and constitute all of the material licenses,
permits and authorizations used in or required for the current operation of
the Station under applicable laws including but not limited to the
Communications Act (as defined below). None of the Licenses is subject to any
condition or restriction which would limit the full operation of the Station
as currently operated by Seller. To Seller's knowledge, there is not pending
or threatened, any action, proceeding, complaint, notice of forfeiture, claim
or investigation by or before the FCC or any other governmental authority to
revoke, suspend, cancel, rescind or materially adversely modify any of the
Licenses or that would materially impair the ability of Seller to assign the
Licenses to Buyer or which would materially impede Seller's ability to
prosecute the FCC Application or seek the grant of the FCC Consent (other than
proceedings to amend FCC rules of general applicability). There is not issued
or outstanding, by or before the FCC, or, to Seller's knowledge threatened,
any order to show cause, notice of violation, notice of apparent liability, or
order of forfeiture against the Station or against Seller with respect to the
Station that could result in any such action. The Station is operating in
compliance in all material respects with the FCC Licenses, the Communications
Act of 1934, as amended, and the rules, regulations and policies of the FCC
(collectively, the "Communications Act").
(b) The Station has been assigned channel 17 by the FCC
for the provision of digital television ("DTV") service. The FCC Licenses
include a license for a maximized DTV facility on channel 17 and the FCC has
tentatively designated channel 17 for the Station's post-transition DTV
operation. The Station is broadcasting the DTV signal in accordance with such
authorization in all material respects.
2.5. TAXES. Seller has, in respect of the Station's business,
filed all foreign, federal, state, county and local income, excise, property,
sales, use, franchise and other tax returns and reports which are required to
have been filed by it under applicable law, and has paid all taxes which have
become due pursuant to such returns or applicable law or pursuant to any
assessments which have become payable.
2.6. PERSONAL PROPERTY. SCHEDULE 1.1(b) contains a list of
material items of Tangible Personal Property as of the date of this Agreement
included in the Station Assets, subject to Section 1.3(c). Except as set forth
on SCHEDULE 1.1(b), Seller has good and marketable title to the Tangible
Personal Property free and clear of liens, claims and encumbrances ("Liens")
other than Permitted Liens. Except as set forth on SCHEDULE 1.1(b), all
material items of Tangible Personal Property are in good operating condition,
ordinary wear and tear excepted. As used herein, "Permitted Liens" means,
collectively, the Assumed Obligations, liens for taxes not yet due and payable
and liens that will be released at or prior to Closing and are disclosed on
SCHEDULE 1.1(b).
2.7. REAL PROPERTY. SCHEDULE 1.1(c) includes a description of
each lease of Real Property or similar agreement included in the Station
Contracts (the "Real Property Leases"). Except for the Studio Site, Seller
does not own any real property which is primarily used or held for use in the
operation of the Station.
2.8. CONTRACTS. SCHEDULE 1.1(d) is a true, correct and complete
listing of all Material Station Contracts (defined below) existing on the date
of this Agreement, and Seller has made
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available copies of such contracts to Buyer, except as set forth on SCHEDULE
1.1(d), in which case Seller has provided a description of the material terms
of such Station Contracts on SCHEDULE 1.1(d). SCHEDULE 1.1(c) AND SCHEDULE
1.1(d) identify each such Material Station Contract (including Real Property
Leases) for which consent to assignment is required for the assignment of the
Station Contract to Buyer. Except as set forth on SCHEDULE 1.1(d), each of the
Station Contracts (including without limitation each of the Real Property
Leases) is in effect and is binding upon Seller and, to Seller's knowledge,
the other parties thereto (subject to bankruptcy, insolvency, reorganization
or other similar laws relating to or affecting the enforcement of creditors'
rights generally). Seller has performed its obligations under each of the
Station Contracts in all material respects, and is not in material default
thereunder, and to Seller's knowledge, no other party to any of the Station
Contracts is in default thereunder in any material respect.
"MATERIAL STATION CONTRACTS" means, with respect to the Station,
except for Retained Obligations:
(i) contracts and other agreements for the future acquisition or
sale of any assets involving $20,000 individually (or in the aggregate, in the
case of any related series of contracts and other agreements), other than for
sales of advertising in the ordinary course of business consistent with past
practice;
(ii) contracts and other agreements relating to joint ventures or
partnerships;
(iii) contracts and other agreements calling for future aggregate
purchase prices, payments or other consideration to or from Seller in any one
year having a value of more than $20,000 in any one case (or in the aggregate,
in the case of any related series of contracts and other agreements) other
than for sales of advertising in the ordinary course of business consistent
with past practice;
(iv) contracts and other agreements containing covenants of
Seller prohibiting or materially limiting the right to compete in any line of
business, prohibiting or restricting its ability to conduct business with any
Person or in any geographical area, or requiring the acquisition of goods or
services exclusively from a single supplier or provider; "Person" means any
individual, general or limited partnership, corporation, limited liability
company, association, trust, unincorporated organization or other entity;
(v) contracts and other agreements relating to the acquisition
by Seller of any operating business, the capital stock of any other Person or,
except for Tangible Property acquired in the ordinary course of business
consistent with past practices, or any other assets or property (real or
personal) for a purchase price of more than $20,000 individually (or in the
aggregate, in the case of any related series of contracts and other
agreements);
(vi) contracts and other agreements requiring the payment by or
to Seller of a royalty, override or similar commission or fee of more than
$20,000 in any one year;
(vii) contracts and other agreements relating to the creation of
liens or the guarantee of the payment of liabilities or performance of
obligations of any other Person by Seller;
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(viii) all network affiliation contracts;
(ix) all sales agency or advertising representation contracts;
(x) all contracts with independent contractors other than those
not requiring expenditures of more than $20,000 in any calendar year and
having a term of not more than one (1) year;
(xi) all contracts and other agreements for the sale of broadcast
time on the Station for other than monetary consideration having a value of
more than $20,000;
(xi) all contracts and other agreements pursuant to which the
Station acquires programming or provides programming to third parties; and
(xii) all retransmission consent agreements.
2.9. ENVIRONMENTAL. Except as set forth in the Phase I
environmental assessment of the Studio Site provided by Seller to Buyer
("Phase I"), to Seller's knowledge, no Hazardous Material has been generated,
stored, transported or Released on, in, from or to the Real Property included
in the Station Assets or the Studio Site. Except as set forth in the Phase I,
to Seller's knowledge, Seller has complied in all material respects with all
Environmental Laws applicable to the Station.
2.10. INTANGIBLE PROPERTY. SCHEDULE 1.1(e) contains a description
of the material Intangible Property as of the date of this Agreement included
in the Station Assets. Except as set forth on SCHEDULE 1.1(e), (i) Seller's
use of the Intangible Property does not infringe upon any third party rights
in any material respect and (ii) none of the material Intangible Property is
being infringed by any third party. Except as set forth on SCHEDULE 1.1(e),
Seller has not received any written notice that its use of the Intangible
Property at the Station is unauthorized or violates or infringes upon the
rights of any other Person or challenging the ownership, use, validity or
enforceability of any Intangible Property. Except as set forth on SCHEDULE
1.1(b), Seller owns or has the right to use the Intangible Property free and
clear of Liens other than Permitted Liens.
2.11. EMPLOYEES.
(a) Seller has complied in all material respects with
all labor and employment laws, rules and regulations applicable to the
Station's business, including without limitation those which relate to prices,
wages, hours, discrimination in employment and collective bargaining. There is
no, nor within the past twelve months has there been any, unfair labor
practice charge or complaint against Seller in respect of the Station's
business pending or to Seller's knowledge threatened before the National Labor
Relations Board, EEOC or any federal, state or local labor relations board or
any court or tribunal, and there is no, nor within the past twelve months has
there been any, strike, dispute, request for representation, slowdown or
stoppage pending or threatened in respect of the Station's business.
(b) Seller has delivered to Buyer the list described in
Section 5.6(a). There are no collective bargaining agreements with respect to
the Station. Unused annual vacation and sick leave benefits for Station
employees do not carryover from year-to-year.
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(c) As used in this Agreement, "Employee Benefit Plans"
means each employee benefit plan, policy, program or contract, including, but
not limited to, employment, bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, equity-based, leave of
absence, vacation, sick leave, severance, insurance, workers' compensation,
disability, supplemental unemployment, or other "employee welfare benefit
plan" or "employee pension benefit plan" as defined in Sections 3(1) and 3(2)
of ERISA) which are maintained or contributed to by Seller for the benefit of,
or pursuant to which Seller or any subsidiary or ERISA Affiliate (defined
below) has any liability with respect to any current or former employee. As
used in this Agreement, an "ERISA Affiliate" means any entity required to be
aggregated with Seller under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA.
(d) For each Employee Benefit Plan intended to qualify
under Section 401(a) of the Code (other than any multiemployer plan, as
defined in Sections 4001(a)(3) or 3(37) of ERISA or Section 414(f) of the
Code), a favorable determination letter has been issued by the Internal
Revenue Service and no events have occurred that would adversely affect the
tax-qualified status of any such Employee Benefit Plan.
(e) Seller has at all times complied, and currently
complies, in all material respects with the applicable health care
continuation requirements for any Employee Benefit Plan that is a welfare
benefit plan (as defined in Section 3(1) of ERISA), including Section 4980B of
the Code and Sections 601-608 of ERISA (collectively referred to as "COBRA")
and any applicable health care continuation coverage requirements under state
law.
2.12. INSURANCE. Seller maintains insurance policies or other
arrangements with respect to the Station and the Station Assets consistent
with its practices for other stations, and will maintain such policies or
arrangements until the Effective Time.
2.13. COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 1.1(a),
Seller has complied in all material respects with all laws, rules and
regulations, and all decrees and orders of any court or governmental authority
which are applicable to the operation of the Station. To Seller's knowledge,
there are no governmental claims or investigations pending or threatened
against Seller in respect of the Station except those affecting the industry
generally.
2.14. LITIGATION. There is no action, suit or proceeding pending
or, to Seller's knowledge, threatened against Seller in respect of the Station
that will subject Buyer to liability or affect the use or value of the Station
Assets or which will affect Seller's ability to perform its obligations under
this Agreement.
2.15. FINANCIAL STATEMENTS. Seller has provided to Buyer copies of
its statements of operations for the Station for the years ended February 29,
2004, February 28, 2005 and February 28, 2006 and the balance sheets for the
Station as of February 29, 2004, February 28, 2005 and February 28, 2006 (the
"Financial Statements"). The Financial Statements are the statements included
in the audited consolidated financial statements of Seller and its affiliates
(but such statements are not separately audited). The Financial Statements are
consistent with the books and records of the Station, have been prepared in
accordance with GAAP consistently applied, and present fairly in all material
respects the financial condition of the Station and the results of operations
of the Station for the respective periods covered thereby, except that (i) the
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Financial Statements do not include corporate overhead expenses for legal,
accounting, human resources and benefits administration, information
technology, engineering, and television division management services, (ii)
insurance expense reflected in the statements is an estimate of the Station's
share of consolidated insurance expense and not necessarily indicative of
actual claims activity of the Station, (iii) a portion of employee
compensation expenses are paid in stock but are reflected as cash expenses in
the statements, (iv) program amortization adjustments resulting from Seller's
application of purchase accounting in connection with its acquisition of the
Station in 1999, (v) certain revenues and expenses associated with Seller's
national rep contract, including amortization of deferred agency buy out
payments which reduce agency commission expense, amortization of related
customer list and payment to the national rep firm based on performance in
Seller's fiscal year ended February 28, 2005 on the consolidated results of
the Seller's television division, all of which is recorded on Seller's books
on a consolidated basis, and (vi) such statements do not include income tax
expense or benefit, interest income and expense, disclosures required by GAAP
in notes accompanying the financial statements, retiree benefit expense
(pension, health insurance, etc.), and non-cash compensation expenses
associated with the discount given to employees on stock purchases under the
Employee Stock Purchase Plan and the Stock Compensation Plan and associated
with restricted stock grants made March 1, 2005, and expenses attributable to
the adoption of accounting pronouncements SFAS 142 and EITF Topic D-108.
Between February 28, 2006 and the date of this Agreement, the Station has been
operated in all material respects in the ordinary course of business and
otherwise in the manner set forth in Section 4.1, as if such Section applied
during such period (other than Section 4.1(g)).
2.16. NO UNDISCLOSED LIABILITIES. There are no liabilities or
obligations of Seller that will be binding upon Buyer after the Effective Time
other than the Assumed Obligations.
2.17. BROKERS. Except for The Blackstone Group, whose fees,
commissions and expenses are the sole responsibility of Seller, neither this
Agreement nor the purchase and sale of the Station Assets or any other
transaction contemplated by this Agreement was induced or procured through any
party acting on behalf of or representing Seller as broker, finder, investment
banker, financial advisor, or in any similar capacity.
2.18. TRANSACTIONS WITH AFFILIATES; ENTIRE BUSINESS. Except as
disclosed in the Financial Statements and except for the Station Contract with
The Daily Buzz, LLC listed on SCHEDULE 1.1(d) and previous arrangements
between the Station and RDS/Coopportunities which have since expired and
except as set forth in clause (i) of the third sentence of Section 2.15 and
except for Excluded Assets, since March 1, 2003 neither Seller nor any
affiliate of Seller has been involved in any business arrangement or
relationship with or in respect of the Station, and, other than for the
Station Assets and the assets listed on the Shared Contracts, neither Seller
nor any affiliate of Seller owns any property or right, tangible or
intangible, that is used in the Station's business or operations. The
conveyance of the Station Assets will convey to Buyer the entire business of
the Station, and all the tangible property and intangible property used by the
Station in connection with the conduct of the business as heretofore conducted
by Seller, except for the Excluded Assets.
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2.19. DISCLOSURE. Neither this Agreement nor any Schedule hereto
contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein misleading.
ARTICLE 3: BUYER REPRESENTATIONS AND WARRANTIES
Buyer hereby makes the following representations and warranties to
Seller:
3.1. ORGANIZATION. Buyer is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, and
is qualified to do business in each jurisdiction in which the Station Assets
are located. Buyer has the requisite power and authority to execute, deliver
and perform this Agreement and all of the other agreements and instruments to
be executed and delivered by Buyer pursuant hereto (collectively, the "Buyer
Ancillary Agreements") and, to its knowledge, to consummate the transactions
contemplated hereby.
3.2. AUTHORIZATION. The execution, delivery and performance of
this Agreement and the Buyer Ancillary Agreements by Buyer have been duly
authorized and approved by all necessary action of Buyer and do not require
any further authorization or consent of Buyer. This Agreement is, and each
Buyer Ancillary Agreement when made by Buyer and the other parties thereto
will be, a legal, valid and binding agreement of Buyer enforceable in
accordance with its terms, except in each case as such enforceability may be
limited by bankruptcy, moratorium, insolvency, reorganization or other similar
laws affecting or limiting the enforcement of creditors' rights generally and
except as such enforceability is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.3. NO CONFLICTS. Except for the Governmental Consents, the
execution, delivery and performance by Buyer of this Agreement and the Buyer
Ancillary Agreements and the consummation by Buyer of any of the transactions
contemplated hereby and thereby does not and will not conflict with or violate
any organizational documents of Buyer or any law, judgment, order or decree to
which Buyer is subject, or require the consent or approval of, or a filing by
Buyer with, any governmental or regulatory authority or any third party or any
contract, mortgage or instrument to which Buyer is a party or is bound or
subject.
3.4. LITIGATION. There is no action, suit or proceeding pending
or, to its knowledge, threatened against Buyer which questions the legality or
propriety of the transactions contemplated by this Agreement or could
materially adversely affect the ability of Buyer to perform its obligations
hereunder.
3.5. QUALIFICATION. To Buyer's knowledge, it is legally,
financially and otherwise qualified to be the licensee of, acquire, own and
operate the Station under the Communications Act and the rules, regulations
and policies of the FCC. To Buyer's knowledge, there are no facts that would,
under existing law and the existing rules, regulations, policies and
procedures of the FCC, disqualify Buyer as an assignee of the FCC Licenses or
as the owner and operator of the Station. To Buyer's knowledge, no waiver of
or exemption from any FCC rule or policy is necessary for the FCC Consent to
be obtained. To Buyer's knowledge, there are no matters which might reasonably
be expected to result in the FCC's denial or delay of approval of the FCC
Application. To Buyer's knowledge, as of the date of this Agreement, Buyer's
acquisition
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of the Station complies with the FCC's multiple-ownership rules. Neither Buyer
nor any Person with an attributable ownership interest under FCC rules in
Buyer has any other attributable ownership interest in any media property in
the Orlando-Daytona-Melbourne, Florida DMA other than WESH.
3.6. BROKERS. Neither this Agreement nor the purchase and sale of
the Station Assets or any other transaction contemplated by this Agreement was
induced or procured through any party acting on behalf of or representing
Buyer as broker, finder, investment banker, financial advisor, or in any
similar capacity.
ARTICLE 4: SELLER COVENANTS
4.1. SELLER'S COVENANTS. Between the date hereof and Closing, and
except as permitted by this Agreement or with the prior written consent of
Buyer, which shall not be unreasonably withheld, delayed or conditioned,
Seller shall:
(a) operate the Station in the ordinary course of
business consistent with past practice (including but not limited to
completion of capital expense projects in accordance with Seller's fiscal year
ended 2007 budget) and in all material respects in accordance with FCC rules
and regulations and with all other applicable laws, regulations, rules and
orders, and use commercially reasonable efforts to preserve intact the
business, operations and assets of the Station and maintain its relationships
with employees, suppliers and customers;
(b) not sell, assign, transfer or materially adversely
modify any of the FCC Licenses;
(c) not other than in the ordinary course of business,
sell, lease or dispose of or agree to sell, lease or dispose of any of the
Station Assets unless replaced with similar items of substantially equal or
greater value and utility, or create, assume or permit to exist any Liens upon
the Station Assets, except for Permitted Liens;
(d) upon reasonable notice, give Buyer reasonable
access during normal business hours to the Station's business and the Station
Assets, and, through a representative designated by Seller, the Station's
employees, and furnish Buyer with information relating to the Station Assets
and the Station employees that Buyer may reasonably request, provided that
such access rights shall not be exercised in a manner that unreasonably
interferes with the operation of the Station;
(e) at Buyer's sole cost and expense, provide Buyer any
financial information regarding the Station that is maintained by Seller on an
unconsolidated basis and requested by Buyer that is reasonably necessary to
satisfy any reporting obligations to the Securities and Exchange Commission or
reasonably necessary to obtain acquisition financing for the Station;
(f) except as otherwise required by law, (i) not enter
into any employment, labor, or union agreement or plan (or amendments of any
such existing agreements or plan) that will be binding upon Buyer after
Closing or (ii) increase the compensation payable (or make any new commitment
to pay severance pay that would be binding on Buyer) to any employee of the
Station, except for bonuses and other compensation payable by Seller in
connection with
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the consummation of the transactions contemplated by this Agreement and other
station sales by Seller;
(g) not enter into any contract or other agreement
which, if in effect on the date hereof, would be a Material Station Contract
or amend any existing Material Station Contracts;
(h) not knowingly waive any right of material value
under a Station Contract, or change the manner in which Seller applies GAAP
unless required by GAAP or law, and give Buyer notice of any material change
in Seller's accounting practices and policies; and
(i) use commercially reasonable efforts to cause the
Station Contract for the Daily Buzz to be modified or amended so as to extend
the term of the Daily Buzz Station Contract through May 2007 and to provide
the Station with retransmission consent rights to multi-channel video
programming distributors within the Station's DMA and where the Station is
significantly viewed.
ARTICLE 5: JOINT COVENANTS
Buyer and Seller hereby covenant and agree as follows:
5.1. CONFIDENTIALITY. Seller (or The Blackstone Group, LLC on
behalf of Seller) and Buyer (or an affiliate of Buyer on behalf of Buyer) are
parties to a non-disclosure agreement with respect to Seller and its
television stations (the "NDA"). To the extent not already a direct party
thereto, Seller and Buyer hereby assume the NDA and agree to be bound by the
provisions thereof. Without limiting the terms of the NDA, subject to the
requirements of applicable law, all non-public information regarding the
parties and their business and properties that is disclosed in connection with
the negotiation, preparation or performance of this Agreement (including
without limitation all financial information provided by Seller to Buyer)
shall be confidential and shall not be disclosed to any other Person, except
in accordance with the terms of the NDA.
5.2. ANNOUNCEMENTS. Prior to Closing, no party shall, without the
prior written consent of the other, issue any press release or make any other
public announcement concerning the transactions contemplated by this
Agreement, except to the extent that such party is so obligated by law or the
rules of any stock exchange, in which case such party shall give advance
notice to the other.
5.3. CONTROL. Buyer shall not, directly or indirectly, control,
supervise or direct the operation of the Station prior to Closing. Consistent
with the Communications Act and the FCC rules and regulations, control,
supervision and direction of the operation of the Station prior to Closing
shall remain the responsibility of Seller as the holder of the FCC Licenses.
5.4. RISK OF LOSS.
(a) Seller shall bear the risk of any loss of or damage
to any of the Station Assets at all times until Closing, and Buyer shall bear
the risk of any such loss or damage thereafter.
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(b) If prior to Closing any item of Tangible Personal
Property is damaged or destroyed or otherwise not in the condition described
in Section 2.6 in any material respect, then:
(i) Seller shall use commercially reasonable
efforts to repair or replace such item in all material respects in the
ordinary course of business; and
(ii) if such repair or replacement is not
completed prior to Closing, then the parties shall proceed to Closing and
Seller shall promptly repair or replace such item in all material respects
after Closing (and Buyer will provide Seller access and any other reasonable
assistance requested by Seller with respect to such obligation), except that
if such damage or destruction has a Material Adverse Effect, then Closing
shall be postponed until the date five (5) Business Days after such Material
Adverse Effect is remedied, subject to Section 10.1.
(c) If prior to Closing the Station (analog and/or
digital) is off the air or operating at power levels that result in a material
reduction in coverage (a "Broadcast Interruption"), then Seller shall use
commercially reasonable efforts to return the Station to the air and restore
prior coverage as promptly as practicable in the ordinary course of business.
Notwithstanding anything herein to the contrary, if on the day otherwise
scheduled for Closing, there is a Broadcast Interruption of the Station, then
Closing shall be postponed until the date five (5) Business Days after the
Station returns to the air and prior coverage is restored in all material
respects, subject to Section 10.1. If the damage, destruction or loss prevents
the transmission of the Station's broadcast signals, or materially impairs the
Station's signal coverage area, for a period of more than forty (40)
consecutive days, then Buyer may terminate this Agreement pursuant to Section
10.1 upon written notice to Seller.
5.5. CONSENTS.
(a) The parties shall use commercially reasonable
efforts to obtain (i) any third party consents necessary for the assignment of
any Station Contract (which shall not require any payment to any such third
party), and (ii) execution of reasonable estoppel certificates by lessors
under any Real Property Leases requiring consent to assignment, but no such
consents or estoppel certificates are conditions to Closing except for the
Required Consents. Receipt of the following consents to assignment, without
conditions other than the execution of an assumption agreement (collectively,
the "Required Consents") is a condition precedent to Buyer's obligation to
close under this Agreement: (i) the Station's WB affiliation agreement, but
only to the extent that Closing occurs prior to the commencement of The CW
Network programming, (ii) the CW term sheet (including an acknowledgment by
the CW Network of such term sheet), but such condition shall be deemed
satisfied by either the acceptance of an assumption agreement from Buyer by
The CW Network or the delivery to Buyer or Seller of a reasonable form of
assumption agreement by The CW Network (and, in the case of such a delivery,
if the form provides for signature by The CW Network, such assumption
agreement shall have been executed by The CW Network), (iii) other programming
agreements designated with a P. on SCHEDULE 1.1(d), and (iv) the Station's
main tower lease designated by a diamond on SCHEDULE 1.1(c).
(b) To the extent that any Station Contract may not be
assigned without the consent of any third party, and such consent is not
obtained prior to Closing, this Agreement and any assignment executed pursuant
to this Agreement shall not constitute an assignment of such Station Contract;
provided, however, with respect to each such Station Contract, Seller and
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Buyer shall cooperate to the extent feasible in effecting a lawful and
commercially reasonable arrangement under which Buyer shall receive the
benefits under the Station Contract from and after Closing, and to the extent
of the benefits received, Buyer shall pay and perform Seller's obligations
arising under the Station Contract from and after Closing in accordance with
its terms.
5.6. EMPLOYEES.
(a) Seller has provided Buyer a list showing employees'
names, employee positions and annualized pay rates for employees of the
Station. Except for the employees designated on SCHEDULE 5.6, Buyer shall
offer employment to all Persons on such list to the extent they are employed
by Seller immediately prior to Closing and to any employee hired after the
date hereof in the ordinary course of business to replace any employee on such
list with Buyer's consent, which shall not be unreasonably withheld. Each such
offer shall be at a salary and at a position substantially similar as in
effect immediately preceding the Closing, and on other terms and conditions
comparable to those provided by Buyer to employees of WESH. Such offers of
employment shall be for employment commencing as of the Closing Date, with the
exception of those identified on SCHEDULE 5.6 as employees to be hired by
Buyer on the Transition Date (the "Master Control Employees"), whose
employment offer will be to commence on the Transition Date. Each employee who
accepts such offer is referred to as a "Transferred Employee", and,
collectively, the "Transferred Employees." Unless Buyer enters into a separate
employment agreement with a Transferred Employee, each Transferred Employee
shall be an "at will" employee of Buyer, and no provision contained in this
Section 5.6 shall be construed as an agreement for, or guarantee of, continued
employment. All Transferred Employees shall be subject to the policies
established from time to time by Buyer with respect to employment and employee
benefits, and Buyer shall not be under any obligation to assume, continue, or
adopt any liabilities or obligations with respect to any Employee Benefit Plan
(as defined in Section 2.11 hereof).
(b) With respect to Transferred Employees, Seller shall
be responsible for all compensation and benefits arising prior to the
Effective Time or Transition Date, as applicable, and Buyer shall be
responsible for all compensation and benefits arising after the Effective Time
or Transition Date, as applicable. Notwithstanding anything herein to the
contrary, effective at the Effective Time or Transition Date, as applicable,
Buyer shall provide severance arrangements which are the same as the severance
arrangements of Seller on the date hereof (a copy of which has been provided
to Buyer) for any Transferred Employee who terminates employment with Seller
during the twelve (12) month period immediately following the Effective Time
or Transition Date, as applicable, provided, however, that Buyer shall have no
liability for any obligation, including but not limited to, severance or
vacation and sick leave with respect to any employees who are not Transferred
Employees.
(c) As of the Effective Time or Transition Date, as
applicable, Buyer shall cause all such Transferred Employees to be eligible to
participate in Buyer's employment, bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, equity-based, leave of
absence, vacation, severance, insurance, worker's compensation, disability,
supplemental unemployment, and other benefit plan, arrangement, agreement,
practice or policy (including, without limitation, "employee welfare benefit
plans" and "employee pension benefit plans" as defined in Sections 3(1) and
3(2) of ERISA) (collectively, the "Buyer Benefit Plans")
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that, in the aggregate, are equivalent to those benefit plans offered to
similarly situated employees of television station WESH. Buyer shall give
Transferred Employees credit under the Buyer Benefit Plans for any deductibles
or co-payments paid for the current year under any plan maintained by Seller.
In addition, Seller shall retain responsibility for all hospital, medical,
life insurance, disability and other welfare plan expenses and benefits, and
for all workers' compensation, unemployment compensation and other government
mandated benefits (collectively referred to herein as "Welfare Type Plan"), in
respect of claims that are covered by any Welfare Type Plans maintained by
Seller and that are incurred by Transferred Employees and their dependents
prior to the Effective Time or Transition Date, as applicable.
(d) As of the Effective Time or Transition Date, as
applicable, Buyer shall cause each applicable Buyer Benefit Plan, other than
plans providing vacation or severance benefits, to recognize service of the
Transferred Employees with Seller for purposes of eligibility and vesting
only. As of the Effective Time or Transition Date, as applicable, Buyer shall
cause each applicable Buyer Benefit Plan that provides vacation or severance
benefits to recognize service of the Transferred Employees with Seller also
for purposes of determining the amount of benefits.
(e) With respect to any Employee Benefit Plan that
includes a cash or deferred arrangement under Section 401(k) of the Code
("Seller's 401(k) Plan"), Seller shall (i) fully vest as of the Closing Date
all accounts of all participants in the 401(k) Plan who are Transferred
Employees, (ii) allow Transferred Employees to elect to receive a complete
distribution of all of their accounts under Seller's 401(k) Plan promptly
following the Closing Date, and (iii) subject to acceptance by Buyer's 401(k)
plan, allow Transferred Employees to rollover outstanding participant loans
under Seller's 401(k) Plan and not treat any such loans rolled-over within 90
days after the date the Closing Date (or, within 90 days after the Transition
Date, as may be applicable) as in default, except as otherwise required by
law.
(f) Seller shall be responsible for any obligations or
liabilities to Transferred Employees under the Workers Adjustment and
Retraining Notification Act and any similar state or local "plant closing" law
as a result of actions taken by Seller prior to the Effective Time.
(g) Seller will fully provide or pay for all
liabilities or obligations to the employees under all Employee Benefit Plans.
Seller shall retain all liability and responsibility for "COBRA" healthcare
continuation coverage required to be offered and provided under Section 4980B
of the Code and Sections 601-608 of ERISA to employees and former employees of
Seller and any other COBRA qualified beneficiaries under Seller's health
plan(s) who have elected or are eligible to elect COBRA continuation coverage
as of or prior to the Closing Date or who incur a COBRA qualifying event in
connection with the transactions contemplated by this Agreement.
5.7. ACCOUNTING SERVICES.
(a) For a period of one hundred twenty (120) days after
Closing (the "Collection Period"), Buyer shall, without charge to Seller, use
commercially reasonable efforts to collect the A/R in the ordinary course of
business and shall apply all amounts collected from the Station's account
debtors to the oldest account first, unless the advertiser disputes in good
faith in writing an older account and designates the payment to a newer
account. Any amounts
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relating to the A/R that are paid directly to Seller shall be retained by
Seller. Buyer shall not discount, adjust or otherwise compromise any A/R and
Buyer shall refer any disputed A/R to Seller. Within ten calendar days after
the end of each month, Buyer shall deliver to Seller a report showing A/R
collections for the prior month and Buyer shall make a payment, without
offset, to Seller equal to the amount of all such collections. At the end of
the Collection Period, any remaining A/R shall be returned to Seller for
collection.
(b) During the first fifteen (15) Business Days after
Closing, Buyer shall provide to Seller at no additional cost the services of
the Station's business offices, together with reasonable access to related
systems and records, for the purposes of closing the books of the Station for
the period prior to Closing and of facilitating the distribution of any stock
compensation from Seller to the Station's employees, all in accordance with
the procedures and practices applied by the business offices for periods prior
to Closing.
5.8. 1031 EXCHANGE. To facilitate a like-kind exchange under
Section 1031 of the Code, Seller may assign its rights under this Agreement
(in whole or in part) to a "qualified intermediary" under section
1.1031(k)-1(g)(4) of the treasury regulations (but such assignment shall not
relieve Seller of its obligations under this Agreement) and any such qualified
intermediary may re-assign to Seller; provided that no such assignment shall
prevent or delay Closing. If Seller gives notice of such assignment, Buyer
shall provide Seller with a written acknowledgment of such notice prior to
Closing and pay the Purchase Price (or such portion thereof as is designated
in writing by the qualified intermediary) to or on behalf of the qualified
intermediary at Closing and otherwise reasonably cooperate therewith. Buyer's
obligation to cooperate with Seller is specifically conditioned upon each of
the following: (i) all of Buyer's rights and all of Seller's obligations to
Buyer respecting all other provisions of this Agreement shall not be adversely
affected by any such exchange, whether or not such exchange is consummated by
Buyer; and (ii) Buyer shall not in any way be liable to Seller or any other
party whatsoever for any failure of Seller's proposed transaction to qualify
as a tax-free exchange of like-kind property under the Code.
5.9. FINAL ORDER.
(a) For purposes of this Agreement, the term "Final
Order" means action by the FCC (including action duly taken by the FCC's
staff, pursuant to delegated authority), which shall not have been reversed,
stayed, enjoined, set aside, annulled, or suspended and with respect to which
no timely request for stay, petition for rehearing, appeal, or certiorari or
sua sponte action of the FCC with comparable effect shall be pending and as to
which the time for filing any such request, petition, appeal, certiorari, or
for the taking of any such sua sponte action by the FCC shall have expired.
(b) If the Closing occurs prior to a Final Order, and
prior to becoming a Final Order the FCC Consent is reversed or otherwise set
aside, and there is an order of the FCC (or an order of a court of competent
jurisdiction) requiring the re-assignment of the FCC Licenses to Seller, then,
upon the earlier of (i) such re-assignment order becoming a Final Order (or a
final order of a court of competent jurisdiction) or (ii) notice by Buyer to
Seller of a request to rescind the purchase and sale of the Station Assets
(the "Rescission Trigger"), the purchase and sale of the Station Assets shall
be rescinded. In such event, Buyer shall reconvey to Seller the Station
Assets, other than those non-license assets that have been disposed of after
Closing in the
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ordinary course of business (the "Reconveyed Station Assets") and Seller shall
repay to Buyer the full Purchase Price and reassume those contracts and leases
and obligations assigned and assumed at Closing that continue to exist.
(c) Any such rescission shall be consummated on a
mutually agreeable date within thirty days of the Rescission Trigger (or, if
earlier, within the time required by a lawful order). In connection therewith,
Buyer and Seller shall each execute such documents (including execution by
Buyer of instruments of conveyance of the Reconveyed Station Assets to Seller
and execution by Seller of instruments of assumption of those contracts and
leases and obligations assigned and assumed at Closing that continue to exist)
and make such payments (including repayment by Seller to Buyer of the full
Purchase Price) as are necessary to give effect to such rescission. All
earnings and profits relating to Buyer's use of the Reconveyed Station Assets
between the Closing and the effective time of such rescission shall belong to
Buyer.
5.10. INTERIM ACTIONS. The parties shall use commercially
reasonable efforts, and proceed diligently and in good faith, to take or cause
to be taken all actions, and do or cause to be done all things necessary and
proper or advisable, to consummate the transactions contemplated by this
Agreement and transition the Station's operations, including, without
limitation, obtaining all necessary waivers, consents (including, without
limitation, Governmental Consents and third party consents to the assignment
to Buyer of the Station Contracts pursuant to Section 5.5, and, in the case of
Buyer, executing an assumption agreement as reasonably requested by The CW
Network with respect to the term sheet listed on SCHEDULE 1.1(d)) and
approvals.
ARTICLE 6: SELLER CLOSING CONDITIONS
The obligation of Seller to consummate the Closing hereunder is
subject to satisfaction, at or prior to Closing, of each of the following
conditions (unless waived in writing by Seller):
6.1. REPRESENTATIONS AND COVENANTS.
(a) The representations and warranties of Buyer made in
this Agreement, shall be true and correct in all material respects as of the
Closing Date with the same force and effect as though made as of the Closing
Date, except for changes expressly permitted by the terms of this Agreement.
(b) The covenants and agreements to be complied with
and performed by Buyer at or prior to Closing shall have been complied with or
performed in all material respects.
(c) Seller shall have received a certificate dated as
of the Closing Date from Buyer executed by an authorized officer of Buyer to
the effect that the conditions set forth in Sections 6.1(a) and (b) have been
satisfied.
6.2. PROCEEDINGS. Neither Seller nor Buyer shall be subject to
any court or governmental order or injunction restraining or prohibiting the
consummation of the transactions contemplated hereby.
6.3. FCC AUTHORIZATION. The FCC Consent shall have been obtained.
6.4. XXXX XXXXX XXXXXX. The HSR Clearance shall have been
obtained.
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6.5. DELIVERIES. Buyer shall have complied with its obligations
set forth in Section 8.2.
ARTICLE 7: BUYER CLOSING CONDITIONS
The obligation of Buyer to consummate the Closing hereunder is
subject to satisfaction, at or prior to Closing, of each of the following
conditions (unless waived in writing by Buyer):
7.1. REPRESENTATIONS AND COVENANTS.
(a) The representations and warranties of Seller made
in this Agreement shall be true and correct in all material respects as of the
Closing Date with the same force and effect as though made as of the Closing
Date, except for changes expressly permitted by the terms of this Agreement.
(b) The covenants and agreements to be complied with
and performed by Seller at or prior to Closing shall have been complied with
or performed in all material respects.
(c) Buyer shall have received a certificate dated as of
the Closing Date from Seller executed by an authorized officer of Seller to
the effect that the conditions set forth in Sections 7.1(a) and (b) have been
satisfied.
7.2. PROCEEDINGS. Neither Seller nor Buyer shall be subject to
any court or governmental order or injunction restraining or prohibiting the
consummation of the transactions contemplated hereby.
7.3. FCC AUTHORIZATION. The FCC Consent shall have been obtained
and shall be in full force and effect without any condition materially adverse
to the Station or Buyer.
7.4. XXXX XXXXX XXXXXX. The HSR Clearance shall have been
obtained.
7.5. DELIVERIES. Seller shall have complied with its obligations
set forth in Section 8.1.
7.6. CONSENTS. The Required Consents shall have been obtained.
ARTICLE 8: CLOSING DELIVERIES
8.1. SELLER DOCUMENTS. At Closing, Seller shall deliver or cause
to be delivered to Buyer:
(i) good standing certificates issued by the Secretary
of State of Seller's jurisdiction of formation;
(ii) certified copies of: certificates of formation and
constituent agreements of Seller; resolutions authorizing the execution,
delivery and performance of this Agreement, including the consummation of the
transactions contemplated hereby; and incumbency and specimen signatures of
officers of Seller executing the transaction documents certified by the
secretary of Seller;
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(iii) the certificate described in Section 7.1(c);
(iv) an assignment of FCC authorizations assigning the
FCC Licenses from Seller to Buyer in the form attached as EXHIBIT A hereto;
(v) an assignment and assumption of contracts assigning
the Station Contracts from Seller to Buyer in the form attached as EXHIBIT A
hereto;
(vi) an assignment and assumption of leases assigning
the Real Property Leases from Seller to Buyer in the form attached as EXHIBIT
A hereto;
(vii) domain name transfers assigning the Station's
domain names listed on SCHEDULE 1.1(e) from Seller to Buyer following
customary procedures of the domain name administrator;
(viii) endorsed vehicle titles conveying the vehicles
included in the Tangible Personal Property from Seller to Buyer;
(ix) a xxxx of sale conveying the other Station Assets
from Seller to Buyer in the form attached as EXHIBIT A hereto;
(x) customary paydown and lien release letter; and
(xi) any other instruments of conveyance, assignment and
transfer that may be reasonably necessary to convey, transfer and assign the
Station Assets from Seller to Buyer, free and clear of Liens, except for
Permitted Liens.
8.2. BUYER DOCUMENTS. At Closing, Buyer shall deliver or cause to
be delivered to Seller:
(i) the Purchase Price in accordance with Section 1.5
hereof;
(ii) good standing certificates issued by the Secretary
of State of Buyer's jurisdiction of formation;
(iii) certified copies of: certificates of formation and
constituent agreements of Buyer; resolutions authorizing the execution,
delivery and performance of this Agreement, including the consummation of the
transactions contemplated hereby; and incumbency and specimen signatures of
officers of Buyer executing the transaction documents certified by the
secretary of Buyer;
(iv) the certificate described in Section 6.1(c);
(v) an assignment and assumption of contracts assuming
the Station Contracts in the form attached as EXHIBIT A hereto;
(vi) an assignment and assumption of leases assuming the
Real Property Leases in the form attached as EXHIBIT A hereto;
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(vii) domain name transfers assuming the Station's domain
names listed on SCHEDULE 1.1(e) following customary procedures of the domain
name administrator; and
(viii) such other documents and instruments of assumption
that may be necessary to assume the Assumed Obligations.
ARTICLE 9: SURVIVAL; INDEMNIFICATION
9.1. SURVIVAL. The representations and warranties and the
covenants and agreements to be performed before the Closing in this Agreement
shall survive Closing for a period of eighteen (18) months from the Closing
Date whereupon they shall expire and be of no further force or effect, except
that if within such period the indemnified party gives the indemnifying party
written notice of a claim for breach thereof describing in reasonable detail
the nature and basis of such claim, then such claim shall survive until the
resolution of such claim. The covenants and agreements in this Agreement to be
performed at or after the Closing shall survive Closing until performed.
9.2. INDEMNIFICATION.
(a) Subject to Section 9.2(b), from and after Closing,
Seller shall defend, indemnify and hold harmless Buyer and its affiliates from
and against any and all losses, costs, damages, liabilities and expenses,
including reasonable attorneys' fees and expenses ("Damages") incurred by
Buyer arising out of or resulting from:
(i) any breach by Seller of its
representations and warranties made under this Agreement or the certificate of
Seller delivered pursuant to Section 7.1(c); or
(ii) any breach by Seller of any covenant or
agreement made under this Agreement; or
(iii) the Retained Obligations; or
(iv) the business or operation of the Station
before the Effective Time.
(b) Notwithstanding the foregoing or anything else
herein to the contrary, after Closing, (i) Seller shall have no liability to
Buyer under clause (i) of Section 9.2(a) until, and only to the extent that,
Buyer's aggregate Damages exceed $1,000,000 and (ii) the maximum liability of
Seller under clause (i) of Section 9.2(a) shall be an amount equal to
$43,500,000.
(c) From and after Closing, Buyer shall defend,
indemnify and hold harmless Seller and its affiliates from and against any and
all Damages incurred by Seller arising out of or resulting from:
(i) any breach by Buyer of its representations
and warranties made under this Agreement or the certificate to be delivered
pursuant to Section 6.1(c); or
(ii) any breach by Buyer of any covenant or
agreement made under this Agreement; or
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(iii) the Assumed Obligations; or
(iv) the business or operation of the Station
after the Effective Time.
9.3. PROCEDURES.
(a) The indemnified party shall give prompt written
notice to the indemnifying party of any demand, suit, claim or assertion of
liability by third parties that is subject to indemnification hereunder (a
"Claim"), but a failure to give such notice or delaying such notice shall not
affect the indemnified party's rights or the indemnifying party's obligations
except to the extent the indemnifying party's ability to remedy, contest,
defend or settle with respect to such Claim is thereby prejudiced and provided
that such notice is given within the time period described in Section 9.1.
(b) The indemnifying party shall have the right to
undertake the defense or opposition to such Claim with counsel selected by it.
In the event that the indemnifying party does not undertake such defense or
opposition in a timely manner, the indemnified party may undertake the
defense, opposition, compromise or settlement of such Claim with counsel
selected by it at the indemnifying party's cost (subject to the right of the
indemnifying party to assume defense of or opposition to such Claim at any
time prior to settlement, compromise or final determination thereof).
(c) Anything herein to the contrary notwithstanding:
(i) the indemnified party shall have the
right, at its own cost and expense, to participate in the defense, opposition,
compromise or settlement of the Claim;
(ii) the indemnifying party shall not, without
the indemnified party's written consent, settle or compromise any Claim or
consent to entry of any judgment which does not include the giving by the
claimant to the indemnified party of a release from all liability in respect
of such Claim; and
(iii) in the event that the indemnifying party
undertakes defense of or opposition to any Claim, the indemnified party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the indemnifying party and its
counsel concerning such Claim and the indemnifying party and the indemnified
party and their respective counsel shall cooperate in good faith with respect
to such Claim.
ARTICLE 10: TERMINATION AND REMEDIES
10.1. TERMINATION. Subject to Section 10.3, this Agreement may be
terminated prior to Closing as follows:
(a) by mutual written consent of Buyer and Seller;
(b) by written notice of Buyer to Seller if Seller
breaches its representations or warranties or breaches or defaults in the
performance of its covenants contained in this Agreement and such breach or
default is material in the context of the transactions contemplated hereby and
is not cured within the Cure Period (defined below);
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(c) by written notice of Seller to Buyer if Buyer
breaches its representations or warranties or breaches or defaults in the
performance of its covenants contained in this Agreement and such breach or
default is material in the context of the transactions contemplated hereby and
is not cured within the Cure Period; provided, however, that the Cure Period
shall not apply to Buyer's obligation to pay the Purchase Price at Closing,
subject to satisfaction of the conditions to such obligation;
(d) by written notice of Seller to Buyer or Buyer to
Seller if Closing does not occur by the date twelve (12) months after the date
of this Agreement, provided that if the failure of the Closing to occur by
such date is due to the fault of the party seeking to terminate, then that
party shall not have such termination right; or
(e) by Buyer pursuant to Section 5.4(c).
10.2. CURE PERIOD. Each party shall give the other party prompt
written notice upon learning of any breach or default by the other party under
this Agreement. The term "Cure Period" as used herein means a period
commencing on the date Buyer or Seller receives from the other written notice
of breach or default hereunder and continuing until the earlier of (i) twenty
(20) calendar days thereafter or (ii) five (5) Business Days after the
scheduled Closing date; provided, however, that if the breach or default is
non-monetary and cannot reasonably be cured within such period but can be
cured before the date five (5) Business Days after the scheduled Closing date,
and if diligent efforts to cure promptly commence, then the Cure Period shall
continue as long as such diligent efforts to cure continue, but not beyond the
date five (5) Business Days after the scheduled Closing date.
10.3. SURVIVAL. Neither party may terminate under Sections 10.1(b)
or (c) if it is then in material default under this Agreement. The termination
of this Agreement shall not relieve any party of any liability for breach or
default under this Agreement prior to the date of termination. Notwithstanding
anything contained herein to the contrary, Sections 5.1 (Confidentiality) and
11.1 (Expenses) shall survive any termination of this Agreement.
10.4. SPECIFIC PERFORMANCE. In the event of failure or threatened
failure by either party to comply with the terms of this Agreement, the other
party shall be entitled to an injunction restraining such failure or
threatened failure and, subject to obtaining any necessary FCC consent, to
enforcement of this Agreement by a decree of specific performance requiring
compliance with this Agreement.
ARTICLE 11: MISCELLANEOUS
11.1. EXPENSES. Each party shall be solely responsible for all
costs and expenses incurred by it in connection with the negotiation,
preparation and performance of and compliance with the terms of this
Agreement. All governmental fees and charges applicable to any requests for
Governmental Consents shall be paid one-half by Buyer and one-half by Seller.
All governmental taxes, fees and charges applicable to the transfer of the
Station Assets under this Agreement shall be paid one-half by Buyer and
one-half by Seller. Each party is responsible for any commission, brokerage
fee, advisory fee or other similar payment that arises as a result of any
agreement or action of it or any party acting on its behalf in connection with
this Agreement or the transactions contemplated hereby.
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11.2. FURTHER ASSURANCES; FURTHER INFORMATION; RECORD RETENTION;
POST-CLOSING ASSISTANCE.
(a) The terms of SCHEDULE 11.2 are hereby incorporated
into this Agreement. After Closing, each party shall from time to time, at the
request of and without further cost or expense to the other, execute and
deliver such other instruments of conveyance and assumption and take such
other actions as may reasonably be requested in order to more effectively
consummate the transactions contemplated hereby.
(b) Following the Closing, each party will afford to
the other party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data of the Seller or
relating to the Station's business, the Station Assets, the Excluded Assets,
the Assumed Obligations or the Seller pertaining to the Station in its
possession with respect to periods prior to the Closing and the right to make
copies and extracts therefrom, to the extent that such access may be
reasonably required by the requesting party (i) to facilitate the
investigation, litigation and final disposition of any claims which may have
been or may be made against any party or its affiliates and (ii) for any other
reasonable business purpose.
(c) Each party agrees that for a period of not less
than seven (7) years following the Closing Date, it shall not destroy or
otherwise dispose of any of the books and records relating to the Station's
business, the Station Assets, the Assumed Obligations, the Excluded Assets or
the Seller pertaining to the Station in its possession with respect to periods
prior to the Closing. Each party shall have the right to destroy all or part
of such books and records after the seventh anniversary of the Closing Date
or, at an earlier time by giving each other party hereto thirty (30) days
prior written notice of such intended disposition and by offering to deliver
to the other parties, at the other party's expense, custody of such books and
records as such party may intend to destroy.
(d) Seller, on the one hand, and Buyer, on the other
hand, will provide each other with such assistance as may reasonably be
requested in connection with the preparation of any tax return, any audit or
other examination by any taxing authority, or any judicial or administrative
proceedings relating to liability for taxes, and each will retain and provide
the requesting party with any records or information that may be reasonably
relevant to such return, audit or examination, proceedings or determination.
The party requesting assistance shall reimburse the other party for reasonable
out-of-pocket expenses (other than salaries or wages of any employees of the
parties) incurred in providing such assistance. Any information obtained
pursuant to this Section or providing for the sharing of information or the
review of any tax return or other schedule relating to taxes shall be kept
confidential by the parties hereto.
11.3. ASSIGNMENT. Except as provided by Section 5.8 (1031
Exchange), neither party may assign this Agreement without the prior written
consent of the other party hereto and any purported assignment in violation of
the foregoing shall be null and void ab initio, provided however, that Buyer
may assign its rights and obligations hereunder in whole or in part to any
affiliate of Buyer upon written notice to, but without the consent of, Seller,
provided that (i) any such assignment does not delay processing of the FCC
Application, grant of the FCC Consent or Closing, (ii) any such assignee
delivers to Seller a written assumption of this Agreement, and (iii) Buyer
shall remain liable for all of its obligations hereunder. The terms of this
Agreement
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shall bind and inure to the benefit of the parties' respective successors and
any permitted assigns, and no assignment shall relieve any party of any
obligation or liability under this Agreement.
11.4. NOTICES. Any notice pursuant to this Agreement shall be in
writing and shall be deemed delivered on the date of personal delivery or
confirmed facsimile transmission or confirmed delivery by a nationally
recognized overnight courier service, and shall be addressed as follows (or to
such other address as any party may request by written notice):
if to Seller: c/o Emmis Communications Corporation
One Emmis Plaza
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: President and CEO
Facsimile: (000) 000-0000
with copies (which shall not Emmis Communications Corporation
constitute notice) to: 0000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
Xxxxx Xxxx & Fielding LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Doc Xxxxxxxxxxxx
Facsimile: (000) 000-0000
if to Buyer: Hearst-Argyle Television, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, President
and CEO
Facsimile: (000) 000-0000
with a copy (which shall not Hearst-Argyle Television, Inc.
constitute notice) to: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Vice
President, General Counsel and
Secretary
Facsimile: (000) 000-0000
11.5. AMENDMENTS. No amendment or waiver of compliance with any
provision hereof or consent pursuant to this Agreement shall be effective
unless evidenced by an instrument in writing signed by the party against whom
enforcement of such amendment, waiver, or consent is sought.
11.6. ENTIRE AGREEMENT. This Agreement (including the Exhibits
hereto and the Disclosure Letter) constitutes the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings
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with respect to the subject matter hereof, except the NDA, which shall remain
in full force and effect (except that after Closing Buyer shall no longer have
any confidentiality obligations with respect to information and materials
pertaining to Station). No party makes any representation or warranty with
respect to the transactions contemplated by this Agreement except as expressly
set forth in this Agreement. Without limiting the generality of the foregoing,
Seller makes no representation or warranty to Buyer with respect to any
projections, budgets or other estimates of the Station's revenues, expenses or
results of operations, or, except as expressly set forth in Article 2, any
other financial or other information made available to Buyer with respect to
the Station.
11.7. SEVERABILITY. If any court or governmental authority holds
any provision in this Agreement invalid, illegal or unenforceable under any
applicable law, then, so long as no party is deprived of the benefits of this
Agreement in any material respect, this Agreement shall be construed with the
invalid, illegal or unenforceable provision deleted and the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected or impaired thereby.
11.8. NO BENEFICIARIES. Nothing in this Agreement expressed or
implied is intended or shall be construed to give any rights to any Person
other than the parties hereto and their successors and permitted assigns.
11.9. GOVERNING LAW. The construction and performance of this
Agreement shall be governed by the laws of the State of New York without
giving effect to the choice of law provisions thereof.
11.10. NEUTRAL CONSTRUCTION. Buyer and Seller agree that this
Agreement was negotiated at arms-length and that the final terms hereof are
the product of the parties' negotiations. This Agreement shall be deemed to
have been jointly and equally drafted by Buyer and Seller, and the provisions
hereof should not be construed against a party on the grounds that the party
drafted or was more responsible for drafting the provision.
11.11. COOPERATION. After Closing, each party shall cooperate as
reasonably requested by the other party in the investigation, defense or
prosecution of any action which is pending or threatened against a party or
its affiliates with respect to the Station, whether or not any party has
notified the other of a claim for indemnity with respect to such matter.
Without limiting the generality of the foregoing, each party shall make
available its employees to give depositions or testimony and shall furnish all
documentary or other evidence in each case as the other party may reasonably
request. Each party shall reimburse the other for all reasonable and necessary
out-of-pocket expenses incurred in connection with the performance of its
obligations under this Section 11.11.
11.12. GUARANTY. Guarantor unconditionally guarantees the payment
and performance of any and all obligations and liabilities of Seller under
this Agreement and the other agreements and documents executed and delivered
in connection herewith and any permitted assignees of Seller's rights or
obligations hereunder, including, without limitation, the obligations and
liabilities under Section 9.2. Guarantor acknowledges that it has agreed to
this unconditional guarantee as an inducement to Buyer to enter into this
Agreement.
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11.13. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.
BUYER: HEARST-ARGYLE TELEVISION, INC.
By:
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Name:
Title:
SELLER: EMMIS TELEVISION BROADCASTING, L.P.
By: Emmis Operating Company, its general partner
By:
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Name:
Title:
EMMIS TELEVISION LICENSE, LLC
By:
--------------------------------------------
Name:
Title:
GUARANTOR: EMMIS OPERATING COMPANY
By:
--------------------------------------------
Name:
Title:
