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EXHIBIT 10.16
ASSET PURCHASE AGREEMENT
BY AND AMONG
SF BROADCASTING OF HONOLULU, INC.
SF HONOLULU LICENSE SUBSIDIARY, INC.
SF BROADCASTING OF NEW ORLEANS, INC.
SF NEW ORLEANS LICENSE SUBSIDIARY, INC.
SF BROADCASTING OF MOBILE, INC.
SF MOBILE LICENSE SUBSIDIARY, INC.
SF BROADCASTING OF GREEN BAY, INC.
SF GREEN BAY LICENSE SUBSIDIARY, INC.
AS SELLERS,
AND
EMMIS BROADCASTING CORPORATION
AS BUYER
MARCH 30, 1998
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of March 30,
1998, by and among SF BROADCASTING OF HONOLULU, INC., a Delaware corporation
("SF Honolulu"), SF HONOLULU LICENSE SUBSIDIARY, INC., a Delaware corporation
("Honolulu Licensee"), SF BROADCASTING OF NEW ORLEANS, INC., a Delaware
corporation ("SF New Orleans"), SF NEW ORLEANS LICENSE SUBSIDIARY, INC., a
Delaware corporation ("New Orleans Licensee"), SF BROADCASTING OF MOBILE, INC.,
a Delaware corporation ("SF Mobile"), SF MOBILE LICENSE SUBSIDIARY, INC., a
Delaware corporation ("Mobile Licensee"), SF BROADCASTING OF GREEN BAY, INC., a
Delaware corporation ("SF Green Bay") and SF GREEN BAY LICENSE SUBSIDIARY,
INC., a Delaware corporation ("Green Bay Licensee") (each of the foregoing
entities shall be referred to herein individually as a "Seller" and
collectively as "Sellers"), and EMMIS BROADCASTING CORPORATION, an Indiana
corporation ("Buyer").
RECITALS:
WHEREAS, SF Honolulu owns and operates television station KHON(TV),
Channel 2, Honolulu, Hawaii, together with satellite station KAII(TV) Wailuku,
Hawaii and satellite station KHAW(TV) Hilo, Hawaii, television translator
station K55DZ Lihue and Kauai, Hawaii, and XxXxxx Videofilm (each of the
foregoing stations together with XxXxxx Videofilm are collectively referred to
herein as the "Honolulu Station"); and Honolulu Licensee holds the licenses and
authorizations issued by the Federal Communications Commission (the "FCC") for
the operation of the Honolulu Station;
WHEREAS, SF Green Bay owns and operates television station WLUK(TV),
Channel 11, Green Bay, Wisconsin and television translator station W40AN
Escanaba, Michigan (the "Green Bay Station"); and Green Bay Licensee holds the
licenses and authorizations issued by the FCC for the operation of the Green
Bay Station;
WHEREAS, SF Mobile owns and operates television station WALA(TV), Channel
10, Mobile, Alabama (the "Mobile Station"); and Mobile Licensee holds the
licenses and authorizations issued by the FCC for the operation of the Mobile
Station;
WHEREAS, SF New Orleans owns and operates television station WVUE(TV),
Channel 8, New Orleans, Louisiana (the "New Orleans Station" and together with
the Mobile Station, the Green Bay Station and the Honolulu Station, the
"Stations"); and New Orleans Licensee holds the licenses and authorizations
issued by the FCC for the operation of the New Orleans Station;
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TABLE OF CONTENTS
Page
ARTICLE I TERMINOLOGY..................................................... 2
1.1 Defined Terms........................................................ 2
1.2 Additional Defined Terms............................................. 7
ARTICLE II PURCHASE AND SALE.............................................. 8
2.1 Sale Assets.......................................................... 8
2.2 Excluded Assets......................................................10
2.3 Assumption of Liabilities............................................11
2.4 Xxxxxxx Money........................................................11
2.5 Purchase Price.......................................................12
2.6 Allocation of the Purchase Price.....................................17
2.7 Adjustment of Purchase Price.........................................18
2.8 Accounts Receivable..................................................20
2.9 Seller Representative................................................21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS.....................21
3.1 Organization, Good Standing and Corporate Power......................21
3.2 Authorization and Binding Effect of Documents........................21
3.3 Absence of Conflicts.................................................22
3.4 Consents.............................................................22
3.5 Sale Assets; Title...................................................22
3.6 FCC Licenses.........................................................22
3.7 Station Agreements...................................................24
3.8 Tangible Personal Property...........................................26
3.9 Real Property........................................................26
3.10 Intellectual Property................................................27
3.11 Financial Statements.................................................28
3.12 Absence of Certain Changes or Events.................................29
3.13 Litigation...........................................................30
3.14 Labor Matters........................................................30
3.15 Employee Benefit Plans...............................................31
3.16 Compliance with Law..................................................33
3.17 Tax Returns and Payments.............................................33
3.18 Environmental Matters................................................33
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3.19 Broker's or Finder's Fees............................................35
3.20 Insurance............................................................35
3.21 Cable Television Transmission........................................35
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER........................35
4.1 Organization and Good Standing.......................................35
4.2 Authorization and Binding Effect of Documents........................35
4.3 Absence of Conflicts.................................................36
4.4 Consents.............................................................36
4.5 Broker's or Finder's Fees............................................36
4.6 Litigation...........................................................36
4.7 Buyer's Qualification................................................37
4.8 Adequacy of Financing................................................37
4.9 Capitalization; Buyer Stock..........................................37
4.10 SEC Filings; Financial Statements....................................38
4.11 Material Contracts...................................................38
4.12 WARN Act.............................................................39
4.13 No Outside Reliance..................................................39
ARTICLE V OTHER COVENANTS.................................................39
5.1 Conduct of the Stations' Business Prior to the Closing Date..........39
5.2 Notification of Certain Matters......................................41
5.3 HSR Filing...........................................................41
5.4 FCC Filing...........................................................42
5.5 Title; Additional Documents..........................................42
5.6 Other Consents.......................................................42
5.7 Inspection and Access................................................42
5.8 Confidentiality......................................................43
5.9 Publicity............................................................43
5.10 Material Adverse Change..............................................43
5.11 Reasonable Best Efforts..............................................43
5.12 FCC Reports and Applications.........................................44
5.13 Tax Returns and Payments.............................................44
5.14 No Solicitation......................................................44
5.15 Certified Resolutions................................................44
5.16 Audited Financial Statements.........................................45
5.17 Studio Relocation....................................................45
5.18 SEC Registration Statement...........................................45
5.19 Environmental Inspection.............................................45
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5.20 Affiliate Guaranty...................................................46
ARTICLE VI CONDITIONS PRECEDENT TO THE
OBLIGATION OF BUYER TO CLOSE..............................................46
6.1 Accuracy of Representations and Warranties; Closing Certificate......46
6.2 Performance of Agreement.............................................46
6.3 FCC Orders...........................................................46
6.4 HSR Act..............................................................47
6.5 Opinions of Sellers' Counsel.........................................47
6.6 Required Consents....................................................48
6.7 Delivery of Closing Documents........................................49
6.8 No Adverse Proceedings...............................................49
6.9 No Material Adverse Change...........................................49
ARTICLE VII CONDITIONS PRECEDENT TO THE
OBLIGATION OF SELLERS TO CLOSE............................................49
7.1 Accuracy of Representations and Warranties...........................49
7.2 Performance of Agreements............................................50
7.3 FCC Orders...........................................................50
7.4 HSR Act..............................................................50
7.5 Opinion of Buyer's Counsel...........................................50
7.6 No Adverse Proceedings...............................................50
7.7 Delivery of Closing Documents........................................51
7.8 Effectiveness of Registration Statement..............................51
7.9 Listing of Shares....................................................51
ARTICLE VIII CLOSING......................................................51
8.1 Time and Place.......................................................51
8.2 Documents to be Delivered to Buyer by Sellers........................51
8.3 Deliveries to Sellers by Buye........................................52
ARTICLE IX INDEMNIFICATION................................................53
9.1 Survival.............................................................53
9.2 Indemnification by Sellers...........................................54
9.3 Indemnification by Buyer.............................................55
9.4 Administration of Indemnification....................................55
ARTICLE X TERMINATION; LIQUIDATED DAMAGES.................................57
10.1 Right of Termination.................................................57
10.2 Obligations Upon Termination.........................................57
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10.3 Termination Notice..................................................58
ARTICLE XI CONTROL OF STATIONS............................................58
ARTICLE XII EMPLOYMENT MATTERS............................................58
12.1 Transfer of Employees...............................................58
12.2 Employee Benefit Plans..............................................59
12.3 Union Employees.....................................................60
12.4 Employment Agreements...............................................60
ARTICLE XIII MISCELLANEOUS................................................60
13.1 Further Actions.....................................................60
13.2 Payment of Expenses.................................................60
13.3 Specific Performance................................................61
13.4 Notices.............................................................61
13.5 Entire Agreement....................................................62
13.6 Binding Effect; Benefits............................................63
13.7 Assignment..........................................................63
13.8 Governing Law.......................................................63
13.9 Amendments and Waivers..............................................63
13.10 Severability........................................................64
13.11 Headings............................................................64
13.12 Counterparts........................................................64
13.13 References..........................................................64
13.14 Schedules and Exhibits..............................................64
13.15 Joint and Several Liability.........................................64
EXHIBITS:
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Exhibit A Form of Promissory Note
Exhibit B Form of Stock Pledge Agreement
Exhibit C Form of Fox Affiliation Agreement
Exhibit D Form of Guaranty
SCHEDULES
Schedule 2.2(l) Additional Excluded Assets
Schedule 2.8 Retained Receivables
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Schedule 3.1 Foreign Qualifications
Schedule 3.3 Required Consents and Filings
Schedule 3.5 Liens to be Released Prior to Closing
Schedule 3.6 FCC Licenses
Schedule 3.7(a) Trade Agreements
Schedule 3.7(b) Station Agreements
Schedule 3.7(c) Affiliate Agreements
Schedule 3.8 Tangible Personal Property
Schedule 3.9 Real Property Interests
Schedule 3.10 Intellectual Property
Schedule 3.12 Absence of Certain Changes or Events
Schedule 3.13 Litigation
Schedule 3.14(a) Employee Claims
Schedule 3.14(c) List of Employees
Schedule 3.15 Employee Benefit Plans
Schedule 3.17 Tax Returns and Payments
Schedule 3.18 Environmental Matters
Schedule 3.21 Cable Television Transmissions
Schedule 6.6 Required Consents
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WHEREAS, pursuant to a guaranty (the "Guaranty") to be given to Buyer on
the Closing Date by USA Broadcasting, Inc., a Delaware corporation and an
Affiliate of each of the Sellers ("USA Broadcasting"), USA Broadcasting will
guarantee to Buyer the prompt and complete performance of the obligations of
Sellers arising under this Agreement and the other Seller Documents; and
WHEREAS, Buyer desires to acquire substantially all the assets used or
useful in the business and operation of the Stations, and Sellers are willing
to convey such assets to Buyer.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sellers and Buyer agree as
follows:
ARTICLE I
TERMINOLOGY
1.1 DEFINED TERMS.
As used herein, the following terms shall have the meanings indicated:
Affiliate: With respect to any specified Person, another Person
which, or a member of an immediate family which, directly or
indirectly controls, is controlled by, or is under common control
with, the specified Person.
Appraisal Firm: Bond & Xxxxxx.
Assumed Plans: The Benefit Plans to which Sellers are required to
contribute pursuant to the collective bargaining agreements and labor
union contracts that are Station Agreements.
Code: The Internal Revenue Code of 1986, as amended.
Common Stock: The Class A Common Stock, $.01 par value per
share, of Buyer.
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Documents: This Agreement, the Note, the Stock Pledge Agreement
and all Exhibits and Schedules hereto, and each other agreement,
certificate or instrument delivered pursuant to this Agreement.
Xxxxxxx Money: As of a given date, the amount deposited as of
such date with the Escrow Agent under the Escrow Agreement, together
with the interest and other earnings thereon as of such date.
Escrow Agent: NBD Bank, N.A., a national banking association
headquartered in Indianapolis, Indiana.
Escrow Agreement: The Escrow Agreement, dated as of the date
hereof, by and among the Sellers, the Seller Representative, Buyer and
the Escrow Agent relating to the deposit, holding, investment and
disbursement of the Xxxxxxx Money.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Fair Market Value: The per share closing price of the Common
Stock on NASDAQ for the second trading day preceding the determination
date, as accurately reported in The Wall Street Journal.
FCC: Federal Communications Commission.
FCC Orders: The orders or decisions of the FCC granting its
consent to the transfer of all of the FCC Licenses to Buyer.
Final Action: An action of the FCC that has not been reversed,
stayed, enjoined, set aside, annulled or suspended; with respect to
which no timely petition for reconsideration or administrative or
judicial appeal or sua sponte action of the FCC with comparable effect
is pending; and as to which the time for filing any such petition or
appeal (administrative or judicial) or for the taking of any such sua
sponte action of the FCC has expired.
Fox Children's Network Payment Rights: Rights of the Sellers to
receive payments from or in connection with the Fox Children's
Network.
Green Bay Station: Television station WLUK(TV), Channel 11,
Green Bay, Wisconsin and television translator station W40AN Escanaba,
Michigan.
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Honolulu Station: Television station KHON(TV), Channel 2,
Honolulu, Hawaii, satellite station KAII(TV) Wailuku, Hawaii,
satellite station KHAW(TV) Hilo, Hawaii, television translator station
K55DZ Lihue and Kauai, Hawaii, and XxXxxx Videofilm.
Liabilities: As to any Person, all debts, adverse claims,
liabilities and obligations, direct, indirect, absolute or contingent
of such Person, whether accrued, vested or otherwise, whether in
contract, tort, strict liability or otherwise and whether or not
actually reflected, or required by generally accepted accounting
principles to be reflected, in such Person's balance sheets or other
books and records.
Lien: Any mortgage, deed of trust, pledge, hypothecation, title
defect, right of first refusal, security or other adverse interest,
encumbrance, easement, restriction, claim, option, lien or charge of
any kind, whether voluntarily incurred or arising by operation of law
or otherwise, affecting any assets or property, including any
agreement to give or grant any of the foregoing, any conditional sale
or other title retention agreement, and the agreement by any Seller to
give any financing statement with respect to any assets or property
under the Uniform Commercial Code or comparable law of any
jurisdiction.
Loss: With respect to any person or entity, any and all costs,
obligations, liabilities, demands, claims, settlement payments,
awards, judgments, fines, penalties, damages and reasonable
out-of-pocket expenses, including court costs and reasonable
attorneys' fees, whether or not arising out of a third party claim.
Material Adverse FCC Condition: A condition imposed by the FCC
which would restrict, limit, increase the cost or burden of or
otherwise adversely affect or impair, in each case in any material
respect, the right of Buyer to the ownership, use, control or
operation of any Station; provided, however, that any condition
imposed by the FCC which requires (i) that Buyer or any of Buyer's
Subsidiaries file periodic reports with the FCC regarding compliance
with rules and policies of the FCC pertaining to affirmative action
and equal opportunity employment, or (ii) that a Station be operated
in accordance with conditions similar to and not materially more
adverse than those contained in the present FCC Licenses shall not be
a Material Adverse FCC Condition.
Material Adverse Effect: A material adverse effect on the
assets, business, or operations of the Stations taken as a whole,
except for any such material adverse effect resulting from (a) general
economic
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conditions applicable to the television broadcast industry, (b)
circumstances that are not likely to recur and either have been
substantially remedied or that can be substantially remedied without
substantial cost or delay, or (c) Buyer's refusal to consent to any
new lease or purchase agreement in connection with relocation of the
Honolulu Station's office and studio as contemplated in Section 5.17.
Mobile Station: Television station WALA(TV), Channel 10, Mobile,
Alabama.
NASDAQ: The National Association of Securities Dealers'
Automated Quotation System/National Market.
New Orleans Station: Television station WVUE(TV), Channel 8, New
Orleans, Louisiana.
Parent Entities: SF Multistations, Inc. and SF Broadcasting of
Wisconsin, Inc., each a Delaware corporation and the owner of all of
the outstanding capital stock of certain of the Sellers.
Permitted Lien: (a) Any statutory Lien which secures a payment
not yet due that arises, and is customarily discharged, in the
ordinary course of Sellers' business; (b) any other Liens or
imperfections in Sellers' title to any Sale Assets or properties that,
individually and in the aggregate, are not material in character or
amount and are not reasonably expected to materially detract from the
value or materially interfere with the existing use of any of the Sale
Assets; (c) Liens arising in connection with equipment or maintenance
financing or leasing under the terms of the Station Agreements; (d)
Liens arising pursuant to the terms of leases on Real Property or
Leased Real Property which are subject to any lease or sublease to a
third party; (e) Liens for Taxes not yet due and payable or which are
being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on Sellers'
books in accordance with GAAP; and (f) Liens specified on the current
title insurance policies for the Owned Real Property provided by
Sellers to Buyer prior to the date hereof (except for Liens securing
indebtedness of Sellers for borrowed money).
Person: Any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization,
other form of business or legal entity or Governmental Authority.
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Proration Items: Any power and utility charges, business and
license fees (including retroactive adjustments thereof), sales and
service charges, commissions, special assessments, and rental payments
and personal and real estate Taxes and assessments with respect to the
Real Property, Taxes (except for Transfer Taxes arising from the
transfer of the Assets hereunder), deposits, rights and obligations
under Trade Agreements, accrued vacation, unused sick leave and other
similar prepaid and deferred items and any other operating expenses
incurred in the ordinary course of Sellers' business, and all
operating income and revenue of the Stations. The parties acknowledge
and agree that there shall be excluded from Proration Items the
severance pay relating to any employee of any Seller that is payable
under any severance plan or arrangement of any Seller (which severance
pay shall remain the obligation of Sellers).
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended.
Subsidiary: With respect to any Person, a corporation,
partnership, limited liability company, or other entity of which
shares of stock or other ownership interests having ordinary voting
power to elect a majority of the directors of such corporation, or
other Persons performing similar functions for such entity, are owned,
directly or indirectly, by such Person.
Stations: The New Orleans Station, the Mobile Station, the Green
Bay Station and the Honolulu Station.
Taxes: All federal, state, local and foreign taxes including,
without limitation, income, gains, transfer, unemployment,
withholding, payroll, social security, real property, personal
property, excise, sales, use and franchise taxes, levies, assessments,
imposts, duties, licenses and registration fees and charges of any
nature whatsoever, including interest, penalties and additions with
respect thereto and any interest in respect of such additions or
penalties.
Tax Return: Any return, filing, report, declaration,
questionnaire or other document required to be filed for any period
with any taxing authority (whether domestic or foreign) in connection
with any Taxes (whether or not payment is required to be made with
respect to such document).
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TBA: Any time brokerage agreement, local marketing arrangement,
joint sales agreement, joint operating agreement, limited management
agreement or other similar agreement or contract.
Transfer Taxes: All sales, use, conveyance, recording and other
similar transfer Taxes and fees applicable to, imposed upon or arising
out of the sale by Sellers and the purchase by Buyer of the Stations
whether now in effect or hereinafter adopted and regardless of which
party such Transfer Tax is imposed upon. Transfer Taxes shall in no
event include any net or gross income Taxes.
USA Broadcasting: USA Broadcasting, Inc., a Delaware corporation
and Affiliate of each of the Sellers.
1.2 ADDITIONAL DEFINED TERMS.
As used herein, the following terms shall have the meanings defined in the
section indicated below:
Acquisition Proposal Section 5.14
Act Section 3.6(b)
Adjustment Amount Section 2.7(a)
Appraisal Report Section 2.6(a)
Arbitrator Section 2.7(d)
Assumed Obligations Section 2.3(a)
Benefit Plans Section 3.15(a)
Buyer Material Contracts Section 4.13
Buyer SEC Reports Section 4.10
Buyer's Plan Section 12.1(f)
Cap Section 9.2(c)
Carrying System Section 3.21
Closing Section 8.1
Closing Date Section 8.1
Collection Period Section 2.8(b)
Deductible Section 9.2(b)
employee benefit plans Section 3.15(a)
employee pension benefit plans Section 12.1(c)
employee welfare benefit plans Section 12.1(c)
Employees Section 3.15(a)
ERISA Section 3.15(a)
Excluded Assets Section 2.2
FCC Arbitrator Section 6.3(b)
FCC Licenses Section 3.6(a)
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Fox Network Agreements Section 8.2(i)
HSR Act Section 5.3
HSR Filing Section 5.3
Indemnified Party Section 9.4(a)
Indemnifying Party Section 9.4(a)
Intellectual Property Section 2.1(e)
Interim Balance Sheet Section 3.11(c)
Leased Real Property Section 5.18
Maturity Date Section 2.5(a)(iv)
Multiemployer Plan Section 3.15(c)
Note Section 2.5(a)(iv)
Owned Real Property Section 3.9(b)
Preliminary Adjustment Report Section 2.7(b)
Purchase Price Section 2.5(a)
Real Property Section 2.1(b)
Registration Statement Section 5.17
Related Persons Section 3.15(a)
Retained Receivables Section 2.8(a)
Sale Assets Section 2.1
Seller Representative Section 2.9
Sellers' Enforcement Costs Section 10.2(c)
Sellers' Liquidated Damage Amount Section 10.2(c)
Sellers' Plan Section 12.1(f)
Shares Section 2.5(c)
significant issue Section 6.3(b)
Station Agreements Section 2.1(d)
Stock Pledge Agreement Section 2.5(a)(iv)
Studio Relocation Section 5.16
Survival Period Section 9.1
Tangible Personal Property Section 2.1(a)
Trade Agreements Section 3.7(a)
Transferred Employees Section 12.1(a)
ARTICLE II
PURCHASE AND SALE
2.1 SALE ASSETS.
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Upon and subject to the terms and conditions provided herein, on the
Closing Date, Sellers will sell, transfer, assign and convey to Buyer, and
Buyer will purchase from Sellers, all of Sellers' right, title and interest in
and to all tangible and intangible assets (except Excluded Assets) used by each
Seller or useful by each Seller in the operation of the Stations as each has
been and is now operated (the "Sale Assets"), including the following:
(a) Tangible Personal Property. All transmitter, antenna and other
broadcast equipment, studio equipment, furniture, parts, artwork, computers and
office equipment, supplies, programming library and other tangible personal
property owned or leased by Sellers and used in the operation of any Station,
including but not limited to the items listed on Schedule 3.8, together with
such modifications, replacements, improvements and additional items, and
subject to such deletions therefrom, made or acquired by Sellers between the
date hereof and the Closing Date in accordance with the terms and provisions of
this Agreement (the "Tangible Personal Property").
(b) Real Property. All interests of Sellers (including, but not limited
to, leaseholds) in the real estate listed on Schedule 3.9 and all fixtures and
improvements thereon, together with such additional improvements and interests
in real estate made or acquired between the date hereof and the Closing Date
(the "Real Property").
(c) Permits. The FCC Licenses and all other governmental permits,
licenses and authorizations (and any renewals, extensions, amendments or
modifications thereof) now held by Sellers or hereafter obtained by Sellers
between the date hereof and the Closing Date, that are necessary for the
operation of the Stations.
(d) Fox Children's Network Payment Rights. All rights to payments made
after March 31, 1997 pursuant to the Fox Children's Network Payment Rights.
(e) Station Agreements. All rights of Sellers in, to and under all
contracts, leases, agreements, commitments and other arrangements, and any
amendments or modifications, used or useful in the operation of any Station as
of the date hereof (including, but not limited to, those listed on Schedule
3.7(b)) or made or entered into by any Seller between the date hereof and the
Closing Date in compliance with this Agreement (the "Station Agreements").
(f) Intellectual Property. All trade names, trademarks, service marks,
copyrights, patents, jingles, slogans, symbols, logos, the call letters
KHON(TV), KAII(TV), KAHW(TV), WLUK(TV), WALA(TV) and WVUE(TV), inventions, and
any other proprietary material, process, trade secret or trade right used by
any Seller in the operation of any Station, and all registrations, applications
and licenses for any of the foregoing, including, without limitation, those set
forth on Schedule 3.10; any additional such items acquired or used by any
Seller in connection with the operation of any
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Station between the date hereof and the Closing Date; and all goodwill
associated with any of the foregoing (collectively, the "Intellectual
Property"); provided, however, that the Intellectual Property shall not include
and Sellers shall retain exclusive rights to, all right, title and interest
whatsoever in or to the names "SF Broadcasting", "USA Networks", "Fox" or any
derivations thereof or any signs, symbols or logos bearing the names "SF
Broadcasting", "USA Networks" or "Fox".
(g) Records. The originals or true and complete copies of all of the
books, records, accounts, files, logs, ledgers and journals pertaining to or
used in the operation of any Station, including, but not limited to, any of
such items stored on computer disks or tapes.
(h) Miscellaneous Assets. Any other tangible or intangible assets,
properties or rights of any kind or nature not otherwise described above in
this Section 2.1 and now or hereafter owned or used by Sellers in connection
with the operation of the Stations, including but not limited to all goodwill
of the Stations.
2.2 EXCLUDED ASSETS.
Notwithstanding any provision of this Agreement to the contrary, the Sale
Assets shall not include the following (the "Excluded Assets"):
(a) Any and all cash, bank deposits and other cash equivalents,
certificates of deposits, marketable securities, cash deposits made by Sellers
to secure contract obligations, and all accounts receivable (except in each
case to the extent Sellers receive a credit therefor under Section 2.7 and
except for rights to receive payments after the date hereof pursuant to the Fox
Children's Network Payment Rights);
(b) All rights and claims of any Seller whether mature, contingent or
otherwise, against third parties relating to the Assets or the Stations,
whether in tort, contract, or otherwise, to the extent arising during and
relating to any period prior to the Closing Date;
(c) All prepaid expenses (and rights arising therefrom or related thereto)
except to the extent taken into account in determining the Adjustment Amount
under Section 2.7;
(d) All Benefit Plans (other than the Assumed Plans);
(e) Any and all claims of any Seller with respect to any Tax refunds;
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(f) All of each Seller's rights under or pursuant to this Agreement or any
other rights in favor of Sellers pursuant to the other Documents;
(g) All rights to payments made prior to the date hereof pursuant to the
Fox Children's Network Payment Rights;
(h) All loan agreements and other instruments evidencing indebtedness for
borrowed money;
(i) All contracts of insurance, all coverages and proceeds thereunder and
all rights in connection therewith, including, without limitation, rights
arising from any refunds due with respect to insurance premium payments to the
extent they relate to such insurance policies;
(j) All tangible personal property disposed of or consumed between the
date hereof and the Closing Date in accordance with the terms and provisions of
this Agreement;
(k) Sellers' corporate minute books, corporate seal, stock transfer
records and other corporate records and any records relating to Excluded Assets
and to liabilities other than the Assumed Obligations; and
(l) The assets listed and identified on Schedule 2.2(l).
2.3 ASSUMPTION OF LIABILITIES.
(a) Buyer shall at Closing assume and agree to pay, discharge, perform and
indemnify and hold Sellers harmless from and against the following Liabilities
of Sellers and the Stations (collectively, the "Assumed Obligations"):
(i) All Liabilities arising under all Station Agreements (including,
without limitation, all Trade Agreements) and the FCC Licenses assigned
and transferred to Buyer in accordance with this Agreement to the extent
such Liabilities arise during and relate to any period on or after the
Closing Date (excluding, however, any Liability arising from either (A)
the breach of any Station Agreement by reason of its assignment to Buyer
without a required consent or (B) any other breach or default by Sellers
upon or prior to Closing under any Station Agreement).
(ii) Provided that Sellers pay Buyer the amount, if any, owed by
Sellers after Closing under Section 2.7, the Assumed Obligations shall
also include such other Liabilities of Sellers and the Stations to the
extent, and only to the extent, the amount thereof is included as a
credit to
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Buyer in calculating the Adjustment Amount as ultimately determined
pursuant to Section 2.7.
(b) Except for the Assumed Obligations, Buyer shall not assume or in any
manner be liable for any Liabilities of Sellers of any kind or nature, all of
which Sellers shall pay, discharge and perform when due.
2.4 XXXXXXX MONEY.
(a) Concurrently with the execution of this Agreement, Buyer has deposited
with the Escrow Agent in immediately available funds the sum of Twenty-Five
Million Dollars ($25,000,000).
(b) The Escrow Agent shall hold the Xxxxxxx Money under the terms of the
Escrow Agreement in trust for the benefit of the parties hereto.
(c) If Closing does not occur, the Xxxxxxx Money shall be delivered to
Sellers or returned to Buyer in accordance with Section 10.2, and if Closing
does occur, the Xxxxxxx Money shall be applied at Closing as provided in
Section 2.5.
(d) If Buyer provides evidence reasonably satisfactory to Sellers
demonstrating Buyer's ability to finance the purchase of the Sale Assets,
Sellers shall promptly cooperate with Buyer to cause the Escrow Agent to return
to Buyer Five Million Dollars ($5,000,000) of the Xxxxxxx Money.
2.5 PURCHASE PRICE.
(a) The purchase price for the Sale Assets ("Purchase Price") shall be
Three Hundred Seven Million Dollars ($307,000,000), subject to adjustment as
provided in Section 2.7, payable as follows:
(i) An amount equal to the Xxxxxxx Money shall be paid by the Escrow
Agent's disbursement of the Xxxxxxx Money to Sellers by wire transfer of
immediately available funds pursuant to joint written instructions from
Sellers and Buyer.
(ii) The sum of (A) Two Hundred Fifty-Seven Million Dollars
($257,000,000) minus (B) the Xxxxxxx Money shall be paid by Buyer to
Sellers on the Closing Date by wire transfer of immediately available
funds pursuant to the written instructions from Sellers to Buyer.
(iii) An additional Twenty-Five Million Dollars ($25,000,000) shall
be paid by Buyer to Sellers on the Closing Date by wire transfer of
immediately available funds pursuant to the written
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instructions from Sellers to Buyer, provided that Buyer may elect by
written notice received by Sellers at least ten (10) business days prior
to the Closing Date to pay such portion of the Purchase Price by the
issuance to Sellers on the Closing Date of the number of shares of Common
Stock equal to the quotient of Twenty-Five Million Dollars ($25,000,000)
divided by the Fair Market Value as of the Closing Date, with any
fractional share interest to be paid in cash based on the Fair Market
Value as of the Closing Date.
(iv) An additional Twenty-Five Million Dollars ($25,000,000) shall
be paid by Buyer's execution and delivery to the Seller Representative
(or the Seller Representative's designee) on the Closing Date of a
Promissory Note, in the form of Exhibit A (the "Note"), in the principal
amount of Twenty-Five Million Dollars ($25,000,000) due and payable,
together with interest at eight percent (8.0%) per annum, on the first
anniversary of the Closing Date (the "Maturity Date"). On four (4)
business days prior written notice to the holder of the Note, the
principal amount of the Note, together with all accrued and unpaid
interest, may be prepaid in whole at any time in cash or by wire transfer
of immediately available funds, without premium or penalty. The Note
shall be payable by wire transfer of immediately available funds,
provided that Buyer may elect by written notice received by Sellers at
least ten (10) business days prior to the payment date, to make payment
by issuance to the Seller Representative (or the Seller Representative's
designee) of the number of shares of Common Stock equal to the quotient
of the amount of the outstanding principal and accrued interest under the
Note as of the payment date, divided by the Fair Market Value as of the
payment date, with any fractional share interest to be paid in cash based
on the Fair Market Value as of the payment date. In order to secure the
obligations of Buyer under the Note, Buyer shall grant to Sellers at
Closing a first priority perfected security interest in Shares as more
particularly described in the Stock Pledge Agreement attached hereto as
Exhibit B (the "Stock Pledge Agreement").
(b) Sellers shall furnish Buyer wire instructions at least two (2)
business days prior to the Closing Date for payments to be made by Buyer to
Sellers on the Closing Date, and not later than three (3) business days after
Sellers' receipt of Buyer's written request with respect to prepayment of the
Note.
(c) All shares of Common Stock issuable in payment of the Purchase Price
or the Note, and all shares of Common Stock issuable as security for repayment
of the Note (collectively, the "Shares") shall, as of the Closing Date and at
all times thereafter until sold by Sellers, be (i) subject to Section 2.5(d),
freely tradeable,
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(ii) registered pursuant to a registration statement declared effective by the
SEC under the Securities Act on or prior to the Closing Date and (iii) included
for listing on NASDAQ.
(d) Buyer acknowledges that Sellers would have preferred that the Purchase
Price be paid entirely in cash at Closing. As an inducement to Sellers for
their agreement under Section 2.5(a)(iii) to permit Buyer at Buyer's election
to satisfy a Twenty-Five Million Dollar ($25,000,000.00) portion of the
Purchase Price by issuance of Shares on the Closing Date (the "Initial Payment
Shares"), Buyer and Sellers agree as follows:
(i) Unless the Seller Representative notifies the Buyer in writing
at or prior to Closing that the Sellers have elected to waive their
rights under this Section 2.5(d) (an "IPS Waiver Notice"), the sale of
the Initial Payment Shares shall be subject to the terms and conditions
of this Section 2.5(d). If the Seller Representative shall provide an
IPS Waiver Notice at or prior to Closing, then neither Sellers nor Buyer
shall have any rights or obligations under this Section 2.5(d) in respect
of any Initial Payment Shares.
(ii) Unless the Seller Representative shall have provided an IPS
Waiver Notice at or prior to Closing, Sellers shall not be entitled to
sell the Initial Payment Shares during the thirty (30) day period
following the Closing Date (the "IPS Lockup Period") except in accordance
with this Section 2.5(d)(ii). During the IPS Lockup Period, Buyer shall
be entitled to cause Sellers to sell in a commercially reasonable manner
such Initial Payment Shares to such buyers and for such prices as
directed by Buyer to the Seller Representative in writing at least two
(2) business days prior to the date of any such sale, provided that (A)
such sale (or sales) shall be for cash, shall close within the IPS Lockup
Period and all proceeds from such sale (or sales) shall be immediately
paid to the Sellers, and (B) Buyer shall pay Sellers in immediately
available funds on the first business day after expiration of the IPS
Lockup Period the sum of (i) the amount, if any, by which the product of
(A) Twenty-Five Million Dollars ($25,000,000) times (B) a fraction having
a numerator equal to the number of Initial Payment Shares sold during the
IPS Lockup Period in accordance with this Section 2.5(d)(ii) and a
denominator equal to the total number of Initial Payment Shares, exceeds
the amount equal to the aggregate cash proceeds received by Sellers from
such sale (or sales) after deduction for all trade costs, sale expenses
and block trade discounts, but without any deduction for brokerage
commissions, plus (ii) interest on the balance of the IPS Guaranteed
Amount outstanding from time to time calculated at a rate of eight
percent (8%) per annum
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from the Closing Date until the amount in Clause (i) is paid to Sellers,
provided that if no amount is payable to Sellers under foregoing Clause
(i), such interest shall be payable on the first business day after
expiration of the IPS Lockup Period. Upon Buyer's payment of the amounts
payable under foregoing Clauses (i) and (ii), no further interest shall
accrue or be payable upon any balance of the IPS Guaranteed Amount.
(iii) Any Initial Payment Shares that are subject to the IPS Lockup
Period but are not sold in accordance with Section 2.5(d)(ii) within the
IPS Lockup Period (the "Remaining IPS Payment Shares") may be sold by
Sellers after expiration of the IPS Lockup Period in any commercially
reasonable manner that Sellers desire. Upon expiration of the period
("Post-IPS Lockup Period") commencing immediately after the IPS Lockup
Period and ending upon the earlier of (A) the date on which all Remaining
IPS Payment Shares have been sold or (B) the first anniversary of the
Closing Date, Buyer shall pay to Sellers in immediately available funds
the amount, if any, by which the product of (A) Twenty-Five Million
Dollars ($25,000,000) times (B) a fraction having a numerator equal to
the number of Remaining IPS Payment Shares sold during the Post-IPS
Lockup Period and a denominator equal to the total number of Initial
Payment Shares, exceeds the amount equal to the aggregate cash proceeds
received by Sellers from such sale (or sales) after deduction for all
trade costs, sale expenses and block trade discounts, but without any
deduction for brokerage commissions; provided that Buyer's obligation to
make such payment shall be conditioned upon Sellers' submission to Buyer
of a reasonably detailed and certified statement setting forth, for each
sale of Remaining IPS Payment Shares during the Post-IPS Lockup Period,
the per share sale price, the manner of sale, and any related trade
costs, sale expenses, block trade discounts and brokerage commissions.
Sellers shall have no rights against Buyer under this Section 2.5(d) with
respect to any Remaining IPS Payment Shares that are not sold within the
Post-IPS Lockup Period.
(iv) As used in this Section 2.5(d), the term "IPS Guaranteed
Amount" shall mean, as of any date commencing on the Closing Date and
ending on the date immediately preceding the date on which the payments
required under Section 2.5(d)(ii) are made, the amount, if any, by which
(i) Twenty-Five Million Dollars ($25,000,000) exceeds as of such date
(ii) the aggregate cash proceeds received by Sellers as of such date from
any sale of Initial Payment Shares after deduction for all trade costs,
sale expenses and block trade discounts, but without any deduction for
brokerage commissions.
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(e) As an inducement to Sellers for their agreement to permit Buyer at
Buyer's election to pay the Note by issuance of Shares on the earlier of the
maturity date or a prepayment date (the "Subsequent Payment Shares"), Buyer and
Sellers agree as follows:
(i) Unless the holder of the Note (the "Holder") notifies the Buyer in
writing on or prior to the date on which the Note is paid in full by the
issuance of Shares, whether on the maturity date or a prepayment date (the
"Note Payment Date"), that the Holder has elected to waive its rights under
this Section 2.5(e) (an "SPS Waiver Notice"), the sale of the Subsequent
Payment Shares shall be subject to the terms and conditions of this Section
2.5(e). If the Holder shall provide an SPS Waiver Notice on or prior to the
Note Payment Date, then neither the Holder nor Buyer shall have any rights or
obligations under this Section 2.5(e) in respect of any Subsequent Payment
Shares.
(ii) Unless the Holder shall have provided an SPS Waiver Notice on or
prior to the Note Payment Date, the Holder shall not be entitled to sell the
Subsequent Payment Shares during the thirty (30) day period following the Note
Payment Date (the "SPS Lockup Period") except in accordance with this Section
2.5(e)(ii). During the SPS Lockup Period, Buyer shall be entitled to cause the
Holder to sell in a commercially reasonable manner such Subsequent Payment
Shares to such buyers and for such prices as directed by Buyer to the Holder
in writing at least two (2) business days prior to the date of any such sale,
provided that (A) such sale (or sales) shall be for cash, shall close within
the SPS Lockup Period and all proceeds from such sale (or sales) shall be
immediately paid to the Holder, and (B) Buyer shall pay the Holder in
immediately available funds on the first business day after expiration of the
SPS Lockup Period the sum of (i) the amount, if any, by which the product of
(A) Twenty-Five Million Dollars ($25,000,000), plus all accrued interest under
the Note as of the Note Payment Date (the "Payment Date Note Balance") times
(B) a fraction having a numerator equal to the number of Subsequent Payment
Shares sold during the SPS Lockup Period in accordance with this Section
2.5(e)(ii) and a denominator equal to the total number of Subsequent Payment
Shares, exceeds the amount equal to the aggregate cash proceeds received by the
Holder from such sale (or sales) after deduction for all trade costs, sale
expenses and block trade discounts, but without any
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deduction for brokerage commissions, plus (ii) interest on the balance of the
SPS Guaranteed Amount outstanding from time to time calculated at a rate of
eight percent (8%) per annum from the Note Payment Date until the amount in
Clause (i) is paid to the Holder, provided that if no amount is payable to the
Holder under foregoing Clause (i), such interest shall be payable on the first
business day after expiration of the SPS Lockup Period. Upon Buyer's payment
of the amounts payable under foregoing Clauses (i) and (ii), no further
interest shall accrue or be payable upon any balance of the SPS Guaranteed
Amount.
(iii) Any Subsequent Payment Shares that are subject to the SPS Lockup
Period but are not sold in accordance with Section 2.5(e)(ii) within the SPS
Lockup Period (the "Remaining SPS Payment Shares") may be sold by the Holder
after expiration of the SPS Lockup Period in any commercially reasonable manner
that the Holder desires. Upon expiration of the period ("Post-SPS Lockup
Period") commencing immediately after the SPS Lockup Period and ending upon the
earlier of (A) the date on which all Remaining SPS Payment Shares have been
sold or (B) the first anniversary of the Note Payment Date, Buyer shall pay to
the Holder in immediately available funds the amount, if any, by which the
product of (A) the Payment Date Note Balance times (B) a fraction having a
numerator equal to the number of Remaining SPS Payment Shares sold during the
Post-SPS Lockup Period and a denominator equal to the total number of
Subsequent Payment Shares, exceeds the amount equal to the aggregate cash
proceeds received by the Holder from such sale (or sales) after deduction for
all trade costs, sale expenses and block trade discounts, but without any
deduction for brokerage commissions; provided that Buyer's obligation to make
such payment shall be conditioned upon the Holder's submission to Buyer of a
reasonably detailed and certified statement setting forth, for each sale of
Remaining SPS Payment Shares during the Post-SPS Lockup Period, the per share
sale price, the manner of sale, and any related trade costs, sale expenses,
block trade discounts and brokerage commissions. The Holder shall have no
rights against Buyer under this Section 2.5(e) with respect to any Remaining
SPS Payment Shares that are not sold within the Post-SPS Lockup Period.
(iv) As used in this Section 2.5(e), the term "SPS Guaranteed Amount"
shall mean, as of any date commencing on
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the Note Payment Date and ending on the date immediately preceding the date on
which the payments required under Section 2.5(e)(ii) are made, the amount, if
any, by which (i) the Payment Date Note Balance exceeds as of such date (ii)
the aggregate cash proceeds received by the Holder as of such date from any
sale of SPS Payment Shares after deduction for all trade costs, sale expenses
and block trade discounts, but without any deduction for brokerage commissions.
2.6 ALLOCATION OF THE PURCHASE PRICE.
(a) Sellers and Buyer shall use good faith efforts to agree upon, prior to
Closing, an allocation of the Purchase Price among the Sale Assets which, if
agreed upon within sixty (60) days after the date hereof, will be incorporated
in a schedule to be executed by the parties prior to or at Closing. If Sellers
and Buyer are unable to agree on such allocation within such sixty (60) day
period, Sellers and Buyer agree to retain the Appraisal Firm to appraise the
classes of Sale Assets of each Station. The Appraisal Firm shall be instructed
to perform an appraisal of the classes of Sale Assets of each Station and to
deliver a report to Sellers and Buyer as soon as reasonably practicable (the
"Appraisal Report"). Buyer and Sellers shall each pay one-half of the fees,
costs and expenses of the Appraisal Firm whether or not the transactions
contemplated hereby are consummated.
(b) Buyer and Sellers each agree to report such allocation, whether agreed
upon or as provided for in the Appraisal Report, to the Internal Revenue
Service in the form required by Treasury Regulation 1.1060-IT and to use such
allocation for all other reporting purposes after Closing in connection with
federal, state and local income and, to the extent permitted under applicable
law, franchise Taxes.
2.7 ADJUSTMENT OF PURCHASE PRICE.
(a) As used herein, "Adjustment Amount" means adjustments to the Purchase
Price customary in television and radio broadcast station transactions for
Proration Items to reflect that all Proration Items of such Stations shall be
apportioned between Buyer and Sellers in accordance with the principle that
Sellers shall receive the benefit of or credit for all revenues, refunds, the
portion of deposits and prepaid expenses allocable to the period from and after
the Closing Date, and shall be responsible for all expenses, costs
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and Liabilities, allocable to the conduct of the businesses or operations of
the Stations for the period prior to the Closing Date, and Buyer shall receive
the benefit of or credit for all revenues and refunds, and shall be responsible
for all expenses, costs and Liabilities, allocable to the conduct of the
businesses or operations of such Stations from and after the Closing Date;
provided, however, that there shall be no adjustment or proration for any
negative or positive net trade balance for the Stations (taken as a whole)
except to the extent that any such trade balance (whether positive or negative)
exceeds $50,000 for the Stations (taken as a whole); provided, further, that
with respect to programming agreements, only those payments due and payable
during the month in which the Closing occurs which relate to programming to be
broadcast during such month shall be prorated. All determinations of the
Adjustment Amount shall be made in accordance with generally accepted
accounting principles consistently applied for the period prior to the Closing
Date; provided that in determining the Adjustment Amount, Buyer shall be given
a credit equal to the total amount of payments received by Sellers during the
period from the date hereof to the Closing Date pursuant to the Fox Children's
Network Payment Rights.
(b) Three (3) business days prior to the Closing Date, Sellers shall
provide Buyer with a statement (the "Preliminary Adjustment Report") setting
forth Sellers' reasonable and good faith estimate of the Adjustment Amount.
The portion of the Purchase Price payable at Closing pursuant to Section
2.5(a)(ii) shall be reduced or increased by, as the case may be, the Adjustment
Amount.
(c) During the 120-day period after the Closing Date, Sellers, Buyer and
their respective accountants shall review the Preliminary Adjustment Report and
the books and records of Sellers related to the report, and Buyer and Sellers
will in good faith seek to reach agreement on the computation of the Adjustment
Amount. If agreement is reached within one hundred twenty (120) days after the
Closing Date, then upon reaching such agreement, Sellers shall pay to Buyer the
amount by which the agreed Adjustment Amount is less than, or Buyer shall pay
to Sellers the amount by which the agreed Adjustment Amount is greater than,
the Adjustment Amount indicated in the Preliminary Adjustment Report.
(d) If Sellers and Buyer fail to reach agreement on the Adjustment Amount
within one hundred twenty (120) days after the Closing Date, then the New York,
New York office of Price Waterhouse L.L.P. (the "Arbitrator") shall make the
determination. Sellers and Buyer shall each inform the Arbitrator in writing
of their respective determinations of the Adjustment Amount and each of its
components and shall make readily available to the Arbitrator any books,
records and work papers relevant to the Arbitrator's determination. The
Arbitrator shall be instructed to complete its determination within thirty (30)
days after the date of its engagement and upon completion to inform the parties
in writing of its determination of the Adjustment Amount, the basis for its
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determination, whether Buyer's or Sellers' written position as to the
Adjustment Amount is closer to its own determination, and whether its own
determination of the Adjustment Amount is within plus or minus ten percent
(10%) of the average of the written positions of Buyer and Sellers as to the
Adjustment Amount. The determination by the Arbitrator in accordance with this
section shall be final and binding on the parties for purposes of this section.
Within five (5) days after the Arbitrator's delivery to the parties of its
written determination of the Adjustment Amount, Sellers shall pay to Buyer the
amount by which the Adjusted Amount is determined by the Arbitrator is less
than, or Buyer shall pay to Sellers the amount by which the Adjustment Amount
determined by the Arbitrator is greater than, the Adjustment Amount indicated
in the Preliminary Adjustment Report.
(e) If the Arbitrator determines that the written position of Buyer as to
the Adjustment Amount is closer to its own determination, Sellers shall pay the
fees and disbursements of the Arbitrator. If the Arbitrator determines that
the written position of Sellers as to the Adjustment Amount is closer to its
own determination, Buyer shall pay the fees and disbursements of the
Arbitrator. However, if the Arbitrator's determination of the Adjustment
Amount is within plus or minus ten percent (10%) of the average of the written
positions of Buyer and Sellers, Sellers and Buyer shall each pay one-half of
the Arbitrator's fees and disbursements.
(f) Concurrently with any payment required under foregoing Subsection (c)
or (d), the payor shall pay the payee interest on the payment at eight percent
(8.0%) per annum from the Closing Date until the date on which the payment is
made.
2.8 ACCOUNTS RECEIVABLE.
(a) Within ten (10) days after the Closing Date, Sellers shall furnish to
Buyer a true and complete list of Sellers' accounts receivable (other than
non-cash receivables under Trade Agreements and unpaid amounts under the Fox
Children's Network Payment Rights) arising from the operation of the Stations
prior to the Closing Date in the ordinary course of business (the "Retained
Receivables"), which list shall set forth for each Retained Receivable the name
of the debtor, the date of the invoice, the amount of any payments previously
received on account and the balance due.
(b) For a period of one hundred twenty (120) days after the Closing Date
(the "Collection Period"), Buyer will, without charge to Sellers, use its usual
and customary procedures to collect the Retained Receivables as Sellers' agent
for collection, provided that (i) Buyer shall not be required to commence
litigation, employ legal counsel or a collection agency or make any
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other extraordinary collection efforts, and (ii) Buyer's obligation to act as
Sellers' agent in the collection of the Retained Receivables shall terminate
upon expiration of the Collection Period. For the purpose of determining
amounts collected by Buyer with respect to the Retained Receivables, each
payment by an account debtor shall be applied to the older or oldest accounts
receivable of such account debtor unless the account debtor in writing
identifies such an account as being in dispute and directs that a particular
payment be applied to a specific newer account receivable.
(c) Every four weeks during the Collection Period (and within fifteen (15)
days after the end of the Collection Period), Buyer shall deliver to Sellers a
statement showing all collections of Retained Receivables made on behalf of
Sellers since the last previous report and shall pay such collections to
Sellers by check at the time such statement is delivered.
(d) Sellers shall not engage in any collection efforts against account
debtors under the Retained Receivables during the Collection Period, other than
with respect to accounts receivable identified as in dispute as provided in
foregoing Subsection (b).
(e) Buyer shall not, without Sellers' prior written consent, compromise or
settle for less than full value any of the Retained Receivables unless Buyer
pays Sellers the full amount of any deficiency. Buyer shall be entitled to
purchase from Sellers any Retained Receivable for such amount as the parties
may agree at any time during or at the expiration of the Collection Period.
(f) Buyer shall have no right to set-off any amounts collected for
Retained Receivables for any amounts owed to Buyer from Sellers, except that
Buyer shall be entitled to offset and retain from its collection of the
Retained Receivables certain amounts for capital expenditures and other items
as and to the extent set forth on Schedule 2.8.
2.9 SELLER REPRESENTATIVE.
Each of the Sellers hereby appoints SF Broadcasting of Honolulu, Inc. as
the seller representative (the "Seller Representative") and agrees that the
Seller Representative shall have the authority, on behalf of each of the
Sellers, to: (a) receive amounts payable to any of the Sellers (including the
Shares), and give discharge and provide receipts with respect thereto, (b)
execute and deliver any documents or agreements necessary or desirable in
connection with the transactions contemplated by the Agreement, (c) give and
receive notices, instructions and other communications under the Agreement; and
(d) take such
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other action with respect to the Agreement or any other Document as the Seller
Representative may deem necessary or appropriate. To further effect the
foregoing, each Seller upon request of the Seller Representative shall execute
a power of attorney designating the Seller Representative his attorney-in-fact
for the purposes set forth in this Section.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer as follows:
3.1 ORGANIZATION, GOOD STANDING AND CORPORATE POWER.
Each Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power to own, operate and lease its Sale Assets and carry on
its business. Each Seller is duly licensed, qualified to do business and
in good standing as a foreign corporation under the laws of the
jurisdiction(s) listed in Schedule 3.1.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.
Each Seller has all requisite corporate power and authority to enter into
this Agreement and the other Documents and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement and each of the other Documents by Sellers and the consummation
by Sellers of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action (including all necessary
shareholder approvals, if any) on the part of Sellers. This Agreement has
been, and each of the other Documents at or prior to Closing will be, duly
executed and delivered by Sellers. This Agreement constitutes (and each of
the other Documents, when executed and delivered, will constitute) the
valid and binding obligation of Sellers enforceable against Sellers in
accordance with its terms.
3.3 ABSENCE OF CONFLICTS. Except as set forth on Schedule 3.3, the
execution, delivery and performance by Sellers of this Agreement and the
other Documents, and consummation by Sellers of the transactions
contemplated hereby and thereby, do not and will not (i) conflict with or
result in any breach of any of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in a violation of, (iv) give
any third party the right to modify, terminate or accelerate any
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obligation under, or (v) result in the creation of any Lien upon the Sale
Assets under, the provisions of the articles or certificate of
incorporation or by-laws of Sellers, any material indenture, mortgage,
lease, loan agreement or other material agreement or instrument to which
Sellers are bound or affected, or any law, statute, rule, judgment, order
or decree to which Sellers are subject.
3.4 CONSENTS. Except as set forth on Schedule 3.3 and except for any
necessary clearances or approvals under the HSR Act or the Act, the
execution, delivery and performance by Sellers of this Agreement and the
other Documents, and consummation by Sellers of the transactions
contemplated hereby and thereby, do not and will not require the
authorization, consent, approval, exemption, clearance or other action by
or notice or declaration to, or filing with, any court, any administrative
or other governmental body, or any other third party.
3.5 SALE ASSETS; TITLE.
The Sale Assets constitute all of the assets, properties and rights of
every type and description, real, personal and mixed, tangible and
intangible, that are currently used in or material to the operation of the
Stations, with the exception of the Excluded Assets. Sellers have good
and marketable title to, or a valid lessee's or licensee's interest in,
all of the Sale Assets free and clear of all Liens except (i) Liens
described on Schedule 3.5 which Sellers shall cause to be released prior
to Closing and (ii) Permitted Liens.
3.6 FCC LICENSES.
Except as set forth on Schedule 3.6:
(a) One of the Sellers is the valid and legal holder of each of the
licenses, permits and authorizations of the FCC listed on Schedule 3.6 for the
operation of the Stations (the "FCC Licenses"). The expiration date of the term
of each FCC License is shown on Schedule 3.6.
(b) The FCC Licenses (i) are valid, subsisting and in full force and
effect, and constitute all of the licenses, permits and authorizations used in
or required for the current operation of the Stations under the Communications
Act of 1934, as amended, and the rules, regulations and policies under the FCC
thereunder (collectively, the "Act"), and (ii) constitute all the licenses and
authorizations, including amendments and modifications thereto, issued by the
FCC to such Seller for or in connection with the operation of such Station.
(c) Other than as set forth in the FCC Licenses, none of the FCC Licenses
is subject to any restriction or condition which limits in any
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material respect the full operation of the Stations as now conducted by
Sellers, and as of the Closing Date, none of the FCC Licenses shall be subject
to any restriction or condition which would limit in any material respect the
full operation of the Stations as they are currently operated.
(d) The Stations are being operated by Sellers in all material respects in
accordance with the terms and conditions of the FCC Licenses, the Act and the
rules and regulations of the FCC applicable to it, including but not limited to
those pertaining to RF emissions.
(e) Except as set forth in Schedule 3.6, no applications, complaints or
proceedings are pending or, to the knowledge of Sellers, are threatened which
may result in the revocation, modification, non-renewal or suspension of any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to any Station or its operation,
other than actions or proceedings affecting the television broadcasting
industry in general.
(f) Sellers have complied in all material respects with all requirements
to file reports, applications and other documents with the FCC with respect to
the Stations, and all such reports, applications and documents are true,
correct and complete in all material respects.
(g) Other than actions or proceedings affecting the television
broadcasting industry in general, Sellers have no knowledge of matters (i)
which might reasonably be expected to result in the adverse modification,
suspension or revocation of or the refusal to renew any of the FCC Licenses or
the imposition of any fines or forfeitures by the FCC against Sellers, or (ii)
which might reasonably be expected to result in the FCC's refusal to grant or
delay approval of the assignment to Buyer (assuming Buyer is qualified to hold
the FCC Licenses) of any FCC License or the imposition of any Material Adverse
FCC Condition in connection with approval of the transfer to Buyer of any FCC
License (other than with respect to the continuation of the satellite waiver in
Hawaii).
(h) There are not any unsatisfied or otherwise outstanding citations
issued by the FCC with respect to any Station or its operation.
(i) True, complete and accurate copies of all FCC Licenses have been
delivered by Sellers to Buyer's FCC counsel.
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(j) Except for the FCC Licenses, there are no material licenses, permits
or authorizations from governmental or regulatory authorities required for the
lawful operation and conduct of each Station by Sellers of the Stations as they
are currently being operated.
3.7 STATION AGREEMENTS.
(a) Schedule 3.7(a) lists in summary manner all agreements, contracts,
understandings and commitments as of the date indicated thereon for the sale of
time on a Station for other than monetary consideration ("Trade Agreements"),
and sets forth the parties thereto, the financial value of the time required to
be provided from and after the date of such Schedule and the estimated
financial value of the goods or services to be received by a Seller from and
after the date of such Schedule. True and complete copies of all written Trade
Agreements in effect as of such date, including all amendments, modifications
and supplements thereto, have been made available to Buyer.
(b) Schedule 3.7(b) lists all the following types of agreements used in or
relating to the operation of any Station:
(i) Agreements for sale of broadcast time on a Station for monetary
consideration as of March 24, 1998, other than such agreements entered into in
the ordinary course of business involving broadcast time of less than
Twenty-Five Thousand Dollars ($25,000);
(ii) All network affiliation agreements;
(iii) All sales agency or advertising representation contracts;
(iv) Each antenna, office and studio lease and any other lease of real
property (including a description of the property leased thereunder);
(v) All collective bargaining agreements, employment agreements and
agreements with independent contractors;
(vi) All programming agreements;
(vii) Any other agreement (other than Trade Agreements) involving a
commitment by any party thereto with a fair market value of, or requiring any
party thereto to pay over the
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life of the contract, more than One Hundred Thousand Dollars ($100,000); and
(viii) Any other agreement that is material to the business, operations or
financial condition of any Station.
True and complete copies of all the foregoing Station Agreements that are in
writing, and true and accurate summaries of all the foregoing Station
Agreements that are oral, including all amendments, modifications and
supplements thereto, have been made available to Buyer. The Station Agreements
(other than Trade Agreements) that are not listed on Schedule 3.7(b) do not
involve commitments by parties thereto with an aggregate fair market value of
more than One Hundred Thousand Dollars ($100,000) for any Station.
(c) Schedule 3.7(c) lists all of the contracts and agreements used in or
relating to the operation of any Station to which an Affiliate of any Seller is
a party. True and complete copies of those in writing have been delivered to
Buyer, and summaries of those that are oral are set forth on Schedule 3.7(c).
(d) Except as set forth in the Schedules hereto, (i) all Station
Agreements which are, individually or in the aggregate, material to the
business, operations or financial condition of any Station are valid and in
full force and effect; (ii) no Seller or, to the knowledge of any Seller, any
other party is in material default under, and no event has occurred which
(after the giving of notice or the lapse of time or both) would constitute a
material default under, any Station Agreements which are, individually or in
the aggregate, material to the business, operations or financial condition of
any Station; (iii) no Seller or any Affiliate of any Seller has granted or been
granted any material waiver or forbearance with respect to any Station
Agreements which are, individually or in the aggregate, material to the
business, operations or financial condition of any Station; (iv) Sellers hold
the right to enforce and receive the benefits under all the Station Agreements
which are, individually or in the aggregate, material to the business,
operations or financial condition of any Station, free and clear of Liens
(other than Permitted Liens) but subject to the terms and provisions of each
such agreement; (v) except as set forth on Schedule 3.3, none of the rights of
Sellers or any Affiliate of Sellers under Station Agreements which are,
individually or in the aggregate, material to the business, operations or
financial condition of any Station is subject to termination or modification as
a result of the consummation of the transactions contemplated by this
Agreement; and (vi) except as set forth on Schedule 3.3, no consent or approval
by any party to Station Agreements which are, individually or in the aggregate,
material to the business, operations or financial condition of any Station is
required thereunder for the consummation of the transactions contemplated
hereby.
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(e) As of the date of this Agreement, Sellers have received less than Ten
Thousand Dollars ($10,000) in the aggregate during the preceding twelve (12)
months pursuant to the Fox Children's Network Payment Rights.
3.8 TANGIBLE PERSONAL PROPERTY.
(a) Schedule 3.8 lists, as of the date of this Agreement, all Tangible
Personal Property (other than Excluded Assets, office supplies and other
incidental items) material to the conduct of the business and operations of any
Station in the manner in which it is now operated and having a book value in
excess of Seven Thousand Five Hundred Dollars ($7,500).
(b) The equipment constituting a part of the Tangible Personal Property
used in or necessary for the operation of any Station in the manner in which it
is now operated by Sellers has been properly maintained prior to the date
hereof in all material respects in accordance with the manufacturers'
recommendations and industry practices as of the date hereof, is in a good
state of repair and operating condition (subject to ordinary wear and tear),
and complies as of the date hereof in all material respects with the Act and
other applicable laws, rules, regulations and ordinances.
3.9 REAL PROPERTY.
(a) The list of Real Property set forth on Schedule 3.9 is a true and
correct list of all of the interests in real estate which any Seller holds or
which are used to any material extent in the operation of any Station in the
manner in which it has been and is being operated by Sellers as of the date of
this Agreement.
(b) Sellers hold good and marketable fee simple title to each parcel of
Real Property listed in Schedule 3.9 as owned by a Seller (the "Owned Real
Property") free and clear of any Liens except (i) Liens described on Schedule
3.5 which Sellers shall cause to be released prior to Closing, and (ii)
Permitted Liens. To Sellers' knowledge, except as set forth on Schedule 3.9,
there is no pending, threatened or contemplated action to take by eminent
domain or to condemn any of the Real Property.
(c) Each lease (including all amendments, modifications and supplements
thereto) under which a Seller leases any interest in any of the Real Property,
including, but not limited to, any Station Agreement under which any Seller
uses a transmitter or antenna site (the "Leased Real Property") is described on
Schedule 3.7(b) (each, a "Real Property Lease"), and except as set forth on
such Schedule, such Seller holds good and marketable title to the lessee's
interest under each Real Property Lease free and clear of all Liens except
Permitted Liens. True and complete copies of all Real Property Leases,
including all amendments, modifications and supplements thereto, have been
delivered to Buyer.
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(d) Except as set forth on the Schedules hereto, (i) each Real Property
Lease is legal, valid, binding and enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity); (ii) no Seller nor,
to the knowledge of any Seller, any other party thereto, is in material breach
of or in material default under any Real Property Lease; (iii) to the knowledge
of Sellers, there has not occurred any event which, after the giving of notice
or the lapse of time or both, would constitute a material default under, or
result in the material breach of, any Real Property Lease, nor has any Seller
received written notice alleging or stating that any such event has occurred
unless such event has been cured; (iv) none of the rights of any Seller under
any Real Property Lease is subject to termination or modification as a result
of the consummation of the transactions contemplated by this Agreement; (v) no
consent or approval by any party to any Real Property Lease is required
thereunder for the consummation of the transactions contemplated hereby; and
(vi) no Seller has granted or been granted any material waiver or forbearance
with respect to any Real Property Lease.
(e) All improvements on the Real Property are in compliance with
applicable zoning and land use laws, ordinances and regulations in all respects
necessary to conduct the operation of the Stations operating thereon as
conducted by Sellers as of the date of this Agreement except for any instances
of any non-compliance which do not or will not in the aggregate have a Material
Adverse Effect. Each Seller's improvements on any Real Property are in good
working condition and repair (subject to ordinary wear and tear).
3.10 INTELLECTUAL PROPERTY.
Schedule 3.10 lists all trade names, trademarks, service marks, copyrights
and patents included in the Intellectual Property, including all registrations,
applications and licenses for any of the Intellectual Property. Except as
disclosed on Schedule 3.10:
(a) To the knowledge of Sellers, Sellers own, free and clear of Liens, all
right and interest in, and right and authority to use in connection with the
conduct of the business of the Stations as presently conducted. To the
knowledge of Sellers, all of the Intellectual Property listed on Schedule 3.10,
and all of the rights and properties constituting a part of the Intellectual
Property, are in full force and effect as of the date of this Agreement;
(b) As of the date of this Agreement, there are no outstanding or, to the
knowledge of Sellers, threatened judicial or adversary proceedings with respect
to any of the Intellectual Property;
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(c) Sellers have not granted to any other person or entity any license or
other right or interest in or to any of the Intellectual Property or to the use
thereof;
(d) As of the date of this Agreement, Sellers have no knowledge of any
infringement or unlawful use of any of the Intellectual Property;
(e) As of the date of this Agreement, Sellers have not violated any
provisions of the Copyright Act of 1976, 17 U.S.C. Section 101, et. seq., in
any material respect. Sellers have filed all notices and statements of account
and have made all payments that are required in connection with the
transmission by Sellers of any television or other signals prior to the date of
this Agreement, except for failures to file or pay that would not have a
Material Adverse Effect; and
(f) Sellers have delivered to Buyer copies of all state or federal
registrations and other material documents, if any, establishing any of the
rights and properties constituting a part of the Intellectual Property.
3.11 FINANCIAL STATEMENTS.
Sellers have delivered to Buyer:
(a) The audited balance sheets of the Parent Entities as of December 31,
1997 and 1996;
(b) The audited statements of operations of the Parent Entities for the
years ended December 31, 1997 and 1996;
(c) The unaudited balance sheet of each Station as of February 28, 1998
(the "Interim Balance Sheet"); and
(d) The unaudited statement of operations of each Station for the interim
period ended February 28, 1998.
All such statements (i) are in accordance in all material respects with the
books and records of the applicable Stations and (ii) have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis and fairly present in all material respects the assets and
liabilities of such Station(s) as of the dates stated and accurately reflect in
all material respects the results of operations of such Station(s) for the
periods covered by the statements, with the exceptions that (A) statements of
cash flows are not included, (B) federal income tax, expense or benefit are not
shown, (C) such statements do not contain the disclosures required by
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generally accepted accounting principles in notes accompanying financial
statements, and (D) the interim statements are subject to normal year-end
adjustments.
3.12 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since the date of the Interim Balance Sheet, other than as described on
Schedule 3.12:
(a) There has not been any damage, destruction or other casualty loss with
respect to the Sale Assets (whether or not covered by insurance) which,
individually or in the aggregate has, or could reasonably be expected to have,
a Material Adverse Effect.
(b) No Seller or any Station has suffered any adverse change or
development which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
(c) No Seller has:
(i) amended or terminated any Station Agreement set forth on Schedule
3.7(a), 3.7(b) or 3.7(c) except in the ordinary course of business;
(ii) mortgaged, pledged or subjected to any Lien, any of the Sale Assets,
except for Permitted Liens;
(iii) acquired or disposed of any Sale Assets or entered into any
agreement or other arrangement for such acquisition or disposition, except in
the ordinary course of business;
(iv) entered into any agreement, commitment or other transaction other
than in the ordinary course of business;
(v) paid any bonus to any officer, director or employee or granted to any
officer, director or employee any other increase in compensation in any form,
except in the ordinary course of business consistent with past practices;
(vi) adopted or amended any collective bargaining, bonus, profit-sharing,
compensation, stock option, pension, retirement, deferred compensation,
severance or other plan, agreement, trust, fund or arrangement for the benefit
of employees (whether or not legally binding) or made any material changes in
its policies of employment;
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(vii) entered into any agreement (other than agreements that will be
terminated prior to Closing) with any Affiliate of any Seller; or
(viii) operated its business other than in the ordinary course.
3.13 LITIGATION.
Except as described in Schedule 3.13, as of the date hereof (a) there are no
actions, suits, claims, investigations or administrative, arbitration or other
proceedings pending or, to the knowledge of any Seller, threatened against any
Seller before or by any court, arbitration tribunal or governmental department
or agency, domestic or foreign, that relates to any Station or the Sale Assets;
(b) no Seller or, to the knowledge of any Seller, any of the officers or
employees of any Seller, has been charged with, or is under investigation with
respect to, any violation of any provision of any federal, state, foreign or
other applicable law or administrative regulation in respect of such officer's
or employee's employment at any Station or with any Seller; and (c) no Seller or
any properties or assets of any Seller or, to the knowledge of any Seller, any
officer or employee of any Seller is a party to or bound by any order,
arbitration award, judgment or decree of any court, arbitration tribunal or
governmental department or agency, domestic or foreign, in respect of any
business practices, the acquisition of any property, or the conduct of any
business, of any Seller, which, individually or in the aggregate, has or could
reasonably be expected to have, a Material Adverse Effect or materially impair
the ability of any Seller to perform its obligations hereunder and consummate
the transactions contemplated hereby.
3.14 LABOR MATTERS.
(a) Except as listed on Schedule 3.14(a):
(i) To each Seller's knowledge, no present or former employee or
independent contractor of any Station has a pending claim or charge which has
been asserted or threatened against any Seller for (A) overtime pay; (B) wages,
salaries or profit sharing; (C) vacations, time off or pay in lieu of vacation
or time off; (D) any violation of any statute, ordinance, contract or
regulation relating to minimum wages, maximum hours of work or the terms or
conditions of employment; (E) discrimination against employees on any basis;
(F) unlawful or wrongful employment or termination practices; (G) unlawful
retirement, termination or labor relations practices or breach of contract; or
(H) any violation of occupational safety or health standards.
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(ii) There is not pending or, to the knowledge of any Seller, threatened
against any Seller any labor dispute, strike or work stoppage that affects or
interferes with, or is likely to affect or interfere with, the operation of any
Station, and no Seller has knowledge of any organizational effort currently
being made or threatened by or on behalf of any labor union with respect to
employees of any Station. There are no material unresolved unfair labor
charges against any Seller. No Seller has experienced any strike, work
stoppage or other similar significant labor difficulties within the twelve (12)
months preceding the date hereof.
(b) Except as set forth on Schedule 3.7(b), (i) no Seller is a signatory
or a party to, or otherwise bound by, a collective bargaining agreement which
covers employees or former employees of any Station, (ii) no Seller has agreed
to recognize any union or other collective bargaining unit with respect to any
employees of any Station, and (iii) no union or other collective bargaining
unit has been certified as representing any employees of any Station.
(c) Schedule 3.14(c) sets forth a true and complete list, as of the date
set forth on such list, of all persons employed by any Seller or at any
Station, and states for each such employee the current level of compensation
payable to such employee, the termination pay or other severance benefits, if
any, that may be payable to such employee upon termination of employment, and
whether such employee is employed under a written contract. A true and
complete copy of any handbook, policy manual or similar written guidelines
furnished to employees of each Station has been made available to Buyer.
3.15 EMPLOYEE BENEFIT PLANS.
(a) All compensation or benefit plans, policies, practices, arrangements
and agreements covering any employee or former employee of any Seller or any
Station or the beneficiaries or dependents of such employee or former employee
(such employees, former employees, beneficiaries and dependents herein referred
to collectively as the "Employees") which are or have been established or
maintained and are currently in effect, or to which contributions are being
made by any Seller or by any other trade or business, whether or not
incorporated, which is or has been treated as a single employer together with
any Seller under Section 414 of the Code (such other trades and businesses
referred to collectively as the "Related Persons") or to which any Seller or
any Related Person is obligated to contribute, including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), employment,
retention, change of control, severance, stock option or other equity based,
bonus, incentive compensation, deferred compensation, retirement, fringe
benefit and welfare plans, policies, practices, arrangements and agreements
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(collectively, the "Benefit Plans"), are disclosed in Schedule 3.15. Except
pursuant to a Benefit Plan disclosed in Schedule 3.15 or any agreements
disclosed in Schedule 3.7(b), no Seller has fixed or contingent liability or
obligation to any of the Employees or to any person whose services are or were
provided as an independent contractor to any Seller or any Station.
(b) All Benefit Plans (other than the Assumed Plans, with respect to which
this representation is limited to Sellers' knowledge) have been administered
and are in compliance in all material respects with applicable provisions, if
any, of ERISA and the Code and all other applicable law. No Seller or any
Related Person has engaged in a transaction with respect to any Benefit Plan
that could result in a material Tax, penalty or other liability under the Code
or ERISA being imposed against Buyer, any Station or the Sale Assets.
(c) Other than the Assumed Plans, no Benefit Plan is a multiemployer plan
within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA (a
"Multiemployer Plan").
(d) No Seller or any Related Person has, to Sellers' knowledge, incurred
or expects to incur any material withdrawal liability with respect to a
Multiemployer Plan under Subtitle E of Title IV of ERISA regardless of whether
based on contributions by any entity which is considered a predecessor of any
Seller or one employer with any Seller under Section 4001 of ERISA.
(e) All contributions required to have been made by each Seller under the
terms of any Benefit Plan or applicable law have been timely made.
(f) No Seller has any unfunded obligations (including projected
obligations) for retiree health and life benefits under any Benefit Plan other
than continuation coverage required by law; provided, however, that this
representation shall be limited to Seller's knowledge to the extent it relates
to the Assumed Plans.
(g) No Seller or any Related Person has incurred any material liability
under or pursuant to Title I or IV of ERISA or the penalty, excise tax or joint
and several liability provisions of the Code relating to employee benefit plans
and, to Sellers' knowledge, no event or condition has occurred or exists which
would result in any such material liability to any Seller.
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3.16 COMPLIANCE WITH LAW.
Each Seller has operated and is operating the applicable Station in all material
respects in compliance with the Act and all other federal, state and local laws,
statutes, ordinances, regulations, licenses, permits or exemptions therefrom and
all applicable orders, writs, injunctions and decrees of any court, commission,
board, agency or other instrumentality, and such Seller has not received any
notice of noncompliance pertaining to such Seller's operation of such Station
that has not been cured.
3.17 TAX RETURNS AND PAYMENTS.
(a) Except as set forth in Schedule 3.17, each Seller has accurately
prepared in all material respects and is not delinquent in the filing of any
Tax Returns required to be filed by such Seller, including filings regarding
employees, sales, operations or assets. All Taxes due and payable pursuant
thereto and all other Taxes or assessments due and payable by such Seller or
chargeable as a Lien upon its assets have been paid, except for any such Taxes
that are being contested in good faith for which adequate reserves have been
made on Sellers' financial statements.
(b) Except as set forth in Schedule 3.17, (i) no outstanding unsatisfied
deficiency, delinquency or default for any Tax has been claimed or assessed
against any Seller, (ii) no Seller has received notice of any such deficiency,
delinquency or default, and (iii) to each Seller's knowledge, no taxing
authority is now threatening to assert any such deficiency, delinquency or
default and, to such Seller's knowledge, there is no reasonable basis for any
such assertion.
(c) No Tax is required to be withheld by Buyer pursuant to Section 1445 of
the Code as a result of the transactions contemplated by this Agreement.
(d) Each Seller has withheld any Tax required to be withheld by such
Seller under applicable law and regulations, and such withholdings have either
been paid to the proper governmental agency or set aside in accounts for such
purpose, or accrued, reserved against and entered upon the books of such
Seller.
3.18 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 3.18, Sellers have obtained all
environmental, health and safety permits necessary for the operation of the
Stations, all such permits are valid and in full force and effect, and Sellers
are in compliance in all material respects with all terms and conditions of
such permits.
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(b) Except as set forth on Schedule 3.18, there is no proceeding pending
or, to Sellers' knowledge, threatened which may result in the reversal,
rescission, termination, modification or suspension of any environmental or
health or safety permits necessary for the operation of any Station, and to
Sellers' knowledge there is no basis for any such proceeding.
(c) Except as set forth on Schedule 3.18, Sellers have operated and are
operating in all material respects in compliance with all federal, state, local
and other laws, statutes, ordinances and regulations, and licenses, permits,
exemptions, orders, writs, injunctions and decrees of any court, commission,
board, agency or other governmental instrumentality, applicable to Sellers and
relating to environmental matters.
(d) Except as set forth on Schedule 3.18, to Sellers' knowledge, there are
no conditions or circumstances associated with the Sale Assets which may give
rise to any material liability or material cost under applicable environmental
law. Except as listed on Schedule 3.18, Sellers do not own or use any
electrical or other equipment containing polychlorinated biphenyls.
(e) For the purposes of this Section 3.18, "hazardous materials" shall
mean any waste, substance, materials, smoke, gas, emissions or particulate
matter designated as hazardous or toxic under any applicable environmental law.
For purposes of this Section 3.18, "environmental law" shall mean any federal,
state, local or other laws, statutes, ordinances, regulations, licenses,
permits or any order, writ, injunction or decree of any court, commission,
board, agency or other instrumentality relating to the regulation of hazardous
materials.
(f) Except as set forth on Schedule 3.18, with respect to the operation of
any Station, Sellers have not filed or been required to file any notice under
any applicable law, rule, regulation, order, judgment, injunction, decree or
ruling reporting a release of a hazardous material into the environment that
has or reasonably can be expected to have a Material Adverse Effect, and no
notice pursuant to Section 103(a) or (c) of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.A. Section 9601, et seq.
("CERCLA") or any other applicable environmental law or regulation has been or
was required to be filed.
(g) Except as set forth on Schedule 3.18, Sellers have not received any
notice letter under CERCLA or any other written notice and there is no
investigation pending, or to Sellers' knowledge threatened, to the effect that
Sellers have or may have material liability for or as a result of the release
or threatened release of a hazardous material into the environment or for the
suspected unlawful presence of hazardous material thereon, nor to Sellers'
knowledge does there exist any basis for such investigation.
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3.19 BROKER'S OR FINDER'S FEES.
Except for R.P. Companies, Inc. the fees and charges of which will be paid by
Sellers simultaneously with Closing, no agent, broker, investment banker or
other person or firm acting on behalf of or under the authority of any Seller or
any Affiliate of any Seller is or will be entitled to any broker's or finder's
fee or any other commission or similar fee, directly or indirectly, in
connection with the transactions contemplated by this Agreement.
3.20 INSURANCE.
There is now in full force and effect with reputable insurance companies fire
and extended coverage insurance with respect to all tangible Sale Assets and
public liability and broadcaster's liability insurance, all in reasonable
commercial amounts.
3.21 CABLE TELEVISION TRANSMISSION.
To Sellers' knowledge, Schedule 3.21 lists each cable television system on which
the signal of any Station is currently being carried (each, a "Carrying
System"). To Sellers' knowledge, except as set forth in Schedule 3.21, (a) the
carriage of each Station on a listed Carrying System is pursuant to a valid and
enforceable retransmission consent agreement, (b) Sellers have not agreed to
reimburse any cable television system for any copyright royalties in respect of
carriage of the signal of any Station, (c) no cable system has advised any
Seller or any Station of any signal quality or copyright indemnity or other
prerequisite to cable carriage of any Station's signal, and (d) no cable system
has declined or threatened to decline such carriage or failed to respond to a
request for carriage or sought any form of relief from carriage from the FCC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING.
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana. Buyer has all requisite corporate power
to own, operate and lease its properties and carry on its business as it is now
being conducted and as the same will be conducted following the Closing.
4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.
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Buyer has all requisite corporate power and authority to enter into this
Agreement and the other Documents and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
each of the other Documents by Buyer and the consummation by Buyer of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been, and
each of the other Documents at or prior to Closing will be, duly executed and
delivered by Buyer. This Agreement constitutes (and each of the other Documents,
when executed and delivered, will constitute) the valid and binding obligation
of Buyer enforceable against Buyer in accordance with its terms.
4.3 ABSENCE OF CONFLICTS.
Except for obtaining the FCC Orders and any necessary clearances or approvals
under the HSR Act, the execution, delivery and performance by Buyer of this
Agreement and the other Documents, and consummation by Buyer of the transactions
contemplated hereby and thereby, do not and will not (i) conflict with or result
in any breach of any of the terms, conditions or provisions of, (ii) constitute
a default under, (iii) result in a violation of, or (iv) give any third party
the right to modify, terminate or accelerate any obligation under, the
provisions of the articles of incorporation or by-laws of Buyer, any indenture,
mortgage, lease, loan agreement or other agreement or instrument to which Buyer
is bound or affected, or any law, statute, rule, judgment, order or decree to
which Buyer is subject.
4.4 CONSENTS.
Except for obtaining the FCC Orders and any necessary clearances or approvals
under the HSR Act, the execution, delivery and performance by Buyer of this
Agreement and the other Documents, and consummation by Buyer of the transactions
contemplated hereby and thereby, do not and will not require the authorization,
consent, approval, exemption, clearance or other action by or notice or
declaration to, or filing with, any court or administrative or other
governmental body, or the consent, waiver or approval of any other Person.
4.5 BROKER'S OR FINDER'S FEES.
No agent, broker, investment banker, or other person or firm acting on behalf of
Buyer or under its authority is or will be entitled to any broker's or finder's
fee or any other commission or similar fee, directly or indirectly, from Buyer
in connection with the transactions contemplated by this Agreement.
4.6 LITIGATION.
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There are no legal, administrative, arbitration or other proceedings or
governmental investigations pending or, to the knowledge of Buyer, threatened
against Buyer that would give any third party the right to enjoin the
transactions contemplated by this Agreement.
4.7 BUYER'S QUALIFICATION.
(a) Buyer is, and pending Closing will remain, legally, financially and
otherwise qualified under the Communications Act and all rules, regulations and
policies of the FCC to acquire and operate the Stations. Buyer has no
knowledge of matters which might reasonably be expected to result in the FCC's
refusal to grant or delay approval of the transfer to Buyer of any FCC License
or the imposition of any Material Adverse FCC Condition in connection with
approval of the transfer to Buyer of any FCC License. To Buyer's knowledge,
and except for FCC approval of Buyer's continued operation of KAII(TV) and
KAHW(TV) as satellite television stations, no waiver of any FCC rule or policy
is necessary to be obtained for the grant of the applications for the
assignment of the FCC Licenses to Buyer, nor will processing pursuant to any
exception or rule of general applicability be requested or required in
connection with the consummation of the transactions herein.
(b) As of the date hereof and through the later to occur of the HSR Filing
and the filing of the FCC Applications, neither Buyer nor any Affiliate of
Buyer (a) owns, controls or operates any television or radio station located in
any DMA in which a Station is located; (b) has any direct or indirect interest,
including, without limitation, any equity, debt, security or any other
financial interest, whether or not "attributable" (as defined in the rules and
regulations of the FCC), or management interest, in (i) any television or radio
station located in any DMA in which a Station is located, or (ii) any applicant
seeking to construct or acquire, by assignment of license or transfer of
control, any such television or radio station (an "Applicant"); or (c) is a
party to any TBA with a television or radio station located in any DMA in which
a Station is located, or with any Applicant. Buyer acknowledges and agrees
that the representations set forth in this Section 4.7(b) shall take into
account and include (a) the consummation of any proposed or pending acquisition
(as of the date hereof and through the later to occur of the HSR Filing and the
filing of the FCC Applications) of television or radio stations (including the
acquisition of the Stations) by Buyer or any Affiliate of Buyer or any
Applicant, and (b) any TBA or proposed or pending TBA (as of the date hereof
and through the later to occur of the HSR Filing and the filing of the FCC
Applications) to which Buyer or any Affiliate of Buyer is or may become a
party.
4.8 ADEQUACY OF FINANCING.
Buyer, as of the Closing, will have adequate funds to enable Buyer to consummate
the transactions contemplated hereby.
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4.9 CAPITALIZATION; BUYER STOCK.
All of the Shares issuable to the Seller Representative in accordance with this
Agreement (or pledged to the Seller Representative under the Stock Pledge
Agreement) will be duly authorized, validly issued, fully paid and
nonassessable, will be issued in compliance with applicable federal and state
securities laws and will be delivered free and clear of all Liens and may be
freely resold or transferred by the Seller Representative.
4.10 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Buyer has filed all forms, reports, statements and other documents
required to be filed with the SEC since December 1, 1997, and has heretofore
made available to Sellers, in the form filed with the SEC since such date,
together with any amendments thereto, its (i) Annual Reports on Form 10-K, (ii)
all Quarterly Reports on Form 10-Q, (iii) all proxy statements relating to
meetings of stockholders (whether annual or special), (iv) all reports on Form
8-K and (v) all other reports or registration statements filed by Buyer
(collectively, the "Buyer SEC Reports"). The Buyer SEC Reports (A) complied as
to form in all material respects with the requirements of the Exchange Act and
the Securities Act and (B) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited interim
financial statements of Buyer included in the Buyer SEC Reports comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto. The
financial statements, including all related notes and schedules, contained in
the Buyer SEC Reports (or incorporated by reference therein) present fairly in
all material respects the consolidated financial position of Buyer and its
subsidiaries as at the respective dates thereof and the consolidated results of
operations and cash flows of Buyer and its subsidiaries for the periods
indicated, in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be noted
therein) and subject in the case of interim financial statements to normal
year-end adjustments.
(c) Since November 30, 1997, there has not been any change in the assets,
business or operations of Buyer, including any transaction, commitment,
dispute, damage, destruction or loss, whether or not covered by insurance, or
other event of any character (whether or not in the ordinary course of
business) individually or in the aggregate which has had, or is reasonably
likely to have, a material adverse effect on Buyer.
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4.11 MATERIAL CONTRACTS.
All agreements filed as exhibits to Buyer SEC Reports and each agreement
that would have been required to be filed as an exhibit to Buyer SEC Reports if
such agreement had been entered into prior to the date of filing any such Buyer
SEC Report (collectively, the "Buyer Material Contracts") are valid and in full
force and effect on the date hereof except to the extent they have previously
expired in accordance with their terms, and has not (and Buyer has no knowledge
that any party thereto has) violated any provision of, or committed or failed to
perform any act which with or without notice, lapse of time or both would
constitute a default under the provisions of, any Buyer Material Contract,
except for defaults which would not reasonably be expected to have a material
adverse effect on Buyer.
4.12 WARN ACT.
Buyer is not planning or contemplating, and has not made or taken, any
decisions or actions concerning the employees of the Stations after the Closing
Date that would require the service of notice under the Worker Adjustment and
Retraining Act of 1988, as amended.
4.13 NO OUTSIDE RELIANCE.
Buyer has not relied and is not relying on any statement, representation
or warranty other than those made in this Agreement, the Schedules hereto or
the certificates to be delivered to Buyer at the Closing pursuant to this
Agreement. Buyer is not relying on any projections or other predictions
contained or referred to in materials that have been or may hereafter be
provided to Buyer or any of its Affiliates, agents or representatives, and
Sellers make no representations or warranties with respect to any such
projections or other predictions.
ARTICLE V
OTHER COVENANTS
5.1 CONDUCT OF THE STATIONS' BUSINESS PRIOR TO THE CLOSING DATE.
Sellers covenant and agree with Buyer that from the date hereof through
the Closing Date, unless Buyer otherwise consents in writing (which consent
shall not be unreasonably withheld, delayed or conditioned), Sellers shall:
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(a) Operate each Station in the ordinary course of business, including (i)
incurring promotional expenses consistent with the amount currently budgeted,
(ii) making capital expenditures prior to the Closing Date as are necessary to
repair or replace Assets that are damaged or destroyed, (iii) using reasonable
commercial efforts to preserve each Station's present business operations,
organization and goodwill and its relationships with customers, employees,
advertisers, suppliers and other contractors (including independent contractors
providing on-air or production services) and to maintain programming for each
Station consistent in all material respects with the type and quantity of each
Station's programming as of the date hereof, and (iv) continuing each Station's
usual and customary policy with respect to extending credit and collection of
accounts receivable and the maintenance of its facilities and equipment;
(b) Operate each Station and otherwise conduct its business in all
material respects in accordance with the terms or conditions of the FCC
Licenses, all applicable rules and regulations of the FCC, and all other rules,
regulations, laws and orders of all governmental authorities having
jurisdiction over any aspect of the operation of such Station;
(c) Maintain Sellers' books and records in accordance with generally
accepted accounting principles on a basis consistent with prior periods;
(d) Promptly notify Buyer in writing of any event or condition which, with
notice or the lapse of time or both, would constitute an event of material
default under any of the Station Agreements which would, individually or in the
aggregate, have a Material Adverse Effect;
(e) Timely comply in all material respects with the Station Agreements
which are, individually or in the aggregate, material to the Sale Assets or the
operations, financial condition or results of operations of any Station;
(f) Not sell, lease, grant any rights in or to or otherwise dispose of, or
agree to sell, lease or otherwise dispose of, any of the Sale Assets except for
dispositions of assets that are in the ordinary course of business consistent
with past practice;
(g) Not amend, enter into, renew or extend any antenna lease, programming
agreement, or network affiliation agreement; and not enter into or amend any
employment contracts or other Station Agreements except on terms comparable to
those of Station Agreements now in existence and otherwise in the ordinary
course of business consistent with past practice;
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(h) Maintain its technical equipment currently in use in good operating
condition and repair, except for ordinary wear and tear;
(i) Not increase in any manner the compensation (including severance pay
or plans) or benefits of any employees, independent contractors, consultants or
commission agents of any Seller or Station, except in the ordinary course of
business consistent with past practice;
(j) Not introduce any material change with respect to the operation of any
Station including, without limitation, any material changes in the percentages
of types of programming broadcast by such Station or any other material change
in such Station's programming policies, except as required by law;
(k) Not engage in any business other than the operation of the Stations
and business activities directly related thereto;
(l) Not enter into any agreement (other than agreements that will be
terminated prior to Closing) with any Affiliate of any Seller;
(m) Not voluntarily enter into any collective bargaining agreement
applicable to any employees of any Station or otherwise voluntarily recognize
any union as the bargaining representative of any such employees; and not enter
into or amend any collective bargaining agreement applicable to any employees
of any Station to provide that it shall be binding upon any "successor"
employer or such employees;
(n) Not take or agree to take any action that would materially delay the
consummation of the Closing as contemplated by this Agreement;
(o) Consult with Buyer regarding extension or modification of current
programming and acquisition of new or additional programming; and
(p) Use commercially reasonable efforts to effect the relocation of the
Honolulu Station's office and studio space in a manner that will not materially
interfere with the operation of the Honolulu Station, and consult with Buyer
regarding the material aspects of such relocation.
5.2 NOTIFICATION OF CERTAIN MATTERS.
Sellers shall give prompt notice to Buyer, and Buyer shall give prompt
notice to Sellers, of (a) the occurrence, or failure to occur, of any event
that would be likely to cause any of their respective representations or
warranties contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Closing Date, and (b)
any failure on their respective parts to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by any of them under this Agreement.
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5.3 HSR FILING.
Within ten (10) business days after the execution of this Agreement,
Sellers and Buyer shall make the filings required to be made under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR Act"), in
connection with the transactions contemplated by this Agreement (the "HSR
Filing").
5.4 FCC FILING.
As promptly as practicable following execution of this Agreement and in no
event more than five (5) business days after the execution of this Agreement,
Sellers and Buyer shall file all necessary applications with the FCC and take
all commercially reasonable actions as shall be necessary and proper to obtain
promptly the FCC Orders without a Material Adverse FCC Condition and to cause
each of the FCC Orders to become a Final Action as soon as practicable.
5.5 TITLE; ADDITIONAL DOCUMENTS.
At the Closing, Sellers shall transfer and convey to Buyer good and
marketable title to all of the Sale Assets free and clear of any Liens except
Permitted Liens. Sellers shall execute or cause to be executed such documents,
in addition to those delivered at the Closing, as may be necessary to confirm in
Buyer such title to the Sale Assets and to carry out the purposes and intent of
this Agreement, which documents shall be in a form reasonably acceptable to
Buyer and Sellers. Buyer shall execute or cause to be executed such documents,
in addition to those delivered at Closing as may be necessary to confirm Buyer's
assumption of the Assumed Obligations and issuance of the Shares free and clear
of all Liens, which documents shall be in a form reasonably acceptable to Buyer
and Sellers.
5.6 OTHER CONSENTS.
Sellers and Buyer shall each use their commercially reasonable efforts to
obtain the consents or waivers to the transactions contemplated by this
Agreement required under the Station Agreements; provided that neither Sellers
nor Buyer shall be required to make any financial accommodation to a third party
in order to obtain any such consent or waiver (other than payment of any amount
otherwise due such third party).
5.7 INSPECTION AND ACCESS.
Sellers will, prior to the Closing Date, make available the assets, books,
accounting records, correspondence and files of Sellers (to the extent related
to the operation of the Stations) for examination by Buyer, its officers,
attorneys, accountants
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and agents, with the right to make copies of such books, records and files or
extracts therefrom. Such access will be available during normal business hours,
upon reasonable notice and in such manner as will not unreasonably interfere
with the conduct of the business of the Stations. Furthermore, Sellers will be
required to provide such access only during two (2) time periods, each of which
will last no more than three (3) consecutive business days. Sellers will
furnish to Buyer monthly unaudited financial statements of Seller prepared in a
manner consistent with the unaudited statements identified in Section 3.12.
Sellers will furnish to Buyer such additional financial and operating data and
other available information regarding Sellers as Buyer may reasonably request.
Those books, records and files the possession of which is not being transferred
to Buyer pursuant to this Agreement which relate to the Sale Assets shall be
preserved and maintained by Sellers for four (4) years after the Closing and
those books, records and files relating to the Sale Assets the possession of
which is being transferred to Buyer hereunder shall be maintained and preserved
by Buyer for a period of four (4) years after the Closing. Each such party
shall give to the other party and its authorized representatives, during normal
business hours, such access to, and the opportunity at the other party's expense
to copy, such books and records retained by it as may be reasonably requested by
the other party.
5.8 CONFIDENTIALITY.
Subject to Section 5.16, all information delivered or made available to
Buyer or Buyer's representatives or otherwise disclosed in writing by Sellers
(or their representatives) before or after the date hereof, in connection with
the transactions contemplated by this Agreement, shall be kept confidential by
Buyer and its representatives and shall not be used other than as contemplated
by this Agreement, except to the extent that such information (a) was otherwise
publicly available when received, (b) is or hereafter becomes lawfully
obtainable from third parties not related to Buyer or its Affiliates, (c) is
required to be disclosed to a governmental authority, (d) is required by law or
the rules of any stock exchange to be disclosed or (e) to the extent such duty
as to confidentiality is waived in writing by Sellers.
5.9 PUBLICITY.
The parties agree that no public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
written consent of the other party, except as required by law or applicable
regulations.
5.10 MATERIAL ADVERSE CHANGE.
Buyer and Sellers will promptly notify the other party of any event of
which Buyer or Sellers, as the case may be, obtains knowledge which has had or
could reasonably be expected to have a Material Adverse Effect.
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5.11 REASONABLE BEST EFFORTS.
Subject to the terms and conditions of this Agreement, each party will use
its reasonable best efforts to take all action and to do all things necessary,
proper or advisable to satisfy any condition hereunder in its power to satisfy
and to consummate and make effective as soon as practicable the transactions
contemplated by this Agreement.
5.12 FCC REPORTS AND APPLICATIONS.
Sellers shall file, on a current and timely basis and in all material
respects in a truthful and complete fashion until the Closing Date, all reports
and documents required to be filed with the FCC with respect to the Stations.
In addition, Sellers shall timely file all applications necessary for renewal of
any of the FCC Licenses, shall prosecute each such application with diligence,
shall in each case seek renewal for a full term, and shall diligently oppose any
objection to, appeal from or petition to reconsider the grant of any such
renewal application.
5.13 TAX RETURNS AND PAYMENTS.
Sellers will timely file with the appropriate governmental agencies all Tax
Returns required to be filed by Sellers with respect to the Stations prior to
Closing and timely pay all Taxes reflected on such Tax Returns as owing by
Sellers.
5.14 NO SOLICITATION.
From the date hereof until the earlier of Closing or termination of this
Agreement, no Seller or any Affiliate of any Seller shall directly or indirectly
(a) knowingly solicit or encourage submission of any proposal or offer from any
person relating specifically to the acquisition or purchase of any interest in
any Seller or any material assets of any Seller or any merger, consolidation or
other business combination with any Seller (each an "Acquisition Proposal"), or
(b) otherwise knowingly assist or negotiate with any person with respect to an
Acquisition Proposal. Sellers shall promptly notify Buyer in writing if an
Acquisition Proposal is made in writing after the date of this Agreement.
5.15 CERTIFIED RESOLUTIONS.
(a) Within fifteen (15) business days after the date hereof, Sellers shall
furnish Buyer with (i) certified resolutions of the board of directors of
Sellers and the Shareholders of Sellers evidencing the authorization and
approval of the execution and delivery of this Agreement and each of the other
Documents and the consummation of the transactions contemplated hereby and
thereby, and (ii) certified resolutions of the board of directors of USA
Broadcasting evidencing the authorization and approval of the execution and
delivery of the Guaranty.
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(b) Within fifteen (15) business days after the date hereof, Buyer shall
furnish Sellers with certified resolutions of the board of directors of Buyer
evidencing the authorization and approval of the execution and delivery of this
Agreement and each of the other Documents and the consummation of the
transactions contemplated hereby and thereby.
5.16 AUDITED FINANCIAL STATEMENTS.
Sellers recognize that Buyer is a publicly reporting company and agree that
Buyer shall be entitled at Buyer's expense to cause audited and unaudited
financial statements of the Stations to be prepared for such periods and filed
with the SEC, and included in a prospectus distributed to prospective investors,
as required by laws and regulations applicable to Buyer as a publicly reporting
company or registrant. Sellers agree to cooperate with Buyer and the auditing
accountants as reasonably requested by Buyer in connection with the preparation
and filing of such financial statements, including providing a customary
management representation letter in the form prescribed by generally accepted
auditing standards. Furthermore, if all or a portion of the audited financial
statements of the Parent Entities may be used for such purpose, Sellers hereby
consent to Buyer's use of such financial statements for the purposes set forth
in this Section 5.16 and Sellers agree to use their commercially reasonable
efforts to obtain the consent of the independent accounting firm which opined as
to such financial statements.
5.17 STUDIO RELOCATION.
Provided Closing occurs, Buyer shall reimburse Sellers on the Closing Date
for all costs, fees, and expenses incurred (a) after the date hereof in
connection with Seller's relocation of the studio site for KHON-TV in Honolulu,
Hawaii and the purchase of a condominium for such studio site ("Studio
Relocation"), and (b) prior to the date hereof, in connection with the Studio
Relocation; provided, however, that any amounts reimbursed by Buyer pursuant to
this Clause (b) shall not exceed $75,000 in the aggregate.
5.18 SEC REGISTRATION STATEMENT.
Promptly following the execution and delivery of this Agreement, Seller
shall prepare and file with the SEC a registration statement registering the
Shares in accordance with the Securities Act (the "Registration Statement").
Seller shall take all actions reasonably necessary, including, without
limitation, responding timely to SEC comments and requests for additional
information, to have the Registration Statement declared effective as of the
Closing Date.
5.19 ENVIRONMENTAL INSPECTION.
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At Buyer's expense, Buyer shall have the right to cause an environmental
inspection to be performed by a reputable environmental engineering company of
each portion of the Owned Real Property and Leased Real Property. Buyer shall
cause the environmental consultant to deliver to Sellers a copy of each such
inspection report at the same time such report(s) are delivered to Buyer.
5.20 AFFILIATE GUARANTY.
On the Closing Date, Sellers shall cause USA Broadcasting to execute and
deliver the Guaranty in the form of Exhibit D.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATION
OF BUYER TO CLOSE
Buyer's obligation to close the acquisition of the Sale Assets pursuant to
the terms of this Agreement is subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, unless waived by Buyer in
writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
(a) The representations and warranties of Sellers contained in this
Agreement or in any other Document shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except for changes permitted
hereunder and except for representations and warranties that speak as of a
specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time)), except to the extent
that the failure of such representations and warranties to be true and correct
shall not have had, or be reasonably expected to have, a Material Adverse
Effect.
(b) Sellers shall have delivered to Buyer on the Closing Date an officer's
certificate that the conditions specified in Sections 6.1(a), 6.2, 6.9, and 7.6
are satisfied as of the Closing Date.
6.2 PERFORMANCE OF AGREEMENT.
Sellers shall have performed all of their covenants, agreements and
obligations required by this Agreement to be performed or complied with by them
prior to or upon the Closing Date, except to the extent that the failure to
perform such covenants, agreements and obligations shall not have, when
considered together, had a Material Adverse Effect.
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6.3 FCC ORDERS.
(a) All of the FCC Orders shall have been issued without any Material
Adverse FCC Condition affecting Buyer; provided that if a petition to deny or
other third-party objection which raises any significant issue is filed with
the FCC prior to the date on which all of the FCC Orders are issued and become
effective, and such petition or objection is not withdrawn as of such date,
then Buyer's obligation to effect the Closing shall be subject to the further
condition that the FCC Orders shall each have become a Final Action (unless the
FCC Arbitrator pursuant to Section 6.3(b) determines there is no significant
issue or the parties otherwise agree). Furthermore, the FCC Orders shall
include authorization for Buyer to continue to operate KAII(TV) and KAHW(TV) as
satellite television stations.
(b) If within five (5) days after Buyer and Sellers acquire knowledge of
such a petition or objection, Buyer and Sellers do not agree on whether such
petition or objection raises a significant issue, then R. Xxxxx Xxxxxx (the
"FCC Arbitrator") of the law firm of Sidley & Austin shall be engaged to
resolve such matter within five (5) business days. If Xx. Xxxxxx is unable or
unwilling to so serve, then the parties shall promptly designate and engage
another attorney who regularly practices communications law to serve as the FCC
Arbitrator. The FCC Arbitrator may adopt such procedures and policies in
reviewing and deciding this matter as the FCC Arbitrator desires in his sole
discretion. The FCC Arbitrator's decision shall be final and binding on Buyer
and Sellers, and Buyer and Sellers shall each bear one-half of the FCC
Arbitrator's fees and expenses. For purposes of this Agreement, the parties
acknowledge and agree that a "significant issue" is any issue which if resolved
in the favor of a petitioner or third-party objector is reasonably likely to
result in the FCC requiring the Buyer to divest any Station or operate any
Station subject to a Material Adverse FCC Condition.
(c) Conditions which the FCC Orders or any order, ruling or decree of any
judicial or administrative body specifies and requires to be satisfied prior to
transfer of the FCC Licenses to Buyer shall have been satisfied.
(d) All of the FCC Licenses shall be in full force and effect.
6.4 HSR ACT.
The waiting period (including any extension) under the HSR Act applicable
to the sale and purchase of the Sale Assets pursuant to this Agreement shall
have expired or been terminated.
6.5 OPINIONS OF SELLERS' COUNSEL.
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Buyer shall have received (a) the written opinion of Sellers' corporate
counsel, dated as of the Closing Date, that (i) each Seller is a corporation
duly formed and in good standing under the laws of the state in which such
Seller is incorporated, (ii) the execution, delivery and performance of the
Agreement and each of the other Documents have been duly authorized by all
requisite corporate action (including any necessary shareholder approval) on the
part of Sellers, and (iii) the Agreement and other Documents have been duly and
validly executed and delivered by Sellers and constitute valid and legally
binding obligations enforceable against Sellers in accordance with their terms,
subject to bankruptcy, insolvency and other laws affecting the enforcement of
creditors' rights generally and general principles of equity, and (b) the
written opinion of Sellers' FCC counsel, dated as of the Closing Date, that (i)
the Sellers hold the FCC Licenses, (ii) all authorizations, approvals and
consents of the FCC required under the Communications Act to permit the
assignment of the FCC Licenses by the Sellers to Buyer have been obtained, are
in effect, and have not been reversed, stayed, enjoined, set aside, annulled or
suspended, and (iii) there is no FCC order, judgment, decree, notice of apparent
liability or order of forfeiture outstanding, and to counsel's knowledge, no
action, suit, notice of apparent liability, order of forfeiture, investigation
or other proceeding pending, by or before the FCC against the Sellers that might
result in a revocation, cancellation, suspension, non-renewal, short-term
renewal or materially adverse modification of the FCC Licenses, except FCC
proceedings generally affecting the television industry (including but not
limited to the proceedings which will require modification of all television
licenses to accommodate the transition to digital television). An opinion
addressing the matters in foregoing Clause (a) but with respect to USA
Broadcasting and the Guaranty shall have also been received by Buyer from
counsel for USA Broadcasting. Each of such opinions shall be subject to
customary qualifications and limitations.
6.6 REQUIRED CONSENTS.
Sellers shall have been able to obtain through commercially reasonable
efforts, but without incurring substantial cost or expense, the written consents
or waivers to the transactions contemplated by this Agreement, in form
reasonably satisfactory to Buyer's counsel and without any condition materially
adverse to Buyer or the Stations, which are required under (i) each Station
Agreement for each transmitter or antenna (including each satellite and
translator transmitter) site where a Seller is a lessee and (ii) the programming
agreements identified for each Station on Schedule 6.6; provided, however, that
(A) obtaining such a consent with respect to one or more of such programming
agreements shall not be a condition precedent to Closing if Buyer and Sellers
agree upon a reduction in the Purchase Price to compensate Buyer for the
reduction, if any, in the fair market value of one or more of the Stations as a
result of the inability to obtain such a consent, and (B) if Buyer and Sellers
fail to agree prior to Closing on such a Purchase Price reduction, (1) Buyer
shall pay the Purchase Price at Closing without such a reduction, (2) the
parties shall promptly take all action necessary
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to cause the appropriate reduction, if any, to be determined by expedited
arbitration in accordance with the expedited arbitration rules of the American
Arbitration Association, and (3) promptly after such determination is made,
Sellers shall refund to Buyer in immediately available funds the amount of such
reduction, if any, together with interest from the Closing Date at eight percent
(8%) per annum. A further condition shall be that Buyer shall have been
furnished a written statement from the lessor under the lease of the Honolulu's
Station's main transmitter and antenna site that the term of such lease was
renewed as of January 2, 1998 for an additional ten (10) years.
6.7 DELIVERY OF CLOSING DOCUMENTS.
Sellers shall have delivered or caused to be delivered to Buyer on the
Closing Date each of the documents required to be delivered pursuant to Section
8.2.
6.8 NO ADVERSE PROCEEDINGS.
No judgment or order shall have been rendered and remain in effect, and no
action or proceeding by any governmental entity shall be pending, against Buyer
that would restrain or make unlawful the purchase and sale of the Sale Assets as
contemplated by this Agreement.
6.9 NO MATERIAL ADVERSE CHANGE.
There shall have been no change or development affecting any Seller or any
Station since December 31, 1997 which has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect; provided, however, that an
adverse change in the revenue or cash flow of any Station shall not constitute
for purposes of this Section a change or development which has, or could
reasonably be expected to have, a Material Adverse Effect unless the failure of
Sellers to perform in all material respects the covenants under Section 5.1
shall have caused such Material Adverse Effect.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF SELLERS TO CLOSE
The obligations of Sellers to close the sale of the Sale Assets pursuant to
the terms of this Agreement is subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, unless waived by Sellers in
writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
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(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects on the date hereof
and at the Closing Date with the same effect as though made at such time,
except for changes that are not materially adverse to Sellers.
(b) Buyer shall have delivered to Sellers on the Closing Date a
certificate that the conditions specified in Sections 7.1(a) and 7.2 are
satisfied as of the Closing Date.
7.2 PERFORMANCE OF AGREEMENTS.
Buyer shall have performed in all material respects all of its covenants,
agreements and obligations required by this Agreement and each of the other
Documents to be performed or complied with by it prior to or upon the Closing
Date.
7.3 FCC ORDERS.
(a) All of the FCC Orders shall have been issued as to all Stations and
shall have become effective under the rules of the FCC and applicable law.
(b) Conditions which the FCC Orders or any order, ruling or decree of any
judicial or administrative body specifies and requires to be satisfied prior to
transfer of the FCC Licenses to Buyer shall have been satisfied.
7.4 HSR ACT.
The waiting period (including any extension) under the HSR Act applicable
to the sale and purchase of the Sale Assets pursuant to this Agreement shall
have expired or been terminated.
7.5 OPINION OF BUYER'S COUNSEL.
Sellers shall have received the written opinion of Buyer's counsel, dated
as of the Closing Date, that (i) Buyer is a corporation duly formed and in good
standing under the laws of the state in which Buyer is incorporated, (ii) the
execution, delivery and performance of the Agreement and other Documents have
been duly authorized by all requisite corporate action (including any necessary
shareholder approval) on the part of Buyer, (iii) the Agreement and each of the
other Documents have been duly and validly executed and delivered by Buyer and
constitute valid and legally binding obligations enforceable against Buyer in
accordance with their terms, subject to bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally and general principles
of equity, (iv) the Shares to be issued to the Sellers in accordance with terms
of this Agreement, when so issued, will be duly authorized, validly issued,
fully paid and non-assessable, and (v) the Stock Pledge Agreement creates in
favor of
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Sellers a perfected security interest in the Shares covered thereby. Each of
the opinions of Buyer's Counsel shall be subject to customary qualifications and
limitations.
7.6 NO ADVERSE PROCEEDINGS.
No judgment or order shall have been rendered and remain in effect, and no
action or proceeding by any governmental entity shall be pending, against
Sellers that would restrain or make unlawful the purchase and sale of the Sale
Assets as contemplated by this Agreement.
7.7 DELIVERY OF CLOSING DOCUMENTS.
Buyer shall have delivered or cause to be delivered to Seller on the
Closing Date each of the Documents required to be delivered pursuant to
Section 8.3.
7.8 EFFECTIVENESS OF REGISTRATION STATEMENT.
The Registration Statement shall have been declared effective by the SEC
under the Securities Act. No stop order suspending the effectiveness of such
registration statement shall have been issued by the SEC and no proceedings for
that purpose shall have been initiated or threatened by the SEC.
7.9 LISTING OF SHARES.
All Shares shall have been included for listing on NASDAQ upon official
notice of issuance.
ARTICLE VIII
CLOSING
8.1 TIME AND PLACE.
Closing of the purchase and sale of the Sale Assets pursuant to this
Agreement (the "Closing") shall take place at the offices of Bose XxXxxxxx &
Xxxxx, 000 Xxxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxx, at
10:00 o'clock A.M. on the date (the "Closing Date") that is the fifth business
day following satisfaction or waiver of the conditions precedent hereunder to
Closing.
8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLERS.
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At the Closing, Sellers shall deliver or cause to be delivered to Buyer
the following, in each case in form and substance reasonably satisfactory to
Buyer:
(a) The opinions of Sellers' counsel and FCC counsel, dated the Closing
Date, to the effect set forth in Section 6.5;
(b) Governmental certificates, dated as of a date as near as reasonably
practicable to the Closing Date, showing that each Seller is duly incorporated
and in good standing in the state of its incorporation and is qualified to do
business and in good standing in the jurisdictions listed in Schedule 3.1;
(c) A certificate of the Secretary of each Seller attesting as to the
incumbency of each officer of such Seller who executes this Agreement and any
of the other Documents and to similar customary matters;
(d) A xxxx of sale and other instruments of transfer and conveyance
transferring the Sale Assets (except the Owned Real Property) to Buyer, in
forms reasonably acceptable to Buyer and Sellers;
(e) A deed, in a form recordable in the applicable jurisdiction, for each
parcel of the Owned Real Property, which deed shall convey insurable, fee
simple title for that parcel free and clear of all Liens except for Permitted
Liens and be substantially the same form as the deed that transferred title to
such Owned Real Property to Sellers; and such customary owner's or seller's
affidavit as are reasonably necessary to enable Buyer to obtain title insurance
with respect to the Owned Real Property without any standard preprinted
exception (except those standard preprinted exceptions which may be deleted by
delivery of a current certified ALTA/ACSM survey);
(f) A certificate of nonforeign status under Section 1445 of the Code,
complying with the requirements of the Income Tax Regulations promulgated
pursuant to such section;
(g) The certificate described in Section 6.1(b);
(h) A written instruction of Sellers to Escrow Agent instructing the
Escrow Agent to distribute the Escrow Account at the direction of Sellers;
(i) Modified network affiliation agreements for each of the Stations with
Fox Broadcasting Company in the form and substance of Exhibit C ("Fox Network
Agreements"); and
(j) The Guaranty executed by USA Broadcasting as prescribed in Section
5.20.
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(k) such additional information and materials as Buyer shall have
reasonably requested to evidence the satisfaction of the conditions to its
obligations hereunder, including without limitation, any documents expressly
required by this Agreement to be delivered by Sellers at Closing.
8.3 DELIVERIES TO SELLERS BY BUYER.
At the Closing, Buyer shall deliver or cause to be delivered to Sellers
the following, in each case in form and substance reasonably satisfactory to
Sellers:
(a) The Purchase Price (including all Shares issued at Closing) in
accordance with Section 2.5, as adjusted under Section 2.7(b);
(b) The certificate described in Section 7.1(b);
(c) A certificate of the Secretary of Buyer attesting as to the incumbency
of each officer of Buyer who executes this Agreement and any of the other
Documents and to similar customary matters;
(d) A written instruction of Buyer to Escrow Agent instructing the Escrow
Agent to distribute the Escrow Account at the direction of Sellers;
(e) An agreement by Buyer assuming the Assumed Obligations, in forms
reasonably acceptable to Buyer and Sellers.
(f) Fox Network Agreements, Stock Pledge Agreement and Note executed by
Buyer; and
(g) Such additional information and materials as Sellers shall have
reasonably requested to evidence the satisfaction of the conditions to their
obligations hereunder.
ARTICLE IX
INDEMNIFICATION
9.1 SURVIVAL.
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All representations, warranties, covenants and agreements in this Agreement
or any other Document shall survive the Closing regardless of any investigation,
inquiry or knowledge on the part of any party, and the Closing shall not be
deemed a waiver by any party of the representations, warranties, covenants or
agreements of any other party in this Agreement or any other Document; provided,
however, that the period of survival shall, (i) with respect to the
representations and warranties in Section 3.15 (Employee Benefit Plans), end for
each Benefit Plan upon expiration of the statute of limitations applicable to
the Benefit Plan, (ii) with respect to the representations and warranties
pertaining to Taxes under Section 3.17, end for each Tax upon expiration of the
statute of limitations applicable to the Tax, (iii) with respect to the
representations and warranties in Section 3.18 (Environmental Matters), end
three (3) years after the Closing Date, and (iv) in the case of any other
representation or warranty, end twelve (12) months after the Closing Date (in
each case, the "Survival Period"). No claim for breach of any representation or
warranty may be brought under this Agreement or any other Document unless
written notice describing in reasonable detail the nature and basis of such
claim is given on or prior to the last day of the applicable Survival Period.
In the event such notice of a claim is so given, the right to indemnification
with respect to such claim shall survive the applicable Survival Period until
the claim is finally resolved and any obligations with respect to the claim are
fully satisfied.
9.2 INDEMNIFICATION BY SELLERS.
(a) Subject to Section 9.2(b), Sellers shall, jointly and severally
indemnify, defend, and hold harmless Buyer and its officers, directors,
employees, Affiliates, successors and assigns from and against, and pay or
reimburse each of them for and with respect to, any Loss relating to, arising
out of or resulting from:
(i) Any breach by Sellers of any of its representations, warranties,
covenants or agreements in this Agreement or any other Document; or
(ii) Any obligation, indebtedness or Liability of Sellers (other than the
Assumed Obligations) regardless of whether disclosed to Buyer and regardless of
whether constituting a breach by Sellers of any representation, warranty,
covenant or agreement hereunder or under any other Document; or
(iii) Noncompliance by Sellers with the provisions of the Bulk Sales Act,
if applicable, in connection with the transactions contemplated by this
Agreement.
(b) If Closing occurs, Sellers shall not be obligated to indemnify Buyer
unless and until the aggregate amount of Buyer's Losses exceeds Five Hundred
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Thousand Dollars ($500,000) (the "Deductible"), in which case Buyer shall then
be entitled to indemnification of Buyer's Loss in excess of the Deductible,
provided that any payment owed by Sellers to Buyer for any Liability pursuant
to or under Section 2.7, Section 2.8(f), or Section 9.2(a)(ii), shall not be
counted in determining whether the Deductible limitation is satisfied, and
Buyer shall have the right to recover any such payment without regard to such
limitation.
(c) The aggregate amount of all payments made by Sellers in satisfaction
of claims for indemnification pursuant to this Section 9.2 shall not exceed
Twenty Million Dollars ($20,000,000) (the "Cap"), provided that any payment
owed by Sellers to Buyer under Section 2.7 shall not be counted in determining
whether the Cap has been met.
(d) Notwithstanding any other provision of this Agreement to the contrary,
and except for remedies that Buyer may have for any fraud by the Sellers, Buyer
acknowledges and agrees that the maximum aggregate liability of the Sellers
(taken as a whole) pursuant to this Agreement to Buyer and any of its
Affiliates for any and all Losses shall not exceed the Cap, regardless of
whether Buyer seeks indemnification pursuant to this Article IX, regardless of
the form of action, whether in contract or tort, including negligence, and
regardless of whether or not the Sellers are notified of the possibility of
damages to Buyer.
9.3 INDEMNIFICATION BY BUYER.
(a) Subject to Sections 9.3(b) and 10.2, Buyer shall indemnify and hold
harmless Sellers and their officers, directors, employees, agents,
representatives, Affiliates, successors and assigns from and against, and pay
or reimburse each of them for and with respect to any Loss relating to, arising
out of or resulting from:
(i) Any breach by Buyer of any of its representations, warranties,
covenants or agreements in this Agreement or any other Document; or
(ii) The Assumed Obligations; or
(iii) Buyer's operation of any of the Stations on or after the Closing
Date (except for any Loss relating to, arising out of or resulting from any
Excluded Asset) or Buyer's ownership of the Sale Assets.
(b) If Closing occurs, Buyer shall not be obligated to indemnify Sellers
unless and until the aggregate amount of Sellers' Losses exceeds the
Deductible, in which case Sellers shall then be entitled to indemnification of
Sellers' Losses in excess of the Deductible, provided any payment owed by Buyer
to Sellers for any Assumed
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Obligations or for any Liability pursuant to or under Section 2.7, Section 2.8,
Section 5.17, Section 9.3(a)(iii) or Sections 12.1(c) and (d) shall not be
counted in determining whether the Deductible limitation is satisfied, and
Sellers shall have the right to recover any such payment without regard to any
such limitation.
9.4 ADMINISTRATION OF INDEMNIFICATION.
For purposes of administering the indemnification provisions set forth in
Sections 9.2 and 9.3, the following procedure shall apply:
(a) Whenever a claim shall arise for indemnification under this Article,
the party entitled to indemnification (the "Indemnified Party") shall
reasonably promptly give written notice to the party from whom indemnification
is sought (the "Indemnifying Party") setting forth in reasonable detail, to the
extent then available, the facts concerning the nature of such claim and the
basis upon which the Indemnified Party believes that it is entitled to
indemnification hereunder.
(b) In the event of any claim for indemnification resulting from or in
connection with any claim by a third party, the Indemnifying Party shall be
entitled, at its sole expense, either (i) to participate in defending against
such claim or (ii) to assume the entire defense with counsel which is selected
by it and which is reasonably satisfactory to the Indemnified Party provided
that (A) the Indemnifying Party agrees in writing that it does not and will not
contest its responsibility for indemnifying the Indemnified Party in respect of
such claim or proceeding and (B) no settlement shall be made and no judgment
consented to without the prior written consent of the Indemnified Party which
shall not be unreasonably withheld (except that no such consent shall be
required if the claimant is entitled under the settlement to only monetary
damages actually paid by the Indemnifying Party). If, however, (i) the claim,
action, suit or proceeding would, if successful, result in the imposition of
damages for which the Indemnifying Party would not be solely responsible, or
(ii) representation of both parties by the same counsel would otherwise be
inappropriate due to actual or potential differing interests between them, then
the Indemnifying Party shall not be entitled to assume the entire defense and
each party shall be entitled to retain counsel who shall cooperate with one
another in defending against such claim. In the case of Clause (i) of the
preceding sentence, the Indemnifying Party shall be obligated to bear only that
portion of the expense of the Indemnified Party's counsel that is in proportion
to the damages indemnifiable by the Indemnifying Party compared to the total
amount of the third-party claim against the Indemnified Party.
(c) If the Indemnifying Party does not choose to defend against a claim by
a third party, the Indemnified Party may defend in such manner as it deems
appropriate or settle the claim (after giving notice thereof to the
Indemnifying Party) on such terms as the Indemnified Party may deem
appropriate, and the Indemnified Party
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shall be entitled to periodic reimbursement of defense expenses incurred and
prompt indemnification from the Indemnifying Party in accordance with this
Article.
(d) Failure or delay by an Indemnified Party to give a reasonably prompt
notice of any claim (if given prior to expiration of any applicable Survival
Period) shall not release, waive or otherwise affect an Indemnifying Party's
obligations with respect to the claim, except to the extent that the
Indemnifying Party can demonstrate actual loss or prejudice as a result of such
failure or delay. Buyer shall not be deemed to have notice of any claim by
reason of any knowledge acquired on or prior to the Closing Date by an employee
of the Stations.
ARTICLE X
TERMINATION; LIQUIDATED DAMAGES
10.1 RIGHT OF TERMINATION.
This Agreement may be terminated prior to Closing:
(a) By written agreement of Sellers and Buyer; or
(b) By written notice from a party that is not then in material breach of
this Agreement if:
(i) The other party has continued in material breach of this Agreement for
twenty (20) days after written notice of such breach from the terminating party
is received by such other party; or
(ii) Closing does not occur within one year after the date hereof.
10.2 OBLIGATIONS UPON TERMINATION.
(a) Upon termination of this Agreement, each party shall thereafter remain
liable for breach of this Agreement prior to such termination and remain liable
to pay and perform any obligation under Article IX and this Article, provided,
however, that in the event Closing does not occur, the aggregate liability of
Buyer for breach or default under this Agreement shall be limited as provided
in Section 10.2(c).
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(b) If this Agreement is terminated prior to Closing for any reason other
than a material breach or default by Buyer under this Agreement, Buyer shall be
entitled to the return of the Xxxxxxx Money, and Buyer and Sellers shall
cooperate in taking such action as required under the Escrow Agreement to
effect the Escrow Agent's distribution of the Xxxxxxx Money to Buyer.
(c) If Closing shall not have occurred because of a material breach or
default by Buyer under this Agreement, Sellers' sole remedy at law or in equity
under this Agreement shall be (i) the termination by Sellers of this Agreement,
and (ii) the recovery from Buyer of (A) an amount equal to the Xxxxxxx Money
(the "Sellers' Liquidated Damage Amount") and (B) Sellers' reasonable
attorneys' fees and other costs of collection incurred by Sellers in enforcing
their right to recover Sellers' Liquidated Damage Amount (such fees and other
costs herein referred to as "Sellers' Enforcement Costs"). In the event of
such termination by Sellers, Sellers shall be entitled under the Escrow
Agreement (subject to Buyer's right to contest in good faith) to effect the
Escrow Agent's distribution to Sellers of the Xxxxxxx Money, and Sellers shall
be entitled to pursue any other remedy available to Sellers at law or in equity
to recover the entire Sellers' Liquidated Damage Amount and Sellers'
Enforcement Costs, provided that the total monetary damages (including any
amount received from the Escrow Agent under the Escrow Agreement) to which
Sellers shall be entitled shall not exceed the sum of Sellers' Liquidated
Damage Amount plus Sellers' Enforcement Costs. BUYER ACKNOWLEDGES AND AGREES
THAT SELLERS' RECEIPT OF SELLERS' LIQUIDATED DAMAGE AMOUNT SHALL CONSTITUTE
PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY AND THAT SELLERS'
LIQUIDATED DAMAGE AMOUNT IS REASONABLE IN LIGHT OF THE SUBSTANTIAL BUT
INDETERMINATE HARM ANTICIPATED TO BE CAUSED BY BUYER'S MATERIAL BREACH OR
DEFAULT UNDER THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS AND DAMAGES, THE
INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY,
AND THE VALUE OF THE TRANSACTIONS TO BE CONSUMMATED HEREUNDER.
10.3 TERMINATION NOTICE.
Each notice given by a party pursuant to Section 10.1 to terminate this
Agreement shall specify the Subsection of Section 10.1 pursuant to which such
notice is given. If at the time a party gives a termination notice, such party
is entitled to give such notice pursuant to more than one Subsection of Section
10.1, the Subsection pursuant to which such notice is given and termination is
effected shall be deemed to be the Subsection specified in such notice provided
that the party giving such notice is at such time entitled to terminate this
Agreement pursuant to the specified Subsection.
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ARTICLE XI
CONTROL OF STATIONS
Between the date of this Agreement and the Closing Date, Buyer shall not
control, manage or supervise the operation of the Stations or the conduct of
their business, all of which shall remain the sole responsibility and under the
control of Sellers, subject to Sellers' compliance with this Agreement.
ARTICLE XII
EMPLOYMENT MATTERS
12.1 TRANSFER OF EMPLOYEES.
(a) Buyer shall offer employment (effective immediately after Closing) to
each of the employees of the Stations (including those on leave of absence,
whether short-term, long-term, family, maternity, disability, paid, unpaid or
other, but excluding the employees identified on Schedule 2.2(l) hereto), at a
comparable salary or wage rate (as the case may be), position and place of
employment as held by each such employee immediately prior to the Closing Date
and with the same employee benefits generally provided by Buyer to Buyer's
similarly situated employees (such employees who are given and accept such
offers of employment are referred to herein as the "Transferred Employees").
As of the Closing Date, Buyer shall provide Sellers with written notice of any
employees of the Stations who have not accepted Buyer's offer of employment.
Nothing in this Section 12.1(a) is intended to nor shall guarantee employment
for any Transferred Employee for any length of time after the Closing Date.
(b) Sellers shall pay, discharge and be solely responsible for all
liabilities, obligations, costs and expenses which arise or become payable
under any Benefit Plan as a result of, or in connection with, the termination
by any Seller of any Station employee including, without limitation, all
severance or termination pay and all accrued vacation, salary, wages and other
compensation payments or benefits, if any, which arise or become payable as a
result of or in connection with such terminations, except to the extent any
such liabilities are included as an Assumed Obligation pursuant to Section
2.3(a)(ii) in determining the Adjustment Amount.
(c) Buyer agrees, as between Buyer and Sellers, that Buyer shall pay any
Transferred Employee who is terminated by Buyer without cause during the six
month period after Closing the severance amount stated on Schedule 3.14(c) for
such Transferred Employee, as adjusted in accordance with the applicable
formula described
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on such Schedule to reflect the actual termination date if other than August
31, 1998. The foregoing agreement by Buyer, however, is not intended to be and
shall not constitute the assumption by Buyer of any obligation under any
severance policy, plan or arrangement of Sellers.
(d) Buyer shall pay, discharge and be solely responsible for all
liabilities, obligations, costs and expenses which arise or become payable as a
result of or in connection with Buyer's employment of any Transferred Employees
upon Closing or Buyer's termination of any Transferred Employees after Closing,
including, without limitation, all severance or termination pay and all accrued
vacation, salary, wages and other compensation payments or benefits. Buyer
shall not, however, assume or be obligated to pay any benefits under any Benefit
Plans (including, but not limited to, any severance policy, plan or arrangement)
except to the extent arising under any Assumed Plan during and relating to any
period on or after the Closing Date.
12.2 EMPLOYEE BENEFIT PLANS.
Buyer shall not acquire any rights or interest in, or assume or have any
obligations or liabilities under, any of the Benefit Plans, and Sellers or the
Benefit Plans, as applicable, will retain all assets and liabilities in respect
of Sellers' employees under the Benefit Plans. Sellers shall comply with the
provisions of the Continuation Coverage Under Group Health Plan of ERISA, Title
I, Part 6, to the extent applicable in connection with the transactions
contemplated by this Agreement.
12.3 UNION EMPLOYEES.
Notwithstanding the above provisions of this Article XII, upon consummation
of the Closing hereunder, Buyer shall: (i) recognize the unions and labor
organizations which are parties to the collective bargaining agreements set
forth in Schedule 3.7(b); and (ii) offer employment to all active employees of
the Stations represented by any such union or labor organization; and (iii)
assume and be responsible for the liabilities and obligations of Sellers arising
under the collective bargaining agreements listed on Schedule 3.7(b), including,
without limitation, liabilities or obligations with respect to severance pay,
accrued vacation and other similar liabilities or obligations, but only to the
extent such liabilities and obligations are included as part of the Assumed
Obligations.
12.4 EMPLOYMENT AGREEMENTS.
Buyer acknowledges and agrees that Buyer's obligations pursuant to this
Article XII are in addition to, and not in limitation of, Buyer's obligation to
assume the employment agreements set forth in Schedule 3.7(b).
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ARTICLE XIII
MISCELLANEOUS
13.1 FURTHER ACTIONS.
From time to time before, at and after the Closing, each party, at its
expense and without further consideration, will execute and deliver such
documents as reasonably requested by the other party in order more effectively
to consummate the transactions contemplated hereby.
13.2 PAYMENT OF EXPENSES.
(a) The fees for the HSR Filing, the fees for filing the applications with
the FCC under Section 5.4, and all Transfer Taxes payable in connection with
consummation of the transactions contemplated by this Agreement, shall be paid
fifty percent (50%) by Sellers and fifty percent (50%) by Buyer. All other
Taxes shall be paid by the party primarily liable under applicable law to pay
such Tax. Notwithstanding anything to the contrary in this Agreement, all
mortgage recordation taxes and fees incurred in connection with the recording of
any mortgage or deed of trust by Buyer or any of its lenders shall be paid by
Buyer.
(b) Except as otherwise expressly provided in this Agreement, each of the
parties shall bear its own expenses, including the fees of any attorneys and
accountants engaged by such party, in connection with the transactions
contemplated by this Agreement.
13.3 SPECIFIC PERFORMANCE.
Sellers acknowledge that each Station is of a special, unique and
extraordinary character, and that damages alone are an inadequate remedy for a
breach of this Agreement by Sellers. Accordingly, as an alternative to
termination of this Agreement under Section 10.1, Buyer shall be entitled, in
the event of Sellers' breach, to enforcement of this Agreement (subject to
obtaining any required approval of the FCC) by a decree of specific performance
or injunctive relief requiring Sellers to fulfill their obligations under this
Agreement. Such right of specific performance or injunctive relief shall be in
addition to, and not in lieu of, Buyer's right to recover damages and to pursue
any other remedies available to Buyer for Sellers' breach. In any action to
specifically enforce Sellers' obligation to close the transactions contemplated
by this Agreement, Sellers shall waive the defense that there is an adequate
remedy at law or in equity and agrees that Buyer shall be entitled to obtain
specific performance of Sellers' obligation to close without being required to
prove actual damages. As a condition to seeking specific performance, Buyer
shall not be required to tender the
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Purchase Price as contemplated by Section 2.5 but shall be required to
demonstrate that Buyer is ready, willing and able to tender the Purchase Price
as contemplated by such Section.
13.4 NOTICES.
All notices, demands or other communications given hereunder shall be in
writing and shall be sufficiently given if delivered by courier (including
overnight delivery service) or sent by registered or certified mail, first
class, postage prepaid, addressed as follows:
(a) if to Buyer, to:
Emmis Broadcasting Corporation
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Chairman
Copy to:
Bose XxXxxxxx & Xxxxx
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
(b) if to Sellers, to:
USA Broadcasting, Inc.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx, Esq.
Copy to:
Xxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
and to:
Fox Inc.
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10201 Xxxx Xxxx Xxxxxxxxx
Xxxxxxxx 00 - Xxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
or such other address as a party may from time to time notify the other party
in writing (as provided above). Any such notice, demand or communication shall
be deemed to have been given (i) if so mailed, as of the close of the third
business day following the date so mailed, and (ii) if delivered by courier, on
the date received.
13.5 ENTIRE AGREEMENT.
This Agreement, the Schedules, Exhibits and the other Documents constitute
the entire agreement and understanding between the parties with respect to the
subject matter hereof and supersede any prior negotiations, agreements,
understandings or arrangements between the parties hereto with respect to the
subject matter hereof.
13.6 BINDING EFFECT; BENEFITS.
Except as otherwise provided herein, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors or permitted assigns. Except to the extent specified herein, nothing
in this Agreement, express or implied, shall confer on any person other than the
parties hereto and their respective successors or permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
13.7 ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by either party without the prior written consent of
the other party, provided that:
(a) Either party may assign its rights under this Agreement as collateral
security to any lender providing financing to the party or any of its
Affiliates; and
(b) Buyer may assign all of its rights under this Agreement to a direct or
indirect wholly-owned subsidiary of Buyer, provided that (i) the representations
and warranties of Buyer hereunder shall be true and correct in all respects as
applied to the assignee, (ii) both Buyer and the assignee shall execute and
deliver to Sellers a written instrument in form and substance satisfactory to
Sellers within their reasonable judgment in which both Buyer and the assignee
agree to be jointly and severally liable for performance of all of Buyer's
obligations under this Agreement, (iii) such assignment shall not materially
delay issuance of the FCC Orders, and (iv) Buyer and the assignee shall deliver
such other documents and instruments as reasonably requested by
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Sellers, including appropriate certified resolutions of the boards of directors
of Buyer and the assignee provided, however, under no circumstances may Buyer
assign any right or obligation hereunder to deliver the Shares or to repay the
Note.
13.8 GOVERNING LAW.
This Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of New York without regard to its
principles of conflicts of laws.
13.9 AMENDMENTS AND WAIVERS.
No term or provision of this Agreement may be amended, waived, discharged
or terminated orally but only by an instrument in writing signed by the party
against whom the enforcement of such amendment, waiver, discharge or termination
is sought. Any waiver shall be effective only in accordance with its express
terms and conditions.
13.10 SEVERABILITY.
Any provision of this Agreement which is unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
unenforceability without invalidating the remaining provisions hereof, and any
such unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
13.11 HEADINGS.
The captions in this Agreement are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
13.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and by any
party on separate counterparts, each of which shall be an original, and all of
which together shall constitute one and the same instrument.
13.13 REFERENCES.
All references in this Agreement to Articles and Sections are to Articles
and Sections contained in this Agreement unless a different document is
expressly specified.
13.14 SCHEDULES AND EXHIBITS.
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Unless otherwise specified herein, each Schedule and Exhibit referred to in
this Agreement is attached hereto, and each such Schedule and Exhibit is hereby
incorporated by reference and made a part hereof as if fully set forth herein.
13.15 JOINT AND SEVERAL LIABILITY.
Sellers shall be jointly and severally liable for each representation,
warranty, covenant, agreement, liability or obligation of all or any one of the
Sellers under this Agreement or any other Document whether or not otherwise
indicated in this Agreement or any other Document.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Asset
Purchase Agreement to be executed as of the date first written above.
SF BROADCASTING OF HONOLULU, INC.
By: _____________________________________
Printed Name: ___________________________
Its: ____________________________________
SF HONOLULU LICENSE SUBSIDIARY, INC.
By: _____________________________________
Printed Name: ___________________________
Its: ____________________________________
SF BROADCASTING OF NEW ORLEANS, INC.
By: _____________________________________
Printed Name: ___________________________
Its: ____________________________________
SF NEW ORLEANS LICENSE SUBSIDIARY, INC.
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By: _____________________________________
Printed Name: ___________________________
Its: ____________________________________
SF BROADCASTING OF MOBILE, INC.
By: _____________________________________
Printed Name: ___________________________
Its: ____________________________________
SF MOBILE LICENSE SUBSIDIARY, INC.
By: _____________________________________
Printed Name: ___________________________
Its: ____________________________________
SF BROADCASTING OF GREEN BAY, INC.
By: _____________________________________
Printed Name: ___________________________
Its: ____________________________________
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SF GREEN BAY LICENSE SUBSIDIARY, INC.
By: _____________________________________
Printed Name: ___________________________
Its: ____________________________________
EMMIS BROADCASTING CORPORATION
By: _____________________________________
Xxxxx X. Xxxxx, Assistant Secretary
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