EXHIBIT 2.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
DATED AS OF DECEMBER 27, 2002
AMONG
TRIBUNE BROADCASTING COMPANY,
ACME TELEVISION, LLC
AND
ACME COMMUNICATIONS, INC.
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS....................................................... 2
Section 1.1. Definitions................................................. 2
ARTICLE II PURCHASE AND SALE OF THE SHARES.................................. 8
Section 2.1. Purchase and Sale of the Shares............................. 8
ARTICLE III PURCHASE PRICE AND CLOSING...................................... 8
Section 3.1. Closing Date................................................ 8
Section 3.2. Purchase Price.............................................. 9
Section 3.3. Payment of the Closing Date Payment......................... 9
Section 3.4. Closing Date Deliveries..................................... 9
Section 3.5. Further Assurances.......................................... 10
Section 3.6. Prorations and Adjustments.................................. 10
Section 3.7. Purchase Price Adjustment................................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE ACME ENTITIES.............. 11
Section 4.1. Organization and Capital Structure.......................... 11
Section 4.2. Subsidiaries and Investments................................ 12
Section 4.3. Authority of the ACME Entities.............................. 13
Section 4.4. Financial Statements........................................ 14
Section 4.5. Operations Since Balance Sheet Date......................... 14
Section 4.6. No Undisclosed Liabilities.................................. 16
Section 4.7. Taxes....................................................... 16
Section 4.8. Sufficiency of Assets....................................... 17
Section 4.9. Governmental Permits........................................ 17
Section 4.10. Real Property; Real Property Leases........................ 18
Section 4.11. Personal Property.......................................... 20
Section 4.12. Personal Property Leases................................... 20
Section 4.13. Intellectual Property...................................... 20
Section 4.14. Intentionally Omitted...................................... 21
Section 4.15. Title to Assets............................................ 21
Section 4.16. Employees.................................................. 21
Section 4.17. Employee Relations......................................... 22
Section 4.18. Contracts.................................................. 22
Section 4.19. Status of Contracts........................................ 23
Section 4.20. No Violation, Litigation or Regulatory Action.............. 24
Section 4.21. Insurance.................................................. 25
Section 4.22. Employee Plans; ERISA...................................... 25
Section 4.23. Environmental Protection................................... 26
Section 4.24. Insolvency Proceedings..................................... 27
TABLE OF CONTENTS
(continued)
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Section 4.25. Transactions with Affiliates............................... 27
Section 4.26. No Finder.................................................. 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER........................... 28
Section 5.1. Organization................................................ 28
Section 5.2. Authority of Buyer.......................................... 28
Section 5.3. Litigation.................................................. 29
Section 5.4. No Finder................................................... 29
Section 5.5. Qualifications as FCC Licensee.............................. 29
Section 5.6. Investment Representation................................... 29
Section 5.7. WARN Act.................................................... 29
ARTICLE VI ACTION PRIOR TO THE CLOSING DATE................................. 29
Section 6.1. Investigation of the Business............................... 30
Section 6.2. Notice of Litigation........................................ 30
Section 6.3. FCC Consent; HSR Act Approval; Other Consents and Approvals. 30
Section 6.4. Operations of the Station Prior to the Closing Date......... 31
Section 6.5. Third Party Consents........................................ 34
Section 6.6. Environmental Site Assessment............................... 34
Section 6.7. Public Announcement......................................... 34
Section 6.8. Interim Financial Statements................................ 34
Section 6.9. Administrative Violations................................... 35
Section 6.10. Adverse Developments....................................... 35
Section 6.11. No Solicitation Covenant................................... 35
Section 6.12. Copies of FCC Applications................................. 37
Section 6.13. Estoppel Certificates / Non-Disturbance Agreement.......... 37
Section 6.14. Title Examination; Title Insurance; Surveys................ 38
Section 6.15. ACME Missouri Licensee Membership Interests................ 38
Section 6.16. Intercompany Obligations................................... 38
Section 6.17. Personal Property Leases................................... 38
Section 6.18. Lien Removal............................................... 39
Section 6.19. Restructuring.............................................. 39
ARTICLE VII ADDITIONAL AGREEMENTS........................................... 39
Section 7.1. Sales, Use and Transfer Taxes............................... 39
Section 7.2. Employees; Employee Benefit Plans........................... 39
Section 7.3. Control of Operations Prior to Closing Date................. 41
Section 7.4. Covenant Not to Compete or Solicit Business................. 42
Section 7.5. Accounts Receivable......................................... 43
Section 7.6. Broadcast Transmitter....................................... 43
Section 7.7. The Daily Buzz.............................................. 43
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TABLE OF CONTENTS
(continued)
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ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER................... 44
Section 8.1. No Misrepresentation or Breach of Covenants and Warranties.. 44
Section 8.2. No Restraint or Litigation.................................. 44
Section 8.3. FCC Consent................................................. 44
Section 8.4. Closing Documents........................................... 45
Section 8.5. Third Party Consents........................................ 45
Section 8.6. Closing of KWBP Transaction................................. 45
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACME ENTITIES......... 45
Section 9.1. No Misrepresentation or Breach of Covenants and Warranties.. 45
Section 9.2. No Restraint or Litigation.................................. 46
Section 9.3. FCC Consent................................................. 46
Section 9.4. Closing Documents........................................... 46
Section 9.5. Closing of KWBP Transaction................................. 46
ARTICLE X INDEMNIFICATION................................................... 46
Section 10.1. Indemnification by the ACME Entities....................... 46
Section 10.2. Indemnification by Buyer................................... 48
Section 10.3. Notice of Claims........................................... 48
Section 10.4. Third Person Claims........................................ 49
Section 10.5. Limitations................................................ 50
ARTICLE XI TAX MATTERS...................................................... 51
Section 11.1. Liability for Taxes........................................ 51
Section 11.2. Filing of Tax Returns...................................... 52
Section 11.3. Contest Provisions......................................... 53
Section 11.4. Assistance and Cooperation................................. 54
Section 11.5. Indemnification Payments on After-Tax Basis................ 55
Section 11.6. Survival of Obligations.................................... 55
ARTICLE XII TERMINATION AND REMEDIES........................................ 55
Section 12.1. Termination................................................ 55
Section 12.2. Notice of Termination...................................... 56
Section 12.3. Effect of Termination...................................... 56
Section 12.4. Liquidated Damages Not a Penalty........................... 57
ARTICLE XIII GENERAL PROVISIONS............................................. 57
Section 13.1. Survival of Representations, Warranties and Obligations.... 57
Section 13.2. Confidential Nature of Information......................... 58
Section 13.3. Governing Law.............................................. 58
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TABLE OF CONTENTS
(continued)
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Section 13.4. Notices.................................................... 58
Section 13.5. Successors and Assigns..................................... 59
Section 13.6. Access to Records after Closing............................ 59
Section 13.7. Entire Agreement; Amendments............................... 60
Section 13.8. Interpretation............................................. 60
Section 13.9. Waivers.................................................... 60
Section 13.10. Expenses.................................................. 61
Section 13.11. Partial Invalidity........................................ 61
Section 13.12. Execution in Counterparts................................. 61
Section 13.13. Risk of Loss; Damage to Facilities........................ 61
Section 13.14. No Third Party Beneficiaries.............................. 62
Section 13.15. Confidentiality Agreement................................. 62
Section 13.16. Performance by Seller..................................... 62
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of December 27, 2002 (this
"Agreement"), is made and entered into by and among Tribune Broadcasting
Company, a Delaware corporation ("Buyer"), ACME Television, LLC, a Delaware
limited liability company ("Seller"), and ACME Communications, Inc., a Delaware
corporation ("Parent" and each of Parent and Seller being individually an "ACME
Entity" and collectively, the "ACME Entities").
W I T N E S S E T H :
WHEREAS, Seller directly owns, and Parent indirectly owns,
beneficially and of record, all of the issued and outstanding shares of capital
stock of ACME Television Holdings of Missouri, Inc., a Missouri corporation
("ACME Missouri Holdings");
WHEREAS, ACME Missouri Holdings owns all of the issued and
outstanding shares of capital stock of ACME Television of Missouri, Inc., a
Missouri corporation ("ACME Missouri"), and, immediately prior to the Closing
shall own, indirectly, all of the issued and outstanding membership interests in
ACME Television Licenses of Missouri, LLC, a Missouri limited liability company
("ACME Missouri Licensee" and each of ACME Missouri Holdings, ACME Missouri and
ACME Missouri Licensee being individually and collectively the "Company");
WHEREAS, the Company is engaged in the business (the "Business") of
owning and operating television broadcast station KPLR-TV, Channel 11 in St.
Louis, Missouri (the "Station");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, all of the issued and outstanding shares (the "Shares") of
capital stock of ACME Missouri Holdings, all on the terms and subject to the
conditions set forth herein (the "KPLR Purchase");
WHEREAS, concurrently herewith, Buyer, Tribune Denver Radio, Inc.,
ACME Television of Oregon, LLC, ACME Television Licenses of Oregon, LLC and
Parent have entered into an Asset Purchase Agreement (the "KWBP Asset Purchase
Agreement"), dated as of the date of this Agreement, pursuant to which Buyer and
Tribune Denver have agreed to purchase substantially all of the asset,
properties and business (the "KWBP Business") relating to television broadcast
station KWBP-TV, Channel 32 in Portland, Oregon (such station being "KWBP" and
such transaction being the "KWBP Purchase"); and
WHEREAS, the consummation of the KPLR Purchase and KWBP Purchase are
both conditioned upon the consummation of the other, each as set forth in this
Agreement and the KWBP Asset Purchase Agreement, respectively.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among Buyer and the ACME
Entities as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. In this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1 and shall be
equally applicable to both the singular and plural forms, including any
reference to the "Company" shall include each of ACME Missouri Holdings, ACME
Missouri and ACME Missouri Licensee individually and collectively, unless
otherwise specified. Unless the context requires otherwise, references herein
(i) to an agreement, instrument or other document mean such agreement,
instrument or other document as amended, supplemented and modified from time to
time to the extent permitted by the provisions thereof and by this Agreement and
(ii) to a statute mean such statute as amended from time to time and includes
any successor legislation thereto.
"ACCOUNTS RECEIVABLE" means the rights of the Company as of the
Closing Date to payment in cash for the sale of advertising time and other goods
and services by the Station (including without limitation goods and services
pursuant to any Barter Agreement or Trade Agreement and reimbursements for
cooperative advertising) prior to the Closing Date."
"ACME ANCILLARY AGREEMENTS" has the meaning specified in Section
4.3(a).
"ACME ENTITY" has the meaning specified in the introductory
paragraph hereof.
"ACME GROUP MEMBER" means each ACME Entity and their Affiliates,
directors, officers, managers, employees and agents and their respective
successors and assigns.
"ACME MISSOURI" has the meaning specified in the second recital
hereof.
"ACME MISSOURI HOLDINGS" has the meaning specified in the first
recital hereof.
"ACME MISSOURI LICENSEE" has the meaning specified in the second
recital hereof.
"ACME PLANS" has the meaning specified in Section 7.2(a).
"ADMINISTRATIVE VIOLATION" has the meaning specified in Section 6.9.
"AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
"ALTERNATIVE PROPOSAL" has the meaning specified in Section 6.11(a).
"BALANCE SHEET" has the meaning specified in Section 4.4.
"BALANCE SHEET DATE" has the meaning specified in Section 4.4.
"BARTER AGREEMENTS" means contracts for the sale of time on the
Station in exchange for programming.
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"BUSINESS" has the meaning specified in the third recital hereof.
"BUYER" has the meaning specified in the introductory paragraph
hereof.
"BUYER ANCILLARY AGREEMENTS" has the meaning specified in Section
5.2(a)
"BUYER GROUP MEMBER" means Buyer, its Affiliates (including the
Company after the Closing), directors, officers, managers, employees and agents
and their respective successors and assigns.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.Sections 9601 et seq.
"CLAIM NOTICE" has the meaning specified in Section 10.3(a).
"CLOSING" has the meaning specified in Section 3.1.
"CLOSING DATE" has the meaning specified in Section 3.1.
"CLOSING DATE PAYMENT" has the meaning specified in Section 3.2.
"CODE" means the Internal Revenue Code of 1986.
"COMBINED ALTERNATIVE PROPOSAL" has the meaning specified in Section
6.11(a).
"COMMUNICATIONS ACT" means the Communications Act of 1934.
"COMPANY" has the meaning specified in the second recital hereof.
"COMPANY GROUP" means any "affiliated group" (as defined in Section
1504(a) of the Code without regard to the limitations contained in Section
1504(b) of the Code) that, at any time before the Closing Date, includes or has
included any Company or any predecessor of or successor to any Company (or
another such predecessor or successor), or any other group of corporations that,
at any time before the Closing Date, files or has filed Tax Returns on a
combined, consolidated or unitary basis with any Company or any predecessor of
or successor to any Company (or another such predecessor or successor).
"CONFIDENTIALITY AGREEMENT" has the meaning specified in Section
13.15.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"DISPUTE DATE" has the meaning specified in Section 3.6(a).
"EMPLOYEE PLANS" has the meaning specified in Section 4.22(a).
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"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind.
"ENVIRONMENTAL CONDITIONS" means the state of the environment,
including natural resources (e.g. flora and fauna), soil, surface water,
groundwater, any drinking water supply, subsurface strata or ambient air.
"ENVIRONMENTAL LAWS" means all applicable foreign, federal, state,
district and local Laws, all applicable rules, policy statements and regulations
promulgated thereunder, and all applicable orders, consent decrees, judgments,
governmental notices, permits and governmental demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata), including, without
limitation, (i) laws relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment and (ii) laws relating to
the identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of Hazardous
Substances. Environmental Laws shall include, without limitation, CERCLA, RCRA,
the Toxic Substances Control Act, the Hazardous Materials Transportation Act,
the Clean Water Act, the Safe Drinking Water Act, the Clean Air Act, the
Occupational Safety and Health Act and all analogous laws promulgated or issued
by any Governmental Body that are enacted and currently in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any Person which is (or at any relevant time
was) a member of a controlled group of corporations within the meaning of Code
Section 414(b), any trade or business which is under common control within the
meaning of Code Section 414(c), and any affiliated service group, within the
meaning of Code Section 414(m) or (o), of which an ACME Entity is (or at any
relevant time was) a member.
"ESCROW AGENT" means Bank One, National Association.
"ESCROW DEPOSIT" means the sum of Five Hundred Thousand Dollars
($500,000), which is being deposited by Buyer with the Escrow Agent within two
business (2) days of the date hereof to secure the obligation of Buyer to close
under this Agreement, with such deposit being held by the Escrow Agent in
accordance with the Escrow Agreement executed among Buyer, the ACME Entities and
Escrow Agent on the date hereof.
"ESTIMATED PRORATIONS" has the meaning specified in Section 3.6(a).
"ESTIMATED PRORATIONS CERTIFICATE" has the meaning specified in
Section 3.6(a).
"ESTIMATED PURCHASE PRICE" has the meaning specified in Section 3.3.
"EXPENSE" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or
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costs, witness fees, and reasonable out-of-pocket fees and disbursements of:
legal counsel; investigators; expert witnesses; consultants; accountants; and
other professionals), provided that, with respect to non-third Person claims,
the term "Expense" shall only include the foregoing expenses and fees if the
Indemnified Party is otherwise successful in obtaining such indemnification
pursuant to Article X of this Agreement.
"FCC" means the Federal Communications Commission.
"FCC CONSENT" means action by the FCC granting its consent to the
assignment to Buyer or its Affiliates of the Station Licenses as contemplated by
this Agreement pursuant to appropriate applications filed by the parties with
the FCC.
"FINAL ORDER" shall mean an action by the FCC upon any application
for FCC Consent filed by the parties hereto for FCC consent, approval or
authorization, which action has not been reversed, stayed, enjoined, set aside,
annulled or suspended, and with respect to which action, no protest, petition to
deny, petition for rehearing or reconsideration, appeal or request for stay is
pending, and as to which action the time for filing of any such protest,
petition, appeal or request and any period during which the FCC may reconsider
or review such action on its own authority has expired.
"GOVERNMENTAL BODY" means any foreign, federal, state or local
governmental authority or regulatory body, including the FCC.
"GOVERNMENTAL PERMITS" has the meaning specified in Section 4.9(a).
"HAZARDOUS MATERIALS" means all pollutants, contaminants, chemicals,
wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic,
infectious, radioactive or otherwise hazardous substances or materials (whether
solids, liquids or gases) subject to regulation, control or remediation under
Environmental Laws but excluding materials occurring naturally at or about any
Station Property. By way of example only, the term Hazardous Materials includes
petroleum, urea formaldehyde, flammable, explosive and radioactive materials,
PCBs, pesticides, herbicides, asbestos, acids, metals, solvents and waste
waters.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"INDEMNIFIED PARTY" has the meaning specified in Section 10.3(a).
"INDEMNITOR" has the meaning specified in Section 10.3(a).
"INTELLECTUAL PROPERTY" has the meaning specified in Section
4.13(a).
"KNOWLEDGE OF THE ACME ENTITIES" (or any similar phrase or
derivation thereof) means, as to a particular matter, the actual knowledge that
exists after reasonable inquiry of the following persons: (i) with respect to
Parent: Chief Executive Officer, President and Chief Operating Officer, Chief
Financial Officer and Controller and (ii) with respect to the Station: General
Manager, Chief Engineer, General Sales Manager and Business Manager.
"KPLR PURCHASE" has the meaning specified in the fourth recital
hereof.
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"KWBP" has the meaning specified in the fifth recital hereof.
"KWBP ASSET PURCHASE AGREEMENT" has the meaning specified in the
fifth recital hereof.
"KWBP BUSINESS" has the meaning specified in the fifth recital
hereof.
"KWBP PURCHASE" has the meaning specified in the fifth recital
hereof.
"LIABILITY" means any and all claims, debts, liabilities,
obligations and commitments of any nature whatsoever, whether known or unknown,
asserted or unasserted, fixed, absolute or contingent, matured or unmatured,
accrued or unaccrued, liquidated or unliquidated or due or to become due,
whenever or however arising (including those arising out of any contract or
tort, whether based in negligence, strict liability or otherwise) and whether or
not the same would be required by generally accepted accounting principles to be
reflected as a liability in financial statements or disclosed in the notes
thereto.
"LOSS" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"MATERIAL ADVERSE EFFECT" means any change or effect, individually
or in the aggregate, that is materially adverse to the business, operations,
properties or condition (financial or otherwise) of the Company, the Station,
the Business or on the ability of the ACME Entities to consummate the
transactions contemplated hereby, other than changes relating to generally
applicable economic conditions or the television broadcasting industry in
general.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq.
"PARENT" has the meaning specified in the introductory paragraph
hereof.
"PERMITTED ENCUMBRANCE" means (a) liens for Taxes, assessments or
other governmental charges which are not yet due and payable, (b) easements,
servitudes, rights-of-way, covenants, consents, conditions, reservations,
encroachments, minor defects or irregularities in title, variations and other
restrictions affecting the use of any Station Property listed on Schedule 4.10
which in the aggregate do not materially impair the use of the property affected
by such Encumbrance for the purposes for which they are or may reasonably be
expected to be held, (c) liens for mechanics, materialmen's and similar
encumbrances with respect to any amounts not yet due and payable and (d)
Encumbrances securing payments not yet due and payable under the leases set
forth in Schedule 4.12.
"PERSON" means any person, employee, individual, corporation,
limited liability company, partnership, trust, or any other non-governmental
entity or any governmental or regulatory authority or body.
"PURCHASE PRICE" has the meaning specified in Section 3.2.
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"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq.
"REAL PROPERTY" has the meaning specified in Section 4.10(a).
"REAL PROPERTY LEASES" has the meaning specified in Section 4.10(c).
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or property.
"REQUIREMENTS OF LAW" means any foreign, federal, state or local
law, rule or regulation, Governmental Permit or other binding determination of
any Governmental Body.
"SELLER" has the meaning specified in the introductory paragraph
hereof.
"SHARES" has the meaning specified in the fourth recital hereof.
"STATION" has the meaning specified in the third recital hereof.
"STATION AGREEMENTS" has the meaning specified in Section 4.19.
"STATION EMPLOYEES" has the meaning specified in Section 4.16(a).
"STATION LICENSES" means all licenses, permits, permissions and
other authorizations issued to the Company for the operation of the Station by
the FCC or any other Governmental Body, including, but not limited to, the
Station's digital television (DTV) license and those other licenses and other
authorizations listed on Schedule 4.9(a) and the right to use the Station's call
sign, and all applications for modification, extension or renewal thereof, and
any pending applications for any new licenses, permits, permissions or
authorizations pending on the Closing Date with respect to the Station,
including, but not limited to, those listed on Schedule 4.9(a).
"STATION PROPERTY" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment or unit, or
other asset owned, leased or operated by the Company.
"STRADDLE PERIOD" means any taxable year or period beginning before
and ending after the Closing Date.
"SUPERIOR PROPOSAL" has the meaning specified in Section 6.11(c).
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means:
(i) any federal, state, local or foreign net income, alternative or
add-on minimum, gross income, franchise, gross receipts, property, sales, use,
transfer, gains, license, excise, employment, payroll, withholding or minimum
tax, value added, stamp, environmental or
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any other tax custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or any penalty, addition to
tax or additional amount imposed by any Governmental Body; and
(ii) any liability for the payment of amounts with respect to
payments of a type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group, or as a result of any
obligation of any Company under any Tax Sharing Arrangement or Tax indemnity
arrangement.
"TAX RETURN" means any return, declaration, report or other
statement, or any other similar filing required to be submitted to any
Governmental Body with respect to any Tax.
"TAX SHARING ARRANGEMENT" means any written or unwritten agreement
or arrangement for the allocation or payment of Tax liabilities or payment for
Tax benefits with respect to a consolidated, combined or unitary Tax Return
which Tax Return includes any Company.
"TIME SALES AGREEMENTS" means contracts for the sale of time on the
Station for cash.
"TRADE AGREEMENTS" means contracts for the sale of time on the
Station in exchange for merchandise or services used or useful for the benefit
of the Station, excluding Barter Agreements.
"TRANSFERRED EMPLOYEES" has the meaning specified in Section 7.2(c).
"VALUATION DATE" means the close of business on the last business
day prior to the Closing Date.
ARTICLE II
PURCHASE AND SALE OF THE SHARES
SECTION 2.1. PURCHASE AND SALE OF THE SHARES. Upon the terms and
subject to the conditions of this Agreement, on the Closing Date, Seller shall,
and Parent shall cause Seller to, sell, transfer, assign, convey and deliver to
Buyer, and Buyer shall purchase from Seller, the Shares, free and clear of all
Encumbrances (except for Permitted Encumbrances).
ARTICLE III
PURCHASE PRICE AND CLOSING
SECTION 3.1. CLOSING DATE. The purchase and sale of the Shares
provided for in Section 2.1 (the "Closing") shall be consummated at 10:00 A.M.,
local time, on a date agreed upon by Seller and Buyer, occurring within three
(3) business days after the conditions set forth in Articles VIII and IX are
satisfied or, if permissible, waived or such other date, as may be agreed upon
by Seller and Buyer, at the offices of Sidley Xxxxxx Xxxxx & Xxxx, Bank One
Plaza, 10 South Dearborn Street, Chicago, Illinois, or at such other place or at
such other time as
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shall be agreed upon by Seller and Buyer (such date and time being hereinafter
called the "Closing Date").
SECTION 3.2. PURCHASE PRICE. The purchase price for the Shares (the
"Purchase Price") shall be $200,000,000 (the "Closing Date Payment") as adjusted
by the prorations and adjustments provided for in Section 3.6. The Escrow
Deposit shall be applied to the Purchase Price at the Closing.
SECTION 3.3. PAYMENT OF THE CLOSING DATE PAYMENT. At Closing Buyer
shall pay Seller an amount equal to the Closing Date Payment, as adjusted by the
Estimated Prorations pursuant to Section 3.6 as set forth in the Estimated
Prorations Certificate (such Closing Date Payment as adjusted by the Estimated
Prorations being the "Estimated Purchase Price"), and as reduced by the Escrow
Deposit, by bank wire transfer of immediately available funds to such bank
account or accounts designated by Seller for such purpose not less than two (2)
business days before the date such payment is required to be made.
SECTION 3.4. CLOSING DATE DELIVERIES.
(a) On the Closing Date, the ACME Entities shall execute and deliver
or cause to be delivered to Buyer (i) a certificate or certificates representing
the Shares, duly endorsed in blank or accompanied by stock powers duly executed
in blank, (ii) all of the documents and instruments required to be delivered by
the ACME Entities pursuant to Article VIII, (iii) the legal opinions
substantially as set forth in Exhibits A and B attached hereto, dated as of the
Closing Date, to be delivered by the ACME Entities' counsel and communications
counsel, respectively, (iv) copies of the certificates of incorporation or
formation, as applicable, of each ACME Entity and each Company, each certified
as of a recent date by the secretary of state of the state of its incorporation
or formation, as applicable, (v) certificates of good standing of each ACME
Entity and each Company, each certified as of a recent date by the secretary of
state of the state of its incorporation or formation, as applicable, (vi) duly
executed resignations, effective as of the Closing Date, of each of the officers
and directors of each Company, (vii) the stock transfer books and records,
minutes books and any related books and records, each as applicable, of each
Company, (viii) such documents and instruments, if any, as are reasonably
requested by Buyer to evidence that the Shares at Closing are free and clear of
all Encumbrances other than Permitted Encumbrances and (ix) a certificate of the
secretary or assistant secretary of each ACME Entity and each Company as to its
respective bylaws or limited liability company agreement or similar governing
document, as applicable, and the resolutions of its board of directors and
stockholders or members, as applicable, authorizing the execution and delivery
of this Agreement and the transactions contemplated hereby.
(b) On the Closing Date, Buyer shall execute and deliver or cause to
be delivered to the ACME Entities (i) the Closing Date Payment, payable in the
manner described in Section 3.3, (ii) all of the documents and instruments
required to be delivered by Buyer pursuant to Article IX, (iii) the legal
opinions substantially as set forth in Exhibit C attached hereto, dated as of
the Closing Date, to be delivered by Buyer's counsel, (iv) a copy of the charter
of Buyer, certified as of a recent date by the secretary of state of its state
of incorporation, (v) a certificate of good standing of Buyer, issued as of a
recent date by the secretary of state of the state of its incorporation and (vi)
a certificate of the secretary or assistant secretary of Buyer
9
as to its bylaws and the resolutions of its board of directors and stockholders
(if applicable) authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
SECTION 3.5. FURTHER ASSURANCES. On the Closing Date and thereafter,
the ACME Entities shall take all steps as may be reasonably necessary to
effectuate or confirm the transfer of the Shares to Buyer in accordance with
this Agreement or as may be otherwise necessary to more effectively convey and
transfer to, and vest in, the Company and put the Company in possession of, any
part of the assets or properties (i) owned by the Company or (ii) owned by any
ACME Entity or any ACME Entity Affiliate but exclusively used by the Company.
SECTION 3.6. PRORATIONS AND ADJUSTMENTS.
(a) Expect as otherwise expressly set forth in this Agreement, the
operation of the Station and the income and normal operating expenses,
including, without limitation, accrued liabilities and prepaid expenses,
attributable thereto through the Valuation Date shall be for the account of
Seller and thereafter for the account of Buyer. Expenses for goods or services
received both before and after the Valuation Date, real and personal property
Taxes and assessments, power and utilities charges, and rents and similar
prepaid and deferred items shall be prorated between Seller and Buyer as of the
Valuation Date. All special assessments and similar charges or liens imposed
against the Station in respect of any period of time through the Valuation Date,
whether payable in installments or otherwise, shall be the responsibility of
Seller, and amounts with respect to such special assessments, charges or liens
in respect of any period of time after the Valuation Date shall be the
responsibility of Buyer, and such charges shall be adjusted as required
hereunder. Three (3) days prior to the Closing Date, Seller shall estimate in
good faith, all apportionments pursuant to this Section 3.6 and shall deliver a
certified statement of its estimates to Buyer (which statement shall set forth
in reasonable detail the basis for those estimates) (the "Estimated Prorations
Certificate"). At the Closing, Buyer shall pay to Seller (through an increase in
the Closing Date Payment), or Seller shall pay to Buyer (through a reduction in
the Closing Date Payment), as the case may be, the net amount due as a result of
the estimated apportionments (excluding any item that is in dispute) (the
"Estimated Prorations"). Within forty-five (45) days after the Closing, Buyer
shall deliver to Seller a statement of any adjustments to Seller's estimate of
the apportionments, and Buyer shall pay to Seller, or Seller shall pay to Buyer,
as the case may be, pursuant to Section 3.7 any amount due as a result of the
adjustment (or, if there is any dispute, the undisputed amount). If Seller
disputes Buyer's determinations, or if at any time after delivery of Buyer's
statement of determinations, Buyer or Seller determine that any item included in
the apportionments is inaccurate, or that an additional item should be included
in the apportionments, the parties shall confer with regard to the matter and an
appropriate adjustment and payment shall be made as agreed upon by the parties
(or, if they are unable to resolve the matter within 15 days of Seller's receipt
of Buyer's statement of adjustments (the "Dispute Date"), they shall within 15
days of the Dispute Date mutually select a firm of independent certified public
accountants to resolve the items of disagreement alone, whose decision on the
matter shall be made within 30 days of their selection and shall be binding and
whose fees and expenses shall be borne by each of Seller and Buyer,
proportionately, in an amount equal the amount of such fees and expenses
multiplied by a fraction, the numerator of which is the difference (with such
difference being deemed in all cases hereunder to be a positive
10
number without regard to whether such difference is a positive or negative
amount) between the final determination of the independent accountant and the
final position taken by such party upon submission to the independent accountant
and the denominator of which is the difference between the Seller's and Buyer's
positions upon submission to the independent accountant. If the amount of Taxes
which are to be prorated pursuant to this Section is not known by forty-five
(45) days after the Closing Date, then the amount of such Taxes will be
estimated as of such date and once the amount of such Taxes is known, Buyer
shall pay to Seller, or Seller shall pay to Buyer, as the case may be, the net
amount due as a result of the actual apportionment of such Taxes.
(b) Consistent with Sections 6.16, 7.7 and 7.8 herein, all
intercompany obligations between the Company, on the one hand, and any ACME
Entity or its Affiliates (other than the Company), on the other hand, and any of
the other agreements referenced in such Sections or in the Schedules referenced
in such Sections shall, with respect to the Company and the Station, have been
cancelled prior to the Closing and shall not be taken into account in the
adjustments contemplated by this Section 3.6.
SECTION 3.7. PURCHASE PRICE ADJUSTMENT. Promptly (but not later than
five business days) after the determination of the Purchase Price pursuant to
Section 3.6 that is final and binding as set forth herein:
(i) if the Purchase Price as finally determined pursuant to
Section 3.6 exceeds the Estimated Purchase Price, Buyer shall pay to
Seller, by wire transfer of immediately available funds to such bank
accounts of Seller as Seller shall designate in writing to Buyer,
the difference between the Purchase Price and the Estimated Purchase
Price; or
(ii) if the Purchase Price as finally determined pursuant to
Section 3.6 is less than the Estimated Purchase Price, Seller shall
pay to Buyer, by wire transfer of immediately available funds to
such bank accounts of Buyer as Buyer shall designate in writing to
Seller, the difference between the Purchase Price and the Estimated
Purchase Price.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACME ENTITIES
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the ACME Entities jointly and
severally represent and warrant to Buyer and agree as follows:
SECTION 4.1. ORGANIZATION AND CAPITAL STRUCTURE.
(a) Each ACME Entity is a corporation or limited liability company
duly organized, validly existing and in good standing under the laws of the
state of its incorporation or formation, as applicable, and has the requisite
corporate power and authority to own or lease and to operate and use its
properties and to conduct its business.
11
(b) Each Company (i) is a corporation or limited liability company
duly organized, validly existing and in good standing under the laws of the
state of its incorporation or formation, as applicable, (ii) is qualified to do
business in the State of Missouri, which is the only jurisdiction in which the
conduct of the Business requires such qualification and (iii) has the requisite
corporate or limited liability company, as applicable, power and authority to
own or lease and to operate and use its properties and to conduct its business.
(c) The authorized capital stock of ACME Missouri Holdings consists
of 30,000 shares of common stock, par value $1.00 per share, of which 100 shares
are issued and outstanding, all of which are owned, beneficially and of record,
by Seller. Except for this Agreement, there are no contracts, options, warrants,
puts, calls, conversion rights, voting agreements, pre-emptive rights or other
rights or commitments of any character relating to the issuance, sale, purchase
or redemption of any shares of capital stock of ACME Missouri Holdings. All of
the outstanding shares of such common stock are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights and are so owned free from all Encumbrances of any kind.
(d) The authorized capital stock of ACME Missouri consists of 25,000
shares of common non-voting stock, par value $1.00 per share, of which 21,206.25
shares are issued and outstanding, and 5,000 shares of Class A preferred voting
stock, par value $110.00 per share, of which 862.875 shares are issued and
outstanding, all of which are owned, beneficially and of record, by ACME
Missouri Holdings. Except for this Agreement, there are no contracts, options,
warrants, puts, calls, conversion rights, voting agreements, pre-emptive rights
or other rights or commitments of any character relating to the issuance, sale,
purchase or redemption of any shares of capital stock of ACME Missouri. All of
the outstanding shares of such common stock are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights and are so owned free from all Encumbrances of any kind.
(e) The authorized capitalization of ACME Missouri Licensee consists
of membership interests, of which 1,000 such interests are authorized and issued
and outstanding, 999 of which are owned, beneficially and of record, by ACME
Missouri and 1 of which is owned, beneficially and of record, by ACME Subsidiary
Holdings III, LLC. Except for this Agreement, there are no contracts, options,
warrants, puts, calls, conversion rights, voting agreements, pre-emptive rights
or other rights or commitments of any character relating to the issuance, sale,
purchase or redemption of any membership interests of ACME Missouri Licensee.
All of the outstanding membership interests in ACME Missouri Licensee are
validly issued, fully paid and nonassessable and were not issued in violation of
any preemptive or similar rights and are so owned free from all Encumbrances of
any kind.
(f) True and complete copies of each of the charter or certificate
of formation, bylaws or limited liability agreement and of the stock ledger,
each as applicable, and all amendments thereto of each Company have been
delivered or made available to Buyer.
SECTION 4.2. SUBSIDIARIES AND INVESTMENTS. Except as set forth on
Schedule 4.2(a) and other than, with respect to ACME Missouri Holdings, ACME
Missouri and ACME Missouri Licensee, no Company, directly or indirectly, (a)
owns, of record or beneficially, any outstanding voting securities or other
equity interests in any corporation, partnership, joint
12
venture or other entity, or (b) otherwise controls any such corporation,
partnership, joint venture or other entity.
SECTION 4.3. AUTHORITY OF THE ACME ENTITIES.
(a) Each ACME Entity has the requisite corporate or limited
liability company power (as applicable) and authority to execute and deliver
this Agreement and all of the other agreements and instruments to be executed
and delivered by the ACME Entities pursuant hereto (collectively, the "ACME
Ancillary Agreements"), to consummate the transactions contemplated hereby and
thereby and to comply with the terms, conditions and provisions hereof and
thereof.
(b) The execution, delivery and performance of this Agreement and
the ACME Ancillary Agreements by each ACME Entity (to the extent a party
thereto) have been duly authorized and approved by all necessary action of the
ACME Entities and do not require any further authorization or consent of the
ACME Entities, or their respective stockholders or members, as applicable. This
Agreement is, and each other ACME Ancillary Agreement when executed and
delivered by the ACME Entities and the other parties thereto will be, a legal,
valid and binding agreement of the ACME Entities (to the extent a party thereto)
enforceable in accordance with its respective 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).
(c) Except as set forth in Schedule 4.3(c), none of the execution,
delivery and performance by the ACME Entities of this Agreement or the other
ACME Ancillary Agreements, the consummation by the ACME Entities of any of the
transactions contemplated hereby or thereby or compliance by the ACME Entities
with or fulfillment by the ACME Entities of the terms, conditions and provisions
hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation
or a loss of rights under, or result in the creation or imposition
of any Encumbrance upon any of the assets or properties of any ACME
Entity or the Company under, (A) the certificate of incorporation or
formation (as applicable) or bylaws, limited liability company
agreement or other similar governing documents (as applicable) of
the ACME Entities or the Company, (B) any Station Agreement or other
contract, agreement, note, instrument, mortgage, lease, license,
franchise, permit or other authorization, right, restriction or
obligation to which the Company or, with respect to the Business,
any ACME Entity is a party or any of the assets or properties of the
Company or the Business is subject or by which the Company, with
respect to the Business, any ACME Entity is bound, (C) any
Governmental Permit, (D) any judgment, order, award or decree to
which the Company or, with respect to the Business, any ACME Entity
is a party or any of the assets or properties or the Company or the
Business is subject or by which the Company or, with respect to
13
the Business, any ACME Entity is bound or (E) any statute, other law
or regulatory provision affecting the Company or, with respect to
the Business, any ACME Entity or the assets or properties of the
Company or the Business, except, in the case of (B), (C) or (E), as
would not have a Material Adverse Effect, provided that such
conflict, breach, default or creation of any Encumbrance shall not
prevent the consummation the transactions contemplated by this
Agreement in accordance with its terms; or
(ii) require the approval, consent, authorization or act of,
or the making by any ACME Entity or the Company of any declaration,
filing or registration with, any third Person or any foreign,
federal, state or local court, governmental or regulatory authority
or body, except for such of the foregoing as are necessary pursuant
to the HSR Act or the Communications Act.
SECTION 4.4. FINANCIAL STATEMENTS. Schedule 4.4 contains (a) the
unaudited balance sheets of the Business as of December 31, 2001 and December
31, 2000, respectively, and the related statements of income for the years then
ended and (b) the unaudited balance sheet (the "Balance Sheet") of the Business
as of November 30, 2002 (the "Balance Sheet Date") and the related statements of
income and broadcast cash flows for the eleven months then ended. Except as set
forth in Schedule 4.4, each of such balance sheets and statements of income and
broadcast cash flows have been prepared in accordance with generally accepted
accounting principles consistently applied and present fairly and accurately, in
all material respects, the financial position and results of operations and
broadcast cash flows, as applicable, of the Business as of their respective
dates and for the respective periods covered thereby. None of such balance
sheets and statements or income or broadcast cash flows understate in any
material respect the normal and customary costs and expenses of conducting the
Business or operations of the Station or overstate in any material respect the
revenue generated by the Business and operations of the Station, in either case
as such Business or operations are currently conducted, or are otherwise
materially misleading regarding the operations of the Station. Except as
reflected in such balance sheets and statements of income and broadcast cash
flows or otherwise disclosed to Buyer in writing, no event has occurred since
the Balance Sheet Date that would make such balance sheets and statements of
income and broadcast cash flows misleading in any material respect.
SECTION 4.5. OPERATIONS SINCE BALANCE SHEET DATE.
(a) Except as set forth in Schedule 4.5(a), since the Balance Sheet
Date there has been, in respect of the Business or the Company:
(i) no change in the financial condition or the results of
operations which has had a Material Adverse Effect;
(ii) no material damage, destruction, loss or claim (whether
or not covered by insurance) or condemnation or other taking; and
(iii) no material adverse change in employee relations.
14
(b) Except as set forth in Schedule 4.5(b), since the Balance Sheet
Date the operations of the Station and the Business have been conducted only in
the ordinary course and in conformity with past practice. Without limiting the
generality of the foregoing, since the Balance Sheet Date, except as set forth
in such Schedule, the Company has not:
(i) sold, leased, transferred or otherwise disposed of
(including any transfers from the Company to any ACME Entity or to
any of their Affiliates), or mortgaged or pledged, or imposed or
suffered to be imposed any Encumbrance (other than Permitted
Encumbrances) on, any assets reflected on the Balance Sheet or any
assets acquired after the Balance Sheet Date, other than personal
property having a value, in the aggregate, of less than $50,000 sold
or otherwise disposed of for fair value in the ordinary course of
the Business consistent with past practice;
(ii) canceled any debts owed to or claims held by the Company
(including the settlement of any claims or litigation) or waived any
right of significant value to the Business other than in the
ordinary course of the Business consistent with past practice;
(iii) created, incurred, guaranteed or assumed, or agreed to
create, incur, guarantee or assume, any indebtedness for borrowed
money (other than money borrowed or advances from any ACME Entity or
any of their Affiliates in the ordinary course of the Business
consistent with past practice) or entered into any capitalized
leases;
(iv) accelerated collection of notes or accounts receivable
generated by the Business to a date prior to the date such
collection would have occurred in the ordinary course of the
Business;
(v) delayed payment of any account payable or other liability
of the Business beyond its due date or the date when such liability
would have been paid in the ordinary course of the Business
consistent with past practice;
(vi) changed accounting methods, principles or practices,
except insofar as may have been required by law or by a change in
generally accepted accounting principles;
(vii) acquired any real property or undertaken or committed to
undertake capital expenditures exceeding $25,000 in the aggregate;
(viii) prepared or filed any Tax Return inconsistent with past
practice or, on any such Tax Return, taken any position, made any
election, or adopted any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods (including, without limitation,
positions, elections or methods which would have the effect of
deferring income to periods for which Buyer is liable pursuant to
Article XI or
15
accelerating deductions to periods for which the ACME Entities are
liable pursuant to Article XI);
(ix) made any acquisition (by merger, consolidation,
acquisition of stock or assets or otherwise) of any corporation,
partnership or other business organization or division thereof or
interest therein; or
(x) entered into any agreement or made any commitment to take
any action described in subparagraphs (i) through (ix) above.
SECTION 4.6. NO UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 4.6 or except for those that would not have a Material Adverse Effect
either individually or in the aggregate, the Company is not subject to any
liability (including, without limitation, unasserted claims, whether known or
unknown), whether absolute, contingent, accrued or otherwise, which is not shown
or reserved for in the Balance Sheet, other than liabilities of the same nature
as those set forth in the Balance Sheet and the notes thereto and incurred in
the ordinary course of the Business after the Balance Sheet Date.
SECTION 4.7. TAXES.
(a) Except as set forth on Schedule 4.7(a): (i) each Company and
each Company Group has filed or caused to be filed all Tax Returns required to
be filed; (ii) all such Tax Returns are complete and accurate and disclose all
Taxes required to be paid by each Company and each Company Group for the periods
covered thereby and all Taxes shown to be due on such Tax Returns have been
timely paid; (iii) all Taxes (whether or not shown on any Tax Return) owed by
each Company and each Company Group have been timely paid; (iv) neither any
Company nor any member of any Company Group has waived or been requested to
waive any statute of limitations in respect of Taxes which waiver is currently
in effect; (v) the Tax Returns referred to in clause (i) have been audited by
the appropriate taxing authorities or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired; (vi)
there is no action, suit, investigation, audit, claim or assessment pending or
proposed or, to the Knowledge of the ACME Entities, threatened with respect to
Taxes of any Company or any Company Group and, to the Knowledge of the ACME
Entities, no basis exists therefor; (vii) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns referred to
in clause (i) have been paid in full; (viii) all Tax Sharing Arrangements and
Tax indemnity arrangements relating to any Company (other than this Agreement)
will terminate prior to the Closing Date and no Company will have any liability
thereunder on or after the Closing Date; (ix) there are no Encumbrances for
Taxes upon the assets or capital stock of any Company except Encumbrances
relating to current Taxes not yet due; (x) all Taxes which any Company is
required by law to withhold or to collect for payment have been duly withheld
and collected, and have been paid or accrued, reserved against and entered on
the books of such Company and (xi) no Company has been a member of an
"affiliated group" (as defined in Section 1504(a) of the Code without regard to
the limitations contained in Section 1504(b) of the Code) other than the Company
Group of which it is a member as of the date hereof and no Company has had any
direct or indirect ownership in any other Person.
16
(b) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code (relating to "FIRPTA").
(c) No payment or other benefit, and no acceleration of the vesting
of any options, payments or other benefits, will be, as a direct or indirect
result of the transactions contemplated by this Agreement, an "excess parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code and the Treasury Regulations thereunder. Except as set forth on
Schedule 4.7(c), no payment or other benefit, and no acceleration of the vesting
of any options, payments or other benefits, will, as a direct or indirect result
of the transactions contemplated by this Agreement, be (or under Section 280G of
the Code and the Treasury Regulations thereunder be presumed to be) a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code and the Treasury Regulations thereunder, without regard to
whether such payment or acceleration is reasonable compensation for personal
services performed or to be performed in the future.
SECTION 4.8. SUFFICIENCY OF ASSETS.
(a) Except as set forth in Schedule 4.8(a), the assets owned or
leased by the Company constitute all of the material assets necessary for or
used by the Company in the conduct of the Business and the operations of the
Station, and are in such good and serviceable condition and repair (subject to
ordinary wear and tear) as is necessary for the conduct of the Business and the
operations of the Station.
(b) Schedule 4.8(b) sets forth a description of all material
services provided by the ACME Entities or any Affiliate of the ACME Entities to
the Business utilizing either (i) assets not owned or leased by the Company or
(ii) employees not listed in Schedule 4.16(a) and the manner in which the costs
of providing such services have been allocated to the Company.
SECTION 4.9. GOVERNMENTAL PERMITS.
(a) The Company owns, holds or possesses the Station Licenses and
all other licenses, franchises, permits, privileges, immunities, approvals and
other authorizations from a Governmental Body that are necessary to entitle it
to own or lease, operate and use the assets of the Station and to carry on and
conduct the Business (herein collectively called "Governmental Permits").
Schedule 4.9(a) sets forth a list and brief description of each such
Governmental Permit held by the Company as of the date of this Agreement.
(b) Except as set forth in Schedule 4.9(b), the Company has
fulfilled and performed in all material respects its obligations under each of
the Governmental Permits, and no event has occurred or condition or state of
facts exists which constitutes or, after notice or lapse of time or both, would
constitute a material breach or material default under any such Governmental
Permit. No notice of cancellation, of default or of any dispute concerning any
Governmental Permit, or of any event, condition or state of facts described in
the preceding sentence, has been received by the ACME Entities or the Company.
Except as set forth in Schedule 4.9(b), each of the Governmental Permits is
valid, subsisting and in full force and effect, and, subject to the receipt of
the FCC Consent and expiration of the waiting period under the HSR Act, may be
transferred to Buyer or its Affiliates in accordance with the transactions
17
contemplated by this Agreement and at such time of assignment or transfer will
be in full force and effect, in each case without (i) the occurrence of any
breach, default or forfeiture of rights thereunder or (ii) the consent, approval
or act of, or the making of any filing with, any Governmental Body or other
party (other than the FCC as contemplated by Section 6.3).
(c) The Station is being operated in accordance with the Station
Licenses and in compliance in all material respects with the Communications Act,
the published rules and regulations thereunder, and all other published laws and
regulations, federal, state and local, applicable to the Station. Neither the
ACME Entities nor the Company have received any notice of any violations of the
Station Licenses, the Communications Act or the rules and regulations
thereunder. There is no action by or before the FCC currently pending or, to the
Knowledge of the ACME Entities, threatened to revoke, cancel, rescind, modify or
refuse to renew in the ordinary course any of the Station Licenses. The Station
Licenses are validly issued in the name of ACME Missouri Licensee as listed on
Schedule 4.9(a). True and complete copies of the Station Licenses have been
delivered to Buyer, including any and all amendments and other modifications
thereto. The Station Licenses are in full force and effect, are valid for the
balance of the current license term applicable generally to television stations
licensed in the state where the Station is located, are unimpaired by any acts
or omissions of the ACME Entities, the Company or any of their Affiliates, or
the employees, agents, officers, directors or managers, members or shareholders
of the ACME Entities, the Company or any of their Affiliates, and are free and
clear of any restrictions which might limit the operation of the Station in the
manner and to the full extent as it is now operated (other than restrictions
under the terms of the Station Licenses themselves and those restrictions in the
Communications Act and the rules and policies of the FCC generally applicable to
television stations of the same type). There are no applications, proceedings,
or complaints pending or, to the Knowledge of the ACME Entities, threatened
before a Governmental Body which may have a Material Adverse Effect on the
Business, the Company or the operation of the Station (other than rulemaking
proceedings that apply to the television broadcasting industry generally). The
ACME Entities do not have Knowledge of any reason why those of the Station
Licenses subject to expiration might not be renewed in the ordinary course for a
full term without material modifications or of any reason why any of the Station
Licenses might be revoked. Except as set forth in Schedule 4.9(c), the Station
is in compliance in all material respects with the FCC's published policy on
exposure to radio frequency radiation. No renewal of any Station License would
constitute a major environmental action under the published rules and
regulations of the FCC. As of the date of this Agreement, to the Knowledge of
the ACME Entities, there are no facts which, under the Communications Act or the
existing published rules and regulations of the FCC, would disqualify the
Company from transferring the Station Licenses or from consummating the
transactions contemplated herein within the times contemplated herein. The
Company maintains an appropriate public inspection file at the Station's studios
in accordance with published FCC rules and regulations. Access to the Station's
transmission facilities is restricted in accordance with the policies, rules and
regulations of the FCC.
SECTION 4.10. REAL PROPERTY; REAL PROPERTY LEASES.
(a) Schedule 4.10(a) contains a brief description of all real
property owned or leased by the Company (the "Real Property") and each option
held by the Company to acquire any Real Property. No real property other than
that listed on Schedule 4.10(a) is used in, held for
18
use in connection with, or necessary for the conduct of the Business or the
operation of the Station. The Company has marketable fee simple title (free and
clear of any Encumbrances other than Permitted Encumbrances) to the owned Real
Property and has made available or delivered to Buyer copies of any current
title insurance policies with respect to the Real Property in its possession.
(b) There are no material encroachments upon the Real Property owned
by the Company nor, to the Knowledge of the ACME Entities, any Real Property
leased by the Company, by any buildings, structures, or improvements located on
adjoining real estate. To the Knowledge of the ACME Entities, none of the
buildings, structures, or improvements (including without limitation any ground
radials, guy wires or guy anchors) constructed on the Real Property owned by the
Company nor, to the Knowledge of the ACME Entities, any Real Property leased by
the Company, encroaches upon adjoining real estate, and all such buildings,
structures, and improvements are constructed in conformity with or are
"grandfathered" with respect to all "setback" lines, easements, and other
restrictions, or rights of record, or that have been established by any
applicable building or safety code or zoning ordinance, except in any case for
any of the foregoing which would not materially impair the ability of the
Company or Buyer to own or operate the Station or the Business or which would
not involve any material cost or expense to cure or remedy. No utility lines
serving the Real Property nor guy wires supporting any tower pass over the lands
of others except where appropriate easements have been obtained. Neither the
whole or any part of the Real Property owned by the Company nor, to the
Knowledge of the ACME Entities, any Real Property leased by the Company is
subject to any pending or threatened suit for condemnation or other taking by
any public authority. As of the date of this Agreement, there exists no writ,
injunction, decree, order or judgment, nor any litigation, pending, or to the
Knowledge of the ACME Entities, threatened, relating to the Company's or the
ACME Entities' use, lease, occupancy or operation of any of the Real Property.
The Company's use and occupancy of the Real Property complies with all
regulations, codes, ordinances, and statutes of all applicable governmental
authorities, including without limitation all environmental protection and
sanitary laws and regulations, occupational safety and health regulations, and
electrical codes, except where such failure to comply would not be material to
the Business. There are no material structural defects in the buildings,
structures, and improvements located on the Real Property. All towers and other
structures on the Real Property are painted and lighted in accordance, in all
material respects, with the requirements of the Station Licenses, the FCC, the
Federal Aviation Administration and all applicable requirements of federal,
state and local law. Each of the towers can structurally support all of the
permitted equipment in accordance with law, governmental approvals, and sound
engineering practices. All Real Property has legal and insurable access from a
public roadway for vehicles and by foot.
(c) Schedule 4.10(c) sets forth a list of each lease or similar
agreement under which the Company is lessee of, or holds or operates, any Real
Property owned by any third Person, which are the sole and complete agreements
concerning the Company's use of the leased premises (the "Real Property
Leases"). Each Real Property Lease is legal, valid, binding, enforceable and in
full force and effect. Neither the Company nor, to the Knowledge of the ACME
Entities, any other party is in default, violation or breach in any respect
under any Real Property Lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
default, violation or breach thereunder. No amount payable under any Real
Property Lease is past due. Neither the ACME Entities nor the
19
Company have received any notice of a default, offset or counterclaim under any
Real Property Lease or any other communication asserting non-compliance with any
Real Property Lease. To the Knowledge of the ACME Entities, the Company has the
exclusive right to use and occupy that portion of the premises leased under each
Real Property Lease. The Company enjoys, in all material respects, peaceful and
undisturbed possession of that portion of the premises leased under the Real
Property Leases. Except as set forth on Schedule 4.10(c), the Company's
interests under the Real Property Leases are free and clear of all Encumbrances
(except for Permitted Encumbrances). The ACME Entities have made available to
Buyer, true and complete copies of the Real Property Leases, together, in the
case of any subleases or similar occupancy agreements, with copies of all other
leases. Except as disclosed in Schedule 4.3(c) or 4.10(c), no consent of any
third party is required under the Real Property Leases in connection with the
sale of the Shares to Buyer in accordance with this Agreement, and such sale of
the Shares will not affect the validity, enforceability and continuity of any
such lease.
(d) All utilities that are required for the full and complete
occupancy and use of the Real Property, including, without limitation, electric,
water, sewer, telephone and similar services, have been connected and are in
good working order.
SECTION 4.11. PERSONAL PROPERTY. Schedule 4.11 contains a list as of
November 30, 2002 of all machinery, equipment, vehicles, furniture and other
personal property owned or leased by the Company having an original cost of
$10,000 or more or relating to the Business or used or held by the Company or
others for use by the Station (the "Personal Property"), except for Personal
Property leases set forth on Schedule 4.12. The Personal Property is in good
operating condition and repair (reasonable wear and tear excepted), is
maintained in compliance with good engineering practice, is performing
satisfactorily, has been properly maintained, in all material respects, in
accordance with the manufacturers' recommendations and industry practices, is
available for immediate use and is otherwise sufficient to permit the Station to
operate in accordance with the Station Licenses and the rules and regulations of
the FCC.
SECTION 4.12. PERSONAL PROPERTY LEASES. Schedule 4.12 contains a
list of each lease or other agreement or right under which the Company is lessee
of, or holds or operates, any Personal Property owned by a third Person (the
"Personal Property Leases").
SECTION 4.13. INTELLECTUAL PROPERTY. (a) Schedule 4.13(a) contains a
list of (i) all call signs, United States and foreign patents, pending patent
applications, trademark registrations, pending trademark applications, trade
names, service marks, copyrights (registered or unregistered), logos, domain
names, and other similar intangible property rights, issued to, licensed to,
assigned to, filed by, or used by the Company or to promote or identify the
Station, or otherwise used in connection with the Business, and (ii) all
agreements, contracts and understandings therefor (clauses (i) and (ii) being
collectively the "Intellectual Property").
(b) Except as disclosed in Schedule 4.13(b), the Company either: (i)
owns the entire right, title and interest in and to the Intellectual Property
listed in Schedule 4.13(a), free and clear of Encumbrances except for Permitted
Encumbrances; or (ii) has the valid right and license to use the same.
20
(c) Except as disclosed in Schedule 4.13(c): (i) all patents and
registrations identified in Schedule 4.13(a) are in force, and all applications
identified in Schedule 4.13(a) are pending without challenge (other than office
actions that may be pending before the Patent and Trademark Office or its
foreign equivalents); (ii) the Intellectual Property owned by the Company is
valid and enforceable; and (iii) the Company has the right to bring actions for
infringement or unauthorized use of the Intellectual Property owned by it.
(d) Except as disclosed in Schedule 4.13(d): (i) neither the ACME
Entities nor the Company have received any written claim and otherwise have no
Knowledge of any claim that has been made or asserted that alleges the
Intellectual Property owned by the Company infringes the Intellectual Property
of another Person; (ii) no litigation, arbitration or other proceeding is
pending with respect to the Intellectual Property owned by the Company; and
(iii) no written claim, delivered or made available to the ACME Entities or the
Company, has been made or asserted that challenges the validity or ownership of
any Intellectual Property owned by the Company.
(e) To the Knowledge of the ACME Entities, the operation of the
Station does not infringe any copyright, patent, trademark, trade name, service
xxxx, call sign or other similar right of any third Person. Neither the Company
nor the ACME Entities, in respect of the Company, have sold, licensed or
otherwise disposed of any of the Intellectual Property to any Person or agreed
to indemnify any Person for any patent, trademark or copyright infringement.
SECTION 4.14. INTENTIONALLY OMITTED.
SECTION 4.15. TITLE TO ASSETS. Except as set forth on Schedule 4.15,
the Company has good and marketable title to all of its tangible assets and
properties (or a valid leasehold or license interest, in the case of any leased
or licensed assets, as applicable), free and clear of all Encumbrances, except
for Permitted Encumbrances.
SECTION 4.16. EMPLOYEES.
(a) Schedule 4.16(a) contains: (i) a list of all individuals
employed by the Company in connection with the Business; and (ii) the titles,
employer and positions of such employees (the "Station Employees"). Since the
Balance Sheet Date, except as disclosed on Schedule 4.16(a) or as has occurred
in the ordinary course of the Business and consistent as to timing and amount
with past practices, the ACME Entities or the Company have not: (A) increased
the compensation payable or to become payable to or for the benefit of any of
the Station Employees (other than normal annual salary increases consistent with
past practice), (B) provided any of the Station Employees with increased
security or tenure of employment, (C) increased the amount payable to any of the
Station Employees upon the termination of such persons' employment, or (D)
increased, augmented or improved benefits granted to or for the benefit of the
Station Employees under any bonus, profit sharing, pension, retirement, deferred
compensation, insurance or other direct or indirect benefit plan or arrangement.
Neither the Company nor the ACME Entities are a party to any agreement or
arrangement, written or oral, with salaried or non-salaried Station Employees
except as described in Schedule 4.18.
21
(b) The ACME Entities represent and warrant that they have or shall
have provided, as the case may be, a schedule to Buyer containing a true and
accurate listing of the current rate of compensation provided to the Station
Employees as of the date hereof and as of the Closing Date.
(c) The ACME Entities represent and warrant as of the date hereof
and as of the Closing Date that no Station Employee is (i) receiving short-term
disability benefits or long-term disability benefits under any plan or program
established or maintained by the ACME Entities or their Affiliates or (ii) on
any type of leave other than vacation leave or sick leave.
SECTION 4.17. EMPLOYEE RELATIONS.
(a) Except as set forth on Schedule 4.17(a), in respect of the
Station Employees, neither the Company nor the ACME Entities are a party to any
(i) labor collective bargaining union or similar agreement or (ii) any
employment, severance, incentive or other similar agreement, arrangement,
commitment or understanding.
(b) Except as set forth on Schedule 4.17(b), (i) no union or similar
organization represents any Station Employees and, to the Knowledge of the ACME
Entities, no such organization is attempting to organize such employees; (ii)
there are no unfair labor practice charges pending or, to the Knowledge of the
ACME Entities, threatened against the ACME Entities or the Company in respect of
the Station Employees; (iii) there is no pending or, to the Knowledge of the
ACME Entities, threatened strike, slowdown, picket, work stoppage or arbitration
proceedings involving labor matters or other labor disputes affecting, the
Station Employees, the Company, the Business or the Station; and (iv) neither
the Company nor the ACME Entities have experienced any strike, work stoppage or
other labor difficulties of any nature at the Station.
SECTION 4.18. CONTRACTS. Except as set forth on Schedule 4.18,
neither the Company nor any of its Affiliates in respect of the Business is a
party to or bound by:
(i) any contract for the future purchase, lease or sale of
real property;
(ii) any contract entered into in the ordinary course of the
Business for the purchase, rental or use of any recordings,
programming or programming services which is not terminable by the
Company without penalty on 30 days' notice or less or which provides
for performance over a period of more than 90 days or which involves
the payment after the date hereof of more than $30,000;
(iii) any contract entered into in the ordinary course of the
Business for the purchase of merchandise, supplies or personal
property or for the receipt of services (other than services
referred to in clause (ii) above) which is not terminable by the
Company on 30 days' notice or less or which provides for performance
over a period of more than 90 days or which involves the payment
after the date hereof of more than $30,000;
22
(iv) any Time Sales Agreement which was not made in the
ordinary course of the Business and consistent with past practice;
(v) any guarantee of the obligations of the Station's
customers, suppliers or employees;
(vi) any sales agency, advertising representative or
advertising or public relations contract entered into in the
ordinary course of the Business which is not terminable by the
Company without penalty on 30 days' notice or less or which provides
for payments over a period of more than 90 days or which involves
the payment after the date hereof of more than $30,000;
(vii) any Trade Agreement or Barter Agreement;
(viii) any employee collective bargaining agreement,
employment agreement (other than employment agreements terminable
without premium or penalty on notice of 30 days or less under which
the only monetary obligation is to make current wage or salary
payments and provide current fringe benefits), consulting, advisory
or service agreement, deferred compensation agreement or covenant
not to compete;
(ix) any written contract which the Company or the ACME
Entities reasonably anticipate will involve the payment of more than
$50,000 in the years ended December 31, 2002 or 2003;
(x) any partnership, joint venture or other similar agreement
or arrangement;
(xi) any agreement or instrument which provides for, or
relates to, the incurrence by the Company of debt for borrowed
money;
(xii) any agreement outside of the ordinary course of the
Business containing any covenant or provision prohibiting the
Company from engaging in any line or type of business;
(xiii) any contract not made in the ordinary course; or
(xiv) any other contract, agreement, commitment, understanding
or instrument which is material to the Station or the Business.
SECTION 4.19. STATUS OF CONTRACTS. Except as set forth in Schedule
4.19 or in any other Schedule hereto, each of the leases, contracts and other
agreements listed in Schedules 4.10(c), 4.12, 4.13(a) and 4.18 (collectively,
the "Station Agreements") constitutes a valid and binding obligation of the
Company and, to the Knowledge of the ACME Entities, the other parties thereto
(subject to bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights generally) and is
in full force and effect (subject to bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting the enforcement of creditors' rights
generally) and (except as set forth in
23
Schedule 4.3(c) and except for those Station Agreements which by their terms
will expire prior to the Closing Date or will be otherwise terminated prior to
the Closing Date in accordance with the provisions hereof or at the direction of
Buyer) will be available to the Company following the sale and purchase of the
Shares contemplated by this Agreement on terms and conditions no less favorable
than those in effect on the date hereof and will be in full force and effect at
the time of such sale and purchase, in each case without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights thereunder
and without the consent, approval or act of, or the making of any filing with,
any other party. The Company has fulfilled and performed in all material
respects its obligations under each of the Station Agreements to which it is a
party, and the Company is not in, or alleged to be in, breach or default under
any of the Station Agreements and, to the Knowledge of the ACME Entities, no
other party to any of the Station Agreements has breached or defaulted
thereunder, and no event has occurred and no condition or state of facts exists
which, with the passage of time or the giving of notice or both, would
constitute such a default or breach by the Company or, to the Knowledge of the
ACME Entities, by any such other party. There are no oral contracts material to
the operation of the Business or the Station. Complete and correct copies of
each of the Station Agreements, together with all amendments thereto, have
heretofore been delivered or made available to Buyer.
SECTION 4.20. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except
as set forth in Schedule 4.20, each ACME Entity and the Company has complied
with all laws, published regulations and rules, writs, injunctions, ordinances,
franchises, decrees or orders of any court or of any foreign, federal, state,
municipal or other Governmental Body which are applicable to the assets or
properties of the Company, the Station or the Business, except where such
noncompliance would not be material to the Business. Without limiting the
generality of the foregoing, except as set forth in Schedule 4.20:
(i) there are no unsatisfied judgments outstanding against the
Company or the assets of the Company, the Station or the Business or
against the ACME Entities in respect of the Company, such assets,
the Station or the Business;
(ii) there are no lawsuits, suits or proceedings pending or,
to the Knowledge of the ACME Entities, threatened against the
Company or the assets of the Company, the Station or the Business or
the ACME Entities in respect of the Company, such assets, the
Station or the Business;
(iii) there are no claims or investigations pending or, to the
Knowledge of the ACME Entities, threatened against the Company or
the assets of the Company or against the ACME Entities in respect of
the Company, such assets, the Station or the Business;
(iv) there is no action, suit or proceeding pending or, to the
Knowledge of the ACME Entities, threatened which questions the
legality or propriety of the transactions contemplated by this
Agreement;
(v) neither the ACME Entities nor the Company have received
any written complaints with respect to the Station causing
interference to the
24
transmission of any other broadcast station or communications
facility, and, to the Knowledge of the ACME Entities, no other
broadcast station or communications facility is causing interference
in violation of FCC rules to the Station's transmissions or the
public's reception of such transmissions;
(vi) each ACME Entity is, with respect to the Business and the
operation of the Station, and the Company is, in compliance with all
applicable laws, rules and regulations relating to the employment of
labor, except where such failure to comply would not be material to
the Business; and
(vii) all material ownership reports, employment reports, Tax
Returns and other material documents required to be filed by the
ACME Entities or the Company with the FCC or other Governmental Body
in respect of the Company, the Company's assets or properties, the
Station or the Business have been filed, and all such documents are
complete and accurate in all material respects. Such items that are
material to the Business and as are required to be placed in the
Station's local public inspection files have been placed in such
files.
SECTION 4.21. INSURANCE. The Company the ACME Entities for the
benefit of the Company currently maintain policies of fire and extended coverage
and casualty, liability and other forms of insurance in respect of the assets or
properties of the Company, the Station and the Business (each as listed in
Schedule 4.21), in such amounts and against such risks and losses as will
provide adequate insurance coverage for the replacement cost of such assets or
properties, the Station and the Business for all risks normally insured against
by a Person carrying on the same business as the Company. All insurance policies
are in full force and effect. With respect to the Business or the Company, there
are no outstanding claims under any insurance policy or default with respect to
provisions in any such policy.
SECTION 4.22. EMPLOYEE PLANS; ERISA.
(a) Schedule 4.22(a) sets forth a list of each benefit and
compensation plan, program and arrangement including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of ERISA and
pension, retirement, post-retirement, profit sharing, deferred compensation,
stock ownership, stock option, stock purchase, stock appreciation rights, stock
bonus, severance or other similar plan relating to the Company, the Station
Employees, the Business or the Station; each medical, vision, dental, disability
or other health plan; each life insurance plan relating to the Company, the
Station Employees, the Business or the Station; and any other employee benefit
plan relating to the Company, the Station Employees, the Business or the Station
which covers or has covered employees or former employees of the Company, the
Business or the Station (the "Employee Plans"). Schedule 4.22(a) classifies such
Employee Plans as either "Employee Pension Benefit Plans" or "Employee Welfare
Benefit Plans," both as defined in Section 3 of ERISA.
(b) The ACME Entities warrant that the Closing will not result in
the imposition of liability with respect to any multiemployer plan or defined
benefit plan which could be assessed against Buyer.
25
(c) Each Employee Plan and each related trust agreement, annuity
contract or other funding instrument is in compliance, both as to form and
operation, in all material respects, with applicable law (including, where
applicable, ERISA and the Code).
(d) Each Employee Plan which is intended to be qualified under Code
Section 401(a) satisfies the qualification requirements of the Code in all
material respects, and has been determined by the Internal Revenue Service to be
so qualified, and each trust forming a part of such Employee Plan is exempt from
Tax pursuant to Code Section 501(a). The ACME Entities have no Knowledge of any
fact or set of circumstances that has adversely affected or could reasonably
adversely affect the qualification of such Employee Plan.
(e) No plan which is an employee benefit plan under Section 3(3) of
ERISA has engaged in a transaction that is a Prohibited Transaction as defined
in Section 406 of ERISA and Section 4975 of the Code for which there is no
exemption and with respect to which the ACME Entities, the Company or the
Business have incurred any Liability which, individually or in the aggregate,
would have a Material Adverse Effect.
(f) Except as set forth in Schedule 4.22(f), the ACME Entities do
not sponsor, maintain or contribute to any Employee Plan that provides health or
death benefits to former employees of the Station other than as required by
Section 4980B of the Code or other applicable laws.
SECTION 4.23. ENVIRONMENTAL PROTECTION. Except as set forth in
Schedule 4.23, in respect of the Business, the Station, the Company or the
assets of the Company:
(a) During the Company's or any ACME Entity's (or any of their
Affiliate's) ownership, lease or use of the real property currently used by the
Company or in the conduct of the Business, and, to the Knowledge of the ACME
Entities, during any former ownership, lease or use of such real property prior
to the ownership, lease or use by the Company or the ACME Entities (or their
Affiliates), there have been no spills, discharges or releases of, and neither
the Company nor the ACME Entities have placed, held, located, transported or
disposed of any, Hazardous Materials in, from, on or under the real property
currently owned, leased or used by the Company or in the conduct of the
Business, or to the Knowledge of the ACME Entities, any real property formerly
used in the conduct of the Business that have resulted or could result in any
material investigation or material remedial action by any Governmental Body
pursuant to any Environmental Law and neither the Company nor the ACME Entities
have any material Liability under any Environmental Law.
(b) No Station Property or, to the Knowledge of the ACME Entities,
any other real property to which the Company or the ACME Entities transported or
arranged for the transportation of any Hazardous Substances is listed or, to the
Knowledge of the ACME Entities, proposed for listing on the National Priorities
List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA), or on
any similar federal or state list of sites requiring investigation or
remediation.
(c) To the Knowledge of the ACME Entities, (i) there are no
structures, improvements, equipment, activities, fixtures or facilities on any
property owned, leased or used
26
by the Company or in the conduct of the Business that are constructed with, use
or otherwise contain radioactive materials, asbestos-containing materials, lead,
urea formaldehyde or polychlorinated biphenyls, unless the same are in good
condition, ordinary wear and tear excepted, and in compliance in all material
respects with Environmental Laws, (ii) there are no underground storage tanks,
or underground piping associated with such tanks, except those that comply with
applicable Environmental Laws and (iii) there are no abandoned underground
storage tanks that have not been either abandoned in place or removed pursuant
to an Environmental Law.
(d) There are no liens, restrictive covenants or other land use
restrictions under Environmental Laws on any of the properties owned, or to the
Knowledge of the ACME Entities, leased or used by the Company or in the conduct
of the Business, and no government actions have been taken, or, to the Knowledge
of the ACME Entities, are in process that could subject any of such properties
to such liens, restrictive covenants or other land use restrictions, and neither
the ACME Entities nor the Company are required to place any notice or
restriction relating to Hazardous Materials in any deed to such property.
(e) Neither the Company nor the ACME Entities have released any
Person or waived any rights or defenses with respect to any Environmental
Conditions or any claim arising under any Environmental Law.
(f) There is no Environmental Report in the possession or control of
the ACME Entities, the Company or any of their Affiliates that has not been made
available or delivered to Buyer.
SECTION 4.24. INSOLVENCY PROCEEDINGS. None of the ACME Entities, the
Company nor the assets or properties of the Company are the subject of any
pending or threatened insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary. Neither the Company nor
the ACME Entities in respect of the Business have made an assignment for the
benefit of creditors or taken any action in contemplation of or which would
constitute a valid basis for the institution of any such insolvency proceedings.
After giving effect to this transaction, each ACME Entity (i) will have
sufficient capital to carry on its business and transactions, (ii) will be able
to pay its debts as they mature or become due, and (iii) will own assets the
fair value of which will be greater than the sum of its liabilities. No ACME
Entity or the Company is insolvent and no the ACME Entity will become insolvent
as a result of entering into this transaction.
SECTION 4.25. TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 4.8(b) or 4.25, no officer, director, manager or Affiliate of the
Company is a party to any agreement, contract, arrangement or transaction with
the Company or has any interest in any property (real or personal or mixed,
tangible or intangible) used exclusively in or pertaining solely to or is
material to the Business or the assets of the Company.
SECTION 4.26. NO FINDER. None of the ACME Entities or any Affiliate
or any party acting on such Person's behalf has paid or become obligated to pay
any fee or commission to any broker, finder or intermediary, except for Deutsche
Bank Securities Inc. (the fees and
27
expenses of which shall be payable by the ACME Entities), for or on account of
the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to the ACME Entities to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer represents and
warrants to the ACME Entities and agrees as follows.
SECTION 5.1. ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and has the requisite corporate power and authority to own or
lease and to operate the properties and assets used in connection with its
business or to be acquired pursuant hereto, and to enter into and perform this
Agreement.
SECTION 5.2. AUTHORITY OF BUYER.
(a) Buyer has the requisite corporate authority to execute and
deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by Buyer pursuant hereto (collectively, the "Buyer
Ancillary Agreements"), to consummate the transactions contemplated hereby and
thereby and to comply with the terms, conditions and provisions hereof and
thereof.
(b) 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 or its stockholder. This Agreement is, and each Buyer Ancillary
Agreement when executed and delivered by Buyer and the other parties thereto
will be, a legal, valid and binding agreement of Buyer enforceable in accordance
with its respective 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).
(c) None of the execution and delivery by Buyer of this Agreement
and the Buyer Ancillary Agreements, the consummation by Buyer of any of the
transactions contemplated hereby or thereby or compliance by Buyer with or
fulfillment by Buyer of the terms, conditions and provisions hereof or thereof
will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation
or a loss of rights under, or result in the creation or imposition
of any Encumbrance upon any assets of Buyer under, the certificate
of incorporation or bylaws of Buyer, any material contract,
agreement, note, instrument, mortgage, lease, license, franchise,
permit or other
28
authorization, right, restriction or obligation, or any judgment,
order, award or decree, to which Buyer is a party or any of the
assets of Buyer is subject or by which Buyer is bound, or any
statute, other law or regulatory provision materially affecting
Buyer or its assets; or
(ii) require the approval, consent, authorization or act of,
or the making by Buyer of any declaration, filing or registration
with, any third Person or any foreign, federal, state or local
court, governmental or regulatory authority or body, except for such
of the foregoing as are necessary pursuant to the HSR Act or the
Communications Act.
SECTION 5.3. LITIGATION. Buyer is not a party to any action, suit or
proceeding pending which, if adversely determined, would reasonably be expected
to restrict the ability of Buyer to consummate the transactions contemplated by
this Agreement. There is no order to which Buyer is subject which would
reasonably be expected to restrict the ability of Buyer to consummate the
transactions contemplated by this Agreement.
SECTION 5.4. NO FINDER. Neither Buyer nor any party acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
SECTION 5.5. QUALIFICATIONS AS FCC LICENSEE. As of the date of this
Agreement, Buyer knows of no fact or circumstance which would, under the
Communications Act, disqualify or preclude it or its assignee from becoming the
FCC licensee of the Station without waiver of any published FCC rule or policy.
There are no proceedings, complaints, notices of forfeiture, claims or
investigations pending against Buyer or any principal, officer, director, or
owner of Buyer that would materially impair the qualifications of Buyer or its
designated assignee to become a FCC licensee of the Station.
SECTION 5.6. INVESTMENT REPRESENTATION. The Shares are being
acquired by Buyer for its own account for investment, and not with a view to the
sale or distribution of any part thereof without registration under the
Securities Act of 1933 or pursuant to an applicable exemption therefrom.
SECTION 5.7. WARN ACT. Buyer has not made or taken, and will not
make or take, any decisions or actions concerning the employees of the Station
after the Closing Date that would require the service of notice under the Worker
Adjustment and Retraining Notification Act of 1988.
ARTICLE VI
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
29
SECTION 6.1. INVESTIGATION OF THE BUSINESS. Upon the request of
Buyer, the ACME Entities shall afford and cause the Company to afford to the
officers, employees and authorized representatives of Buyer (including, without
limitation, independent public accountants, attorneys and consultants)
reasonable access during normal business hours to the offices, properties,
employees and business and financial records (including computer files,
retrieval programs and similar documentation) of the Company and the Business to
the extent Buyer shall reasonably deem necessary or desirable and shall furnish
to Buyer or its authorized representatives such additional information
concerning the Company or the Business as shall be reasonably requested. Buyer
agrees that any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operations of the Station. It is expressly
understood that, pursuant to this Section 6.1, Buyer, at its sole expense, shall
be entitled to make such engineering inspections of the Station, such
inspections of the Station for the purpose of appraising the Business and such
audits of the Company's or Station's financial records as Buyer may desire, so
long as the same do not unreasonably interfere with the operation of the
Station; provided, that neither the furnishing of such information to Buyer or
its representatives nor any investigation made heretofore or hereafter by Buyer
shall affect Buyer's right to rely upon any representation or warranty made by
the ACME Entities in this Agreement, each of which shall survive any furnishing
of information to Buyer or its agents, or any investigation by Buyer or its
agents, subject to Section 13.1 hereof.
SECTION 6.2. NOTICE OF LITIGATION. Each party shall promptly notify
the other of any action, suit or proceeding that shall be instituted or
threatened against such party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement. The ACME Entities
shall promptly notify Buyer, and Buyer shall promptly notify the ACME Entities,
of any lawsuit, claim, proceeding or investigation that may be threatened,
brought, asserted or commenced against the other or the Company, its assets or
the Business which would have been listed in Schedule 4.20 or would be an
exception to Section 5.3, if such lawsuit, claim, proceeding or investigation
had arisen prior to the date hereof.
SECTION 6.3. FCC CONSENT; HSR ACT APPROVAL; OTHER CONSENTS AND
APPROVALS.
(a) As promptly as practicable after the date of the execution of
this Agreement, but in any event no later than ten (10) business days
thereafter, the ACME Entities and Buyer shall file with the FCC applications
requesting its consent to the transfer of control of the Station Licenses (and
any extensions or renewals thereof) in connection with the purchase and sale of
the Shares contemplated by this Agreement (the "Transfer Applications"). The
ACME Entities and Buyer will cooperate in the preparation of such Transfer
Applications and will diligently take, or cooperate in the taking of, all
necessary and commercially reasonable steps, provide any additional information
reasonably required and otherwise use reasonable efforts to obtain promptly the
FCC's consent and approval of the Transfer Applications. Any fees assessed by
the FCC incident to the filing or grant of such applications shall be borne
equally by Buyer and the ACME Entities, with each party responsible for one half
of any such fees assessed. Each of the ACME Entities and Buyer shall make
available to the other, promptly after the filing thereof, copies of all reports
filed by it, the Company or its Affiliates on or prior to the Closing Date with
the FCC in respect of the Station.
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(b) As promptly as practicable after the execution and delivery of
this Agreement, but in any event no later than fifteen (15) business days
thereafter, the ACME Entities and Buyer shall file with the Federal Trade
Commission and the Antitrust Division of the Department of Justice the
notifications and other information required to be filed by such commission or
department under the HSR Act, or any rules and regulations promulgated
thereunder, with respect to the purchase and sale of the Shares and the other
transactions contemplated by this Agreement. Each of the ACME Entities and Buyer
covenants to file as promptly as practicable such additional information as may
be requested to be filed by such commission or department. Each of the ACME
Entities and Buyer warrants that all such filings by it will be, as of the date
filed, true and accurate in all material respects and in accordance with the
requirements of the HSR Act and any such rules and regulations. Each of the ACME
Entities and Buyer agrees to make available to the other such other information
as may be required by such commission or department to be filed as additional
information requested by such agencies under the HSR Act and such rules and
regulations. The cost of any filing fees payable under the HSR Act in connection
with the notifications and information described in this Section 6.3(b) shall be
borne equally by Buyer and the ACME Entities.
(c) The ACME Entities and Buyer shall each use reasonable best
efforts to promptly obtain all consents, amendments or permits from Governmental
Bodies, which are required by the terms thereof or this Agreement for the
consummation of the transactions contemplated by this Agreement.
SECTION 6.4. OPERATIONS OF THE STATION PRIOR TO THE CLOSING DATE.
(a) Prior to the Closing Date, except as approved by Buyer, the ACME
Entities shall cause the Company to:
(i) operate and carry on the operations of the Station and the
Business only in the ordinary course consistent with past practices
and published FCC rules and regulations;
(ii) maintain the assets and properties of the Company in good
operating condition and repair (wear and tear in ordinary usage
excepted);
(iii) maintain its books and records in the usual and ordinary
manner, on a basis consistent with prior periods; and
(iv) comply in all material respects with all laws, published
rules, ordinances and published regulations applicable to it, to its
assets and to the Business and the operation of the Station.
(b) Prior to the Closing Date, the ACME Entities shall cause the
Company to, consistent with past practice, use its commercially reasonable
efforts to:
(i) continue to promote and conduct advertising on behalf of
the Station and the Business at levels substantially consistent with
past practice;
(ii) retain the Station's programming library;
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(iii) maintain the business organization of the Station;
(iv) preserve the goodwill of the suppliers, contractors,
licensors, employees, customers, distributors and others having
business relations with the Business or the Station;
(v) maintain the present character and entertainment format of
the Station and the quality of its programs;
(vi) maintain the employment of each current employee who is
necessary for the continued operation of the Station and the
Business as currently operated;
(vii) preserve the Station's present customers and business
relations;
(viii) maintain all inventories at levels consistent with the
Station's prior practices; and
(ix) perform all Station Agreements without default and pay
trade accounts payable in a timely manner; provided, however, that
the Company may dispute, in good faith, any of its alleged
obligations.
(c) Notwithstanding Sections 6.4(a) and (b), except as expressly
contemplated by this Agreement, except as set forth in Schedule 6.4(c) or except
with the express prior written approval of Buyer (which approval may not be
unreasonably withheld or delayed), the ACME Entities shall not permit the
Company to, and, in respect of the Station, the Company, the Company's assets or
properties or the Business, the ACME Entities shall not or permit any of their
other Affiliates to:
(i) make any material change in the Business or the operations
of the Station;
(ii) make any capital expenditure, or enter into any contract
or commitment therefor, in excess of $25,000 in the aggregate;
(iii) enter into any contract for the purchase of real
property or exercise any option to extend a lease listed in Schedule
4.10(c);
(iv) sell, lease (as lessor), transfer or otherwise dispose of
(including any transfers to the ACME Entities or any of their
Affiliates), or mortgage or pledge, or impose or suffer to be
imposed any Encumbrance on, any of the assets or properties of the
Company or the Business, other than inventory and minor amounts of
personal property sold or otherwise disposed of in the ordinary
course of the Business and other than Permitted Encumbrances;
(v) create, incur or assume, or agree to create, incur or
assume, any indebtedness for borrowed money (other than money
borrowed or advances from
32
any ACME Entity or any of their Affiliates in the ordinary course of
the Business consistent with past practice), except in the ordinary
course of the Business;
(vi) institute any material increase in any profit-sharing,
bonus, incentive, deferred compensation, insurance, pension,
retirement, medical, hospital, disability, welfare or other employee
benefit plan with respect to the Station Employees, other than in
the ordinary course of the Business or as required by any such plan
or Requirements of Law;
(vii) make any material change in the compensation of the
Station Employees, other than changes made in accordance with normal
compensation practices and consistent with past compensation
practices;
(viii) enter into any employment agreement for services to be
performed for the Company or on behalf of the Station or the
Business;
(ix) change the Station's call sign or knowingly acquiesce in
any infringement, unauthorized use or impairment of the Intellectual
Property;
(x) renew, extend, amend, terminate, or waive any material
right under any Station Agreement or enter into any contract or
commitment or incur any obligation that will be assumed by or be
otherwise binding on the Company after Closing, except for (a) cash
Time Sales Agreements and production agreements made in the ordinary
course of business consistent with the Station's past practices; (b)
the renewal or extension of any existing contract on its existing
terms in the ordinary course of business (provided that such renewal
or extension does not extend beyond six (6) months except for
program barter agreements listed on Schedule 4.18 where such renewal
or extension may not extend beyond twelve (12) months); (c) other
contracts entered into in the ordinary course of business consistent
with the Station's past practices that do not involve consideration
the value of which, individually, is in excess of $30,000.00 and
which, in the aggregate, is in excess of $40,000.00 measured at
Closing; (d) trade agreements entered into in the ordinary course of
business that do not involve consideration which, individually, is
in excess of $30,000.00 and which, in the aggregate, in excess of
$40,000.00; provided, that none of such actions with respect to
clauses (a) - (d) result in the modification or renewal of any
Station Agreement in a manner adverse or that would be adverse upon
consummation of the transactions contemplated hereby to Buyer or the
Company or the entering into any contract, agreement, undertaking or
commitment which would have been required to be set forth in
Schedule 4.18 if in effect on the date hereof or the entering into
any contract which would require the consent of a third Person upon
the purchase and sale of the Shares; or
(xi) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods (including, without
33
limitation, positions, elections or methods which would have the
effect of deferring income to periods for which Buyer is liable
pursuant to Article XI or accelerating deductions to periods for
which the ACME Entities are liable pursuant to Article XI).
SECTION 6.5. THIRD PARTY CONSENTS. The ACME Entities shall (and
shall cause the Company to) use commercially reasonable efforts to obtain the
consents of the other contracting parties to the transactions contemplated
hereby to the extent required by any Station Agreements or Station License
requiring such consent; provided, however, that none of the ACME Entities, the
Company or Buyer shall be required to pay or incur any material cost or expense
to obtain any third Person consent that the ACME Entities or the Company is not
otherwise required to pay or incur in accordance with the terms of the
applicable Station Agreement or Station License. If any such third Person
consent, approval or waiver is not obtained before the Closing, the parties
shall use reasonable efforts in good faith to cooperate, and to cause each of
their respective Affiliates to cooperate, in effecting any lawful arrangement to
provide to Buyer or its designated Affiliates (including the Company) the
economic benefits of the Station Agreements or Station Licenses for which third
Person consents, approvals, and waivers are being sought after Closing, and to
have Buyer or its designated Affiliates (including the Company) assume and
discharge the obligations under the Station Agreements or Station Licenses from
and after the Closing Date.
SECTION 6.6. ENVIRONMENTAL SITE ASSESSMENT. Within thirty (30) days
of the execution of this Agreement, Buyer may obtain a Phase I Environmental
Assessment for each of the parcels of Real Property (the "Environmental
Assessment"). Such Environmental Assessment shall not relieve the ACME Entities
of any obligation with respect to any representation, warranty or covenant of
the ACME Entities in this Agreement or waive any condition to Buyer's
obligations under this Agreement. The cost of completing the Environmental
Assessment shall be paid by Buyer.
SECTION 6.7. PUBLIC ANNOUNCEMENT. None of the ACME Entities, the
Company, Buyer or any of their respective Affiliates shall, without the approval
of the other, make any press release or other public announcement concerning the
transactions contemplated by this Agreement, except as and to the extent that
any such party shall be so obligated by law or by the rules, regulations or
policies of any national securities exchange or association, in which case the
other party shall be advised and the parties shall use reasonable efforts to
cause a mutually agreeable release or announcement to be issued.
SECTION 6.8. INTERIM FINANCIAL STATEMENTS. The ACME Entities shall
deliver (or cause the Company to deliver) to Buyer, within five (5) business
days of their preparation, copies of any monthly, quarterly or annual financial
statements relating to the Business that may be prepared by them or any of their
Affiliates during the period from the date hereof through the Closing Date. Such
financial statements shall fairly present, in all material respects, the
financial position and results of operations of the Business as at the dates and
for the periods indicated, and shall be prepared on a basis consistent and in
accordance with the basis upon which the financial statements included in
Schedule 4.4 were prepared.
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SECTION 6.9. ADMINISTRATIVE VIOLATIONS. If the ACME Entities or the
Company receive any finding, order, complaint, citation or notice prior to the
Closing Date which states that any aspect of the Station's operations violates
any rule or regulation of the FCC or of any other Governmental Body (an
"Administrative Violation"), including, without limitation, any rule or
regulation concerning environmental protection, the employment of labor, or
equal employment opportunity, the ACME Entities shall, if such violation is
material to the Business, promptly notify Buyer of the Administrative Violation
and, whether or not such violation is material to the Business, (i) if the
allegation is valid, the ACME Entities shall use reasonable efforts to remove or
correct the Administrative Violation, and (ii) the ACME Entities (and not the
Company) shall be responsible for the payment of all costs associated therewith,
including any fines or back pay that may be assessed.
SECTION 6.10. ADVERSE DEVELOPMENTS. The ACME Entities shall (or
shall cause the Company to) promptly notify Buyer of any unusual or materially
adverse developments Known to the ACME Entities that occur prior to Closing with
respect to the Company or the operation of the Station or the Business unrelated
to FCC proceedings generally relating to the television industry or general
economic conditions; provided, however, that the ACME Entities' compliance with
the disclosure requirements of this Section 6.10 shall not relieve the ACME
Entities of any obligation with respect to any representation, warranty or
covenant of the ACME Entities in this Agreement or waive any condition to
Buyer's obligations under this Agreement.
SECTION 6.11. NO SOLICITATION COVENANT.
(a) From and after the date of this Agreement, the ACME Entities
shall not, and shall use their respective best efforts to cause their respective
Affiliates, representatives and agents (including, without limitation,
investment bankers, attorneys and accountants) (collectively, their
"Representatives") not to, directly or indirectly, through any officer,
director, agent or otherwise, enter into, solicit, initiate, conduct or continue
any discussions or negotiations with, or knowingly encourage any inquiries or
proposals or offers by, or provide any information to, or otherwise cooperate in
any other way with, any Person or group, other than Buyer and its
representatives and agents, concerning (i) any sale of all or any portion of the
Shares, the Business or the Station or the assets or properties of KWBP or the
KWBP Business, individually or in any combination, to any Person other than
Buyer, (ii) any merger, acquisition, consolidation, recapitalization,
liquidation, dissolution or similar transaction involving the Shares, the
Business or the Station or the assets or properties of KWBP or the KWBP
Business, individually or in any combination (other than the sale of the Shares
to Buyer as contemplated by this Agreement or the sale of substantially all of
the assets of KWBP as contemplated by the KWBP Asset Purchase Agreement), or
(iii) any transaction or transactions that would have an effect similar to the
transactions described in (i) or (ii) (any of (i), (ii) and (iii) being an
"Alternative Proposal" and any Alternative Proposal to acquire the Shares (as
contemplated by this Agreement) and substantially all of the assets of KWBP (as
contemplated in the KWBP Asset Purchase Agreement), in one or more transactions,
or any transaction or transactions that would have an effect similar to such
transactions is referred to herein as a "Combined Alternative Proposal"). The
ACME Entities agree not to release any third Person from, or waive any provision
of, any confidentiality or standstill agreement to which they (or any of them)
are a party with respect to sale of the Shares, the Business or the Station or
the assets or properties of KWBP or the KWBP Business. The ACME Entities shall
cease and cause to be terminated all
35
existing discussions or negotiations with any Persons conducted heretofore with
respect to, or that could reasonably be expected to lead to, any Alternative
Proposal.
(b) Notwithstanding anything in this Agreement to the contrary,
nothing contained in this Section 6.11 will prohibit:
(i) the board of directors of Parent from complying with Rule
14d-9 and Rule 14e-2 promulgated under the Securities Exchange Act
of 1934; provided, however, that none of the ACME Entities nor their
respective boards of directors shall approve or recommend an
Alternative Proposal except pursuant to and in accordance with the
following clause (ii); and
(ii) (A) the ACME Entities (or their Representatives) from
engaging in discussions or negotiations with a third Person
concerning an Alternative Proposal who (without any solicitation,
initiation, encouragement, discussion or negotiation, directly or
indirectly, by or with the ACME Entities or their Representatives
after the date of this Agreement) seeks to initiate such discussions
or negotiations, and furnishing such third Person information
concerning the ACME Entities and their business, properties and
assets if, and only to the extent that, (1) such Person has
submitted a written Alternative Proposal to the board of directors
of Parent which determines in good faith, following consultation
with and after having received the advice of a nationally recognized
firm of outside legal counsel and Parent's financial advisors, that
such Alternative Proposal would reasonably be expected to result in
a Superior Proposal; and (2) three business days before furnishing
such information to or entering into discussions or negotiations
with such Person, the ACME Entities (w) provide prompt, oral and
written notice to Buyer to the effect that they are intending to
furnish information to or enter into discussions or negotiations
concerning an Alternative Proposal with such Person and identify
such Person and the proposed material terms and conditions of such
Alternative Proposal and promptly apprise Buyer of the status and
details (including any amendments or proposed amendments) of any
Alternative Proposal, (x) promptly provide to Buyer any information
regarding the ACME Entities to be provided to any Person making an
Alternative Proposal that was not previously provided to Buyer, (y)
if requested by Buyer, negotiate in good faith with Buyer during
such three business day period with respect to possible revisions to
this Agreement so that the Alternative Proposal that may constitute
a Superior Proposal, in light of such revisions to this Agreement,
no longer would constitute a Superior Proposal and (z) receive from
such Person an executed confidentiality agreement in reasonably
customary form on terms not more favorable to such Person than the
terms contained in the Confidentiality Agreement are to Buyer;
and/or
(B) following the receipt by the ACME Entities of a
Superior Proposal and a determination by the board of directors of
Parent, in good faith, after receipt of advice from its outside
legal counsel, that failure to accept such Superior Proposal would
be inconsistent with its fiduciary duties to Parent's stockholders
under applicable law, the ACME Entities from terminating this
36
Agreement at any time after the fifth business day following Buyer's
receipt of written notice from the ACME Entities that the ACME
Entities have (y) received a Superior Proposal and (z) elected to
terminate this Agreement pursuant to this Section 6.11(b)(ii)(B)
(which notice must specify the material terms and conditions of such
Superior Proposal and the Person making the Superior Proposal);
provided that (1) the conditions set forth in clause (A) above have
been satisfied, (2) prior to such termination, if requested by
Buyer, the ACME Entities shall have negotiated in good faith with
Buyer for such five business day period with respect to possible
revisions to this Agreement so that the Alternative Proposal that
constituted a Superior Proposal, in light of such revisions to this
Agreement, no longer constitutes a Superior Proposal, (3) following
any negotiations contemplated by clause (2) above, the board of
directors of Parent, in good faith and after receipt of advice from
its outside legal counsel and financial advisors, shall have
determined that the Alternative Proposal continues to represent a
Superior Proposal, (4) Parent, ACME Television of Oregon, LLC and
ACME Television Licenses of Oregon, LLC shall have similarly
exercised their rights to terminate the KWBP Asset Purchase
Agreement under Section 6.12(b)(ii)(B) therein due to such Superior
Proposal and (5) before or contemporaneously with such termination
the ACME Entities pay to Buyer the amounts owed pursuant to Section
12.3(ii) of this Agreement and Section 11.3(ii) of the KWBP Asset
Purchase Agreement, and provided, further that after Buyer's receipt
of an initial notice of a Superior Proposal pursuant to this Section
6.11(b)(ii)(B), the ACME Entities shall be obligated to promptly
notify Buyer of any material change in the terms of such Superior
Proposal and may terminate this Agreement thereafter in accordance
with the terms of this Section 6.11(b)(ii)(B) after having satisfied
the provisions of this Section 6.11(b)(ii)(B) with respect to each
such amended Superior Proposal, except that the five business days
referred to above shall be reduced to three business days for any
such change (but in no event shall the ACME Entities exercise their
right to terminate pursuant to this Section 6.11(b)(ii)(B) fewer
than ten business days following Buyer's receipt of the initial
notice of such Superior Proposal).
(c) For purposes of this Agreement, "Superior Proposal" means a
Combined Alternative Proposal, made by a third Person, that the board of
directors of Parent, acting consistent with its fiduciary duties, determines in
good faith (after consultation with its outside legal counsel and financial
advisor) (y) is reasonably capable of being consummated, taking into account all
relevant legal, financial, regulatory and other aspects of the Combined
Alternative Proposal and the source of its financing, on the terms proposed, and
(z) would result in a transaction more favorable to the ACME Entities and the
holders of their respective equity interests than the transactions contemplated
by this Agreement and the KWBP Asset Purchase Agreement considered on an
aggregate basis.
SECTION 6.12. COPIES OF FCC APPLICATIONS. The ACME Entities shall
promptly deliver to Buyer copies of any applications filed with the FCC with
respect to the Station upon filing the same with the FCC.
SECTION 6.13. ESTOPPEL CERTIFICATES / NON-DISTURBANCE AGREEMENT.
37
(a) The ACME Entities shall use commercially reasonable efforts to
obtain, from the lessors under the Real Property Leases, executed versions of
estoppel certificates in a form reasonably acceptable to Buyer.
(b) Prior to the Closing, the ACME Entities shall obtain a
non-disturbance agreement, in a form reasonably acceptable to Buyer, from the
landlord and sublandlord in favor of Buyer with respect to the lease for the
Station's studio.
SECTION 6.14. TITLE EXAMINATION; TITLE INSURANCE; SURVEYS.
(a) Buyer may, at its expense, conduct a review and examination with
respect to title of the Real Property, and the ACME Entities shall (and shall
cause the Company to) cooperate as reasonably necessary in completion of such
review and examination. If any such review and examination reflects the
existence of any defect, encumbrance, or other limitation with respect to any
such title which would cause a material limitation or exclusion from the title
insurance to be obtained under Section 6.14(b) (a "Title Defect"), the ACME
Entities shall (and shall cause the Company to) use commercially reasonable
efforts to cause such Title Defect to be cleared or otherwise remedied prior to
Closing.
(b) Upon Buyer's request, the ACME Entities shall (and shall cause
the Company to) cooperate with Buyer to extent necessary for Buyer to obtain the
commitment of a title insurance company reasonably satisfactory to Buyer to
issue ALTA 1992 Form extended coverage title insurance policies with a zoning
endorsement insuring the Company's (or Buyer's or its Affiliate's) interest in
the Real Property (the "Title Commitment"). The costs of any Title Commitment
and the policy to be issued pursuant to such Title Commitment shall be paid by
Buyer.
(c) Buyer, at its expense, may obtain surveys of the Real Property
performed by surveyors reasonably acceptable to Buyer sufficient to remove any
"survey exception" from the title insurance policies to be issued pursuant to
the Title Commitment.
SECTION 6.15. ACME MISSOURI LICENSEE MEMBERSHIP INTERESTS. Prior to
the Closing, Parent shall cause ACME Subsidiary Holdings III, LLC to transfer
all of its membership interests in ACME Missouri Licensee to ACME Missouri and
take such other actions to cause the membership interests of ACME Missouri
Licensee to be wholly-owned by ACME Missouri.
SECTION 6.16. INTERCOMPANY OBLIGATIONS. The ACME Entities shall take
such action as may be necessary so that, as of the Closing Date, there shall be
no intercompany obligations between the Company, on the one hand, and any ACME
Entity or its Affiliates (other than the Company), on the other hand, including
any obligations pursuant to the agreements set forth in Schedule 4.8(b) and
Schedule 4.25.
SECTION 6.17. PERSONAL PROPERTY LEASES. Prior to the Closing, the
ACME Entities (and not the Company) shall purchase, on behalf of the Company,
from Xxxxx Fargo Equipment Finance, Inc. and General Electric Capital
Corporation the property leased under the leases with such entities referenced
in Schedule 4.12 and take such other actions so that such
38
property shall be owned by the Company free and clear of all Encumbrances as of
the Closing. Neither Buyer nor, after the purchase of the leased property as
contemplated hereby, the Company shall have any Liability, through the proration
provisions of Section 3.6 or otherwise, for any obligations under such leases or
with respect to the purchase of the property relating thereto.
SECTION 6.18. LIEN REMOVAL. Prior to the Closing, the ACME Entities
shall take all necessary action to remove any Encumbrances (except Permitted
Encumbrances), including those referenced in Schedule 4.15, on the Shares and
the assets of the Company.
SECTION 6.19. RESTRUCTURING. Prior to the Closing and with Buyer's
consent, ACME Missouri Holdings may merge with ACME Missouri, or it may be
liquidated and its assets distributed, so that ACME Television may become the
direct parent of ACME Missouri, provided that Buyer's consent to such
restructuring shall not constitute a waiver of its rights to indemnification
under Articles X and XI of this Agreement. In the event of such a restructuring,
Buyer and the ACME Entities shall amend this Agreement and the KWBP Asset
Purchase Agreement accordingly to reflect such restructuring.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. SALES, USE AND TRANSFER TAXES. Any sales, stock
transfer, use or other transfer Taxes payable by reason of transfer and
conveyance of the Shares, the Business, the Station or the Company's assets or
properties hereunder and any documentary stamp or transfer Taxes payable by
reason of the real estate or interests therein included shall be paid one-half
by Buyer and one-half by the ACME Entities. Except as set forth in Section 6.3,
all fees relating to any filing with any Governmental Body required for transfer
and conveyance of the Shares, the Business, the Station or the Company's assets
or properties hereunder, other than amounts (including Taxes) owing to any
Governmental Body as of the date hereof or with respect to events occurring
prior to the date hereof, shall be paid one-half by Buyer and one-half by the
ACME Entities.
SECTION 7.2. EMPLOYEES; EMPLOYEE BENEFIT PLANS.
(a) The ACME Entities shall cause the Company to terminate its
participation in all Employee Plans for which an ACME Entity is the plan sponsor
that are listed on Schedule 4.22(a) (the "ACME Plans") as of the Closing Date.
The ACME Entities shall retain the liability for payment of all benefits under
the ACME Plans, and Buyer shall not assume nor shall the Company be responsible
for any liability with respect to such claims or related expenses. In no event
shall any Transferred Employee (as hereinafter defined) be entitled to accrue
any benefits under the ACME Plans after the Closing.
(b) The Company (or one or more of its Affiliates, including Buyer,
after the Closing) will continue to employ on the Closing Date all active
Station Employees (except for Station Employees identified by Buyer within sixty
days after the date hereof, but in any event prior to the Closing, who shall be
retained by Seller or one of its Affiliates, and for whom Buyer
39
shall indemnify the ACME Entities for claims by any such employee solely to the
extent relating to Buyer's decision not to continue the employment of such
employee with the Company) at the level of salary, wages and commissions, if
applicable, comparable to similarly situated employees of Buyer and at the place
of employment of each such employee immediately prior to the Closing Date. For
purposes of the previous sentence, "active Station Employee" shall mean the
Station Employees who are properly classified as actively at work at the Station
on the Valuation Date or any Station Employee on approved maternity or paternity
leave of absence as of the Valuation Date.
(c) Each Station Employee who accepts employment with Buyer pursuant
to Section 7.2(b) (referred to in this Agreement as a "Transferred Employee")
shall, subject to applicable collective bargaining agreements, be eligible to
become a participant in such employee benefit plans (as such term is defined in
Section 3(3) of ERISA) and such other programs and arrangements as may be
provided to similarly situated employees of Buyer (other than the Tribune
Company Employee Stock Ownership Plan and the Tribune Company Savings Incentive
Plan) as soon as practicable following the closing; provided, however, that
Transferred Employees will be eligible to participate in Buyer's group health
plans immediately following the Closing without waiting periods or exclusion for
pre-existing conditions. Buyer shall not be obligated to provide, nor shall
assume any obligation or liability relating to, COBRA Coverage for any Station
Employee or any beneficiary who incurs a qualifying event on or prior to the
Closing Date. Buyer shall implement a new 401k Plan for the Transferred
Employees the ("Buyer 401(k) Plan"). To the extent requested by a Transferred
Employee, the ACME Entities shall permit a rollover, pursuant to Code Section
402(c), to the Buyer 401(k) Plan, in cash, of all of the individual account
balances of such Transferred Employee under the ACME Entities' 401(k) Plan,
including any outstanding plan participant loan receivables allocated to such
accounts subject to compliance with the requirements of the Buyer 401(k) Plan.
(d) The ACME Entities shall be solely responsible for the ACME Plans
and all obligations and liabilities thereunder. Buyer shall not assume any of
the ACME Plans or any obligation or liability thereunder. The ACME Entities
shall be responsible for, and shall indemnify and hold harmless Buyer from and
against any adverse consequences that Buyer may suffer resulting from, arising
out of, relating to, in the nature of, or caused by, any actions taken by the
ACME Entities or their Affiliates or any ERISA Affiliate pursuant to Section
7.2(b) with respect to an ACME Plan.
(e) Except as otherwise provided in Section 7.2, the ACME Entities
will remain responsible for all claims under the applicable Employee Plans for
health, accident, sickness, and disability benefits deemed incurred prior to the
Closing Date by Station Employees regardless of whether payment is made after
the Closing Date. For all purposes under such Employee Plans, Transferred
Employees will be considered to have terminated employment with the ACME
Entities or their Affiliates as of the Closing Date. For purposes of this
Agreement: (i) a claim for health benefits (including, without limitation,
claims for medical, prescription drug and dental expenses) will be deemed to
have been incurred on the date on which the related medical service or material
was rendered to or received by the Station Employee claiming such benefit, (ii)
a claim for sickness or disability benefits based on an injury or illness
occurring on or prior to the Closing Date will be deemed to have been incurred
prior to the Closing Date, and (iii) in the case of any claim for benefits other
than health benefits and sickness and disability
40
benefits (e.g., life insurance benefits), a claim will be deemed to have been
incurred upon the occurrence of the event giving rise to such claims.
(f) Any preexisting condition clause or waiting period in any of the
health coverage (including medical, dental and disability coverage) included in
Buyer's benefits programs shall be waived for the Transferred Employees to the
extent such crediting does not result in the duplication of benefits. For
purposes of any eligibility requirements, vesting requirements or differential
benefit provisions based on length of service under any of Buyer's benefit
programs (but not for purposes of pension benefit accruals), service of
Transferred Employees with the ACME Entities or their Affiliates (or any
predecessor thereof) will be treated as service with Buyer or its Affiliates.
Buyer shall ensure that each Transferred Employee receives credit under any
welfare benefit plan of Buyer or its Affiliates for any deductibles or
co-payments paid by such Transferred Employee and his or her dependents for the
calendar year in which the Closing Date occurs under a plan maintained by the
ACME Entities or any Affiliate of the ACME Entities, subject to Buyer's receipt
of such information within two months of the Closing Date. Buyer shall grant
credit to each Transferred Employee for sick leave and vacation time in
accordance with the policies of Buyer applicable generally to its similarly
situated employees after treating service for an ACME Entity, any Affiliate of
an ACME Entity, or any predecessor, as service for Buyer, subject to Buyer's
receipt of such information within two months of the Closing Date. To the extent
any claim with respect to vacation leave or sick leave accrued after the Closing
Date or accrued prior to the Closing Date to the extent Buyer has received a
credit under other provisions of this Agreement is lodged against an ACME Entity
with respect to any Transferred Employee, Buyer shall indemnify, defend, and
hold harmless the ACME Entities from and against any and all Losses, directly or
indirectly, as a result of or based upon or arising from the same.
(g) Buyer shall reimburse the ACME Entities for the costs of
severance benefits for each Station Employee, to the extent provided for
similarly situated employees under the Employee Plans, who does not receive an
offer of employment from Buyer. During the six-month period following the
Closing, Buyer will maintain a severance pay plan or policy for Transferred
Employees that provides benefits at least equal to the benefits provided for
such employees under any severance pay plan or policy maintained by the ACME
Entities immediately prior to the Closing. Schedule 4.22(a) sets forth the level
of severance benefits provided by the ACME Entities under any severance pay plan
or policy for such Transferred Employees.
(h) Nothing contained herein, expressed or implied, is intended to
confer upon any Station Employee any right to continued employment for any
period of time by reason of this Agreement. Nothing contained herein is intended
to confer upon any Station Employee any particular term or condition of
employment.
SECTION 7.3. CONTROL OF OPERATIONS PRIOR TO CLOSING DATE.
Notwithstanding anything contained herein to the contrary, the Closing shall not
be consummated prior to the grant of the FCC Consent. The ACME Entities and
Buyer acknowledge and agree that at all times commencing on the date hereof and
ending on the Closing Date, neither Buyer nor any of its employees, agents or
representatives, directly or indirectly, shall, or have any right to, control,
direct or otherwise supervise, or attempt to control, direct or otherwise
supervise any of the
41
management or operations of the Station, it being understood that the operation,
management, control and supervision of all programs, equipment, operations and
other activities of the Station shall be the sole responsibility, and at all
times prior to the Closing Date remain within the complete control and
discretion, of the ACME Entities and the Company, subject to the terms of
Section 6.4 of this Agreement.
SECTION 7.4. COVENANT NOT TO COMPETE OR SOLICIT BUSINESS. In
furtherance of the sale of the Shares to Buyer hereunder by virtue of the
transactions contemplated hereby and more effectively to protect the value and
goodwill of the Business, the ACME Entities covenant and agree that:
(i) until the third anniversary of the Closing Date, neither
the ACME Entities nor any of their Affiliates (which term
"Affiliate" shall not include the Company for purposes of this
Section) will, directly or indirectly (whether as principal, agent,
independent contractor, partner or otherwise) own, manage, operate,
control, provide consulting or management services for, or otherwise
carry on, a television broadcast station similar to or competitive
with the Business as conducted by the Company as of the Closing Date
(a "Competitive Business") anywhere within the St. Louis, Missouri
Designated Market Area (as defined by Xxxxxxx Media Research, Inc.);
or
(ii) until the first anniversary of the Closing Date, neither
the ACME Entities nor any of their Affiliates will, induce or
attempt to persuade any current employee, agent or customer of the
Business to terminate such employment, agency or business
relationship in order to enter into any such relationship on behalf
of any Competitive Business;
provided, however, that nothing set forth in this Section 7.4 shall prohibit the
ACME Entities or any of their Affiliates from owning not in excess of 5% in the
aggregate of any class of capital stock of any corporation if such stock is
publicly traded and listed on any national or regional stock exchange or
included on the NASDAQ market system or similar system. In addition, the ACME
Entities covenant and agree that neither they nor any of their Affiliates will
divulge or make use of any trade secrets or other confidential information of
the Business existing as of the Closing Date other than to disclose such secrets
and information to Buyer or its Affiliates, except as required by applicable law
or regulation or by legal process. In the event the ACME Entities or any of
their Affiliates violate any of their obligations under this Section 7.4, Buyer
may proceed against them in law or in equity for such damages or other relief as
a court may deem appropriate. The ACME Entities acknowledge that a violation of
this Section 7.4 may cause Buyer irreparable harm which may not be adequately
compensated for by money damages. The ACME Entities therefore agree that in the
event of any actual or threatened violation of this Section 7.4, Buyer shall be
entitled, in addition to other remedies that it may have, to a temporary
restraining order and to preliminary and final injunctive relief against the
ACME Entities or such Affiliate of the ACME Entities to prevent any violations
of this Section 7.4, without the necessity of posting a bond. It is the intent
and understanding of each party hereto that if, in any action before any court
or agency legally empowered to enforce this Section 7.4, any term, restriction,
covenant or promise in this Section 7.4 is found to be unreasonable and for
42
that reason unenforceable, then such term, restriction, covenant or promise
shall be deemed modified to the extent necessary to make it enforceable by such
court or agency.
SECTION 7.5. ACCOUNTS RECEIVABLE.
(a) As soon as practicable after the Closing, the ACME Entities
shall deliver to Buyer a complete and detailed list of all the Accounts
Receivable. During the period beginning on the Closing Date and ending on the
one hundred twentieth (120th) day after the Closing Date (the "Collection
Period"), Buyer shall use commercially reasonable efforts to collect the
Accounts Receivable in the usual and ordinary course of business, using the
Station's credit, sales, and other appropriate personnel in accordance with
customary practices which may include referral to a collection agency.
Notwithstanding the foregoing, Buyer shall not be required to institute legal
proceedings to enforce the collection of any Accounts Receivable. Buyer shall
not adjust any Accounts Receivable or grant credit without Seller's written
consent, and Buyer shall not pledge, secure, or otherwise encumber such Accounts
Receivable or the proceeds therefrom, other than to the extent such pledge,
security or encumbrance arises without any further action not specifically
required by Buyer under Buyer's or its Affiliates' financing instruments or
facilities in the ordinary course of business. On or before the tenth (10th)
Business Day after the end of each calendar month during the Collection Period,
Buyer shall remit to Seller collections received by Buyer with respect to the
Accounts Receivable, together with a report of all amounts collected with
respect to the Accounts Receivable during, as the case may be, the period from
the Closing or the beginning of such month through the end of such month, less
any reasonable sales commissions or collection costs paid by Buyer in the
ordinary course of its business during the respective periods with respect to
those Accounts Receivable, plus any sales commission chargebacks taken by Buyer
to the extent such sales commissions were previously deducted in determining the
amount to be paid to Seller hereunder.
(b) Any payments received by Buyer during the Collection Period from
any Person that is an account debtor with respect to any account disclosed in
the list of Accounts Receivable delivered by the ACME Entities to Buyer shall be
applied first to the invoice designated by the account debtor and, if none, such
payment shall be applied to the oldest account which is not disputed. Buyer
shall incur no liability to the ACME Entities for any uncollected account, other
than as a result of Buyer's breach of its obligations under this Section 7.5, in
which case such liability shall not exceed the amount of the disputed Accounts
Receivable. Prior to the end of the Collection Period, neither the ACME
Entities, nor any agent of the ACME Entities, shall make any direct solicitation
of the account debtors for payment.
SECTION 7.6. BROADCAST TRANSMITTER. On or prior to the Closing, the
ACME Entities shall cause the Company to transfer, and the ACME Entities shall
assume from the Company, any and all obligation for the payment of the purchase
price of the new analog Transmitter, provided that the Company shall retain
title to and possession of such transmitter prior to and as of the Closing.
SECTION 7.7. THE DAILY BUZZ. From and after Closing, neither Buyer,
the Company nor the Station shall have any obligation to air or fund any portion
of The Daily Buzz, a program produced by the ACME Entities or their Affiliates
and currently shown on all stations owned or operated, directly or indirectly,
by the ACME Entities. The programming contract for
43
The Daily Buzz with respect to the Station and the Company shall be terminated
by the ACME Entities at or prior to Closing.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement to consummate the
Closing shall, at the option of Buyer, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
SECTION 8.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES.
(a) There shall have been no material breach by any ACME Entity in
the performance of any of its respective covenants and agreements contained
herein.
(b) Each of the representations and warranties of the ACME Entities
contained or referred to herein that is not qualified as to materiality or
Material Adverse Effect shall be true and correct in all material respects on
the Closing Date as though made on the Closing Date (except to the extent that
they expressly speak as of a specific date or time other than the Closing Date,
in which case they need only have been true and correct in all material respects
as of such specified date or time), and each of the representations and
warranties of the ACME Entities contained or referred to herein that is
qualified as to materiality or Material Adverse Effect shall be true and correct
in all respects on the Closing Date as though made on the Closing Date, except
in any case for changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Buyer.
(c) The ACME Entities shall have delivered to Buyer certificates,
dated as of the Closing Date, signed on behalf of each ACME Entity by its
respective President or any Vice President, certifying that the conditions
described in subsections (a) and (b) above have been satisfied.
SECTION 8.2. NO RESTRAINT OR LITIGATION.
(a) Any applicable waiting period under the HSR Act shall have
expired or have been terminated and there shall not be in effect any preliminary
or permanent injunction or other order, decree or ruling by a court of competent
jurisdiction or by a Governmental Body, no statute, rule, regulation or
executive order shall have been promulgated or enacted by a Governmental Body
and there shall not be in effect any temporary restraining order of a court of
competent jurisdiction, which, in any case, restrains or prohibits the
transactions contemplated hereby.
(b) There shall not be in existence any suit, action, proceeding or
investigation instigated by a Governmental Body before any court or governmental
agency or body to prohibit the transactions contemplated by this Agreement.
SECTION 8.3. FCC CONSENT.
44
(a) The FCC Consent shall have been granted, without any condition
or qualification which is materially adverse to Buyer, the Company or to the
operations of the Station, provided that if a petition to deny or other
third-party objection is filed with the FCC prior to the date on which the FCC
Consent is issued and becomes a Final Order, and such petition or objection is
not withdrawn as of such date and in the reasonable judgment of Buyer's counsel
such objection would reasonably be expected to result in a reversal or
rescission of the FCC Consent, then Buyer's obligation to effect the Closing
shall be subject to the further condition that the FCC Consent shall have become
a Final Order.
(b) Conditions which the FCC Consent, Final Order or any other
order, ruling or decree of any judicial or Governmental Body specifies and
requires to be satisfied prior to transfer of the Station Licenses to Buyer or
its Affiliates shall have been satisfied.
SECTION 8.4. CLOSING DOCUMENTS. The ACME Entities shall deliver to
Buyer all of the closing documents specified in Section 3.4(a), all of which
documents shall be dated as of the Closing Date, duly executed and in a form
customary in transactions of this type and reasonably acceptable to Buyer.
SECTION 8.5. THIRD PARTY CONSENTS. The ACME Entities or the Company
shall have obtained all consents required under the Station Agreements set forth
on Schedule 8.5 in connection with the consummation of the transactions
contemplated by this Agreement, such that after the Closing the Company will
continue to enjoy all of its rights and privileges under such Station Agreements
subject only to the same obligations as are currently binding thereunder,
pursuant to the present terms thereof.
SECTION 8.6. CLOSING OF KWBP TRANSACTION. The closing of the KWBP
Purchase shall occur simultaneously with the Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACME ENTITIES
The obligations of the ACME Entities under this Agreement to
consummate the Closing shall, at the option of the ACME Entities, be subject to
the satisfaction on or prior to the Closing Date, of the following conditions:
SECTION 9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES.
(a) There shall have been no material breach by Buyer in the
performance of any of its respective covenants and agreements contained herein.
(b) Each of the representations and warranties of Buyer contained or
referred to herein that is not qualified by materiality shall be true and
correct in all material respects on the Closing Date as though made on the
Closing Date (except to the extent that they expressly speak as of a specific
date or time other than the Closing Date, in which case they need only have been
true and correct in all material respects as of such specified date or time),
and each of the representations and warranties of Buyer contained or referred to
herein that is qualified as to
45
materiality shall be true and correct in all respects on the Closing Date as
though made on the Closing Date, except in any case for changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by the ACME Entities or any transaction
contemplated by this Agreement.
(c) Buyer shall have delivered to the ACME Entities a certificate
dated as of the Closing Date and signed on behalf of each Buyer by its President
or any Vice President, certifying that the conditions described in subsections
(a) and (b) above have been satisfied.
SECTION 9.2. NO RESTRAINT OR LITIGATION.
(a) Any applicable waiting period under the HSR Act shall have
expired or been terminated and there shall not be in effect any preliminary or
permanent injunction or other order, decree or ruling by a court of competent
jurisdiction or by a Governmental Body, no statute, rule, regulation or
executive order shall have been promulgated or enacted by a Government Body and
there shall not be in effect any temporary restraining order of a court of
competent jurisdiction, which, in any case, restrains or prohibits the
transactions contemplated hereby.
(b) There shall not be in existence any suit, action, proceeding or
investigation instigated by a Governmental Body before any court or governmental
agency or body to prohibit the transactions contemplated by this Agreement.
SECTION 9.3. FCC CONSENT. The FCC Consent shall have been granted,
without any condition or qualification which is materially adverse to the ACME
Entities, notwithstanding that it may not have yet become a Final Order.
SECTION 9.4. CLOSING DOCUMENTS. Buyer shall deliver to the ACME
Entities all of the closing documents specified in Section 3.4(b), all of which
documents shall be dated as of the Closing Date, duly executed and in a form
customary in transactions of this type and reasonably acceptable to the ACME
Entities.
SECTION 9.5. CLOSING OF KWBP TRANSACTION. The closing of the KWBP
Purchase shall occur simultaneously with the Closing.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. INDEMNIFICATION BY THE ACME ENTITIES. The ACME
Entities agree jointly and severally to indemnify and hold harmless each Buyer
Group Member from and against any and all Loss and Expense incurred by such
Buyer Group Member in connection with or arising from:
(i) any breach by the ACME Entities of, or any other failure
of the ACME Entities or their respective Affiliates to perform, any
of their covenants, agreements or obligations in this Agreement or
in any ACME Ancillary
46
Agreement (determined without regard to materiality or Material
Adverse Effect qualifiers);
(ii) any breach of any warranty or the inaccuracy of any
representation of the ACME Entities contained or referred to in this
Agreement or any certificate delivered by or on behalf of the ACME
Entities pursuant hereto (determined without regard to materiality
or Material Adverse Effect qualifiers); or
(iii) any Losses, Expenses, Taxes or other amount for which,
under Article XI, Buyer Group Members are to be indemnified by the
ACME Entities;
provided, however, that the ACME Entities shall not be required to indemnify and
hold harmless pursuant to clause (ii) with respect to Loss and Expense incurred
by Buyer Group Members until the aggregate amount of all such Loss and Expense
exceeds $250,000 and then only to the extent that the aggregate amount of all
such Loss and Expense exceeds $125,000 and, provided, further, that the
aggregate amount that the ACME Entities shall be required to indemnify and hold
harmless pursuant to clause (ii) with respect to Loss and Expense incurred by
Buyer Group Members shall not exceed $50,000,000. The indemnification provided
for in this Section 10.1 shall terminate eighteen (18) months after the Closing
Date (and no claims shall be made by any Buyer Group Member under this Section
10.1 thereafter), except that the indemnification by the ACME Entities shall
continue in any event as to:
(A) the covenants of the ACME Entities set forth in this Agreement,
as to all of which no time limitation shall apply, unless otherwise stated
herein;
(B) the covenants of the ACME Entities set forth in Section 7.4,
which shall terminate one year after the expiration of the noncompetition
period provided for therein;
(C) the representations and warranties contained in Sections 4.7 and
4.23 and the covenants of the ACME Entities set forth in Section 7.1 and
any Loss or Expense incurred by any Buyer Group Member in connection with
or arising out of the matters described in clause (iii) of this Section
10.1, as to all of which no time limitation shall apply other than the
full period of any applicable statute of limitations plus sixty (60) days;
(D) the representations and warranties contained in Sections 4.3(b),
4.15 and 4.26, as to which no time limitation shall apply; and
(E) any Loss or Expense of which any Buyer Group Member has notified
the ACME Entities in accordance with the requirements of Section 10.3 on
or prior to the date such indemnification would otherwise terminate in
accordance with this Section 10.1, as to which the obligation of the ACME
Entities shall continue until the liability of the ACME Entities shall
have been determined pursuant to this Article X, and the ACME Entities
shall have reimbursed all Buyer Group Members for the full amount of such
Loss and Expense in accordance with this Article X.
47
SECTION 10.2. INDEMNIFICATION BY BUYER. Buyer agrees to indemnify
and hold harmless each ACME Group Member from and against any and all Loss and
Expense incurred by such ACME Group Member in connection with or arising from:
(i) any breach by Buyer, or any other failure of Buyer to
perform, any of its covenants, agreements or obligations in this
Agreement or in any Buyer Ancillary Agreement (determined without
regard to materiality qualifiers);
(ii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement
or any certificate delivered by or on behalf of Buyer pursuant
hereto (determined without regard to materiality qualifiers); or
(iii) any Losses, Expenses, Taxes or other amount for which,
under Article XI, ACME Group Members are to be indemnified by Buyer;
provided, however, that Buyer shall not be required to indemnify and hold
harmless pursuant to clause (ii) with respect to Loss and Expense incurred by
ACME Group Members until the aggregate amount of all such Loss and Expense
exceeds $250,000 and then only to the extent that the aggregate amount of all
such Loss and Expense exceeds $125,000. The indemnification provided for in this
Section 10.2 shall terminate eighteen (18) months after the Closing Date (and no
claims shall be made by any ACME Group Member under this Section 10.2
thereafter), except that the indemnification by Buyer shall continue in any
event as to:
(A) the covenants of Buyer set forth in this Agreement, as to all of
which no time limitation shall apply, unless otherwise stated herein;
(B) the covenants of Buyer set forth in Section 7.1 and any Loss or
Expense incurred by any Buyer Group Member in connection with or arising
out of the matters described in clause (iii) of this Section 10.2, as to
all of which no time limitation shall apply other than the full period of
any applicable statute of limitations plus sixty (60) days;
(C) the representations and warranties contained in Sections 5.2(b)
and 5.4, as to which no time limitation shall apply; and
(D) any Loss or Expense of which any ACME Group Member has notified
Buyer in accordance with the requirements of Section 10.3 on or prior to
the date such indemnification would otherwise terminate in accordance with
this Section 10.2, as to which the obligation of Buyer shall continue
until the liability of Buyer shall have been determined pursuant to this
Article X, and Buyer shall have reimbursed all ACME Group Members for the
full amount of such Loss and Expense in accordance with this Article X.
SECTION 10.3. NOTICE OF CLAIMS. (a) If any Buyer Group Member (with
respect to Section 10.1) or any ACME Group Member (with respect to Section 10.2)
believes that it has suffered or incurred any Loss or incurred any Expense, such
Buyer Group Member or ACME Group Member, as the case may be (the "Indemnified
Party"), shall so notify the parties
48
obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") promptly in writing describing such Loss or Expense, the amount
thereof, if known, and the method of computation of such Loss or Expense, all
with reasonable particularity and containing a reference to the provisions of
this Agreement or any certificate delivered pursuant hereto in respect of which
such Loss or Expense shall have occurred (a "Claim Notice"); provided, however,
that the omission by the Indemnified Party to give notice as provided herein
shall not relieve the Indemnitor of its indemnification obligation under this
Article X except to the extent that such omission results in a failure of actual
notice to the Indemnitor and such Indemnitor is materially damaged as a result
of such failure to give notice. If any action at law or suit in equity is
instituted by or against a third Person with respect to which any Indemnified
Party intends to claim any liability or expense as Loss or Expense under this
Article X, such Indemnified Party shall promptly notify the Indemnitor of such
action or suit as specified in this Section 10.3.
(a) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification to which an Indemnified Party shall be entitled under this
Article X shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Losses and Expenses suffered by it.
SECTION 10.4. THIRD PERSON CLAIMS.
(a) Subject to Section 10.4(b), the Indemnified Party shall have the
right to conduct and control, through one separate counsel (plus appropriate
local counsel) of its choosing, the defense, compromise or settlement of any
third Person claim, action or suit against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any Indemnitor
hereunder, and in any such case the Indemnitor shall cooperate in connection
therewith and shall furnish such records, information and testimony and attend
such conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnified Party in connection therewith; provided,
that the Indemnitor may participate, through counsel chosen by it and at its own
expense, in the defense of any such claim, action or suit as to which the
Indemnified Party has so elected to conduct and control the defense thereof; and
provided further that the Indemnified Party shall not, without the written
consent of the Indemnitor (which written consent shall not be unreasonably
withheld), pay, compromise or settle any such claim, action or suit, except that
no such consent shall be required if, following a written request from the
Indemnified Party, the Indemnitor shall fail, within fourteen (14) days after
the making of such request, to acknowledge and agree in writing that, if such
claim, action or suit shall be adversely determined, such Indemnitor has an
obligation to provide indemnification hereunder to such Indemnified Party.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle or compromise any such claim, action or suit without such consent,
provided that in such event the Indemnified Party shall waive any right to
indemnity therefor hereunder unless such consent is unreasonably withheld.
49
(b) If any third Person claim, action or suit against any
Indemnified Party is solely for money damages or, where the ACME Entities are
the Indemnitor, will have no continuing effect in any material respect on the
Company or Buyer or its Affiliates or their respective businesses, assets or
operations, then the Indemnitor shall have the right to conduct and control,
through counsel of its choosing and at its own expense, the defense, compromise
or settlement of any such third Person claim, action or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnitor hereunder if the Indemnitor has acknowledged and
agreed in writing that, if the same is adversely determined, the Indemnitor has
an obligation to provide indemnification to the Indemnified Party in respect
thereof, and in any such case the Indemnified Party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the Indemnitor in connection therewith;
provided, that the Indemnified Party may participate, through counsel chosen by
it and at its own expense, in the defense of any such claim, action or suit as
to which the Indemnitor has so elected to conduct and control the defense
thereof. Notwithstanding the foregoing, the Indemnified Party shall have the
right to pay, settle or compromise any such claim, action or suit, provided that
in such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless the Indemnified Party shall have sought the consent of the
Indemnitor to such payment, settlement or compromise and such consent was
unreasonably withheld, in which event no claim for indemnity therefor hereunder
shall be waived.
SECTION 10.5. LIMITATIONS. (a) In any case where an Indemnified
Party recovers from third Persons any amount in respect of a matter with respect
to which an Indemnitor has indemnified it pursuant to this Article X, such
Indemnified Party shall promptly pay over to the Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses incurred by
it in procuring such recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnitor to or on behalf of the Indemnified Party in
respect of such matter and (ii) any amount reasonably expended by the Indemnitor
in pursuing or defending any claim arising out of such matter.
(a) Except in claims of common law fraud or except for equitable or
specific performance remedies, remedies that cannot be waived as a matter of law
and injunctive and provisional relief, if the Closing occurs, this Article X
shall be the exclusive remedy for breaches of this Agreement (including any
covenant, obligation, representation or warranty contained in this Agreement or
in any certificate delivered pursuant to this Agreement).
(b) To the extent of any inconsistency between this Article X and
Article XI, the provisions of Article XI shall control.
(c) Each party agrees to use its commercially reasonable efforts to
mitigate any Loss and Expense that forms the basis for any claim for
indemnification hereunder.
(d) In no event shall a party be entitled to indemnification for
such party's incidental, consequential or punitive damages.
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ARTICLE XI
TAX MATTERS
SECTION 11.1. LIABILITY FOR TAXES. (a) Except as set forth in
subparagraph (b) below, the ACME Entities shall be liable for and pay, and
pursuant to Article X shall indemnify each Buyer Group Member against, (A) all
Taxes imposed on any Company, or for which any Company may otherwise be liable,
as a result of having been a member of a Company Group (including, without
limitation, Taxes for which any Company may be liable pursuant to Treasury
Regulation Section 1.1502-6 or similar provisions of state, local or foreign law
as a result of having been a member of a Company Group), (B) all Taxes imposed
on any Company, or for which any Company may otherwise be liable, for any
taxable year or period that ends on or before the Closing Date and, with respect
to any Straddle Period, the portion of such Straddle Period ending on and
including the Closing Date (including, without limitation, any obligations to
contribute to the payment of a Tax determined on a consolidated, combined or
unitary basis with respect to a Company Group and any Taxes resulting from a
Company ceasing to be a member of a Company Group, (C) any interest or penalties
that are due to the failure (through no fault of Buyer) of any ACME Group Member
to timely prepare, assist in preparation or file or cause to be filed any Tax
Return required to be filed with respect to any Straddle Period, and (D) Taxes
arising as a result of any breach of a warranty or covenant of the ACME Entities
under this Agreement.
(b) Buyer shall be liable for and pay, and pursuant to Article X
shall indemnify each ACME Group Member against, (A) all Taxes imposed on any
Company for any taxable year or period that begins after the Closing Date and,
with respect to any Straddle Period, the portion of such Straddle Period
beginning after the Closing Date, other than Taxes for which such Company is
liable as a result of having been a member of a Company Group, (B) any Taxes to
the extent such Taxes were taken into account in making the computations
required by Section 3.6, (C) Taxes imposed on any Company resulting from
actions, decisions or elections undertaken or made by any Buyer Group Member
after the Closing, or any settlements effected by Buyer if Buyer has agreed to
forego indemnification as required by Section 11.3(b), (D) any interest or
penalties that are due to the failure (through no fault of the ACME Entities) of
any Buyer Group Member to timely prepare, assist in preparation or file or cause
to be filed any Tax Return required to be filed after the Closing Date, (E)
Taxes arising as a result of any other breach of a warranty or covenant of Buyer
under this Agreement and (F) Taxes that arise or are increased as a result of
any change after the Closing Date in the bases, methods, or policies of
accounting adopted by Company, provided, that the previous bases, methods, or
policies of accounting used by the Company were in accordance with applicable
Tax law.
(c) For purposes of paragraphs (a) and (b) of this Section 11.1,
whenever it is necessary to determine the liability for Taxes of any Company for
a Straddle Period, the determination of the Taxes of the Company for the portion
of the Straddle Period ending on and including, and the portion of the Straddle
Period beginning after, the Closing Date shall be determined by assuming that
the Straddle Period consisted of two taxable years or periods, one which ended
at the close of the Closing Date and the other which began at the beginning of
the day following the Closing Date, and subject to paragraph (d) of this Section
11.1, items of income, gain, deduction, loss or credit of the Company for the
Straddle Period shall be allocated
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between such two taxable years or periods on a "closing of the books basis" by
assuming that the books of the Company were closed at the close of the Closing
Date; provided, however, that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation, shall be
apportioned between such two taxable years or periods on a daily basis.
(d) Except as provided herein, the ACME Entities and their
Affiliates shall be entitled to any refund of Taxes of any Company pertaining to
taxable periods (or portions thereof) ending prior to or on the Closing Date. If
the ACME Entities or any Affiliate thereof becomes entitled to a refund or
credit of Taxes for which the ACME Entities are liable under paragraph (a) to
indemnify any Buyer Group Member, and such refund or credit is attributable to
the carryback of losses, credits or similar items from a taxable year or period
that begins after the Closing Date and is attributable to any Company, the ACME
Entities or such Affiliate shall promptly pay to Buyer the amount of such refund
or credit together with any interest (net of Taxes) thereon. Buyer will pay to
the ACME Entities an amount equal to any savings actually realized by any Buyer
Group Member in respect of the net operating loss carryforwards, and credit
carryforwards, of any Company existing as of the Closing Date. Buyer will make
such remittance promptly after such savings is realized by Buyer or any of its
Affiliates. In the event that any refund or credit of Taxes for which a payment
has been made to Buyer or to the ACME Entities is subsequently reduced or
disallowed, Buyer or the ACME Entities shall indemnify and hold harmless the
ACME Entities or Buyer, respectively, for any Tax assessed by reason of the
reduction or disallowance. If any adjustment is made to any Tax Return of any
Company for a period for which the ACME Entities are liable under subparagraph
(a) to indemnify any Buyer Group Member, and which results in an indemnification
payment by the ACME Entities, and which also results in any deduction, exclusion
from income, addition to tax basis or other allowance (a "Tax Benefit") to the
Company or any of its Affiliates in a taxable period (or portion thereof)
beginning after the Closing Date, the Company or Buyer shall pay to the ACME
Entities the amount of the tax reduction attributable to such Tax Benefit at
such time or times as, and to the extent that, such Tax Benefit is realized;
provided, however, that this sentence shall not apply to any Tax Benefit (i)
arising from an adjustment to a Tax Return of any Company which also results in
a Tax Benefit (for example, through an increase in stock basis) to any of the
ACME Entities or Affiliates or (ii) recognized after the second full taxable
year following the taxable year that includes the Closing Date.
SECTION 11.2. FILING OF TAX RETURNS.
(a) The ACME Entities shall timely file or cause to be timely filed
when due (taking into account all extensions properly obtained) all Tax Returns
that are required to be filed by or with respect to the Company for taxable
years or periods ending on or before the Closing Date (including Tax Returns
required to be filed by or with respect to the Company for taxable years or
periods ending on or before or including the Closing Date on a combined,
consolidated or unitary basis with any entity other than solely the Company) or
due on or before the Closing Date (with respect to other Tax Returns) and in
each case the ACME Entities shall remit or cause to be remitted any
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Taxes due in respect of such Tax Returns. Subject to the requirements of
subparagraph (b) of this Section 11.2, Buyer shall timely file or cause to be
timely filed when due (taking into account all extensions properly obtained) all
other Tax Returns that are required to be filed by or with respect to each
Company and Buyer shall remit or cause to be remitted any Taxes due in respect
of such Tax Return. The ACME Entities or Buyer shall promptly reimburse the
other party the Taxes for which the ACME Entities are, or Buyer is, liable
pursuant to Section 11.1 of this Article XI but which are payable with any Tax
Return to be filed by the other party pursuant to this Section 11.2(a) upon the
written request of the party entitled to reimbursement setting forth in detail
the computation of the amount owed by the ACME Entities or Buyer, as the case
may be, but in no event earlier than 10 days prior to the due date for paying
such Taxes. All Tax Returns that the ACME Entities are required to file or cause
to be filed in accordance with this Section 11.2(a) shall be prepared and filed
in a manner consistent with past practice and, on such Tax Returns, no position
shall be taken, elections made or method adopted that is inconsistent with
positions taken, elections made or methods used in preparing and filing similar
Tax Returns in prior periods (including positions, elections or methods which
would have the effect of deferring income to periods for which Buyer is liable
under Section 11.1(b) or accelerating deductions to periods for which the ACME
Entities are liable under Section 11.1(a)).
(b) Buyer shall file or cause to be timely filed when due (taking
into account all extensions properly obtained) all Tax Returns that are required
to be filed after the Closing Date that relate to a Straddle Period. All Tax
Returns that Buyer is required to file or cause to be filed under this Section
11.2(b) shall be prepared and filed in a manner consistent with past practice
and, on such Tax Returns, no position shall be taken, elections made or method
adopted that is inconsistent with positions taken, elections made or methods
used in preparing and filing similar Tax Returns in prior periods, except as
required by law or as regarding separate versus unitary or combined tax filing.
The ACME Entities or Buyer shall promptly reimburse the other party the Taxes
for which the ACME Entities are, or Buyer is, liable pursuant to Section 11.1 of
this Article XI but which are payable with any Tax Return to be filed pursuant
to this Section 11.2(b) upon the written request of the party entitled to
reimbursement setting forth in detail the computation of the amount owed by the
ACME Entities or Buyer, as the case may be, but in no event earlier than 10 days
prior to the due date for paying such Taxes. Tax Returns required to be filed
pursuant to this Section 11.2(b) shall be provided to the ACME Entities for
review and comment no later than 10 days prior to the due date for filing such
Tax Returns, taking into account any applicable extensions (or, if such due date
or extended due date is within 10 days following the Closing Date, as promptly
as practicable following the Closing Date). Buyer will consider in good faith
any comments received from the ACME Entities and will consult with the ACME
Entities to resolve such comments prior to the due date or extended due date for
the filing of such Tax Return.
(c) Without the ACME Entities' prior written consent, no Buyer Group
Member shall permit, or cause to be permitted, an amendment of any Tax Return of
the Company pertaining to Taxes for which the ACME Entities are responsible
pursuant to Section 11.1(a), unless required by applicable law.
SECTION 11.3. CONTEST PROVISIONS.
(a) Buyer shall notify the ACME Entities in writing upon receipt by
Buyer, any of its Affiliates, or, after the Closing Date, any Company of notice
of any pending or threatened Tax audits or assessments which may affect the Tax
liabilities of the Company for which the ACME Entities would be required to
indemnify any Buyer Group Member pursuant to
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this Article XI, provided that failure to comply with this provision shall not
affect any Buyer Group Member's right to indemnification hereunder except to the
extent such failure materially impairs the ACME Entities' ability to contest any
such Tax liabilities.
(b) The ACME Entities shall have the sole right to represent each
Company's interests in any Tax audit or administrative or court proceeding
relating to taxable periods ending on or before the Closing Date, and to employ
counsel of its choice at its expense; provided, however, that the ACME Entities
shall have no right to represent the Company's interests in any Tax audit or
administrative or court proceeding unless the ACME Entities shall have first
notified Buyer in writing of the ACME Entities' intention to do so; provided,
further, that Buyer and its representatives shall be permitted, at Buyer's
expense, to be present at, and participate in, any such audit or proceeding.
Nothing herein shall be construed to impose on Buyer or any Affiliate of Buyer
any obligation to defend the Company in any Tax audit or administrative or court
proceeding. In the case of a Straddle Period, the ACME Entities and their
representatives shall be permitted, at their expense, to be present at, and
participate in, any Tax audit or administrative or court proceeding relating (in
whole or in part) to Taxes attributable to the portion of such Straddle Period
ending on and including the Closing Date. Notwithstanding the foregoing, the
ACME Entities and their Affiliates shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim for Taxes
which could adversely affect the liability for Taxes of Buyer, the Company or
any Affiliate thereof for any period after the Closing Date to any extent
(including the imposition of income Tax deficiencies, the reduction of asset
basis or cost adjustments, the lengthening of any amortization or depreciation
periods, the denial of amortization or depreciation deductions, or the reduction
of loss or credit carryforwards) without the prior written consent of Buyer,
which consent shall not be unreasonably withheld and shall not be necessary if
the ACME Entities have indemnified Buyer and its Affiliates against the effects
of any such settlement. Buyer shall have the sole right to defend the Company
with respect to any issue arising with respect to any Tax audit or
administrative or court proceeding relating to taxable periods ending on or
before the Closing Date to the extent Buyer shall have agreed in writing to
forego any indemnification under this Agreement with respect to such issue,
provided, that such issue does not pertain to a consolidated or combined Tax
Return. Neither Buyer, nor any of its Affiliates, shall be entitled to settle,
either administratively or after the commencement of litigation, any claim for
Taxes that would result in or increase the ACME Entities' obligation to
indemnify a Buyer Group Member, or decrease a net operating loss or credit
carryforward existing on the Closing Date, without the ACME Entities' prior
written consent, which consent shall not be unreasonably withheld, and which
consent shall not be necessary if the ACME Entities are relieved of their
indemnification obligations with respect to such Taxes and appropriately
compensated for the reduction of such carryforwards, as applicable.
SECTION 11.4. ASSISTANCE AND COOPERATION. After the Closing Date,
the ACME Entities and Buyer shall (and cause their respective Affiliates to):
(a) timely sign and deliver such certificates or forms as may be
necessary or appropriate to establish an exemption from (or otherwise reduce),
or file Tax Returns or other reports with respect to, Taxes described in Section
7.1 (relating to sales, transfer and similar Taxes);
54
(b) assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing in accordance with Section
11.2;
(c) cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns of the Company;
(d) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of the Company; and
(e) furnish the other with copies of all correspondence received
from any taxing authority in connection with any Tax audit or information
request with respect to any such taxable period.
SECTION 11.5. INDEMNIFICATION PAYMENTS ON AFTER-TAX BASIS. Any
indemnification payment under this Article XI with respect to a Loss or Expense
shall be an amount that is sufficient to compensate the Indemnified Party for
the amount of such Loss or Expense, after taking into account all increases or
decreases in Taxes payable by the Indemnified Party or its Affiliates as a
result of the receipt of such payment or the taking of any deduction related to
the Loss or Expense giving rise thereto (by reason of such payment being
included in income, resulting in a reduction of tax basis, or otherwise
increasing or decreasing such Taxes payable by the Indemnified Party or its
Affiliates at any time); provided, that notwithstanding the foregoing, any
indemnification payment under this Article XI shall not take into account any
increases or decreases in Taxes recognized after the second full taxable year of
the Company following the taxable year that includes the Closing Date.
SECTION 11.6. SURVIVAL OF OBLIGATIONS. Notwithstanding anything to
the contrary in this Agreement, the obligations of the parties set forth in this
Article XI shall be unconditional and absolute and shall remain in effect for
the full period of any applicable statute of limitations plus sixty (60) days.
ARTICLE XII
TERMINATION AND REMEDIES
SECTION 12.1. TERMINATION.
(a) Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may be terminated at any time prior to the Closing:
(i) by the mutual written consent of the ACME Entities and
Buyer;
(ii) by the ACME Entities in the event of a material breach by
Buyer of any of its agreements, representations or warranties
contained in this Agreement or if any of the representations or
warranties of Buyer contained in this Agreement shall have been
inaccurate in any material respect when made, and the failure of
Buyer to cure such breach within thirty (30) days after receipt of
written notice from the ACME Entities requesting such breach to be
cured;
55
(iii) by Buyer in the event of a material breach by the ACME
Entities of any of their respective agreements, representations or
warranties contained in this Agreement or if any of the
representations or warranties of the ACME Entities contained in this
Agreement shall have been inaccurate in any material respect when
made, and the failure of the ACME Entities to cure such breach
within thirty (30) days after receipt of written notice from Buyer
requesting such breach to be cured;
(iv) by the ACME Entities or Buyer if any court of competent
jurisdiction in the United States or other United States
Governmental Body shall have issued a final and non-appealable
order, decree or ruling permanently restraining, enjoining or
otherwise prohibiting the consummation of the transactions
contemplated hereby;
(v) by Buyer, pursuant to the provisions of Section
13.13(a)(ii) hereof;
(vi) by Buyer, pursuant to the provisions of Section 13.13(b)
hereof;
(vii) by the ACME Entities or Buyer if the Closing shall not
have occurred within one year after the date of this Agreement (or
such later date as may be mutually agreed to by the ACME Entities
and Buyer); provided, however, that the right to terminate this
Agreement under this Section 12.1(a)(vii) shall not be available to
any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or resulted in, the failure
of the Closing to occur prior to such date; and
(viii) by the ACME Entities as contemplated by Section
6.11(b)(ii)(B).
SECTION 12.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to Section 12.1 shall give notice of such termination to
the other party to this Agreement.
SECTION 12.3. EFFECT OF TERMINATION. In the event that this
Agreement shall be terminated pursuant to this Article XII, all further
obligations of the parties under this Agreement (other than the provisions of
Sections 13.2 and 13.10) shall be terminated without further liability of any
party to the other; provided that
(i) nothing herein shall relieve any party from liability for
any breach of this Agreement;
(ii) if this Agreement is terminated pursuant to Section
12.1(a)(viii), the ACME Entities shall pay Buyer $7,300,000, by wire
transfer of same day funds before or contemporaneously with such
termination, as liquidated damages as full and final settlement of
all claims of Buyer under this Agreement and there shall be no
further remedies of Buyer hereunder; provided that, if at or prior
to such termination by the ACME Entities pursuant to Section
12.1(a)(viii) any of the ACME Entities have materially breached
Section 6.11 of this Agreement,
56
such fee and expenses described above shall not constitute
liquidated damages or full and final settlement of all claims of
Buyer and neither the provisions of this Section 12.3(ii) nor the
payment or receipt of the fees and expenses described above shall
limit Buyer's remedies hereunder for such breach; and
(iii) if (A) the Agreement is terminated by the ACME Entities
pursuant to Section 12.1(a)(ii), (B) at the time of such termination
all of the conditions contained in Articles VIII and IX to the
parties' respective obligations to consummate the Closing have been
satisfied (or upon delivery of the certificates described in
Sections 8.1 and 9.1 would be satisfied) or waived by the party
entitled to the benefit thereof or such conditions have not been
satisfied solely by reason of Buyer's wrongful failure to fulfill
its obligations under this Agreement, (C) notwithstanding a request
by the ACME Entities to consummate the Closing, Buyer violates its
obligations under Section 3.1 to consummate the Closing, and (D) no
ACME Entity is otherwise in material breach hereunder, then Buyer
shall pay to the ACME Entities, taken as a whole, an amount equal to
$6,800,000 plus the ACME Entities shall be entitled to the Escrow
Deposit, together with 50% of all interest and other proceeds from
the investment of the Escrow Deposit; Buyer and the Escrow Agent,
respectively, shall make such payments within five (5) business days
after the ACME Entities' notice of termination to Buyer and the
Escrow Agent in accordance with the terms of this Agreement and the
Escrow Agreement, as liquidated damages as full and final settlement
of all claims of the ACME Entities under this Agreement and there
shall be no further remedies of the ACME Entities hereunder.
SECTION 12.4. LIQUIDATED DAMAGES NOT A PENALTY. With respect to the
liquidated damages provided for in Section 12.3, the ACME Entities and Buyer
agree that neither the damage that may be suffered by Buyer if this Agreement is
terminated pursuant to Section 12.1(a)(viii) nor the damage that may be suffered
by the ACME Entities if the transactions contemplated by this Agreement are not
consummated as a result of Buyer's wrongful failure to close hereunder in
accordance with Section 12.3(iii), is readily ascertainable and as such
liquidated damages on the date hereof are a reasonable estimate of such damages
and are intended to compensate the injured party(ies) for any such damage and
are not intended to be construed as a penalty.
ARTICLE XIII
GENERAL PROVISIONS
SECTION 13.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS. All representations, warranties, covenants and obligations
contained in this Agreement shall survive the consummation of the transactions
contemplated by this Agreement; provided, however, that, except as otherwise
provided in Article X or herein, the representations and warranties contained in
Articles IV and V of this Agreement shall terminate eighteen (18) months after
the Closing Date. Notwithstanding the foregoing or anything to the contrary
contained in this Agreement, the representations and warranties contained in
Sections 4.3(b), 4.15, 4.26, 5.2(b) and 5.4 shall survive without limitation and
the representations and warranties contained in Sections 4.7 and
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4.23 shall survive for the full period of any applicable statute of limitations
plus sixty (60) days. Except as otherwise provided herein, no claim shall be
made for the breach of any representation or warranty contained in Article IV or
V after the date on which such representations and warranties terminate as set
forth in this Section.
SECTION 13.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence all documents, materials and other information
which it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will, upon request, return to or destroy the other party
all copies of nonpublic documents and materials which have been furnished in
connection therewith. Without limiting the right of either party to pursue all
other legal and equitable rights available to it for violation of this Section
13.2 by the other party, it is agreed that other remedies cannot fully
compensate the aggrieved party for such a violation of this Section 13.2 and
that the aggrieved party shall be entitled to injunctive relief to prevent a
violation or continuing violation hereof.
SECTION 13.3. GOVERNING LAW. This Agreement and the transactions
contemplated hereby shall be governed by and construed in accordance with the
laws of the State of Delaware without reference to its choice of law rules.
SECTION 13.4. NOTICES. All notices or other communications required
or permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally or by messenger or facsimile (or, with
respect to facsimiles, if not sent on a business day, on the first business day
after) or 24 hours after having been sent by registered or certified mail or
when delivered by private courier addressed as follows:
If to Buyer, to:
Tribune Broadcasting Company
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: 312-222-3203
with copies to:
Tribune Company
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and General Counsel
Facsimile: 000-000-0000
and
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Sidley Xxxxxx Xxxxx & Xxxx
Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: 312-853-7036
If to the ACME Entities, to:
ACME Communications, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile: 000-000-0000
with a copy to:
O'Melveny & Xxxxx LLP
1999 Avenue of the Stars, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
SECTION 13.5. SUCCESSORS AND ASSIGNS.
(a) The rights of any party under this Agreement shall not be
assignable by such party hereto prior to the Closing without the written consent
of the other parties hereto. Notwithstanding the foregoing, (i) either party may
assign from all or a part of its rights under this Agreement to an Affiliate of
the assigning party, and (ii) either party may assign all or a part of its
rights under this Agreement in the case of a merger, consolidation or change of
control.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any Person other than the parties and successors and assigns permitted by
this Section 13.5 any right, remedy or claim under or by reason of this
Agreement.
SECTION 13.6. ACCESS TO RECORDS AFTER CLOSING.
(a) For a period of six years after the Closing Date the ACME
Entities and their representatives shall have reasonable access to all of the
books and records of the Company or the Business transferred to Buyer hereunder
to the extent that such access may reasonably be required by the ACME Entities
in connection with matters relating to or affected by the operations of the
Company or the Business prior to the Closing Date. Such access shall be afforded
by Buyer upon receipt of reasonable advance notice and during normal business
hours.
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The ACME Entities shall be solely responsible for any costs or expenses incurred
by them pursuant to this Section 13.6(a). If Buyer shall desire to dispose of
any of such books and records prior to the expiration of such six-year period,
it shall, prior to such disposition, give the ACME Entities a reasonable
opportunity, at the ACME Entities' expense, to segregate and remove such books
and records as the other party may select.
(b) For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Company or the Business which the ACME Entities or any of their
Affiliates may retain after the Closing Date. Such access shall be afforded by
the ACME Entities and their Affiliates upon receipt of reasonable advance notice
and during normal business hours. Buyer shall be solely responsible for any
costs and expenses incurred by it pursuant to this Section 13.6(b). If the ACME
Entities or any of their Affiliates shall desire to dispose of any of such books
and records prior to the expiration of such six-year period, the ACME Entities
shall, prior to such disposition, give Buyer a reasonable opportunity, at
Buyer's expense, to segregate and remove such books and records as the other
party may select.
SECTION 13.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the
Exhibits and Schedules referred to herein and the other documents delivered
pursuant hereto contain the entire understanding of the parties hereto with
regard to the subject matter contained herein or therein, and supersede all
prior agreements, understandings or intents between or among any of the parties
hereto. The parties hereto, by mutual agreement in writing, may amend, modify
and supplement this Agreement.
SECTION 13.8. INTERPRETATION. Article titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. Any items disclosed in the Schedules shall be referenced
to the applicable Section and subsection, if applicable, of the Agreement to
which such items relate. Any references in this Agreement to "herein," "hereto,"
"hereof," "herewith" or "hereunder" shall be to this Agreement as a whole. As
used in this Agreement, the word "including" is not limiting and the word "or"
is not exclusive. Whenever the word "dollar" or the symbol "$" is used in this
Agreement, such word or symbol shall mean United States dollars. All parties
have participated in the negotiation and review of this Agreement and no
provision of this Agreement shall be construed more strictly against any party.
All remedies provided for hereunder are cumulative except as otherwise provided
in this Agreement.
SECTION 13.9. WAIVERS. Any term or provision of this Agreement may
be waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
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SECTION 13.10. EXPENSES. Except as otherwise expressly provided
herein, each of the ACME Entities and Buyer will pay all of its own respective
costs and expenses incident to its negotiation and preparation of this Agreement
and to its performance and compliance with all agreements and conditions
contained herein on its part to be performed or complied with, including the
fees, expenses and disbursements of its counsel and accountants.
SECTION 13.11. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
SECTION 13.12. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties and delivered to each of the ACME Entities and
Buyer.
SECTION 13.13. RISK OF LOSS; DAMAGE TO FACILITIES.
(a) Risk of Loss. The risk of loss or damage to the Station and the
assets of the Company shall be on the ACME Entities prior to the Closing Date
and thereafter shall be on Buyer. Notwithstanding anything in this Agreement to
the contrary, including, without limitation, Section 10.1, if any of the assets
of the Company or the Station is damaged or destroyed prior to the Closing Date
(any such event being referred to as an "Event of Loss") and such Event of Loss
shall materially affect the operations of the Station, and repair or replacement
cannot be accomplished by the scheduled Closing Date but can be accomplished
within 30 days after that date, the ACME Entities may postpone the Closing Date
for that 30-day period in order to undertake such repair or replacement; if,
however, the repair or replacement cannot be accomplished within that 30-day
period, Buyer may elect:
(i) to consummate the Closing and accept all the assets of the
Company and the Station as is, in which event the ACME Entities
shall assign to Buyer at the Closing all of their rights under any
insurance policies and to all insurance proceeds covering that Event
of Loss (less amounts due to the assigning party for repairs or
replacements of the property prior to the Closing); or
(ii) to terminate this Agreement without liability on the part
of the ACME Entities or Buyer.
If the Closing Date is postponed beyond the time specified in Section
12.1(a)(vii), the parties shall amend their application to the FCC to request an
extension of the date of Closing.
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(b) Failure of Broadcast Transmission. The ACME Entities shall give
prompt written notice to Buyer if the regular broadcast transmissions of the
Station in the normal and usual manner are interrupted or discontinued. If such
interruption occurs for more than seventy-two (72) hours, whether or not
consecutive, during any period of thirty (30) consecutive days, then Buyer may,
at its option: (i) terminate this Agreement without liability on the part of the
ACME Entities or Buyer, or (ii) proceed with the Closing in the manner set forth
in Section 13.13(a)(i).
SECTION 13.14. NO THIRD PARTY BENEFICIARIES. The ACME Entities and
Buyer do not intend by the execution, delivery or performance of this Agreement
to confer a benefit upon any Person not a party to this Agreement.
SECTION 13.15. CONFIDENTIALITY AGREEMENT. Subject to the provisions
of Section 6.11, the provisions of the Non-Disclosure Agreement dated January
24, 2001, as amended November 14, 2002, between Tribune Company and Parent (the
"Confidentiality Agreement"), shall remain in full force and effect through the
Closing and shall not be superseded by the terms of this Agreement unless and
until the Closing occurs; provided, however, that in the event that the Closing
occurs, such Confidentiality Agreement shall automatically be terminated and be
of no further force or effect.
SECTION 13.16. PERFORMANCE BY SELLER. On behalf of Seller, Parent
hereby covenants and agrees to take all necessary action to cause Seller to
discharge, perform, comply and otherwise satisfy its obligations under this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
ACME COMMUNICATIONS, INC.
By:
--------------------------------
Name:
-----------------------------
Title:
------------------------------
ACME TELEVISION, LLC
By:
--------------------------------
Name:
-----------------------------
Title:
------------------------------
TRIBUNE BROADCASTING COMPANY
By:
--------------------------------
Name:
-----------------------------
Title:
------------------------------
EXHIBIT A
ACME ENTITY CORPORATE OPINIONS (TO BE GIVEN BY O'MELVENY & XXXXX LLP)
FOR THE FOLLOWING OPINIONS MISSOURI LAW WILL BE ASSUMED TO BE THE SAME AS
DELAWARE LAW.
1. Each of ACME Television, LLC and ACME Television Licenses of
Missouri, LLC is a limited liability company duly formed and validly
existing in good standing under the laws of its respective state of
formation.
2. Each of ACME Television Holdings of Missouri, Inc. and ACME
Television of Missouri, Inc. is a corporation duly organized and is
validly existing in good standing under the laws of its respective
state of incorporation.
3. The execution, delivery and performance of the Stock Purchase
Agreement and each of the ACME Ancillary Agreements to which ACME
Television, LLC is a party have been duly authorized by all
necessary action under the Delaware Limited Liability Company Act
and the organizational documents described on Exhibit A on the part
of ACME Television, LLC, and the Stock Purchase Agreement and each
of the ACME Ancillary Agreements to which it is a party has been
duly executed and delivered by ACME Television, LLC.
4. The execution, delivery and performance of the Stock Purchase
Agreement and each of the ACME Ancillary Agreements to which ACME
Communications, Inc. is a party have been duly authorized by all
necessary corporate action on the part of ACME Communications, Inc.,
and the Stock Purchase Agreement and each of the ACME Ancillary
Agreements to which it is a party has been duly executed and
delivered by ACME Communications, Inc.
5. The Stock Purchase Agreement and each ACME Ancillary Agreement
constitutes the legally valid and binding obligation of each ACME
Entity that is a party to such agreement, enforceable against each
such ACME Entity in accordance with its respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by
general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or
injunctive relief, regardless of whether considered in a proceeding
in equity or at law.
6. The authorized capital stock of ACME Television Holdings of
Missouri, Inc. consists of ___________ shares of Common Stock. Based
solely
upon a review of the stock record books of ACME Television Holdings
of Missouri, Inc., the completeness and accuracy of which have been
certified to us by ACME Television Holdings of Missouri, Inc., there
are _________ shares of Common Stock outstanding. The outstanding
shares of Common Stock of ACME Television Holdings of Missouri, Inc.
have been duly authorized by all necessary corporate action on the
part of ACME Television Holdings of Missouri, Inc., are validly
issued, fully paid and non-assessable and are owned of record by
ACME Television, LLC.
7. The authorized capital stock of ACME Television of Missouri, Inc.
consists of ___________ shares of Common Stock. Based solely upon a
review of the stock record books of ACME Television of Missouri,
Inc., the completeness and accuracy of which have been certified to
us by ACME Television of Missouri, Inc., there are _________ shares
of Common Stock outstanding. The outstanding shares of Common Stock
of ACME Television of Missouri, Inc. have been duly authorized by
all necessary corporate action on the part of ACME Television of
Missouri, Inc., are validly issued, fully paid and non-assessable
and are owned of record by ACME Television Holdings of Missouri,
Inc.
8. The outstanding membership interests in ACME Television Licenses of
Missouri, LLC are duly authorized by such limited liability company
and are owned of record by ACME Television of Missouri, Inc.
9. The holder of the capital stock of ACME Television Holdings of
Missouri, Inc. is not entitled to any preemptive right to subscribe
to any additional shares of the capital stock of ACME Television
Holdings of Missouri, Inc. under the Articles of Incorporation,
By-laws or corporate law of the state of incorporation of ACME
Television Holdings of Missouri, Inc.
10. The holder of the capital stock of ACME Television of Missouri, Inc.
is not entitled to any preemptive right to subscribe to any
additional shares of the capital stock of ACME Television of
Missouri, Inc. under the Articles of Incorporation, By-laws or the
corporate law of the state of incorporation of ACME Television of
Missouri, Inc.
11. The holder of the membership interests in ACME Television Licenses
of Missouri, LLC is not entitled to any preemptive right to
subscribe to any additional membership interests under the charter
documents or the limited liability company law of the state of
formation of ACME Television Licenses of Missouri, LLC.
12. Upon payment for and delivery to Buyer in California of the Shares
in accordance with the Stock Purchase Agreement, assuming Buyer is
acquiring the Shares without notice of any adverse claim, Buyer will
acquire the Shares free and clear of any adverse claim as defined in
Division 8 of the Uniform Commercial Code.
1
EXHIBIT B
ACME ENTITY FCC OPINIONS (GIVEN BY XXXXXXXXX XXXXXXX XXXXX & XXXXXXXX LLP)
1. ___________________ has been authorized by the FCC to hold the FCC
licenses, permits and authorizations as listed in Exhibit A hereto
(the "FCC Licenses"). All of such FCC Licenses are in full force and
effect. The FCC Licenses include all FCC licenses, permits and
authorizations issued by the FCC under Part 73 of the FCC `s rules
necessary to operate the Station on the frequencies and in the
communities of license listed in Exhibit A.
2. To our knowledge, the FCC Licenses are not subject to any condition
or requirement, other than conditions or requirements that appear on
the face of the FCC Licenses or pertain to the FCC Licenses under
generally applicable rules or policies of the FCC
3. The FCC has granted its consent to the assignment of the Station to
Buyer (the "FCC Consent"). The time within which any party in
interest other than the FCC may seek administrative or judicial
reconsideration or review of such consent has expired and, to our
knowledge, no petition for such reconsideration or review was timely
filed with the FCC or with a court of competent jurisdiction. The
time set forth in the FCC rules within which the FCC may review such
consent on its own motion has expired and, to our knowledge, the FCC
has not undertaken such review.
4. Except for rulemaking proceedings or similar proceedings of general
applicability to entities such as the Companies or to facilities
such as the Station, to our knowledge, there is not now pending any
action or proceeding by or before the FCC with respect to the
Station or the FCC Licenses.
EXHIBIT C
BUYER OPINIONS (TO BE GIVEN BY XXXX XXXXXX, BUYER INTERNAL COUNSEL)
1. Tribune Broadcasting Company is a corporation duly formed and
validly existing in good standing under the laws of the State of
Delaware.
2. The execution, delivery and performance by Tribune Broadcasting
Company of the Stock Purchase Agreement and each of the Buyer
Ancillary Agreements to which it is a party have been duly
authorized by all necessary corporate action on the part of Tribune
Broadcasting Company, and the Stock Purchase Agreement and each of
the Buyer Ancillary Agreements to which it is a party has been duly
executed and delivered by Tribune Broadcasting Company.
3. The Stock Purchase Agreement and each of the Buyer Ancillary
Agreements to which Tribune Broadcasting Company is a party
constitutes the legally valid and binding obligation of Tribune
Broadcasting Company, enforceable against such entity in accordance
with its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance laws) and by general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at
law.
