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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
PRESS COMMUNICATIONS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AS SELLER,
AND
EMMIS COMMUNICATIONS CORPORATION
AS BUYER
JUNE 3, 1999
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TABLE OF CONTENTS
RECITALS..........................................................................................................1
ARTICLE I - TERMINOLOGY..................................................................................1
1.1 Defined Terms..........................................................................1
1.2 Additional Defined Terms...............................................................3
ARTICLE II - PURCHASE AND SALE...........................................................................5
2.1 Sale Assets............................................................................5
(a) Tangible Personal Property....................................................5
(b) Real Property.................................................................5
(c) Permits.......................................................................5
(d) Station Agreements............................................................6
(e) Intellectual Property.........................................................6
(f) Records.......................................................................6
(g) Miscellaneous Assets..........................................................6
2.2 Excluded Assets........................................................................6
2.3 Assumption of Liabilities..............................................................7
2.4 Xxxxxxx Money..........................................................................8
2.5 Purchase Price.........................................................................8
2.6 Allocation of the Purchase Price.......................................................8
2.7 Adjustment of Purchase Price...........................................................9
2.8 Accounts Receivable...................................................................11
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER..................................................12
3.1 Organization, Good Standing and Requisite Power.......................................12
3.2 Authorization and Binding Effect of Documents.........................................12
3.3 Absence of Conflicts..................................................................12
3.4 Consents..............................................................................13
3.5 Sale Assets; Title....................................................................13
3.6 FCC Licenses..........................................................................13
3.7 Station Agreements....................................................................14
3.8 Tangible Personal Property............................................................16
3.9 Real Property.........................................................................17
3.10 Intellectual Property.................................................................17
3.11 Financial Statements..................................................................18
3.12 Absence of Certain Changes or Events..................................................19
3.13 Litigation............................................................................20
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3.14 Labor Matters.........................................................................20
3.15 Employee Benefit Plans................................................................21
3.16 Compliance with Law...................................................................22
3.17 Tax Returns and Payments..............................................................22
3.18 Environmental Matters.................................................................23
3.19 Broker's or Finder's Fees.............................................................24
3.20 Insurance.............................................................................24
3.21 Cable Television Transmission.........................................................24
3.22 Transactions with Affiliates..........................................................25
3.23 Florida Sales Tax.....................................................................25
3.24 Year 2000 Computer Compliance.........................................................25
3.25 Disclosure............................................................................25
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER....................................................25
4.1 Organization and Good Standing........................................................25
4.2 Authorization and Binding Effect of Documents.........................................26
4.3 Absence of Conflicts..................................................................26
4.4 Consents..............................................................................26
4.5 Broker's or Finder's Fees.............................................................26
4.6 Litigation............................................................................27
4.7 Buyer's Qualification.................................................................27
4.8 WARN Act..............................................................................27
ARTICLE V - OTHER COVENANTS.............................................................................27
5.1 Conduct of the Station's Business Prior to the Closing Date...........................27
5.2. Notification of Certain Matters.......................................................29
5.3 HSR Filing............................................................................29
5.4 FCC Filing; Related FCC Litigation....................................................29
5.5 Title; Additional Documents...........................................................30
5.6 Other Consents........................................................................31
5.7 Inspection and Access.................................................................31
5.8 Confidentiality.......................................................................31
5.9 Publicity.............................................................................32
5.10 Material Adverse Change...............................................................32
5.11 Reasonable Best Efforts...............................................................32
5.12 FCC Reports and Applications..........................................................32
5.13 Tax Returns and Payments..............................................................32
5.14 No Solicitation.......................................................................32
5.15 Certified Resolutions.................................................................33
5.16 Audited Financial Statements..........................................................33
5.17 Survey and Environmental Inspection...................................................33
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5.18 Broker's Fee..........................................................................34
5.19 Covenants of Buyer pending Closing....................................................34
5.20 Cable Television Carriage.............................................................34
5.21 Digital Television Transmission.......................................................34
5.22 Programming Agreements................................................................35
ARTICLE VI - CONDITIONS PRECEDENT TO THE OBLIGATION OF
BUYER TO CLOSE........................................................................35
6.1 Accuracy of Representations and Warranties; Closing Certificate.......................35
6.2 Performance of Agreement..............................................................36
6.3 FCC Order.............................................................................36
6.4 HSR Act...............................................................................36
6.5 Opinions of Seller's Counsel..........................................................36
6.6 Required Consents.....................................................................37
6.7 Delivery of Closing Documents.........................................................37
6.8 No Adverse Proceedings................................................................37
6.9 No Material Adverse Change............................................................37
ARTICLE VII - CONDITIONS PRECEDENT TO THE OBLIGATION OF
SELLER TO CLOSE.......................................................................38
7.1 Accuracy of Representations and Warranties............................................38
7.2 Performance of Agreement..............................................................38
7.3 FCC Order.............................................................................38
7.4 HSR Act...............................................................................38
7.5 Opinion of Buyer's Counsel............................................................38
7.6 No Adverse Proceedings................................................................39
7.7 Delivery of Closing Documents.........................................................39
ARTICLE VIII - CLOSING..................................................................................39
8.1 Time and Place........................................................................39
8.2 Documents to be Delivered to Buyer by Seller..........................................39
8.3 Deliveries to Seller by Buyer.........................................................40
ARTICLE IX - INDEMNIFICATION............................................................................41
9.1 Survival..............................................................................41
9.2 Indemnification by Seller.............................................................41
9.3 Indemnification by Buyer..............................................................42
9.4 Administration of Indemnification.....................................................42
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ARTICLE X - TERMINATION................................................................................43
10.1 Right of Termination..................................................................43
10.2 Obligations Upon Termination..........................................................44
10.3 Termination Notice....................................................................45
ARTICLE XI - CONTROL OF STATION.........................................................................45
ARTICLE XII - EMPLOYMENT MATTERS........................................................................46
12.1 Transfer of Employees.................................................................46
12.2 Employee Benefit Plans................................................................47
12.3 Employment Agreements.................................................................47
ARTICLE XIII - MISCELLANEOUS............................................................................48
13.1 Further Actions.......................................................................48
13.2 Payment of Expenses...................................................................48
13.3 Specific Performance..................................................................48
13.4 Notices...............................................................................48
13.5 Entire Agreement......................................................................49
13.6 Binding Effect; Benefits..............................................................50
13.7 Assignment............................................................................50
13.8 Governing Law.........................................................................50
13.9 Amendments and Waivers................................................................50
13.10 Severability..........................................................................50
13.11 Headings..............................................................................51
13.12 Counterparts..........................................................................51
13.13 References............................................................................51
13.14 Schedules.............................................................................51
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SCHEDULES:
Schedule 2.2 Excluded Assets
Schedule 3.3 Required Consents and Filings (Seller)
Schedule 3.5(a) Excluded Material Assets
Schedule 3.5(b) Liens to be Released Prior to Closing
Schedule 3.6 FCC Licenses
Schedule 3.7(a) Trade Agreements
Schedule 3.7(b) Station Agreements
Schedule 3.7(c) Affiliate Agreements
Schedule 3.8 Tangible Personal Property
Schedule 3.9 Real Property Interests
Schedule 3.10 Intellectual Property
Schedule 3.11 Financial Statements
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 3.20 Insurance
Schedule 3.21 Cable Television Transmissions
Schedule 3.22 Transactions with Affiliates
Schedule 3.24 Year 2000
Schedule 4.3 Required Consent and Filings (Buyer)
Schedule 6.6 Required Consents
Schedule 12.1 Excluded Employees
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of June 3,
1999, between PRESS COMMUNICATIONS, LLC, a Delaware limited liability company
("Seller"), and EMMIS COMMUNICATIONS CORPORATION, an Indiana corporation
("Buyer").
RECITALS:
WHEREAS, Seller owns and operates television station WKCF-TV, Channel
18, Clermont, Florida (the "Station"); and
WHEREAS, Buyer desires to acquire substantially all the assets used or
useful in the business and operation of the Station, and Seller is willing to
convey such assets to Buyer.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller 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, directly or indirectly controls, is controlled by, or is
under common control with, the specified Person.
Appraisal Firm: BIA Consulting, Inc.
Code: The Internal Revenue Code of 1986, as amended.
Documents: This Agreement, all Exhibits and Schedules
hereto, and each other agreement, certificate or instrument delivered
in connection with 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: First Union National Bank, a national banking
association headquartered in Charlotte, North Carolina.
Escrow Agreement: The Escrow Agreement, dated as of the date
hereof, by and among Seller, Buyer and the Escrow Agent relating to the
deposit, holding, investment and disbursement of the Xxxxxxx Money.
FCC: Federal Communications Commission.
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FCC Order: The order or decision of the FCC (or its delegatee)
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 normally applicable time for filing any
such petition or appeal (administrative or judicial) or for the taking
of any such sua sponte action of the FCC has expired.
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 filing of
or agreement to give any financing statement with respect to any assets
or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
Loss: With respect to any person 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 attorney fees, whether
or not arising out of a third party claim.
Material Adverse Condition: A condition 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 the Station or the proceeds
therefrom; provided, however, that (i) any condition which requires (A)
that Buyer or any of its subsidiaries file periodic reports with the
FCC regarding compliance with rules and policies of the FCC pertaining
to affirmative action and equal opportunity employment, or (B) that the
Station be operated in accordance with conditions similar to and not
more adverse than those contained in the present FCC Licenses issued
for operation of the Station, shall not be a Material Adverse
Condition, and (ii) the pendency of a petition for reconsideration,
application for review, notice of appeal or other pleading contesting
the issuance of the FCC Order shall not in any event constitute a
Material Adverse Condition.
Material Adverse Effect: A material adverse effect on the
assets, business, operations, financial condition or results of
operations of the Station.
Permitted Lien: (i) Any statutory Lien which secures a payment
not yet due that arises, and is customarily discharged, in the ordinary
course of Seller's business; (ii) Liens arising in connection with
equipment or maintenance financing or leasing under the terms of any
Station Agreement; and (iii) any other Liens or imperfections in
Seller's 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.
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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Subsidiary: With respect to any Person, a corporation,
partnership, limited liability company, or other entity of which shares
of stock or other ownership interests having ordinary voting power to
elect a majority of the directors of such corporation, or other Persons
performing similar functions for such entity, are owned, directly or
indirectly, by such Person.
Taxes: All federal, state, local and foreign taxes including,
without limitation, income, gains, transfer, unemployment, withholding,
payroll, social security, real property, personal property, excise,
sales, use and franchise taxes, levies, assessments, imposts, duties,
licenses and registration fees and charges of any nature whatsoever,
including interest, penalties and additions with respect thereto and
any interest in respect of such additions or penalties.
Tax Return: Any return, filing, report, declaration,
questionnaire or other document required to be filed for any period
with any taxing authority (whether domestic or foreign) in connection
with any Taxes (whether or not payment is required to be made with
respect to such document).
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 Seller and the purchase by Buyer of the
Station 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.
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)
Agreement Introduction
Appraisal Report Section 2.6(a)
Arbitrating Firm Section 2.7(e)
Assumed Obligations Section 2.3(a)
Benefit Plans Section 3.15(a)
Buyer Introduction
Broker Section 3.19
Buyer's Loss Section 9.2(a)
Buyer's Trade Credit Section 2.7(b)
Cable Agreements Section 5.20
Carrying System Section 3.21
CERCLA Section 3.18(f)
Closing Section 8.1
Closing Date Section 8.1
Collection Period Section 2.8(b)
DTV Application Section 5.21
Employees Section 3.15(a)
ERISA Section 3.15(a)
Excluded Assets Section 2.2
FCC Licenses Section 3.6(a)
HSR Act Section 5.3
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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(a)
Leased Real Property Section 5.18
Mid-Range Section 2.7(e)
Multiemployer Plan Section 3.15(c)
New Programming Document Section 5.22
Pending FCC Litigation Section 5.4(b)
Pending Seller FCC Litigation Section 5.4(c)
Preliminary Adjustment Report Section 2.7(b)
Purchase Price Section 2.5(a)
Real Property Section 2.1(b)
Real Property Lease Section 3.9(c)
Related Persons Section 3.15(a)
Retained Receivables Section 2.8(a)
Sale Assets Section 2.1
Seller Introduction
Seller's Enforcement Costs Section 10.2(c)
Seller's Liquidated Damage Amount Section 10.2(c)
Seller's Loss Section 9.3(a)
Seller's Trade Credit Section 2.7(b)
Station Recitals
Station Agreements Section 2.1(d)
Survival Period Section 9.1
Tangible Personal Property Section 2.1(a)
Threshold Section 9.2(b)
Trade Agreements Section 3.7(a)
Transfer Objection Section 5.4(b)
Transferred Employees Section 12.1(a)
ARTICLE II
PURCHASE AND SALE
2.1 SALE ASSETS.
Upon and subject to the terms and conditions provided herein, on the
Closing Date, Seller will sell, transfer, assign and convey to Buyer, and Buyer
will purchase from Seller, all of Seller's right, title and interest in and to
all tangible and intangible assets (except Excluded Assets) principally used or
useful in the operation of the Station as now or previously 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 Seller and principally used in the operation of the
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 Seller between
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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 Seller (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 for use by the Station 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 Seller or hereafter obtained by Seller
between the date hereof and the Closing Date, that are necessary for the
operation of the Station.
(d) Station Agreements. All rights of Seller in, to and under all
contracts, leases, agreements, commitments and other arrangements, and any
amendments or modifications, principally used or useful in the operation of the
Station as of the date hereof (including, but not limited to, those listed on
Schedule 3.7(b)) or made or entered into by Seller between the date hereof and
the Closing Date in compliance with this Agreement principally for use by the
Station (the "Station Agreements").
(e) Intellectual Property. All trade names, trademarks, service
marks, copyrights, patents, jingles, slogans, symbols, logos, the call letters
WKCF, inventions, and any other proprietary material, process, trade secret or
trade right principally used by Seller in the operation of the 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 Seller in connection with the operation of the 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 Seller shall
retain exclusive rights to, all right, title and interest whatsoever in or to
the name "Press Communications" or any derivations thereof or any signs, symbols
or logos bearing the name "Press Communications".
(f) 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 the Station, including, but not limited to, any of such
items stored on computer disks or tapes.
(g) Miscellaneous Assets. Any other tangible or intangible assets,
properties or rights of any kind or nature not otherwise described above in this
Section 2.1 and now or before Closing owned or used by Seller principally in
connection with the operation of the Station, including but not limited to all
goodwill of the Station.
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 deposit, marketable securities, cash deposits made by Seller to
secure contract obligations (except to the extent Seller receives a credit
therefor under Section 2.7), and all accounts receivable (other than non-cash
receivables under Trade Agreements) for services performed or for goods sold or
delivered by Seller prior to the Closing Date;
(b) All rights and claims of Seller whether mature, contingent or
otherwise, against third parties with respect to, or which are made under or
pursuant to, other Excluded Assets;
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(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;
(e) All claims of Seller with respect to any Tax refunds;
(f) All of Seller's rights under or pursuant to this Agreement or any
other rights in favor of Seller pursuant to the other Documents;
(g) All loan agreements and other instruments evidencing indebtedness
for borrowed money;
(h) All contracts of insurance, all coverages and proceeds thereunder
and all rights in connection therewith, including, without limitation, rights
arising from any refunds due with respect to insurance premium payments to the
extent they relate to such insurance policies;
(i) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement;
(j) Seller's minute books, ownership transfer records and other
entity records, and any records relating to Excluded Assets and to Liabilities
other than the Assumed Obligations;
(k) Assets of Seller which are not principally used or useful in the
operation or business of the Station, it being understood that Seller engages in
other businesses and activities, including other broadcasting business; and
(l) The assets listed on Schedule 2.2.
2.3 ASSUMPTION OF LIABILITIES.
(a) Buyer shall at Closing assume and agree to pay, discharge and
perform the following Liabilities of Seller and the Station (collectively, the
"Assumed Obligations"):
(i) All Liabilities arising under all Station 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 Seller upon or prior to Closing under
any Station Agreement).
(ii) Provided that Seller pays Buyer the amount, if any, owed
by Seller after Closing under Section 2.7, the Assumed Obligations
shall also include such other Liabilities of Seller and the Station to
the extent, and only to the extent, the amount thereof is included as a
credit to 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 Seller of any kind or nature, all of
which Seller shall pay, discharge and perform when due.
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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 Twelve
Million Five Hundred Thousand Dollars ($12,500,000).
(b) The Escrow Agent shall hold the Xxxxxxx Money under the terms of
the Escrow Agreement in trust for the benefit of Seller and Buyer.
(c) If Closing does not occur, the Xxxxxxx Money shall be delivered
to Seller 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.
2.5 PURCHASE PRICE.
(a) The purchase price for the Sale Assets ("Purchase Price") shall
be One Hundred Ninety-One Million Five Hundred Thousand Dollars ($191,500,000),
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 Seller by wire
transfer of immediately available funds pursuant to joint written
instructions from Seller and Buyer.
(ii) The sum of (A) One Hundred Ninety-One Million Five
Hundred Thousand Dollars ($191,500,000) minus (B) the Xxxxxxx Money
shall be paid by Buyer to Seller on the Closing Date by wire transfer
of immediately available funds pursuant to written instructions from
Seller to Buyer.
(b) Seller shall furnish Buyer wire instructions at least two (2)
business days prior to the Closing Date.
2.6 ALLOCATION OF THE PURCHASE PRICE.
(a) Seller 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 Seller and Buyer are unable to agree on such allocation within such sixty
(60) day period, Seller and Buyer agree to retain the Appraisal Firm to appraise
the classes of Sale Assets. The Appraisal Firm shall be instructed to perform an
appraisal of the classes of Sale Assets and to deliver a report to Seller and
Buyer as soon as reasonably practicable (the "Appraisal Report"). Buyer and
Seller shall each pay one-half of the fees, costs and expenses of the Appraisal
Firm regardless of whether Closing occurs.
(b) Buyer and Seller each agree to report the allocation determined
in accordance with Section 2.6(a) to the Internal Revenue Service in the form
required by Treasury Regulations Section 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) All operating income and operating expenses of the Station shall
be adjusted and allocated between Seller and Buyer, and an adjustment in the
Purchase Price shall be made as provided in this Section, to
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the extent necessary to reflect the principle that all such income and expenses
attributable to the operation of the Station on or before the date preceding the
Closing Date shall be for the account of Seller, and all such income and
expenses attributable to the operation of the Station on and after the Closing
Date shall be for the account of Buyer. The net amount by which the Purchase
Price is to be increased or decreased in accordance with this Section is herein
referred to as the "Adjustment Amount".
(b) Without limiting the generality of the foregoing:
(i) Seller shall receive a credit for the unapplied portion,
as of Closing, of the security deposits made by Seller under those
Station Agreements assumed by Buyer at Closing in accordance with
Section 2.3.
(ii) Buyer shall be given a credit ("Buyer's Trade Credit") in
the amount equal to the financial value (determined in accordance with
generally accepting accounting principles) of all time required to be
broadcast on the Station on or after the Closing Date under the Trade
Agreements, and Seller shall be given a credit ("Seller's Trade
Credit") for the financial value (determined in accordance with
generally accepted accounting principles) of the goods and services to
be received on or after the Closing Date under the Trade Agreements,
provided that Seller's Trade Credit shall in no event exceed Buyer's
Trade Credit;
(iii) Buyer shall be given a credit equal to the amount or
value of both cash and noncash consideration that Seller has not paid
or provided prior to the Closing Date for programming run by the
Station prior to the Closing Date.
(iv) with respect to each vacation or portion thereof earned
but not taken before the Closing Date by each Station employee hired by
Buyer, Buyer shall receive a credit equal to the compensation
equivalent thereof, including applicable payroll taxes.
(v) The credit given Seller for each prepaid expense shall not
exceed an amount commensurate with the benefit therefrom to be received
by Buyer after Closing.
(c) To the extent not inconsistent with the express provisions of
this Agreement, the allocations made pursuant to this Section shall be made in
accordance with generally accepted accounting principles.
(d) Three (3) business days prior to the Closing Date, Seller shall
provide Buyer with a statement setting forth a detailed computation of Seller's
reasonable and good faith estimate of the Adjustment Amount as of the Closing
Date (the "Preliminary Adjustment Report"). If the Adjustment Amount reflected
on the Preliminary Adjustment Report is a credit to Buyer, the Purchase Price
payable on the Closing Date shall be reduced by the amount of the preliminary
Adjustment Amount, and if the Adjustment Amount reflected on the Preliminary
Adjustment Report is a charge to Buyer, the Purchase Price payable on the
Closing Date shall be increased by the amount of such preliminary Adjustment
Amount. Thereafter, Seller and its auditors and Buyer and its auditors shall
have ninety (90) days after the Closing Date to review the Preliminary
Adjustment Report and the related books and records of Seller, and Buyer and
Seller will in good faith seek to reach agreement on the final Adjustment Amount
as of the Closing Date. If agreement is reached within ninety (90) days after
the Closing Date, then upon reaching such agreement, Seller shall pay to Buyer
or Buyer shall pay to Seller, as the case may be, an amount equal to the
difference between (i) the agreed Adjustment Amount and (ii) the preliminary
Adjustment Amount indicated in the Preliminary Adjustment Report. Any such
payment shall be
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made as provided in Section 2.7(g). If agreement is not reached within such
90-day period, then the dispute resolutions of Section 2.7(e) shall apply.
(e) If Seller and its auditors and Buyer and its auditors do not,
within the 90-day period specified in Section 2.7(d), reach an agreement on the
Adjustment Amount as of the Closing Date, then an independent accounting firm of
recognized national standing (the "Arbitrating Firm") selected by Seller and
Buyer shall resolve the disputed items. If Seller and Buyer do not agree on the
Arbitrating Firm within five (5) days, the Arbitrating Firm shall be a
nationally recognized accounting firm selected by lot (after excluding one firm
designated by Seller and one firm designated by Buyer). Buyer and Seller shall
each inform the Arbitrating Firm in writing as to their respective positions
concerning the Adjustment Amount as of the Closing Date, and each shall make
readily available to the Arbitrating Firm any books and records and work papers
relevant to the preparation of such firm's computation of the Adjustment Amount.
The Arbitrating Firm shall be instructed to complete its analysis within thirty
(30) days from the date of its engagement and upon completion to inform the
parties in writing of its own determination of the Adjustment Amount, the basis
for its determination, whether Buyer's or Seller's written position as to the
Adjustment Amount is closer to its own determination, and whether its own
determination of the Adjustment Amount is within a range that (i) equals twenty
percent (20%) of the absolute difference between the written positions of Buyer
and Seller as to the Adjustment Amount and (ii) has a midpoint equal to the
median of such written positions of Buyer and Seller (the "Mid-Range"). Any
determination by the Arbitrating Firm in accordance with this Section shall be
final and binding on the parties for purposes of this Section. Within five (5)
days after the Arbitrating Firm delivers to the parties its written
determination of the Adjustment Amount, Seller shall pay to Buyer, or Buyer
shall pay to Seller, as the case may be, an amount equal to the difference
between (i) the Adjustment Amount as determined by the Arbitrating Firm and (ii)
the preliminary Adjustment Amount indicated in the Preliminary Adjustment
Report. Any such payment shall be made as provided in Section 2.7(g).
(f) If the Arbitrating Firm determines that the written position of
Buyer concerning the Adjustment Amount is closer to its own determination,
Seller shall pay the fees and disbursements of the Arbitrating Firm in
connection with its analysis. If the Arbitrating Firm determines that the
written position of Seller concerning the Adjustment Amount is closer to its own
determination, Buyer shall pay the fees and disbursements of the Arbitrating
Firm in connection with its analysis. However, if the Arbitrating Firm's
determination of the Adjustment Amount is within the Mid-Range, Seller and Buyer
shall each pay one-half of the fees and disbursements of the Arbitrating Firm in
connection with its analysis.
(g) Any payments required under Section 2.7(d) or (e) shall be paid
by wire transfer in immediately available funds to the account of the payee at a
financial institution in the United States and shall for all purposes constitute
an adjustment to the Purchase Price.
2.8 ACCOUNTS RECEIVABLE.
(a) Within ten (10) days after the Closing Date, Seller shall furnish
to Buyer a true and complete list of Seller's accounts receivable (other than
non-cash receivables under Trade Agreements) arising from the operation of the
Station 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 Seller, use its
usual and customary procedures to collect the Retained Receivables as Seller's
agent for collection, provided that (i) Buyer shall not be required to commence
litigation, employ legal
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counsel or a collection agency or make any other extraordinary collection
efforts, and (ii) Buyer's obligation to act as Seller's agent in the collection
of the Retained Receivables shall terminate upon expiration of the Collection
Period. For the purpose of determining amounts collected by 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 (4) weeks during the Collection Period (and within
fifteen (15) days after the end of the Collection Period), Buyer shall deliver
to Seller a statement showing all collections of Retained Receivables made on
behalf of Seller since the last previous report and shall pay such collections
to Seller by check at the time such statement is delivered.
(d) Seller 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 Section 2.8(b).
(e) Buyer shall not, without Seller's prior written consent,
compromise or settle for less than full value any of the Retained Receivables
unless Buyer pays Seller the full amount of any deficiency. Buyer shall be
entitled to purchase from Seller any Retained Receivable for the full amount
thereof at any time during or at the expiration of the Collection Period.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows;
3.1 ORGANIZATION, GOOD STANDING AND REQUISITE POWER.
Seller is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has all
requisite power to own, operate and lease its Sale Assets and carry on its
business. Seller is duly licensed, qualified to do business and in good standing
as a foreign limited liability company under the laws of the State of Florida.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.
Seller has all requisite 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 Seller and the consummation by Seller of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action (including all necessary member approvals, if any) on the part
of Seller. This Agreement has been, and each of the other Documents at or prior
to Closing will be, duly executed and delivered by Seller. This Agreement
constitutes (and each of the other Documents, when executed and delivered, will
constitute) the valid and binding obligation of Seller enforceable against
Seller in accordance with its terms.
3.3 ABSENCE OF CONFLICTS.
Except as set forth on Schedule 3.3, and except for necessary
clearances or approvals under the HSR Act or the Act, the execution, delivery
and performance by Seller of this Agreement and the other Documents, and
consummation by Seller of the transactions contemplated hereby and thereby, do
not and will not (i) conflict with
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or result in any breach of any of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in a violation of, (iv) give any third
party the right to modify, terminate or accelerate any obligation under, or (v)
result in the creation of any Lien upon the Sale Assets under, the provisions of
the organizational documents of Seller, any material indenture, mortgage, lease,
loan agreement or other material agreement or instrument to which Seller is
bound or affected, or any law, statute, rule, judgment, order or decree to which
Seller is 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 Seller of this Agreement and the other Documents, and
consummation by Seller 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.
(a) 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
Station, with the exception of the Excluded Assets. Schedule 3.5(a) lists each
contract, agreement and other asset which is used in the operation of the
Station, or is material to the Sale Assets or the business, operations,
financial condition or results of operations of this Station, but which in each
case is an Excluded Asset by reason of Section 2.2(k).
(b) Seller has 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(b) which Seller 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) Seller 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 Station (the "FCC Licenses"), and any action of the FCC with respect to
each FCC License is a Final Action with the exception of the FCC Order. 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 Station under the Communications
Act of 1934, as amended, and the rules, regulations and policies of the FCC
thereunder (collectively, the "Act"), and (ii) constitute all the licenses and
authorizations, including amendments and modifications thereto, issued by the
FCC to Seller for or in connection with the operation of the 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 material
respect the full operation of the Station as now conducted, 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
Station as currently operated.
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(d) The Station is being operated by Seller in all material respects
in accordance with the terms and conditions of the FCC Licenses and the Act,
including but not limited to those pertaining to RF emissions.
(e) No applications, complaints or proceedings are pending or, to the
knowledge of Seller, 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 the Station or its operation, other than actions or proceedings
affecting the television broadcasting industry in general.
(f) Seller has complied in all material respects with all
requirements to file registrations, reports, applications and other documents
with the FCC with respect to the Station, and all such registrations, reports,
applications and documents are true, correct and complete in all material
respects.
(g) Other than actions or proceedings affecting the television
broadcasting industry in general, Seller has 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 Seller, or (ii) which
might reasonably be expected to result in the FCC's denial or delay of approval
of the assignment to Buyer of any FCC License or the imposition of any Material
Adverse Condition in connection with approval of the transfer to Buyer of any
FCC License.
(h) There are no unsatisfied or otherwise outstanding citations
issued by the FCC with respect to the Station or its operation.
(i) True, complete and accurate copies of all FCC Licenses have been
delivered by Seller to Buyer.
(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 the Station as previously and currently
operated by Seller.
3.7 STATION AGREEMENTS.
(a) Schedule 3.7(a) lists all agreements, contracts, understandings
and commitments (excluding, however, programming agreements) as of the date
indicated thereon for the sale of time on the 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 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 delivered to Buyer,
and each Trade Agreement entered into by Seller between the date of this
Agreement and Closing shall be promptly delivered to Buyer.
(b) Schedule 3.7(b) lists all the following types of agreements used
in or relating to the operation of the Station:
(i) Agreements for sale of broadcast time on the Station for
monetary consideration, 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;
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(iii) All sales agency or advertising representation contracts;
(iv) Each lease of any Sale Asset (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) All agreements requiring the Station to acquire goods or
services exclusively from a single supplier or provider, or prohibiting
the Station from providing certain goods or services to any Person
other than a specified Person;
(viii) All agreements that are not terminable by Seller or its
assignee on thirty or less days' notice without breach, penalty or
cancellation fee;
(ix) Any other agreement involving a commitment by any party
thereto with a fair market value of, or requiring any party thereto to
pay over the life of the contract, more than Twenty-Five Thousand
Dollars ($25,000); and
(x) Any other agreement that is material to the business,
operations, financial condition or results of operations of the
Station.
True and complete copies of all the foregoing Station Agreements that are in
writing, and true and accurate summaries of all the foregoing Station Agreements
that are oral, including all amendments, modifications and supplements, have
been delivered to Buyer. The Station Agreements that are not listed on Schedule
3.7(a) or 3.7(b) do not involve commitments by parties thereto with an aggregate
fair market value of more than Fifty Thousand Dollars ($50,000).
(c) Schedule 3.7(c) lists all of the contracts and agreements used in
or relating to the operation of the Station to which an Affiliate of 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, (i) each programming
agreement is valid, binding, in full force and effect, and enforceable in
accordance with its terms; (ii) neither Seller nor, to the knowledge of 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 programming agreement; (iii) neither Seller nor any
Affiliate of Seller has granted or been granted any material waiver or
forbearance with respect to any programming agreement; (iv) Seller holds the
right to enforce and receive the benefits under each programming agreement, free
and clear of Liens (other than Permitted Liens) but subject to the terms and
provisions of each such agreement; (v) none of the rights of Seller or any
Affiliate of Seller under any programming agreement is subject to termination or
modification as a result of the consummation of the transactions contemplated by
this Agreement; and (vi) consent or approval by each party to any programming
agreement is required thereunder for the consummation of the transactions
contemplated hereby.
(e) With respect to the Station Agreements (other than programming
agreements) which are, individually or in the aggregate, material to the assets,
business, operations, financial condition or results of
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operations of the Station, except as set forth in the Schedules, (i) such
Station Agreements are valid, binding, in full force and effect, and enforceable
in accordance with its terms; (ii) neither Seller nor, to the knowledge of
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 such Station Agreements; (iii) neither Seller nor
any Affiliate of Seller has granted or been granted any material waiver or
forbearance with respect to any such Station Agreements; (iv) Seller holds the
right to enforce and receive the benefits under all such Station Agreements,
free and clear of Liens (other than Permitted Liens) but subject to the terms
and provisions of each such agreement; (v) none of the rights of Seller or any
Affiliate of Seller under any such Station Agreements is subject to termination
or modification as a result of the consummation of the transactions contemplated
by this Agreement; and (vi) consent or approval by each party to any such
Station Agreements is required thereunder for the consummation of the
transactions contemplated hereby.
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 the Station as now operated.
(b) Except as specified on Schedule 3.8, the equipment constituting a
part of the Tangible Personal Property used in or necessary for the operation of
the Station as now operated by Seller has been properly maintained in all
material respects in accordance with the manufacturers' recommendations and
industry practices, is in a good state of repair and operating condition
(subject to ordinary wear and tear), and complies in all material respects with
the Act and other applicable laws, rules, regulations and ordinances.
3.9 REAL PROPERTY.
(a) The list of Real Property set forth on Schedule 3.9 is a correct
and complete list of all of the interests in real estate which Seller holds or
which are used to any material extent in the operation of the Station.
(b) Seller does not own any Real Property used in the operation of
the Station.
(c) A description of each lease (including all amendments,
modifications and supplements) under which Seller leases an interest in any of
the Real Property (each, a "Real Property Lease") and a description of the
leased Real Property, including but not limited to studio and office space and
each transmitter or antenna site (the "Leased Real Property"), are set forth on
Schedule 3.7(b). Except as set forth on such Schedule, 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,
have been delivered to Buyer.
(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; (ii) neither Seller nor, to the knowledge of Seller, any other party, is
in material default under any Real Property Lease; (iii) to the knowledge of
Seller, 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 Seller received
written notice alleging any such event has occurred; (iv) none of the rights of
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 for the consummation of the transactions
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contemplated hereby; and (vi) Seller has not 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 in all
material respects with applicable zoning and land use laws, ordinances and
regulations. Seller's improvements on the 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 constituting 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 Seller, Seller owns, 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 Station as presently conducted, 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.
(b) There are no outstanding or, to the knowledge of Seller,
threatened judicial or adversary proceedings with respect to any of the
Intellectual Property.
(c) Seller has 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) Seller has no knowledge of any infringement or unlawful use of
any of the Intellectual Property.
(e) Seller has not violated any provisions of the Copyright Act of
1976, 17 U.S.C. ss.101, et seq., in any material respect. Seller has filed all
notices and statements of account and has made all payments that are required in
connection with the transmission by Seller of any television or other signals.
(f) Seller has delivered to Buyer copies of all state and federal
registrations and other material documents, if any, establishing any of the
rights and properties constituting a part of the Intellectual Property.
3.11 FINANCIAL STATEMENTS.
(a) Attached as Schedule 3.11 are:
(i) The audited balance sheets of Seller as of December 31,
1997 and December 31, 1998;
(ii) The audited statements of operations of Seller for the
years ended December 31, 1997 and December 31, 1998;
(iii) The unaudited balance sheet of Seller as of March 31, 1999
(the "Interim Balance Sheet"); and
(iv) The unaudited statement of operations of Seller for the
interim period ended March 31, 1999.
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All such statements (i) are in accordance in all material respects with the
books and records of the Station and (ii) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
fairly present the assets and liabilities of the Station as of the dates stated
and accurately reflect the results of operations of the Station for the periods
covered by the statements, with the exceptions that (A) statements of cash flows
are not included with the unaudited statements of operations, (B) federal income
tax, expense or benefit are not shown, (C) the unaudited statements do not
contain the disclosures required by generally accepted accounting principles in
notes accompanying financial statements, and (D) the interim statements are
subject to normal year-end adjustments.
(b) Seller has no debt, liability or obligation, secured or unsecured
(whether absolute, accrued, contingent or otherwise, and whether due or to
become due), of a nature required by generally accepted accounting principles to
be reflected in a balance sheet or disclosed in the notes thereto, except such
debts, liabilities and obligations which (i) are fully accrued or fully reserved
against in the Interim Balance Sheet or (ii) are incurred after the date of the
Interim Balance Sheet in the ordinary course of business consistent with past
practice and in an amount not material to the business, operations, financial
condition or results of operations of the Station.
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 had or is reasonably likely to have a
Material Adverse Effect.
(b) Neither Seller nor the Station has suffered any adverse change or
development which, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect.
(c) Seller has not:
(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 consistent with past practices, or any Real Property Lease;
(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 consistent with past
practices;
(iv) entered into any agreement, commitment or other transaction
other than in the ordinary course of business consistent with past
practices;
(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;
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(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;
(vii) entered into any agreement (other than agreements that
will be terminated prior to Closing) with any Affiliate of Seller; or
(viii) operated its business other than in the ordinary course
consistent with past practices.
3.13 LITIGATION.
Except as described in Schedule 3.6 and Schedule 3.13, (i) there are no
actions, suits, claims, investigations or administrative, arbitration or, to the
knowledge of Seller, other proceedings pending or threatened against Seller
before or by any court, arbitration tribunal or governmental department or
agency, domestic or foreign, that relates to the Station or the Sale Assets;
(ii) neither Seller nor, to the knowledge of Seller, any of the officers or
employees of Seller, has been charged with, or to the knowledge of Seller 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 the Station or with
Seller; and (iii) neither Seller, any properties or assets of Seller nor, to the
knowledge of Seller, any officer or employee of 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 Seller which, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect or materially impair the
ability of 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 Seller's knowledge, no present or former employee or
independent contractor of the Station has a pending claim or charge
which has been asserted or threatened against 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.
(ii) There is not pending or, to the knowledge of Seller,
threatened against Seller any labor dispute, strike or work stoppage
that affects or interferes with the operation of the Station, and
Seller has no knowledge of any organizational effort currently being
made or threatened by or on behalf of any labor union with respect to
employees of the Station. There are no material unresolved unfair labor
charges against Seller, and Seller has not experienced any strike, work
stoppage or other similar significant labor difficulties within the
preceding twelve (12) months.
(b) Except as set forth on Schedule 3.7(b), (i) Seller is not a
signatory or a party to, or otherwise bound by, a collective bargaining
agreement which covers employees or former employees of the Station, (ii)
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Seller has not agreed to recognize any union or other collective bargaining unit
with respect to any employees of the Station, and (iii) no union or other
collective bargaining unit has been certified as representing any employees of
the 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 Seller principally in
connection with the operation of the Station (other than Xxxx X. Xxxx, Xxxxxx X.
XxXxxxx, Xxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxxx, III, Xxxxxxx X. Xxxxxx), 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
the Station has been delivered 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 the
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 Seller or by any other trade or business, whether or not incorporated, which
is or has been treated as a single employer together with Seller under Section
414 of the Code (such other trades and businesses referred to collectively as
the "Related Persons") or to which 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 (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), Seller has no 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 Seller or
the Station.
(b) All Benefit Plans 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. Neither Seller nor 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, the Station or the Sale Assets.
(c) 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) Neither Seller nor any Related Person has, to Seller's 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 Seller
or one employer with Seller under Section 4001 of ERISA.
(e) All contributions required to have been made by Seller under the
terms of any Benefit Plan or applicable law have been timely made.
(f) Seller has no unfunded obligations (including projected
obligations) for retiree health and life benefits under any Benefit Plan other
than continuation coverage required by law.
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(g) Neither Seller nor 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 Seller's knowledge, no event or condition has occurred or
exists which would result in any such material liability to Seller.
3.16 COMPLIANCE WITH LAW.
Seller has operated and is operating the 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 except as noted at Schedule 3.13,
Seller has not received any notice of noncompliance pertaining to Seller's
operation of the Station that has not been cured.
3.17 TAX RETURNS AND PAYMENTS.
(a) Except as set forth in Schedule 3.17, Seller has accurately
prepared in all material respects and is not delinquent in the filing of any Tax
Returns required to be filed by 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 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 Seller's
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 Seller, (ii) Seller has not received notice of any such
deficiency, delinquency or default, and (iii) to Seller's knowledge, no taxing
authority is now threatening to assert any such deficiency, delinquency or
default and, to 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) Seller has withheld any Tax required to be withheld by 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 Seller.
3.18 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 3.18, Seller has obtained all
environmental, health and safety permits necessary for the operation of the
Station, all such permits are valid and in full force and effect, and Seller is
in compliance in all material respects with all terms and conditions of such
permits.
(b) Except as set forth on Schedule 3.18, there is no proceeding
pending or, to Seller's knowledge, threatened which may result in the reversal,
rescission, termination, modification or suspension of any environmental or
health or safety permits necessary for the operation of the Station, and to
Seller's knowledge, there is no basis for any such proceeding.
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(c) Except as set forth on Schedule 3.18, Seller has operated and is
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 Seller
relating to environmental matters.
(d) Except as set forth on Schedule 3.18, 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, Seller does not own or use any electrical or other
equipment containing polychlorinated biphenyls.
(e) For the purposes of this Section 3.18, (i) "hazardous materials"
shall mean any waste, substance, materials, smoke, gas, emissions or particulate
matter designated as hazardous or toxic under any applicable environmental law,
and (ii) "environmental law" shall mean any federal, state, local or other laws,
statutes, ordinances, regulations, licenses, permits or any order, writ,
injunction or decree of any court, commission, board, agency or other
instrumentality relating to the regulation of hazardous materials.
(f) Except as set forth on Schedule 3.18, with respect to the
operation of the Station, Seller has 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, and no notice pursuant to Section 103(a) or (c) of the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.A. ss.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, Seller has not received any
notice letter under CERCLA or any other written notice, and, to Seller's
knowledge, there is no investigation pending or threatened, to the effect that
Seller has or may have material liability for or as a result of the release or
threatened release of a hazardous material into the environment or for the
suspected unlawful presence of hazardous material thereon, nor to Seller's
knowledge does there exist any basis for such investigation.
3.19 BROKER'S OR FINDER'S FEES.
Except for X.X. XxXxx, Media Brokers (the "Broker") who has acted on
behalf of both Buyer and Seller, no agent, broker, investment banker or other
person or firm acting on behalf of or under the authority of Seller or any
Affiliate of 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.
Schedule 3.20 lists and briefly describes each insurance policy
maintained by Seller with respect to the assets and business of the Station with
a claims history for the preceding four (4) years. All of such insurance
policies are in full force and effect, and Seller is not in default with respect
to its obligations under any such insurance policy and has not been denied
insurance coverage.
3.21 CABLE TELEVISION TRANSMISSION.
Schedule 3.21 lists (i) to the best of Seller's knowledge, each cable
television system on which the signal of the Station is currently being carried
(each, a "Carrying System"), (ii) the cable channel on which the Station is
currently carried on each Carrying System, and (iii) as to each Carrying System,
whether carriage of the signal of the Station is pursuant to a "must-carry"
election, a retransmission consent agreement, or otherwise. Except
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as set forth in Schedule 3.21, (i) the Station is carried on each Carrying
System pursuant to a valid and timely must-carry election or a valid and
enforceable retransmission consent agreement, as the case may be, (ii) Seller
has not agreed to reimburse any cable television system for any copyright
royalties in respect of carriage of the signal of the Station, (iii) no cable
system has advised Seller or the Station of any signal quality or copyright
indemnity or other prerequisite to cable carriage of the Station's signal, (iv)
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, and (v) there are no pending or decided requests to modify the
Station's Area of Dominant Influence as set forth in the Arbitron 1991-1992
Television ADI Market Guide.
3.22 TRANSACTIONS WITH AFFILIATES.
Except as described on Schedule 3.22, Seller has not been involved in
any business arrangement or relationship relating to the Station with any
Affiliate of Seller, and no Affiliate of Seller owns any property or right,
tangible or intangible, which is used in the operation of the Station or is
material to the Sale Assets or the business, operations, financial condition or
results of operations of the Station.
3.23 FLORIDA SALES TAX.
No past, present or future act or omission on the part of Seller shall
cause the sale of the Sale Assets (other than motor vehicles, if any) to Buyer
pursuant to this Agreement not to be exempt from the Florida personal property
sales tax.
3.24 YEAR 2000 COMPUTER COMPLIANCE.
Schedule 3.24 describes the actions taken by Seller to avoid
errors or failures in its computer systems and software in connection with the
year 2000.
3.25 DISCLOSURE.
To Seller's knowledge, neither this Agreement (including the Schedules)
nor any other Document furnished by Seller or on its behalf contains any untrue
statement of a material fact or omits to state a material fact necessary to make
any statement herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller 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.
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4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS.
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 hereby and thereby 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 as set forth on Schedule 4.3 and except for any necessary
clearances or approvals under the HSR Act or the 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 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 as set forth on Schedule 4.3 and except for any necessary
clearances or approvals under the HSR Act or the 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.
Except for the Broker, who has acted on behalf of both Buyer and
Seller, 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.
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 or delay the
transactions contemplated by this Agreement.
4.7 BUYER'S QUALIFICATION.
Buyer has no knowledge of matters which might reasonably be expected to
result in the FCC's denial or delay of approval of the transfer to Buyer of any
FCC License or the imposition of any Material Adverse Condition in connection
with approval of the transfer to Buyer of any FCC License.
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4.8 WARN ACT.
Buyer is not planning or contemplating, and has not made or taken, any
decisions or actions concerning the employees of the Station after the Closing
Date that would require the service of notice under the Worker Adjustment and
Retraining Act of 1988, as amended.
ARTICLE V
OTHER COVENANTS
5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE.
Seller covenants and agrees with Buyer that from the date hereof
through the Closing Date, or the termination of this Agreement if earlier, and
only with respect to Station and none of Seller's other business activities,
unless Buyer otherwise consents in writing (which consent shall not be
unreasonably withheld, delayed or conditioned), Seller shall:
(a) Operate the Station in the ordinary course of business consistent
with past practices, 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 commercially reasonable efforts to preserve the
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 the Station consistent in all material
respects with the type and quantity of the Station's programming as of the date
hereof, and (iv) continuing the 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 the Station and otherwise conduct its business in all
material respects in accordance with the terms or conditions of FCC Licenses,
the Act, and all other rules, regulations, laws and orders of all governmental
authorities having jurisdiction over any aspect of the operation of the Station;
(c) Maintain Seller's 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 are, individually or in the
aggregate, material to the Sale Assets or the business, operations, financial
condition or results of operations of the Station;
(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 business, operations, financial condition or results of operations
of the 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 (i) are in the ordinary course of
business consistent with past practice and (ii) if material, are replaced by
similar assets of substantially equal or greater value or utility;
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(g) Not amend, enter into, renew or extend any Trade Agreement that
would cause the aggregate financial value (calculated at the Station's average
cash advertising rate) of all time required to be broadcast on the Station on or
after the Closing Date under Trade Agreements (including amendments, but
excluding trade of up to One Hundred Thousand Dollars ($100,000.00) under the
broadcast rights agreement Seller intends to enter into with the Orlando Magic)
entered into after the date of this Agreement to exceed Fifty Thousand Dollars
($50,000.00); any personal property lease that would cause the aggregate rent
required to be paid under personal property leases (including amendments)
entered into after the date of this Agreement to exceed Fifty Thousand Dollars
($50,000.00); studio or office lease; antenna lease; network affiliation
agreement; talent agreement; broadcast rights agreement with the Orlando Magic;
or any agreement described in Section 3.7(b)(vii);
(h) Subject to Section 5.22 regarding programming agreements, not
enter into, amend, renew or extend any other 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 practices;
(i) Maintain its technical equipment currently in use in good
operating condition and repair except for ordinary wear and tear;
(j) Not increase in any manner the compensation (including severance
pay or plans) or benefits of any employees, independent contractors, consultants
or commission agents of Seller or the Station, except in the ordinary course of
business consistent with past practice;
(k) Not introduce any material change with respect to the operation
of the Station including, without limitation, any material changes in the
percentages of types of programming broadcast by the Station or any other
material change in the Station's programming policies, except as required by
law;
(l) Not enter into any agreement relating to the Station (other than
agreements that will be terminated prior to Closing) with any Affiliate of
Seller;
(m) Not voluntarily enter into any collective bargaining agreement
applicable to any employees of the 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
the 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; and
(o) Consult with Buyer regarding the extension or modification prior
to Closing of current programming, the acquisition prior to Closing of new or
additional programming, and the terms and conditions of each such extension,
modification or acquisition.
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5.2. NOTIFICATION OF CERTAIN MATTERS.
Seller shall give prompt notice to Buyer, and Buyer shall give prompt
notice to Seller, 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 either of
them under this Agreement.
5.3 HSR FILING.
Within ten (10) business days after the execution of this Agreement,
Seller 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; RELATED FCC LITIGATION.
(a) As promptly as practicable following execution of this Agreement
and in no event more than ten (10) business days after the execution of this
Agreement, Seller and Buyer shall file all applications with the FCC necessary
to obtain the FCC Order, and shall cooperate in taking all commercially
reasonable action necessary and proper to promptly obtain the FCC Order without
a Material Adverse Condition. Although the FCC Order becoming a Final Action is
not a condition precedent to either party's obligation to close under this
Agreement, Seller and Buyer shall cooperate in taking all commercially
reasonable action necessary and proper to cause the FCC Order to become a Final
Action as soon as practicable, provided that commercially reasonable action
shall not include payment or providing of material consideration to settle with
an objecting party.
(b) Seller and Buyer acknowledge that for the FCC Order to become a
Final Action, it will be necessary to achieve final resolution of (i) each
objection or petition filed in opposition to the transfer of the FCC Licenses to
Buyer (each, a "Transfer Objection") and (ii) the currently pending proceedings
described on Schedule 3.6 relating to the renewal of the FCC Licenses and the
prior transfer of the FCC Licenses to Seller (the "Pending FCC Litigation").
Seller agrees to reimburse Buyer for the reasonable attorney fees incurred by
Buyer in connection with its participation in the defense of (i) each Transfer
Objection based upon or relating to the alleged misconduct or other act or
omission of Seller and (ii) the Pending FCC Litigation. Buyer agrees to
reimburse Seller for the reasonable attorney fees incurred by Seller in
connection with its participation in the defense of each Transfer Objection
based upon or relating to the alleged misconduct or other act or omission of
Buyer.
(c) Buyer agrees to participate as reasonably requested by Seller in
prosecuting to a final resolution the pending proceedings instituted by Seller
in opposition to the FCC's grant of authorizations for WRBW-TV (the "Pending
Seller FCC Litigation"), provided that Seller promptly reimburses Buyer for all
reasonable out-of-pocket expenses incurred by Buyer in connection with such
participation. Such out-of-pocket expenses will include reasonable attorney fees
but shall not include any portion of employee compensation allocable to the time
spent by any employee of Buyer in participating on Buyer's behalf in the Pending
Seller FCC Litigation as requested by Seller.
5.5 TITLE; ADDITIONAL DOCUMENTS.
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At the Closing, Seller 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. Seller 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 Seller. 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, which documents shall be in a form
reasonably acceptable to Buyer and Seller.
5.6 OTHER CONSENTS.
Seller shall use its commercially reasonable efforts to obtain the
consents or waivers to the transactions contemplated by this Agreement required
under the Station Agreements, and Buyer shall cooperate as reasonably requested
by Seller in assisting Seller to obtain such consents. Neither Seller nor Buyer
shall be required to pay or grant any material consideration in order for Seller
to obtain any such consent or waiver except that Seller shall be required to
obtain releases of Liens (other than Permitted Liens) which encumber any of the
Sale Assets with Seller being permitted to use the proceeds delivered by Buyer
at Closing in order to obtain such releases. Buyer acknowledges that Seller's
failure to obtain any consent shall not be a breach of this Agreement provided
that Seller shall have used commercially reasonable efforts to obtain the
consent.
5.7 INSPECTION AND ACCESS.
Seller will, prior to the Closing Date, make available the assets,
books, accounting records, correspondence and files of Seller (to the extent
related to the operation of the Station) for examination by Buyer, its officers,
attorneys, accountants and agents, with the right to make copies of all or
portions of such books, records and files. Such access will be available during
normal business hours upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of the business of the Station. Seller
will furnish to Buyer monthly unaudited financial statements of Seller prepared
in a manner consistent with the unaudited statements identified in Section 3.11,
and such additional financial, operating and other information regarding Seller
or the Station as Buyer may reasonably request. If Closing occurs, the books,
records and files that are not part of but relate to the Sale Assets shall be
preserved and maintained by Seller for five (5) years after the Closing, and the
books, records and files that are part of the Sale Assets shall be maintained
and preserved by Buyer for a period of five (5) years after the Closing. Each
such party shall give the other party and its authorized representatives, during
normal business hours, such access to, and the opportunity at the other party's
expense to copy, such books and records retained by it as reasonably requested
by the other party.
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 Seller (or
its 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 such information (i) was otherwise publicly
available when received, (ii) is or hereafter becomes lawfully obtainable from
third parties not related to Buyer or its Affiliates, (iii) is required to be
disclosed by law, judicial or other governmental rule or order, or the rules of
any stock exchange or (iv) to the extent such duty as to confidentiality is
waived in writing by Seller.
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5.9 PUBLICITY.
The parties agree that no public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
written consent of the other party, except as required by law or applicable
regulations.
5.10 MATERIAL ADVERSE CHANGE.
Buyer and Seller will promptly notify the other party of any event of
which Buyer or Seller, as the case may be, obtains knowledge which has had or
could reasonably be expected to have Material Adverse Effect.
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.
Seller 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 Station. In
addition, Seller 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.
Seller will timely file with the appropriate governmental agencies all
Tax Returns required to be filed by Seller with respect to the Station prior to
Closing and timely pay all Taxes reflected on such Tax Returns as owing by
Seller.
5.14 NO SOLICITATION.
From the date hereof until the earlier of Closing or termination of
this Agreement, neither Seller nor any Affiliate of 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 Seller or any material assets of the Station or any merger,
consolidation or other business combination with Seller (each an "Acquisition
Proposal"), or (b) otherwise knowingly assist or negotiate with any Person with
respect to an Acquisition Proposal. Seller 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, Seller
shall furnish Buyer with certified resolutions of its managers and members
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.
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(b) Within fifteen (15) business days after the date hereof, Buyer
shall furnish Seller 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.
Seller recognizes that Buyer is a publicly reporting company and agrees
that Buyer shall be entitled at Buyer's expense to cause audited and unaudited
financial statements of the Station 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. Seller agrees 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 Sellers may be used for such purpose, Seller hereby consents to
Buyer's use of such financial statements for the purposes set forth in this
Section 5.16, and Seller agrees to use its commercially reasonable efforts to
obtain the consent of the independent accounting firm which opined as to such
financial statements.
5.17 SURVEY AND ENVIRONMENTAL INSPECTION.
At Buyer's expense, subject to obtaining the consent of any landlord of
Leased Real Property and Buyer providing such releases and indemnifications as
may be reasonably required by any such landlord to provide such consents, Buyer
shall have the right to cause a detailed survey and an environmental inspection
to be performed for each portion of the Leased Real Property. Buyer shall cause
the companies performing such work to deliver to Seller, contemporaneously with
the delivery to Buyer, a copy of each such survey or inspection report. Buyer
agrees to indemnify, defend and hold Seller and each owner and tenant of Lease
Real Property harmless from and against any liability, loss, costs ,damages,
and/or expenses (including reasonable attorneys' fees and expenses) incurred by
any of Seller, the owners or other tenants of Leased Real Property, as a result
of conducting the survey and/or environmental inspections of any portion of
Leased Real Property by Buyer, its agents, employees or independent contractors.
5.18 BROKER'S FEE.
If Closing occurs, each of Seller and Buyer agrees to pay Closing
one-half of the fee earned by Broker in connection with the transactions
contemplated by this Agreement, provided that Buyer shall in no event be
obligated to pay in excess of Nine Hundred Seventy-Five Thousand Dollars
($975,000) of such fee.
5.19 COVENANTS OF BUYER PENDING CLOSING.
Buyer covenants and agrees with Seller that from the date hereof
through the Closing Date or the date this Agreement is terminated, if earlier,
that Buyer shall (i) not take or agree to take any action that would materially
delay the consummation of the Closing as contemplated by this Agreement; and
(ii) respond promptly to any request of Seller in connection with any of the
activities described in Section 5.1.
5.20 CABLE TELEVISION CARRIAGE.
If the Closing has not occurred by October 1, 1999, Seller, in
consultation with Buyer, shall timely make must-carry elections or enter into
retransmission consent agreements (together with the must-carry elections, the
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"Cable Agreements") with all material Carrying Systems. Seller shall negotiate,
in consultation with Buyer, the terms and conditions of the Cable Agreements
which shall be commercially reasonable and include terms and conditions that are
usual and customary within the television broadcasting industry. In negotiating
the Cable Agreements, Seller shall also endeavor to provide for the Station to
be carried on channel 8 of each Carrying System and to have a channel of each
Carrying System allocated for future digital transmission of the Station's
signal.
5.21 DIGITAL TELEVISION TRANSMISSION.
If the Closing has not occurred by November 1, 1999, Seller, in
consultation with Buyer, shall timely file a digital television construction
permit application ("DTV Application") for the Station. Seller shall prosecute
the DTV Application with diligence and shall diligently oppose any objection to,
appeal from or petition to reconsider the grant of the DTV Application.
5.22 PROGRAMMING AGREEMENTS.
(a) Seller shall consult with Buyer regarding programming as
prescribed in Section 5.1(o) and shall furnish Buyer a copy of each document
setting forth the terms and conditions and otherwise governing each extension,
modification or acquisition of programming prior to Closing (each, a "New
Programming Document") promptly after the New Programming Document is available
to Seller. Buyer may object within its reasonable judgment to an extension,
modification or acquisition of programming or to the terms and conditions set
forth in the related New Programming Document by giving Seller written notice of
Buyer's objection within five (5) business days after receipt of the related New
Programming Document. If Buyer fails to so object, Buyer shall be deemed to have
granted approval (and Buyer may not subsequently object) with respect to the
extension, modification or acquisition of programming or the terms and
conditions set forth in the related New Programming Document.
(b) In the event Buyer objects in accordance with foregoing
Subsection (a) to an extension, modification or acquisition of programming or
the terms and conditions set forth in the related New Programming Document, the
New Programming Document shall be deemed to be an Excluded Asset that will not
be assigned to or assumed by Buyer, and Seller shall remain responsible after
Closing for all liabilities and obligations under the New Programming Document.
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 Seller contained in this
Agreement or in any other Document shall be true and correct in all material
respects 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.
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(b) Seller shall have delivered to Buyer on the Closing Date an
officer's certificate that the conditions specified in Sections 6.1(a), 6.2,
6.6, 6.9, and 7.6 are satisfied as of the Closing Date.
6.2 PERFORMANCE OF AGREEMENT.
Seller shall have performed in all material respects all of its
covenants, agreements and obligations required by this Agreement to be performed
or complied with by Seller prior to or up the Closing Date.
6.3 FCC ORDER.
(a) The FCC Order shall have been issued without any Material Adverse
Condition affecting Buyer and shall have become effective under the Act.
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body specifies and requires to be satisfied prior
to transfer of the FCC Licenses to Buyer shall have been satisfied.
(c) All of the FCC Licenses shall be in full force and effect.
6.4 HSR ACT.
The waiting period (including any extensions) 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 SELLER'S COUNSEL.
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Buyer shall have received (a) the written opinion of Seller's counsel,
dated as of the Closing Date, that (i) Seller is a limited liability company
duly formed and in good standing under the laws of the State of Delaware and is
in good standing and duly qualified to do business under the laws of the State
of Florida, (ii) the execution, delivery and performance of the Agreement and
each of the other Documents have been duly authorized by all requisite action
(including any necessary member approval) on the part of Seller, and (iii) the
Agreement and other Documents have been duly and validly executed and delivered
by Seller and constitute valid and legally binding obligations enforceable
against Seller 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 Seller's FCC
counsel, dated as of the Closing Date, that (i) Seller holds the FCC Licenses,
which (A) are in full force and effect and constitute all of the licenses,
permits and authorizations required by the FCC for, or used in the operation of,
the Station as now operated; and (B) constitute all of the licenses and
authorizations issued by the FCC to Seller for, or in connection with, the
operation of the Station, (ii) all authorizations, approvals and consents of the
FCC required under the Act to permit the assignment of the FCC Licenses by
Seller to Buyer have been obtained, are in effect, and have not been reversed,
stayed, enjoined, set aside, annulled or suspended, and (iii) except as set
forth in Schedule 3.6, there is no FCC or judicial order, judgment, decree,
notice of apparent liability or order of forfeiture outstanding, and to
counsel's knowledge, no action, suit, notice of apparent liability, order of
forfeiture, investigation or other proceeding pending, by or before the FCC or
any court of competent jurisdiction against Seller 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). Each opinion shall state that
Buyer's senior lenders are entitled to rely on the opinion, and may otherwise be
subject to customary qualifications and limitations.
6.6 REQUIRED CONSENTS.
(a) Subject to Section 6.6(b), Seller shall have obtained prior to
Closing the written consents or waivers to the transactions contemplated by this
Agreement, in form reasonably satisfactory to Buyer's counsel and without any
modification or condition which is materially adverse to Buyer or the Station,
which are required under (i) each Station Agreement for each transmitter,
antenna (including each satellite and translator transmitter) or office and
studio site under which Seller is a lessee, (ii) the network affiliation
agreement with WB Television Network Partners, LP, (iii) the programming
agreements identified on Schedule 6.6.
(b) In the event that prior to the sixtieth (60th) day after issuance
of the FCC Order, Seller shall not have obtained the written consent as
prescribed in Section 6.6(a) for the assignment to Buyer of the network
affiliation agreement with WB Television Network Partners, LP, Buyer shall be
entitled to terminate this Agreement by giving Seller written notice of such
termination on or before the seventy-fifth (75th) day after issuance of the FCC
Order.
6.7 DELIVERY OF CLOSING DOCUMENTS.
Seller shall have delivered or caused to be delivered to Buyer on the
Closing Date each of the documents to be delivered pursuant to Section 8.2.
6.8 NO ADVERSE PROCEEDINGS.
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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 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 the Station
since the date of the Interim Balance Sheet which has resulted in, or is
reasonably likely to result in, a Material Adverse Effect; provided, however,
that an adverse change in the revenue or ratings of the Station shall not
constitute for purposes of this Section a change or development which has, or is
reasonably likely to have, a Material Adverse Effect.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF SELLER TO CLOSE
The obligations of Seller 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 Seller
in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
(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 Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that the conditions specified in Sections 7.1(a), 7.2 and 6.8 are
satisfied as of the Closing Date.
7.2 PERFORMANCE OF AGREEMENT.
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 ORDER.
(a) The FCC Order shall have been issued and shall have become
effective under the Act.
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body specifies and requires to be satisfied prior
to transfer of the 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 his Agreement
shall have expired or been terminated.
7.5 OPINION OF BUYER'S COUNSEL.
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Seller 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 and (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 law effecting the enforcement of creditors' rights generally and general
principles of equity. The opinion of Buyer's counsel may be subject to customary
qualifications and limitations.
7.6 NO ADVERSE PROCEEDINGS.
Except as set forth in Schedule 3.6, 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 Seller 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 to be delivered pursuant to Section 8.3.
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 LLP, 000 Xxxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxx, at
10:00 o'clock A.M. on the fifth business day following satisfaction or waiver of
the conditions precedent hereunder to Closing (the "Closing Date").
8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER.
At the Closing, Seller shall deliver to cause to be delivered to Buyer
the following, in each case in form and substance reasonably satisfactory to
Buyer:
(a) The opinions of Seller's 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 Seller is duly
organized and in good standing as a limited liability company in the State of
Delaware and is qualified to do business and in good standing in the State of
Florida;
(c) A certificate of a duly authorized managing member of Seller
attesting as to the incumbency of each signatory of Seller who executes this
Agreement and any of the other Documents and to similar customary matters;
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(d) A xxxx of sale and other instruments of transfer and conveyance
transferring the Sale Assets to Buyer, in form reasonably acceptable to Buyer;
(e) The certificate described in Section 6.1(b);
(f) A written instruction of Seller to Escrow Agent instructing the
Escrow Agent to distribute the Xxxxxxx Money as prescribed in Section 2.4;
(g) The consents or waivers prescribed in Section 6.6; and
(h) Such additional information and materials as Buyer shall have
reasonably requested to evidence the satisfaction of the conditions to its
obligation to close hereunder, including without limitation, any documents
expressly required by this Agreement to be delivered by Seller at Closing.
8.3 DELIVERIES TO SELLER BY BUYER.
At the Closing, Buyer shall deliver or cause to be delivered to Seller
the following, in each case in form and substance reasonably satisfactory to
Seller:
(a) The Purchase Price in accordance with Section 2.5, as adjusted
under Section 2.7(d);
(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 Xxxxxxx Money as prescribed in Section 2.4;
(e) An agreement by Buyer assuming the Assumed Obligations; and
(f) Such additional information and materials as Seller shall have
reasonably requested to evidence the satisfaction of the conditions to its
obligation to close hereunder.
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ARTICLE IX
INDEMNIFICATION
9.1 SURVIVAL.
All representations, warranties, covenants and agreements in this
Agreement or any other Document shall survive the Closing regardless of any
investigation, inquiry or knowledge on the part of any party, and the Closing
shall not be deemed a waiver by any party of the representations, warranties,
covenants or agreements of any other party in this Agreement or any other
Documents; provided, however, that the period of survival shall, (i) with
respect to the representations and warranties in 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 five (5) years after the Closing Date, and (iv) in the case of any
other representation or warranty, end two (2) years 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 SELLER.
(a) Subject to Section 9.2(b), Seller shall 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 (each, a "Buyer's Loss") relating to, arising out
of or resulting from:
(i) Any breach by Seller of any of its representations,
warranties, covenants or agreements in this Agreement or any other Document; or
(ii) Any obligation, indebtedness or Liability of Seller
(other than the Assumed Obligations) regardless of whether disclosed to
Buyer and regardless of whether constituting a breach by Seller of any
representation, warranty, covenant or agreement hereunder or under any
other Document; or
(iii) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transactions
contemplated by this Agreement.
(b) If Closing occurs, Seller shall not be obligated to indemnify
Buyer unless and until the aggregate amount of Buyer's Losses exceeds One
Hundred Fifty Thousand Dollars ($150,000) (the "Threshold"), in which case Buyer
shall then be entitled to indemnification of the entire amount of Buyer's
Losses, provided that any payment owed by Seller to Buyer for any Liability for
breach of Section 3.23 or pursuant to or under Section 2.7 or Section 9.2(a)(ii)
shall not be counted in determining whether the Threshold limitation is
satisfied, and Buyer shall have the right to recover any such Liability without
regard to such limitation.
9.3 INDEMNIFICATION BY BUYER.
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(a) Subject to Sections 9.3(b) and 10.2, Buyer shall indemnify and
hold harmless Seller and its officers, directors, members, employees, agents,
representatives, Affiliates, successors and assigns from and against, pay or
reimburse each of them for and with respect to any Loss (each, a "Seller's
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 the Station 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
Seller unless and until the aggregate amount of Seller's Losses exceeds the
Threshold, in which case Seller shall then be entitled to indemnification of the
entire amount of Seller's Losses, provided any payment owed by Buyer to Seller
for any Liability pursuant to or under Section 2.7 or Section 9.3(a)(ii) shall
not be counted in determining whether the Threshold limitation is satisfied, and
Seller shall have the right to recover any such Liability 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.
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(c) If the Indemnifying Party does not choose to defend against a
claim by a third party, the Indemnified Party may defend in such manner as it
reasonably 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 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 Station.
ARTICLE X
TERMINATION
10.1 RIGHT OF TERMINATION.
This Agreement may be terminated prior to Closing:
(a) By written agreement of Seller 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 the other party; or
(ii) Closing does not occur within eighteen (18) months after
the date hereof.
(c) By Buyer as provided in Section 6.6(b).
Buyer agrees that in the event (i) the conditions precedent under Article VI
(excluding Section 6.7) have been satisfied, (ii) Seller is ready, willing and
able to satisfy the condition under Section 6.7, and (iii) Buyer nevertheless
fails or refuses to perform its obligation to close under this Agreement, Buyer
shall be in material breach of this Agreement.
10.2 OBLIGATIONS UPON TERMINATION.
(a) Upon termination of this Agreement, each party shall thereafter
remain liable for (i) breach of this Agreement prior to such termination and
(ii) payment and performance of the party's obligations under Sections 5.8, 5.9,
and 13.2 and under Article IX and this Article X, which in each case shall
survive termination of this Agreement; provided, however, that if 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).
(b) If this Agreement is terminated prior to Closing for any reason
other than by Seller pursuant to Section 10.1(b)(i) as a result of a material
breach by Buyer under this Agreement, Buyer shall be entitled to the return of
the Xxxxxxx Money, in which case Buyer and Seller 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.
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(c) If Closing shall not have occurred because of a material breach
by Buyer under this Agreement, Seller's sole remedy at law or in equity under
this Agreement shall be (i) the termination by Seller of this Agreement, and
(ii) the recovery from Buyer of (A) an amount equal to the Xxxxxxx Money (the
"Seller's Liquidated Damage Amount") and (B) Seller's reasonable attorneys' fees
and other costs of collection incurred by Seller in enforcing its right to
recover Seller's Liquidated Damage Amount (such fees and other costs herein
referred to as "Seller's Enforcement Costs"). In the event of such termination
by Seller, Seller shall be entitled to receive the Xxxxxxx Money in payment of
Seller's Liquidated Damage Amount, and Buyer and Seller shall cooperate in
taking such action as required under the Escrow Agreement to effect the Escrow
Agent's distribution of the Xxxxxxx Money to Seller. Seller shall also be
entitled to pursue any other remedy available to Seller at law or in equity to
recover the entire Seller's Liquidated Damage Amount and Seller's Enforcement
Costs, provided that the total monetary damages (including any amount received
from the Escrow Agent under the Escrow Agreement) to which Seller shall be
entitled shall not exceed the sum of Seller's Liquidated Damage Amount plus
Seller's Enforcement Costs. BUYER ACKNOWLEDGES AND AGREES THAT SELLER'S RECEIPT
OF SELLER'S LIQUIDATED DAMAGE AMOUNT SHALL CONSTITUTE PAYMENT OF LIQUIDATED
DAMAGES HEREUNDER AND NOT A PENALTY AND THAT SELLER'S 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 the
notice is given. If at the time a party gives a termination notice, the party is
entitled to give the notice pursuant to more than one Subsection of Section
10.1, the Subsection pursuant to which the notice is given and termination is
effected shall be deemed to be the Subsection specified in the notice provided
that the party giving the notice is at such time entitled to terminate this
Agreement pursuant to the specified Subsection.
ARTICLE XI
CONTROL OF STATION
Between the date of this Agreement and the Closing Date, Buyer shall
not control, manage or supervise the operation of the Station or the conduct of
its business, all of which shall remain the sole responsibility and under the
control of Seller, subject to Seller's compliance with this Agreement.
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ARTICLE XII
EMPLOYMENT MATTERS
12.1 TRANSFER OF EMPLOYEES.
(a) Seller and Buyer shall cooperate in arranging a presentation by
the Chairman of Buyer to Seller's employees promptly after the date of this
Agreement. The form and substance of the presentation shall be subject to the
approval of both Seller and Buyer, which shall not be unreasonably withheld. In
addition, at such time as Seller in its sole and absolute discretion shall
permit but in no event earlier than sixty (60) days before the projected Closing
Date, Buyer may interview employees of Seller who perform services principally
for the Station (excluding the employees identified on Schedule 12.1) for the
purpose of selecting those employees to whom Buyer desires to offer employment
effective immediately after Closing (such employees who are given and accept
such offers of employment are referred to herein as the "Transferred
Employees"). Seller agrees to cooperate fully with Buyer in connection with
Buyer's interviewing and offering to hire any such employees, and Seller shall
not take any action, directly or indirectly, to prevent any such employee from
becoming employed by Buyer from and after the Closing; provided, however, that
(i) all such offers of employment shall be expressly conditioned upon the
occurrence of Closing, and (ii) if this Agreement is terminated, Buyer shall
not, for a period of two years after such termination, employ or solicit the
employment of any person employed by Seller at the Station at any time during
the six-month period preceding such termination.
(b) Seller 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 of any
Station employee before, upon or after Closing, 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
under any Benefit Plan as a result of or in connection with such termination,
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 shall pay, discharge and be solely responsible for all
liabilities, obligations, costs and expenses of Buyer 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 any such liabilities
are included as an Assumed Obligation pursuant to Section 2.3(a)(ii) in
determining the Adjustment Amount.
12.2 EMPLOYEE BENEFIT PLANS.
(a) Buyer shall not acquire any rights or interest in, or assume or
have any obligations or liabilities under, any of the Benefit Plans, and Seller
or the Benefit Plans, as applicable, will retain all assets and liabilities
under the Benefit Plans. Seller 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.
(b) Solely for purposes of determining the eligibility of any
Transferred Employee not covered by the Assumed Plans to participate in, and for
purposes of determining the vesting of any amounts that may accrue to each such
Transferred Employee under, any pension or profit sharing plan of Buyer
applicable to persons
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employed at the Station after Closing, Buyer shall for each such plan of Buyer
take into account and give credit of one year for each two full years of service
of each such Transferred Employee with Seller immediately prior to the Closing,
to the extent such service is required to be taken into account under such
pension or profit sharing plan of Buyer. Buyer shall not be required to take
into account the length of service of any such Transferred Employee with Seller
for any other purpose in connection with such Transferred Employee's
participation in any pension or profit sharing plan of Buyer, including, without
limitation, the determination of the amount of benefits accrued to such
Transferred Employee thereunder.
(c) Solely for purposes of determining the eligibility of any
Transferred Employee not covered by the Assumed Plans to participate in the
group insurance plans of Buyer after Closing, Buyer shall take into account and
give credit for the period of service of each such Transferred Employee with
Seller immediately prior to Closing to the extent such service is required to be
taken into account under the comparable plan of Buyer, provided that Buyer shall
not be obligated to provide immediate coverage for pre-existing conditions.
Buyer shall, however, use reasonable efforts to provide immediate coverage for
pre-existing conditions with respect to each such Transferred Employee, provided
that such reasonable efforts shall not include the incurrence of material cost
or liability on the part of Buyer.
12.3 EMPLOYMENT AGREEMENTS.
Buyer acknowledges and agrees that Buyer's obligations under this
Article XII are in addition to and not in limitation of Buyer's obligation to
assume, as and to the extent prescribed in Section 2.3(a), the employment
agreements set forth in Schedule 3.7(b).
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 Seller and fifty percent (50%) by Buyer, provided
that any Transfer Taxes (including, but not limited to, any Florida documentary
stamp tax imposed as a result of Buyer's grant of a mortgage or security
interest with respect to any of the Sale Assets) shall be borne by Buyer. All
other Taxes shall be paid by the party primarily liable under applicable law to
pay such Tax.
(b) Except as otherwise expressly provided in this Agreement, each of
the parties shall bear its own expenses, including the fees of any attorneys and
accountants engaged by such party, in connection with the transactions
contemplated by this Agreement.
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13.3 SPECIFIC PERFORMANCE.
Seller acknowledges that the Station is of a special, unique and
extraordinary character, and that damages alone are an inadequate remedy for a
breach of this Agreement by Seller. Accordingly, as an alternative to
termination of this Agreement under Section 10.1, Buyer shall be entitled, in
the event of Seller's breach, to enforcement of this Agreement (subject to
obtaining any required approval of the FCC or the Department of Justice) by a
decree of specific performance or injunctive relief requiring Seller to fulfill
its obligations under this Agreement. Such right of specific performance or
injunctive relief shall be in addition to, and not in lieu of, Buyer's right to
recover damages and to pursue any other remedies available to Buyer for Seller's
breach. In any action to specifically enforce Seller's obligation to close the
transactions contemplated by this Agreement, Seller 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 Seller's 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 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 Communications Corporation
One Emmis Plaza
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Chairman
Copy to:
Bose XxXxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxx
000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
(b) If to Seller, to:
Press Communications, LLC
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Copy to:
Xxxxxx, Stadtmauer & Michaels, P.A.
00 Xxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
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or to such other address as a party may from time to time give notice to the
other party in writing (as provided above). Any such notice, 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 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 d
irect 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 Seller a written instrument in form and substance
satisfactory to Seller within its 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 Order, and (iv) Buyer and the assignee
shall deliver such other documents and instruments as reasonably requested by
Seller, including appropriate certified resolutions of the boards of directors
of Buyer and the assignee.
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.
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13.10 SEVERABILITY.
Any provision of this Agreement which is unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such unenforceability without invalidating the remaining provisions hereof, and
any such unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
13.11 HEADINGS.
The captions in this Agreement are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
13.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and by
any party on separate counterparts, each of which shall be an original, and all
of which together shall constitute one and the same instrument.
13.13 REFERENCES.
All references in this Agreement to Articles and Sections are to
Articles and Sections contained in this Agreement unless a different document is
expressly specified.
13.14 SCHEDULES.
Unless otherwise specified in this Agreement, each of the Schedules
referenced in this Agreement is attached to, and is incorporated by reference
into, this Agreement.
Executed as of the date first written above.
PRESS COMMUNICATIONS, LLC
By:_______________________________
Printed:__________________________
Its:______________________________
EMMIS COMMUNICATIONS CORPORATION
By:_______________________________
Printed:__________________________
Its:______________________________
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