1
Exhibit 2.6
ASSET PURCHASE AGREEMENT
BY AND AMONG
TUSCALOOSA BROADCASTING, INC.,
WPTZ LICENSEE, INC.,
WNNE LICENSEE, INC.
AS SELLERS
AND
STC BROADCASTING OF VERMONT, INC.
AS BUYER
DATED AS OF FEBRUARY 3, 1998
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS AND REFERENCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. SALE AND PURCHASE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Asset Sale and Purchase of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1.1. FCC Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1.2. Real and Leased Property Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.3. Tangible Personal Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.4. Intellectual Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.5. Program Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.6. Trade-out Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.7. Broadcast Time Sales Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.8. Network Affiliation Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.9. Operating Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.10. Vehicles.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.11. Files and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.12. Auxiliary Facilities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.13. Permits and Licenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.14. Goodwill.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.15. Other Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.1. Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.2. Accounts Receivable.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.3. Personal Property Disposed Of.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.4. Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.5. Employee Plans and Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.6. Right to Tax Refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.7. Certain Books and Records.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.8. Third-Party Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.9. Rights Under this Agreement and the Heritage Agreement. . . . . . . . . . . . . . . . . . . 6
2.2.10. Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2.11. Deposit and Prepaid Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2.12. WFFF Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2.13. Miscellaneous Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3. Escrow Deposit.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4. Purchase Price.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5. Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6. Proration Amount.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7. Allocation of Base Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.8. Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY SELLERS. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1. Organization and Standing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2. Authorization.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4. Consents and Approvals; No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5. Financial Statements; Undisclosed Liabilities.. . . . . . . . . . . . . . . . . . . . . . . . 12
3.6. Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7. Absence of Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.8. Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9. FCC Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10. Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.12. Station Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.13. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.14. Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.15. Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.16. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.17. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.18. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY BUYER. . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1. Organization and Standing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2. Authorization.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3. Consents and Approvals; No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4. Availability of Funds.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5. Qualification of Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6. WARN Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.7. No Outside Reliance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8. Interpretation of Certain Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 5. PRE-CLOSING FILINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1. Applications for FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2. Xxxx-Xxxxx-Xxxxxx.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3. Non-Required Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 6. COVENANTS AND AGREEMENTS OF SELLERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1. Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1.1. Dispositions; Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1.2. Accounting Principles and Practices. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1.3. Trade-out Agreements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1.4. Broadcast Time Sales Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.5. Network Affiliation Agreements and LMAs. . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.6. Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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6.1.7. Breaches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.8. Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.9. Actions Affecting FCC Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1.10. Programming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1.11. Encumbrances.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1.12. Transactions With Affiliates.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2.1. Preserve Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2.2. Normal Operations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2.3. Maintain FCC Licenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2.4. Network Affiliation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2.5. Station Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2.6. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2.7. Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2.8. Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2.9. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2.10. Consents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2.11. Corporate Action.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2.12. Environmental Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2.13. Heritage Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4. Heritage Acquisition.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 7. COVENANTS AND AGREEMENTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.1. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2. Corporate Action.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.3. Access.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.4. Collection of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8. MUTUAL COVENANTS AND UNDERSTANDINGS OF SELLERS AND BUYER. . . . . . . . . . . . . . . . . . 32
8.1. Possession and Control.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2. Risk of Loss.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3. Public Announcements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4. Employee Matters.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5. Disclosure Schedules.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.6. Bulk Sales Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.7. Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.8. Preservation of Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.9. TBA Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. . . . . . . . . . . . . . . . . . . . . . . . 36
9.1. Closing Under the Heritage Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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9.2. Representations and Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3. No Transmission Defects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.4. Delivery of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.5. FCC Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6. Xxxx-Xxxxx-Xxxxxx. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.7. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 10. CONDITIONS PRECEDENT TO OBLIGATION OF SELLERS. . . . . . . . . . . . . . . . . . . . . . . 37
10.1. Closing Under the Heritage Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.2. Representations and Covenants.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.3. Delivery by Buyer.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.4. FCC Order.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.5. Xxxx-Xxxxx-Xxxxxx.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.6. Legal Proceedings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 11. CLOSING; NON-LICENSE TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.1. Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.2. Non-License Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.3. Time and Place of Non-License Transfer and Closing. . . . . . . . . . . . . . . . . . . . . . 40
11.4. Deliveries by Sellers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4.1. Agreements and Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4.2. Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4.3. Certified Resolutions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4.4. Officers' Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.4.5. Good Standing Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5. Deliveries by Buyer.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5.1. Purchase Price Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5.2. Agreements and Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5.3. Certified Resolutions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5.4. Officers' Certificate.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 12. SURVIVAL; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.1. Survival of Representations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.2. Indemnification By Sellers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.3. Indemnification By Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.4. Limitations on Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.5. Conditions of Indemnification.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.6. Cure of Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 13. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.1. Termination by the Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.2. Automatic Termination.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.3. Effect of Termination.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 14. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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14.1. Default by Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.2. Liquidated Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.3. Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 15. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
15.1. Additional Actions, Documents and Information.. . . . . . . . . . . . . . . . . . . . . . . . 47
15.2. Brokers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.3. Expenses and Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.4. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.5. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
15.6. Benefit and Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
15.7. Entire Agreement; Amendment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.8. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.9. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.10. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
15.11. Signature in Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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SCHEDULES
Schedule 2.1.1 FCC Licenses
Schedule 2.1.2 Real Property Interests
Schedule 2.1.3 Tangible Personal Property
Schedule 2.1.5 Program Contracts
Schedule 2.1.6 Trade-out Agreements
Schedule 2.1.8 Network Affiliation Agreements
Schedule 2.1.9 Operating Contracts
Schedule 2.1.10 Vehicles
Schedule 2.2.13 Excluded Assets
Schedule 3.4 Consents
Schedule 3.6 Absence of Certain Changes or Events
Schedule 3.7 Litigation
Schedule 3.8 Encumbrances on Assets
Schedule 3.9 FCC Matters
Schedule 3.14 Employee Benefit Plans
Schedule 3.15 Employee Matters
Schedule 3.16 Environmental Matters
Schedule 3.17 Insurance
Schedule 4.5.1 Buyer Stations
Schedule I License Assets
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EXHIBITS
EXHIBIT A Form of Xxxx of Sale and Assignment of Assets
EXHIBIT B Form of Assignment of FCC Licenses
EXHIBIT C Form of Assignment of Contracts and Leases
EXHIBIT D Form of Assumption Agreement
EXHIBIT E Form of TBA Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
this 3rd day of February, 1998, by and among STC BROADCASTING OF VERMONT, INC.,
a Delaware corporation ("Buyer"), TUSCALOOSA BROADCASTING, INC., a Maryland
corporation ("Tuscaloosa"), WPTZ LICENSEE, INC., a Maryland corporation ("WPTZ
Licensee"), and WNNE LICENSEE, INC., a Maryland corporation ("WNNE Licensee")
(Tuscaloosa, WPTZ Licensee and WNNE Licensee, collectively, the "Sellers" and,
individually a "Seller").
WHEREAS, pursuant to an Asset Purchase Agreement dated as of July 16,
1997 (the "Heritage Agreement"), by and among Xxxxxxxx Broadcast Group, Inc., a
Maryland corporation ("Xxxxxxxx") and certain indirect subsidiaries of Heritage
Media Corporation, a Delaware corporation ("HMC"), Xxxxxxxx has agreed to buy,
and such subsidiaries have agreed to sell, certain broadcast stations owned,
controlled or operated by such subsidiaries, including (i) television broadcast
station WPTZ-TV, Channel 0, Xxxxx Xxxx, Xxx Xxxx ("XXXX"); (ii) certain assets
and rights relating to television broadcast station WFFF-TV, Channel 44,
Burlington, Vermont ("WFFF"); and (iii) television broadcast station WNNE-TV,
Channel 31, Hartford, Vermont ("WNNE") (WPTZ, WFFF and WNNE each, individually,
a "Station" and, collectively, the "Stations") (such subsidiaries of HMC
transferring assets related to the Stations pursuant to the Heritage Agreement
are referred to herein as the "Heritage Subsidiaries");
WHEREAS, each Seller is a wholly-owned indirect subsidiary of Xxxxxxxx,
and Xxxxxxxx has assigned to Sellers Xxxxxxxx'x rights to acquire the Stations,
subject to and in accordance with the terms and conditions of the Heritage
Agreement;
WHEREAS, pursuant to a Transfer Agreement dated as of May 2, 1997, among
Xxxxxxx X. Xxxxx (the "Trustee"), HMC, The News Corporation Limited, a South
Australia corporation and Heritage Media Services, Inc., a Iowa corporation and
wholly-owned subsidiary of HMC ("HMSI"), on August 20, 1997, HMSI transferred to
the Trustee to hold in trust for the benefit of HMSI, all of the outstanding
capital stock of HMI Broadcasting Corp., a Delaware corporation and owner of all
of the outstanding capital stock of the Heritage Subsidiaries;
WHEREAS, pursuant to a guaranty given as of the date hereof by Xxxxxxxx
to Buyer, Xxxxxxxx has guaranteed to Buyer the prompt and complete performance
of the obligations of Sellers arising under this Agreement and the other Seller
Documents;
WHEREAS, Buyer is a wholly-owned indirect subsidiary of STC
Broadcasting, Inc., a Delaware corporation ("STC");
WHEREAS, pursuant to a guaranty given as of the date hereof by STC to
Sellers, STC has guaranteed to Sellers the prompt and complete performance of
the obligations of Buyer arising under this Agreement and the other Buyer
Documents;
10
WHEREAS, the parties hereto desire to enter into this Agreement to
provide for the sale, assignment and transfer by Sellers to Buyer of the assets
of the Stations, all subject to the terms described in this Agreement; and
WHEREAS, upon the satisfaction of certain conditions set forth herein,
the parties desire to enter into operating agreements pursuant to which Buyer
will commence operating the Stations, subject to compliance with all
requirements of the FCC.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Capitalized terms used herein without definition shall have the
respective meanings assigned thereto in Annex I attached hereto and incorporated
herein for all purposes of this Agreement (such definitions to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise specified, all references herein to "Articles" or "Sections" are to
Articles or Sections of this Agreement.
ARTICLE 2.
SALE AND PURCHASE OF ASSETS
2.1. ASSET SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, Sellers shall sell,
assign, transfer, convey and deliver to Buyer free and clear of any Encumbrances
other than Permitted Encumbrances, and Buyer shall purchase, acquire, pay for
and accept from Sellers, all right, title and interest of Sellers in, to and
under all real, personal and mixed assets, rights, benefits and privileges, both
tangible and intangible, owned, leased, used or useful by Sellers in connection
with the business and operations of the Stations (collectively, the "Assets");
but excluding the Excluded Assets described in Section 2.2.
The Assets shall include, without limitation, all right, title and
interest of Sellers in, to and under the following:
2.1.1. FCC LICENSES.
All licenses, permits and other authorizations issued by the FCC to any
Seller or any Heritage Subsidiary for the operation of the Stations (the "FCC
Licenses"), including without limitation those listed in Schedule 2.1.1, and all
applications therefor, together with any renewals, extensions or modifications
thereof and additions thereto.
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2.1.2. REAL AND LEASED PROPERTY INTERESTS.
(a) All the real property owned by any Seller or any Heritage
Subsidiary including, without limitation, all land, fee interests,
easements and other interests of every kind and description in real
property, buildings, structures, fixtures, appurtenances, towers and antennae,
and other improvements thereon owned by any Seller or any Heritage Subsidiary
used or useful in connection with the business and operations of the Stations
("Real Property"), including, without limitation, all of those items listed in
Schedule 2.1.2.
(b) All the real property leasehold interests of any Seller or any
Heritage Subsidiary including, without limitation, leases and subleases of any
land, easements and other real property leasehold interests of every kind and
description in real property, buildings, structures, fixtures, appurtenances,
towers and antennae, and other improvements thereon leased by any Seller or any
Heritage Subsidiary in connection with the business and operations of the
Stations ("Leased Property"), including, without limitation, all of those items
listed in Schedule 2.1.2.
2.1.3. TANGIBLE PERSONAL PROPERTY.
All of the furniture, fixtures, furnishings, machinery, computers,
equipment, inventory, spare parts, supplies, office materials and other tangible
property of every kind and description owned, leased or used by any Seller or
any Heritage Subsidiary in connection with the business and operations of the
Stations, together with any replacements thereof and additions thereto made
before the Closing Date, and less any retirements or dispositions thereof made
before the Closing Date in the Ordinary Course of Business, including, without
limitation, those items which have a book value in excess of Five Thousand
Dollars ($5,000), all of which as of the date of the Heritage Agreement are set
forth and identified in Schedule 2.1.3.
2.1.4. INTELLECTUAL PROPERTY.
All of the service marks, copyrights, franchises, trademarks, trade
names, jingles, slogans, logotypes and other similar intangible assets
maintained, owned, leased or used by any Seller or any Heritage Subsidiary in
connection with the business and operations of the Stations (including any and
all applications, registrations, extensions and renewals relating thereto) (the
"Intellectual Property"), and all of the rights, benefits and privileges
associated therewith including, without limitation, the right to use the call
letters for the Stations.
2.1.5. PROGRAM CONTRACTS.
The program licenses and contracts under which any Seller or Heritage
Subsidiary is authorized to broadcast programs on the Stations (collectively the
"Program Contracts") including, without limitation, (a) all program (cash and
non-cash) licenses and contracts listed on Schedule 2.1.5, and (b) any other
such program contracts that are entered
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into between the date of this Agreement and the Closing Date in accordance with
the terms of this Agreement.
2.1.6. TRADE-OUT AGREEMENTS.
All contracts and agreements (excluding Program Contracts) pursuant to
which any Seller or Heritage Subsidiary has sold, traded or bartered commercial
air time on the Stations in consideration for any property or services in lieu
of or in addition to cash (collectively, the "Trade-out Agreements")
including, without limitation, those set forth and identified in Schedule 2.1.6.
2.1.7. BROADCAST TIME SALES AGREEMENT.
All contracts and agreements pursuant to which any Seller or Heritage
Subsidiary has sold commercial air time on the Stations for cash (collectively
the "Time Sales Agreements").
2.1.8. NETWORK AFFILIATION AGREEMENTS.
All network affiliation agreements or other contracts of the Stations
with any television broadcast network (collectively, the "Network Agreements")
including, without limitation, those listed on Schedule 2.1.8.
2.1.9. OPERATING CONTRACTS.
All other operating contracts and agreements relating to the business or
operations of the Stations, all material such contracts as of the date of the
Heritage Agreement being listed on Schedule 2.1.9 (including, without
limitation, any LMA, all employment agreements and talent contracts, all leases
and subleases relating to the Leased Property, all agreements relating to any
motor vehicles, and all national and local advertising representation agreements
for the Stations), together with all contracts and agreements that are entered
into between the date of the Heritage Agreement and the Closing Date in
accordance with the terms of this Agreement (collectively, the "Operating
Contracts" and together with the Program Contracts, Trade-out Agreements, Time
Sales Agreements and the Network Agreements, the "Station Contracts").
2.1.10. VEHICLES.
All automotive equipment and motor vehicles maintained, owned, leased or
otherwise used by any Seller or any Heritage Subsidiary in connection with the
business and operations of the Stations, including, without limitation, those
set forth and described in Schedule 2.1.10.
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2.1.11. FILES AND RECORDS.
All engineering, business and other books, papers, logs, files and
records pertaining to the business and operations of the Stations, but not the
organizational documents and records described in Section 2.2.7.
2.1.12. AUXILIARY FACILITIES.
All translators, earth stations, and other auxiliary facilities, and all
applications therefor owned, leased or otherwise used or useful by any Seller or
any Heritage Subsidiary in connection with the business and operations of the
Stations.
2.1.13. PERMITS AND LICENSES.
All permits, approvals, orders, authorizations, consents, licenses,
certificates, franchises, exemptions of, or filings or registrations with, any
court or Governmental Authority (other than the FCC) in any jurisdiction, which
have been issued or granted to or are owned or used or useful by any Seller or
any Heritage Subsidiary in connection with the business and operations of the
Stations and all pending applications therefor.
2.1.14. GOODWILL.
The business of the Stations as a "going concern", customer
relationships and goodwill.
2.1.15. OTHER ASSETS.
All other real, personal and mixed assets, rights, benefits and
privileges, both tangible and intangible, acquired by Sellers pursuant to the
Heritage Agreement that are owned, leased, used or useful in connection with the
business and operations of the Stations.
2.2. EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this Agreement, there shall
be excluded from the Assets and retained by Sellers, to the extent in existence
as of the Closing Date, the following assets (collectively, the "Excluded
Assets").
2.2.1. CASH.
All cash, cash equivalents or deposits held by Sellers, all interest
payable in connection with any such cash, cash equivalents or deposits or short
term investments, bank balances and rights in and to bank accounts, marketable
and other securities of Sellers.
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2.2.2. ACCOUNTS RECEIVABLE.
All Accounts Receivable arising out of the business and operations of
the Stations.
2.2.3. PERSONAL PROPERTY DISPOSED OF.
All tangible personal property disposed of or consumed in the Ordinary
Course of Business as permitted by this Agreement.
2.2.4. INSURANCE.
All contracts of insurance and all insurance plans and the assets
thereof.
2.2.5. EMPLOYEE PLANS AND ASSETS.
All Plans, Benefit Arrangements (except for any Station Contracts,
Proration Items or other matters which are specifically assumed by Buyer
pursuant to the terms hereof), Qualified Plans and Welfare Plans and the assets
thereof.
2.2.6. RIGHT TO TAX REFUNDS.
Any and all claims of Sellers with respect to any Tax refunds.
2.2.7. CERTAIN BOOKS AND RECORDS.
All of each Seller's (a) organizational documents, corporate books and
records (including minute books and stock ledgers and records), and originals of
account books of original entry, (b) duplicated copies of any books, records,
accounts, checks, payment records, Tax records (including payroll, unemployment,
real estate and other Tax records) and other similar books, records and
information relating to such Seller's operation of the business of the Stations
prior to the Closing Date, (c) records prepared by or on behalf of such Seller
in connection with the sale of the Stations, and (d) records and documents
relating to any Excluded Assets.
2.2.8. THIRD-PARTY CLAIMS.
All rights and claims of Sellers whether mature, contingent or
otherwise, against third parties relating to the Assets or the Stations, whether
in tort, contract, or otherwise.
2.2.9. RIGHTS UNDER THIS AGREEMENT AND THE HERITAGE AGREEMENT.
All rights of Sellers under or pursuant to this Agreement and the
Heritage Agreement or any other rights in favor of Sellers pursuant to the other
agreements contemplated hereby or thereby.
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2.2.10. NAMES.
All rights to the names "Xxxxxxxx Broadcasting", "Heritage Broadcasting"
and "Heritage Media" and any logo or variation thereof and the goodwill
associated therewith.
2.2.11. DEPOSIT AND PREPAID EXPENSES.
All deposits and prepaid expenses of Sellers, provided, however, any
deposit and prepaid expenses shall be included in the Assets conveyed pursuant
hereto to the extent that any Seller receives a credit therefor in the
calculation of the Proration Amount pursuant to Section 2.6.
2.2.12. WFFF LICENSES.
All licenses, permits and other authorizations issued by the FCC for the
operation of WFFF (all of such licenses, permits and authorizations being issued
to Champlain Valley Telecasting).
2.2.13. MISCELLANEOUS EXCLUDED ASSETS.
The assets listed and identified on Schedule 2.2.13.
2.3. ESCROW DEPOSIT.
For and in partial consideration of the execution and delivery of this
Agreement, simultaneously with the execution and delivery of this Agreement,
Buyer is depositing in escrow with the Deposit Escrow Agent an original,
irrevocable letter of credit (the "Letter of Credit") issued for the benefit of
Sellers and the Deposit Escrow Agent by The Chase Manhattan Bank for an amount
equal to SEVEN MILLION TWO HUNDRED THOUSAND DOLLARS ($7,200,000) (the
"Deposit"), such Letter of Credit to be held in accordance with the terms and
conditions of the Deposit Escrow Agreement. Buyer and Sellers shall cause the
Letter of Credit to be returned to Buyer on the Transfer Date.
2.4. PURCHASE PRICE.
For and in consideration of the conveyances and assignments of the
Assets described herein and in addition to the assumption of Liabilities as set
forth in Section 2.8, Buyer agrees to pay to Sellers, and Sellers agree to
accept from Buyer, an amount equal to SEVENTY TWO MILLION DOLLARS ($72,000,000)
(the "Base Purchase Price"), plus or minus (as the case may be) the Proration
Amount (collectively, the "Purchase Price").
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2.5. PAYMENT OF PURCHASE PRICE.
2.5.1. At the Non-License Transfer pursuant to Section 11.2,
Buyer shall pay to Sellers by wire transfer of immediately available funds to an
account which will be identified by Sellers not less than two (2) days prior to
the Non-License Transfer Date, an amount equal to SEVENTY MILLION DOLLARS
($70,000,000) of the Base Purchase Price (plus or minus, as the case may be, the
Proration Amount).
2.5.2. The Purchase Price (less any amounts paid to Sellers at
a Non-License Transfer) shall be payable to Sellers at the Closing by wire
transfer of immediately available federal funds to an account which will be
identified by Sellers not less than two (2) days prior to the Closing Date.
2.6. PRORATION AMOUNT.
2.6.1. At least five (5) days prior to the Transfer Date,
Sellers shall make a good faith estimate of the adjustments to the Base Purchase
Price customary in television broadcast station transactions for Proration Items
(the "Proration Amount") to reflect that all Proration Items of the Stations
shall be apportioned between Buyer and Sellers in accordance with the principle
that Sellers shall receive the benefit of all revenues, refunds, deposits (other
than deposits for Program Contracts which shall be prorated based on the
percentage of the term that the film or program was aired on the Stations before
the Transfer Date and the percentage available to be aired on and after the
Transfer Date) and prepaid expenses, and shall be responsible for all expenses,
costs and liabilities allocable to the conduct of the businesses or operations
of the Stations for the period prior to the Transfer Date, and Buyer shall
receive the benefit of all revenues, refunds, deposits and prepaid expenses, and
shall be responsible for all expenses, costs and liabilities allocable to the
conduct of the businesses or operations of the Stations from and after the
Transfer Date; provided, however, that there shall be no adjustment or proration
for any negative or positive net trade balance except to the extent that the
negative trade balance (i.e., the amount by which the value of goods or services
to be received is less than the value of any advertising time remaining to be
run) for any Station exceeds Fifty Thousand Dollars ($50,000) as of the Transfer
Date; provided, further, that if there shall be a Non-License Transfer, then
prorations and adjustments for Proration Items related to the License Assets
shall be made pursuant to this Section 2.6 as of the Closing Date.
Determinations pursuant to this Section 2.6.1 shall be made in accordance with
generally accepted accounting principles consistently applied for the period
prior to the Non-License Transfer Date or the Closing Date, as applicable.
2.6.2. Within ninety (90) days after the Transfer Date, Buyer
shall deliver to Sellers in writing and in reasonable detail a good faith final
determination of the Proration Amount determined as of the Transfer Date under
Section 2.6.1 ("Final Proration Amount"). Sellers shall assist Buyer in making
such determination, and Buyer shall provide Sellers with reasonable access to
the properties, books and records relating to the Stations for the purpose of
determining the Final Proration Amount. Sellers shall have the right to review
the computations
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and workpapers used in connection with Buyer's preparation of the Final
Proration Amount. If Sellers disagree with the amount of the Final Proration
Amount determined by Buyer, Sellers shall so notify Buyer in writing within
thirty (30) days after the date of receipt of Buyer's Final Proration Amount,
specifying in detail any point of disagreement; provided, however, that if
Sellers fail to notify Buyer in writing of Sellers' disagreement within such
thirty (30) day period, Buyer's determination of the Final Proration Amount
shall be final, conclusive and binding on Sellers and Buyer. After the receipt
of any notice of disagreement, Buyer and Sellers shall negotiate in good faith
to resolve any disagreements regarding the Final Proration Amount. If any such
disagreement cannot be resolved by Sellers and Buyer within thirty (30) days
after Buyer has received notice from Sellers of the existence of such
disagreement, Buyer and Sellers shall jointly select a nationally recognized
independent public accounting firm (the "Accounting Firm"), to review Buyer's
determination of the Final Proration Amount and to resolve as soon as possible
all points of disagreement raised by Sellers. All determinations made by the
Accounting Firm with respect to the Final Proration Amount shall be final,
conclusive and binding on Buyer and Sellers. The fees and expenses of the
Accounting Firm incurred in connection with any such determination shall be
shared one-half by Buyer and one-half by Sellers.
If the Final Proration Amount is such that Buyer's payment of the
Proration Amount was an underpayment to Sellers, then Buyer shall pay such
underpayment amount to Sellers in cash, within two (2) business days following
the final determination of the Final Proration Amount. If the Final Proration
Amount is such that Buyer's payment of the Proration Amount was an overpayment
to Sellers, then Sellers shall pay such overpayment amount to Buyer in cash
within two (2) business days following the final determination of the Final
Proration Amount. Any amounts paid pursuant to this Section 2.6.2 shall be by
wire transfer of immediately available funds for credit to the recipient at a
bank account identified by such recipient in writing.
Buyer and Sellers agree that prior to the date of the final
determination of the Final Proration Amount pursuant to this Section 2.6.2 (by
the Accounting Firm or otherwise), neither party will destroy any records
pertaining to, or necessary for, the final determination of the Final Proration
Amount.
Each Seller hereby appoints Xxxxxxxx as its attorney-in-fact with power
and authority to act for and on behalf of each Seller in connection with all
matters arising under this Section 2.6. Buyer shall be entitled to rely on
such appointment and treat Xxxxxxxx as the duly appointed attorney-in-fact of
each Seller.
2.7. ALLOCATION OF BASE PURCHASE PRICE.
Each party hereto represents, warrants, covenants and agrees with each
other party hereto that the Base Purchase Price shall be allocated among the
classes of Assets for each Station as agreed by the parties within sixty (60)
days after the date hereof; provided, however, that if the parties are unable
to agree on such allocation within such sixty (60) day period, each
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party shall have the right to allocate the classes of Assets for each Station
based upon its own determination. The parties agree, pursuant to Section 1060
of the Code, that the Base Purchase Price shall be allocated in accordance with
this Section 2.7, and that all Tax returns and reports shall be filed
consistent with such allocation. The parties acknowledge and agree that the
payment of the Purchase Price as contemplated herein does not reflect the
allocation among the classes of Assets for each Station as determined pursuant
to this Section 2.7. Notwithstanding any other provision of this Agreement,
the provisions of this Section 2.7 shall survive the Closing Date without
limitation.
2.8. ASSUMPTION OF LIABILITIES.
2.8.1. At the Non-License Transfer, Buyer shall assume, pay,
perform, discharge and indemnify and hold Sellers harmless from and against (a)
all Liabilities arising out of events occurring on or after the Non-License
Transfer Date related to the businesses or operations of the Stations by Buyer
or Buyer's ownership of the Non-License Assets, (b) all Liabilities arising on
or after the Non-License Transfer Date under the Station Contracts (including,
without limitation, Trade-out Agreements) pursuant to their terms (except for
Liabilities for any breaches thereunder by any Seller occurring prior to the
Non-License Transfer Date), (c) all Liabilities for which there is a downward
adjustment to the Base Purchase Price in connection with the calculation of the
Proration Amount, and (d) all Liabilities to employees of the Stations to be
assumed by Buyer in accordance with Section 8.4 hereof.
2.8.2. To the extent not assumed by Buyer at the Non-License
Transfer, at the Closing, Buyer shall assume, pay, perform, discharge and
indemnify and hold Sellers harmless from and against (a) all Liabilities
arising out of events occurring on or after the Closing Date related to the
businesses or operations of the Stations or Buyer's ownership of the Assets,
(b) all Liabilities arising out of events occurring on or after the Closing
Date with respect to the FCC Licenses, (c) all Liabilities arising on or after
the Closing Date under the Station Contracts (including, without limitation,
Trade-out Agreements) pursuant to their terms (except for Liabilities for any
breaches thereunder by any Seller occurring prior to the Closing Date), (d) all
Liabilities for which there is a downward adjustment to the Base Purchase Price
in connection with the calculation of the Proration Amount, and (e) all
Liabilities to employees of the Stations to be assumed by Buyer in accordance
with Section 8.4 hereof.
2.8.3. Except for the Assumed Liabilities, Buyer assumes no
other Liabilities of any kind or description including, without limitation, any
obligations under or pursuant to the Heritage Agreement.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY SELLERS
Each Seller, jointly and severally with the other Sellers, represents
and warrants to Buyer as follows:
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3.1. ORGANIZATION AND STANDING.
Each Seller is duly organized, validly existing and in good standing
under the laws of the state of its organization and will at Closing be duly
qualified to do business and is in good standing in any jurisdiction where such
qualification is necessary in order to consummate the transactions contemplated
under this Agreement, except for those jurisdictions where the failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect. Prior to the Transfer Date, each Seller will have the corporate power
and authority to own, lease and otherwise to hold and operate such Seller's
Assets, and to carry on the business of the Stations as now conducted. Each
Seller has the corporate power and authority to enter into and perform the
terms of this Agreement, the other Seller Documents and the transactions
contemplated hereby and thereby.
3.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and of the
other Seller Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action (none of which actions has been
modified or rescinded and all of which actions are in full force and effect).
This Agreement and the Deposit Escrow Agreement constitute, and upon execution
and delivery each other Seller Document to which it is a party will constitute,
valid and binding agreements and obligations of each Seller, enforceable
against it in accordance with their respective terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general applicability relating to or affecting creditors' rights
generally and by the application of general principles of equity.
3.3. COMPLIANCE WITH LAWS.
To the knowledge of Sellers and the Heritage Subsidiaries, Sellers and
the Heritage Subsidiaries are in material compliance with all Laws applicable
to the Assets and to the business and operations of the Stations. The Heritage
Subsidiaries have obtained and hold (and Sellers will obtain and hold prior to
the Transfer Date) all material permits, licenses and approvals (none of which
has been modified or rescinded and all of which are in full force and effect)
from all Governmental Authorities necessary in order to conduct the operations
of the Stations as presently conducted.
3.4. CONSENTS AND APPROVALS; NO CONFLICTS.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Sellers, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority, except as follows: (a)
filings required under Xxxx-Xxxxx-Xxxxxx, (b) consents to the assignment of the
FCC Licenses to Buyer by the FCC, (c) filings, if any, with respect to real
estate transfer taxes, (d) filings with the Securities and Exchange Commission,
and (e) certain of
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the Station Contracts may be assigned only with the consent of third parties,
as specified in Schedule 3.4.
3.4.2. Assuming all consents, approvals, authorizations and
other actions described in Section 3.4.1 have been obtained and all filings and
notifications described in Section 3.4.1 have been made, the execution,
delivery and performance of this Agreement and the other Seller Documents by
each Seller do not and will not (a) conflict with or violate in any material
respect any Law applicable to such Seller, the Assets or Stations or by which
any of the Assets or Stations is subject or affected, (b) conflict with or
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) of any Station Contract or
other material agreement to which such Seller is a party or by which such
Seller is bound or to which any of the Assets or Stations is subject or
affected, (c) result in the creation of any Encumbrance upon the Assets, or (d)
conflict with or violate the organizational documents of such Seller.
3.5. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
3.5.1. Seller has provided to Buyer an unaudited balance sheet
of the Stations as of December 31, 1997 (the "Balance Sheet"), and an unaudited
statement of income and operating cash flows for the Stations for the twelve
(12) month period ending December 31, 1997. The financial statements referred
to in this Section 3.5.1 (a) present fairly in all material respects the
financial condition of the Stations as of the date and the results of
operations and operating cash flows for the period indicated, and (b) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except that the financial statements referred to in this
Section 3.5.1 do not contain all footnotes and cash flow information from
investing and financing activities required under generally accepted accounting
principles and are subject to customary year-end adjustments).
3.5.2. There exist no Liabilities of the Stations relating to,
or arising out of, the business or operations of the Stations, contingent or
absolute, matured or unmatured, known or unknown, except (a) as reflected on
the Balance Sheet and (b) for Liabilities that (i) were incurred after December
31, 1997 (the "Current Balance Sheet Date") in the Ordinary Course of Business,
or (ii) were not required to be reflected on the Balance Sheet in accordance
with generally accepted accounting principles applied on a consistent basis.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth and described in Schedule 3.6, since the Current
Balance Sheet Date, there has been no Material Adverse Effect. Since the
Current Balance Sheet Date, the business of the Stations has been conducted in
the Ordinary Course of Business, and neither any Seller nor any Heritage
Subsidiary has (a) incurred any extraordinary loss of, or injury to, any of the
Assets as the result of any fire, explosion, flood, windstorm, earthquake,
labor trouble, riot, accident, act of God or public enemy or armed forces, or
other casualty; (b) incurred, or become subject to, any Liability, except
current Liabilities incurred in the Ordinary Course of
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Business; (c) discharged or satisfied any Encumbrance or paid any Liability
other than current Liabilities shown in the Balance Sheet, current Liabilities
incurred since the Current Balance Sheet Date in the Ordinary Course of
Business, and Liabilities (including, without limitation, partial and complete
prepayments) arising under any credit or loan agreement between any Seller and
its lenders; (d) mortgaged, pledged or subjected to any Encumbrance any of the
Assets (except for Permitted Encumbrances); (e) made any material change in any
method of accounting or accounting practice; (f) sold, leased, assigned or
otherwise transferred any of the material Assets other than obsolete Assets
which have been replaced by suitable replacements; (g) made any material
increase in compensation or benefits payable to any employee other than in the
Ordinary Course of Business; or (h) made any agreement to do any of the
foregoing.
3.7. ABSENCE OF LITIGATION.
Except as set forth on Schedule 3.7, as of the date of the Heritage
Agreement, there is no material or, to the knowledge of Sellers and the
Heritage Subsidiaries, immaterial action, suit, investigation, claim,
arbitration, litigation or similar proceeding, nor any order, decree or
judgment pending or, to the knowledge of Sellers and the Heritage Subsidiaries,
threatened against any Seller, any Heritage Subsidiary, the Assets or Stations
before any Governmental Authority.
3.8. ASSETS.
Except for the Excluded Assets, the Assets include all of the assets or
property used or useful in the businesses of the Stations as presently operated
and all of the assets or property acquired by Sellers under the Heritage
Agreement. Except for leased or licensed Assets, the Heritage Subsidiaries are
(and Sellers will be prior to the Transfer Date) the owner of, and have (and
Sellers will have prior to the Transfer Date) good title to, the Assets free
and clear of any Encumbrances, except for Permitted Encumbrances (including,
without limitation, those items set forth on Schedule 3.8). At the Non-License
Transfer and the Closing, Buyer shall acquire good title to, and all right,
title and interest in and to the Assets being transferred at the Non-License
Transfer and the Closing, respectively, free and clear of all Encumbrances,
except for the Permitted Encumbrances.
3.9. FCC MATTERS.
The Heritage Subsidiaries hold (and Sellers will hold prior to the
Transfer Date) the FCC Licenses listed as held by the Heritage Subsidiaries on
Schedule 2.1.1. Such FCC Licenses constitute all of the licenses, permits and
authorizations from the FCC which have been issued to the Heritage Subsidiaries
or the Sellers that are required for the business and operations of the
Stations. Except as set forth on Schedule 3.9, such FCC Licenses are valid and
in full force and effect through the dates set forth on Schedule 2.1.1,
unimpaired by any condition, other than as set forth in the FCC Licenses.
Except as set forth on Schedule 3.9, no application, action or proceeding is
pending for the renewal or modification of any of the FCC Licenses, and, except
for actions or proceedings affecting television broadcast stations generally,
no
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application, complaint, action or proceeding is pending or, to the knowledge of
Sellers and the Heritage Subsidiaries, threatened that may result in the (a)
the revocation, modification, non-renewal or suspension of any of the FCC
Licenses, or (b) the issuance of a cease-and-desist order. Except as set
forth in Schedule 3.9, no Seller or Heritage Subsidiary has knowledge of any
facts, conditions or events relating to any Seller, any Heritage Subsidiary or
the Stations that would reasonably be expected to cause the FCC to revoke any
FCC License or not to grant any pending applications for renewal of the FCC
Licenses or to deny the assignment of the FCC Licenses to a qualified Buyer as
provided for in this Agreement.
3.10. REAL PROPERTY.
3.10.1. The Heritage Subsidiaries have (and Sellers will have
prior to the Transfer Date) good and marketable fee simple title to all fee
estates included in the Real Property and good title to all other owned Real
Property, in each case free and clear of all Encumbrances, except for Permitted
Encumbrances.
3.10.2. The Heritage Subsidiaries have (and Sellers will have
prior to the Transfer Date) a valid leasehold interest in all Leased Property
listed as leased by the Heritage Subsidiaries or Sellers in Schedule 2.1.2.
Schedule 2.1.2 lists all leases and subleases pursuant to which any of the
Leased Property is leased by the Heritage Subsidiaries and Sellers in
connection with the business and operations of the Stations. The Heritage
Subsidiaries are (and Sellers will be prior to the Transfer Date) the owner and
holder of all the Leased Property purported to be granted by such leases and
subleases. Each such lease and sublease is valid as to the lessee and
sublessee thereunder and, to the knowledge of Sellers and the Heritage
Subsidiaries, valid as to any other party thereto, and is in full force and
effect and, to the knowledge of Sellers and the Heritage Subsidiaries,
constitutes a legal and binding obligation of, and is legally enforceable
against the lessee or sublessee thereunder and each other party thereto and
grants the leasehold interest it purports to grant, including any rights to
nondisturbance and peaceful and quiet enjoyment that may be contained therein.
The lessees and sublessees are, and to the knowledge of Sellers and the
Heritage Subsidiaries all other parties are, in compliance in all material
respects with the provisions of such leases and subleases.
3.10.3. The Real Property and the Leased Property listed in
Schedule 2.1.2 constitute all of the real property owned, leased or used by
Sellers or the Heritage Subsidiaries in the business and operations of the
Stations which is material to the business and operations of the Stations.
3.10.4. No portion of the Real Property or any building,
structure, fixture or improvement thereon is the subject of, or affected by,
any condemnation, eminent domain or inverse condemnation proceeding currently
instituted or pending or, to the knowledge of Sellers and the Heritage
Subsidiaries, threatened. To the knowledge of Sellers and the Heritage
Subsidiaries and to the extent that such documents are in the possession of
Sellers or a Heritage Subsidiary, Sellers have delivered to Buyer true, correct
and complete copies of the following documents with respect to the Real
Property and Leased Property: (a) deeds, by which the current owner has
received a fee interest in any of the Real Property; (b) leases for all of the
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Leased Property; (c) title insurance policies or commitments; (d) surveys; and
(e) inspection reports or other instruments or reports, including, without
limitation, any phase I or phase II environmental reports or other similar
environmental reports, surveys or assessments (including any and all amendments
and other modifications of such instruments).
3.11. INTELLECTUAL PROPERTY.
The Heritage Subsidiaries possess (and Sellers will possess prior to
the Transfer Date) adequate rights, licenses and authority to use all
Intellectual Property necessary to conduct the business of the Stations as
presently conducted. The Heritage Subsidiaries have (and Sellers will have
prior to the Transfer Date) good title to all Intellectual Property that the
Heritage Subsidiaries or Sellers own in connection with the business and
operations of the Stations, free and clear of any Encumbrances, except for
Permitted Encumbrances. No Heritage Subsidiary is (and no Seller will be as of
the Transfer Date) obligated to pay any royalty or other fees to anyone with
respect to the Intellectual Property. Neither Seller nor any Heritage
Subsidiary has received any written notice to the effect that any service
rendered by any Seller or any Heritage Subsidiary relating to the business of
the Stations may infringe, or that any Seller or any Heritage Subsidiary is
otherwise infringing, on any Intellectual Property right or other legally
protectable right of another. No director, officer or employee of any Seller
or any Heritage Subsidiary has any interest in any Intellectual Property.
3.12. STATION CONTRACTS.
Complete and correct copies of the Station Contracts set forth in
Schedules 2.1.5, 2.1.6, 2.1.8 and 2.1.9 (which schedules, to Sellers' knowledge
are and which have been represented to Sellers by the Heritage Subsidiaries
making such representations to be, true and correct in all material respects)
have been made available to Buyer and (a) each such material Station Contract
and, to the knowledge of Sellers and the Heritage Subsidiaries, each such
immaterial Station Contract, is in full force and effect and constitutes a
legal, valid and binding obligation of the owner of the Station that is a party
thereto, and, to the knowledge of Sellers and the Heritage Subsidiaries, of
each other party thereto; (b) no owner of a Station is in breach or default in
any material respect of the terms of any Station Contract; (c) none of the
material rights of the owner of a Station under any such Station Contract will
be subject to termination, nor will a default occur, as a result of the
consummation of the transactions contemplated hereby, except to the extent that
failure to obtain the prior consent to assignment thereof of any party thereto
shall or could be interpreted to constitute a termination or modification of or
a default under any such Station Contract; and (d) to the knowledge of Sellers
and the Heritage Subsidiaries, no other party to any such Station Contract is
in breach or default in any material respect of the terms thereunder.
3.13. TAXES.
The Heritage Subsidiaries have (or, in the case of returns becoming due
after the date hereof and on or before the Transfer Date, the Heritage
Subsidiaries or Sellers will have
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prior to the Transfer Date) duly filed all material Seller Tax Returns required
to be filed by them on or before the Transfer Date with respect to all material
applicable Taxes. In the case of any Seller Tax Returns which receive an
extension for their date of filing, such Seller Tax Returns will be considered
due on, and not considered required to be filed before, the extended due date.
To the knowledge of Sellers and the Heritage Subsidiaries, all Seller Tax
Returns are (or, in the case of returns becoming due after the date hereof and
on or before the Transfer Date, will be) true and complete in all material
respects. The Heritage Subsidiaries or Sellers have: (a) paid all Taxes due to
any Governmental Authority as indicated on the Seller Tax Returns; or (b)
established (or, in the case of amounts becoming due after the date hereof,
prior to the Transfer Date will have established) adequate reserves (in
conformity with generally accepted accounting principles consistently applied)
for the payment of such Taxes.
3.14. EMPLOYEE BENEFIT PLANS.
3.14.1. Schedule 3.14 lists all Plans and Benefit
Arrangements (exclusive of severance arrangements and retention agreements)
maintained by or contributed to for the benefit of the employees of the
Stations (collectively, the "Benefit Plans"). Each Benefit Plan has been
maintained in material compliance with its terms and with ERISA, the Code and
other applicable Laws.
3.14.2. Schedule 3.14 sets forth a list of all Qualified
Plans maintained by or contributed to for the benefit of the employees of the
Stations. All such Qualified Plans and any related trust agreements or annuity
agreements (or any other funding document) have been maintained in material
compliance with ERISA and the Code (including, without limitation, the
requirements for tax qualification described in Section 401 thereof), other
than any Multiemployer Plan. To the knowledge of Sellers and the Heritage
Subsidiaries, any trusts established under such Plans are exempt from federal
income taxes under Section 501(a) of the Code.
3.14.3. Schedule 3.14 lists all funded Welfare Plans that
provide benefits to current or former employees of the Stations or their
beneficiaries. To the knowledge of Sellers, the funding under each such
Welfare Plan does not exceed and has not exceeded the limitations under
Sections 419A(b) and 419A(c) of the Code. To the knowledge of Sellers and the
Heritage Subsidiaries, no Seller Party is subject to taxation on the income of
any such Welfare Plan's welfare benefit fund (as such term is defined in
Section 419(e) of the Code) under Section 419A(g) of the Code.
3.14.4. There are no post-retirement medical, life insurance
or other benefits promised, provided or otherwise due now or in the future to
current, former or retired employees of the Stations.
3.14.5. To the knowledge of Sellers and the Heritage
Subsidiaries, except as set forth in Schedule 3.14, the Seller Parties have (a)
filed or caused to be filed all returns and reports on the Plans that they are
required to file and (b) paid or made adequate provision for all fees,
interest, penalties, assessments or deficiencies that have become due pursuant
to those
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returns or reports or pursuant to any assessment or adjustment that has been
made relating to those returns or reports. All other fees, interest, penalties
and assessments that are payable by or for the Seller Parties have been timely
reported, fully paid and discharged. There are no unpaid fees, penalties,
interest or assessments due from any Seller Party or from any other person that
are or could become an Encumbrance on any of the Assets or could otherwise
adversely affect the businesses of the Stations or the Assets. To the
knowledge of Sellers and the Heritage Subsidiaries, the Seller Parties have
collected or withheld all amounts that are required to be collected or withheld
by them to discharge their obligations, and all of those amounts have been paid
to the appropriate Governmental Authority or set aside in appropriate accounts
for future payment when due. Sellers have furnished to Buyer true and complete
copies of all documents setting forth the terms and funding of each Plan.
3.14.6. Except as set forth in Schedule 3.14, neither any
Seller Party nor any ERISA Affiliate has ever sponsored or maintained, had any
obligation to sponsor or maintain, or had any liability (whether actual or
contingent, with respect to any of its assets or otherwise) with respect to any
Plan subject to Section 302 of ERISA or Section 412 of the Code or Title IV of
ERISA (including any Multiemployer Plan). Neither any Seller Party nor any
ERISA Affiliate (since January 1, 1989) has terminated or withdrawn from or
sought a funding waiver with respect to any plan subject to Title IV of ERISA,
and no facts exist that could reasonably be expected to cause such actions in
the future; no accumulated funding deficiency (as defined in Code Section 412),
whether or not waived, exists with respect to any such plan; no reportable
event (as defined in ERISA Section 4043) has occurred with respect to any such
plan (other than events for which reporting is waived); all costs of any such
plans have been provided for on the basis of consistent methods in accordance
with sound actuarial assumptions and practices, and the assets of each such
plan, as of its last valuation date, exceeded its "Benefit Liabilities" (as
defined in ERISA Section 4001(a)(16)); and, since the last valuation date for
each such plan, no such plan has been amended or changed to increase the
amounts of benefits thereunder and, to the knowledge of Sellers and the
Heritage Subsidiaries, there has been no event that would reduce the excess of
assets over benefit liabilities; and except as set forth in Schedule 3.14,
neither any Seller Party nor any ERISA Affiliate has ever made or been
obligated to make, or reimbursed or been obligated to reimburse another
employer for, contributions to any Multiemployer Plan.
3.14.7. No claims or lawsuits are pending or, to the
knowledge of Sellers and the Heritage Subsidiaries, threatened by, against, or
relating to any Benefit Plan. To the knowledge of Sellers and the Heritage
Subsidiaries, the Benefit Plans are not presently under audit or examination
(nor has notice been received of a potential audit or examination) by the IRS,
the Department of Labor, or any other governmental agency or entity and no
matters are pending with respect to any Qualified Plan under the IRS's
Voluntary Compliance Resolution program, its Closing Agreement Program, or
other similar programs.
3.14.8. With respect to each Plan, there has occurred no
non-exempt "prohibited transaction" (within the meaning of Section 4975 of the
Code) or transaction prohibited by Section 406 of ERISA or breach of any
fiduciary duty described in Section 404 of ERISA that would, if successful,
result in any liability for any of the Seller Parties.
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3.14.9. No Seller Party has any liability (whether actual,
contingent, with respect to any of its Assets or otherwise) with respect to any
employee benefit plan that is not a Benefit Plan (exclusive of severance
arrangements and retention agreements) or with respect to any employee benefit
plan sponsored or maintained (or which has been or should have been sponsored
or maintained) by any ERISA Affiliate.
3.14.10. All group health plans of the Seller Parties and the
ERISA Affiliates covering any current or former employees of the Stations have
been operated in material compliance with the requirements of Sections 4980B
(and its predecessor) and 5000 of the Code, and the Seller Parties have
provided, or will have provided before the Transfer Date, to individuals
entitled thereto all required notices and coverage pursuant to Section 4980B
with respect to any "qualifying event" (as defined therein) occurring before or
on the Transfer Date.
3.15. LABOR RELATIONS.
Sellers have made available to Buyer a true and complete list of all
employees of the Heritage Subsidiaries and Sellers engaged in the business or
operations of the Stations as of the date set forth on the list, together with
such employee's position, salary and date of hire. Schedule 3.15 lists all
written employment contracts with any such employees and all written
agreements, plans, arrangements, commitments and understandings pursuant to
which any of the Seller Parties have severance obligations or retention
obligations with respect to such employees. No labor union or other collective
bargaining unit represents or, to the knowledge of Sellers and the Heritage
Subsidiaries, claims to represent, any of the employees of the Stations. There
are no strikes, work stoppages, grievance proceedings, union organization
efforts, or other controversies pending between any Seller or any Heritage
Subsidiary and any union or collective bargaining unit representing (or, to the
knowledge of Sellers and the Heritage Subsidiaries, claiming to represent) any
employees of the Stations. The Heritage Subsidiaries are (and Sellers will be
as of the Transfer Date) in compliance with all Laws relating to the employment
of employees of the Stations or the workplace of the Stations, including,
without limitation, provisions relating to wages, hours, collective bargaining,
safety and health, work authorization, equal employment opportunity,
immigration and the withholding of income taxes, unemployment compensation,
worker's compensation, employee privacy and right to know and social security
contributions, except for any noncompliance which would not have a Material
Adverse Effect. There are no collective bargaining agreements relating to the
Stations or the business and operations thereof.
3.16. ENVIRONMENTAL MATTERS.
3.16.1. Except as set forth in Schedule 3.16, to the
knowledge of Sellers and the Heritage Subsidiaries (which knowledge is based on
the items set forth on Schedule 3.16), the Heritage Subsidiaries are (and
Sellers will be as of the Transfer Date) in material compliance with, and the
Real Property and all improvements thereon are in material compliance with, all
Environmental Laws.
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3.16.2. Except as set forth in Schedule 3.16, there are no
pending or, to the knowledge of Sellers and the Heritage Subsidiaries,
threatened actions, suits, claims, or other legal proceedings based on (and
neither any Seller nor any of the Heritage Subsidiaries has received any
written notice of any complaint, order, directive, citation, notice of
responsibility, notice of potential responsibility, or information request from
any Governmental Authority arising out of or attributable to): (a) the current
or past presence at any part of the Real Property of Hazardous Materials; (b)
the current or past release or threatened release into the environment from the
Real Property (including, without limitation, into any storm drain, sewer,
septic system or publicly owned treatment works) of any Hazardous Materials;
(c) the off-site disposal of Hazardous Materials originating on or from the
Real Property or the Assets or businesses of the Stations; (d) any facility
operations or procedures of the Stations which do not conform to requirements
of the Environmental Laws; or (e) any violation of Environmental Laws at any
part of the Real Property arising from activities of the Stations involving
Hazardous Materials. To the knowledge of Sellers and the Heritage
Subsidiaries, the Heritage Subsidiaries have been (and Sellers will have been
prior to the Transfer Date) duly issued all material permits, licenses,
certificates and approvals required under any Environmental Law.
3.17. INSURANCE.
Schedule 3.17 contains a true and complete list and brief summary of
all policies of title, property, fire, casualty, liability, life, workmen's
compensation, libel and slander, and other forms of insurance of any kind
relating to the Assets or the business and operations of the Stations. All
such policies: (a) are in full force and effect; (b) are sufficient for
compliance in all material respects with all requirements of Law and of all
material agreements to which any Station owner is a party; and (c) to the
knowledge of Sellers and the Heritage Subsidiaries, are valid, outstanding, and
enforceable policies and the policy holder is not in default in any material
respect thereunder.
3.18. REPORTS.
All material returns, reports and statements that the Stations are
currently required to file with the FCC or any governmental agency have been
timely filed, and all reporting requirements of the FCC and other governmental
authorities having jurisdiction thereof have been complied with by Sellers and
the Heritage Subsidiaries in all material respects. All of such reports,
returns and statements are complete and correct in all material respects as
filed. To the knowledge of Sellers and the Heritage Subsidiaries, all
documents required by the FCC to be deposited by the owners of the Stations in
their public files (as defined in the rules and regulations of the FCC) during
the period of operation of the Stations by the Heritage Subsidiaries and
Sellers have been deposited therein.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Sellers as follows:
4.1. ORGANIZATION AND STANDING.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and by the Transfer Date will
be duly qualified to do business as a foreign corporation in the State of New
York and the State of Vermont. Buyer has the full corporate power and
corporate authority to enter into and perform the terms of this Agreement and
the other Buyer Documents and to carry out the transactions contemplated hereby
and thereby.
4.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and of the
other Buyer Documents, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
actions of Buyer (none of which actions has been modified or rescinded and all
of which actions are in full force and effect). This Agreement and the Deposit
Escrow Agreement constitute, and upon execution and delivery each such other
Buyer Document will constitute, a valid and binding agreement and obligation of
Buyer, enforceable against Buyer in accordance with its respective terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
4.3. CONSENTS AND APPROVALS; NO CONFLICTS.
4.3.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Buyer, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority, except as follows: (a)
filings required under Xxxx-Xxxxx-Xxxxxx, (b) approvals of the assignment of
the FCC Licenses to Buyer by the FCC, (c) filings, if any, with respect to real
estate transfer taxes and (d) filings with the Securities and Exchange
Commission.
4.3.2. Assuming all consents, approvals, authorizations and
other actions described in Section 4.3.1 have been obtained and all filings and
notifications described in Section 4.3.1 have been made, the execution,
delivery and performance of this Agreement and the other Buyer Documents by
Buyer do not and will not (a) conflict with or violate any material Law
applicable to Buyer, (b) conflict with or result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become
a default) of any material contract or material agreement to which Buyer is a
party or by which Buyer is bound, or (c) conflict with or violate the
organizational documents of Buyer.
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4.4. AVAILABILITY OF FUNDS.
Buyer will have available on the Non-License Transfer Date and the
Closing Date sufficient funds to enable it to consummate the transactions
contemplated hereby.
4.5. QUALIFICATION OF BUYER.
4.5.1. Except as disclosed in Schedule 4.5.1, Buyer is, and
pending Closing will remain legally, financially and otherwise qualified under
the Communications Act and all rules, regulations and policies of the FCC to
acquire and operate the Stations. There are no facts or proceedings which
would reasonably be expected to disqualify Buyer under the Communications Act
or otherwise from acquiring or operating any of the Stations or would cause the
FCC not to approve the assignment of the FCC Licenses to Buyer. Except as
disclosed in Schedule 4.5.1, Buyer has no knowledge of any fact or circumstance
relating to Buyer or any of Buyer's Affiliates that would reasonably be
expected to (a) cause the filing of any objection to the assignment of the FCC
Licenses to Buyer, or (b) lead to a delay in the processing by the FCC of the
applications for such assignment. Except for existing waivers pertaining to
the Stations, no waiver of any FCC rule or policy is necessary to be obtained
for the grant of the applications for the assignment of the FCC Licenses to
Buyer, nor will processing pursuant to any exception or rule of general
applicability be requested or required in connection with the consummation of
the transactions herein.
4.5.2. As of the date hereof and through the later to occur
of the HSR Filing and the filing of the FCC Applications, except as set forth
on Schedule 4.5.1, neither Buyer nor any Affiliate of Buyer (a) owns, controls
or operates any television or radio station located in the Burlington DMA; (b)
has any direct or indirect interest, including, without limitation, any equity,
debt, security or any other financial interest, whether or not "attributable"
(as defined in the rules and regulations of the FCC), or management interest,
in (i) any television or radio station located in the Burlington DMA, or (ii)
any applicant seeking to construct or acquire, by assignment of license or
transfer of control, any such television or radio station (an "Applicant"); or
(c) is a party to any TBA with a television or radio station located in the
Burlington DMA, or with any Applicant. Buyer acknowledges and agrees that the
representations set forth in this Section 4.5.2 shall take into account and
include (a) the consummation of any proposed or pending acquisition (as of the
date hereof and through the later to occur of the HSR Filing and the filing of
the FCC Applications) of television or radio stations (including the
acquisition of the Stations) by Buyer or any Affiliate of Buyer or any
Applicant, and (b) any TBA or proposed or pending TBA (as of the date hereof
and through the later to occur of the HSR Filing and the filing of the FCC
Applications) to which Buyer or any Affiliate of Buyer is or may become a
party.
4.6. WARN ACT.
Buyer is not planning or contemplating, and has not made or taken, any
decisions or actions concerning the employees of the Stations after the Transfer
Date that would
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require the service of notice under the Worker Adjustment and Retraining Act of
1988, as amended.
4.7. NO OUTSIDE RELIANCE.
Buyer has not relied and is not relying on any statement,
representation or warranty not made in this Agreement, any Schedule
hereto or any certificate to be delivered to Buyer at the Non-License Transfer
or the Closing pursuant to this Agreement. Buyer is not relying on any
projections or other predictions contained or referred to in materials (other
than the Schedules) that have been or may hereafter be provided to Buyer or any
of its Affiliates, agents or representatives, and Sellers make no
representations or warranties with respect to any such projections or other
predictions.
4.8. INTERPRETATION OF CERTAIN PROVISIONS.
Buyer has not relied and is not relying on the specification of any
dollar amount in any representation or warranty made in this Agreement or any
Schedule hereto to indicate that such amounts, or higher or lower amounts, are
or are not material, and agrees not to assert in any dispute or controversy
between the parties hereto that specification of such amounts indicates or is
evidence as to whether or not any obligation, item or matter is or is not
material for purposes of this Agreement and the transactions contemplated
hereby.
ARTICLE 5.
PRE-CLOSING FILINGS
5.1. APPLICATIONS FOR FCC CONSENT.
Within five (5) business days following the execution of this
Agreement, Sellers and Buyer (or any permitted assignee of Buyer under Section
15.6.1) shall jointly file applications for the Stations with the FCC
requesting consent to the assignment of the FCC Licenses for the Stations from
Sellers to Buyer (the "FCC Applications"). Sellers and Buyer will diligently
take, or fully cooperate in the taking of, all necessary and proper steps, and
provide any additional information reasonably requested in order to obtain
promptly the requested consents and approvals of the FCC Applications by the
FCC.
5.2. XXXX-XXXXX-XXXXXX.
Within five (5) business days following the execution of this
Agreement, Sellers and Buyer shall complete any filing that may be required
pursuant to Xxxx-Xxxxx-Xxxxxx (each an "HSR Filing"). Sellers and Buyer shall
diligently take, or fully cooperate in the taking of, all necessary and proper
steps, and provide any additional information reasonably requested in order to
comply with, the requirements of Xxxx-Xxxxx-Xxxxxx.
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5.3. NON-REQUIRED ACTIONS.
Neither Buyer nor any Seller shall have any obligation to take any
steps pursuant to Section 5.1 or Section 5.2 which would be reasonably expected
to result in the incurrence of a material cost or other liability or which
would require the divestiture of any business or assets of any party hereto or
any Affiliate thereof.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLERS
Each Seller covenants and agrees with Buyer as follows:
6.1. NEGATIVE COVENANTS.
Pending and prior to the Non-License Transfer and the Closing, such
Seller will not, and will use its commercially reasonable efforts to enforce
such rights under the Heritage Agreement to cause the Heritage Subsidiaries not
to, without the prior written consent of Buyer (which consent will not be
unreasonably withheld, delayed or conditioned, except in the case of matters
referred to in Sections 6.1.6(b), 6.1.7, 6.1.9 and 6.1.11, with respect to
which Buyer's consent may be withheld in its sole and absolute discretion), do
or agree to do any of the following insofar as such actions (or failure to act)
relate to the Stations:
6.1.1. DISPOSITIONS; MERGERS.
Sell, assign, lease or otherwise transfer or dispose of any of the
Assets other than at substantially fair market value and in the Ordinary Course
of Business; or merge or consolidate with or into any other entity or enter into
any contracts or agreements relating thereto.
6.1.2. ACCOUNTING PRINCIPLES AND PRACTICES.
Change or modify any accounting principles or practices or any method
of applying such principles or practices.
6.1.3. TRADE-OUT AGREEMENTS.
Enter into or renew any Trade-out Agreement that would be binding on
Buyer after the Non-License Transfer Date or the Closing Date, except in the
Ordinary Course of Business and which requires the provision of broadcast time
having a value of less than (a) Twenty-Five Thousand Dollars ($25,000)
individually, and (b) together with existing Trade-out Agreements still in
effect as of the Non-License Transfer Date or the Closing Date, as the case may
be, Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate as of the
Non-License Transfer Date or the Closing Date, as the case may be.
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6.1.4. BROADCAST TIME SALES AGREEMENTS.
Enter into or renew any Time Sales Agreement except in the Ordinary
Course of Business and which are for cash at prevailing rates for a term not
exceeding twelve (12) months.
6.1.5. NETWORK AFFILIATION AGREEMENTS AND LMAS.
Except for the TBA Agreement, acquire or enter into or renew any LMA or
network affiliation agreement.
6.1.6. ADDITIONAL AGREEMENTS.
(a) Acquire or enter into any new Station Contracts not referred to in
Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend, amend, alter, modify or
otherwise change any existing Station Contract, except in the Ordinary Course
of Business (collectively, "Additional Agreements"); provided, however, such
Seller shall not, and shall use its commercially reasonably efforts to cause
each Seller Party not to, enter into (a) any Program Contract for any Station
which will be binding on Buyer after the Non-License Transfer Date or the
Closing Date, or (b) any other Station Contract requiring payments by a Seller
Party under each Station Contract in excess of Fifty Thousand Dollars
($50,000). For purposes of clause (a) above, each Seller acknowledges that it
shall not be unreasonable for Buyer to withhold its consent to approve of any
Program Contract where Buyer, acting in good faith, has reason to conclude that
it can acquire such programming on better terms.
(b) From and after the Sellers' acquisition of the Stations from the
Heritage Subsidiaries, Sellers shall not, without the prior written consent of
Buyer, acquire or enter into any new Station Contract or renew, extend, amend,
alter, modify or otherwise change any existing Station Contract, which in any
case requires payments by a Seller Party under any such Station Contract in
excess of Twenty-Five Thousand Dollars ($25,000).
6.1.7. BREACHES.
Do or omit to do any act which will cause a material breach of any
Station Contract.
6.1.8. EMPLOYEE MATTERS.
Enter into or become subject to any employment, labor, union, or
professional service contract not terminable at will, or any bonus, pension,
insurance, profit sharing, incentive, deferred compensation, severance pay,
retirement, hospitalization, employee benefit, or other similar plan; or
increase the compensation payable or to become payable to any employee, or pay
or arrange to pay any bonus payment to any employee, except in the Ordinary
Course of Business.
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6.1.9. ACTIONS AFFECTING FCC LICENSES.
Take any action which may jeopardize the validity or enforceability of
or rights under the FCC Licenses.
6.1.10. PROGRAMMING.
Program or broadcast any Program Contract or syndicated program, except
in the Ordinary Course of Business.
6.1.11. ENCUMBRANCES.
Create, assume or permit to exist any Encumbrances upon any of the
Assets except for Permitted Encumbrances and Encumbrances that will be
discharged prior to or on the Transfer Date.
6.1.12. TRANSACTIONS WITH AFFILIATES.
Enter into any transaction with any Affiliate of a Seller Party that
will be binding upon Buyer, the Assets or any Station on or after the
Non-License Transfer Date or the Closing Date, except for transactions not
otherwise prohibited by this Section 6.1 and transactions between and
among Stations operating in the same DMA in the Ordinary Course of Business, in
each case on arm's length terms.
6.2. AFFIRMATIVE COVENANTS.
Pending and prior to the Non-License Transfer and the Closing, each
Seller will, and will use its commercially reasonable efforts to enforce such
rights under the Heritage Agreement to cause the Heritage Subsidiaries to take
the following actions insofar as such actions relate to the Stations:
6.2.1. PRESERVE EXISTENCE.
Preserve its corporate existence and business organization intact,
maintain its existing franchises and licenses, use commercially
reasonable efforts to preserve for Buyer the relationships of the Stations with
suppliers, customers, employees and others with whom the Stations have business
relationships, and keep all of the Assets substantially in their present
condition, ordinary wear and tear excepted.
6.2.2. NORMAL OPERATIONS.
Subject to the terms and conditions of this Agreement (including,
without limitation, Section 6.1) and the TBA Agreement, (a) carry on the
businesses and activities of the Stations, including without limitation,
promotional activities, the sale of advertising time, entering into other
contracts and agreements, or purchasing and scheduling of programming, in the
Ordinary Course of Business; (b) pay or otherwise satisfy all obligations
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(cash and barter) of the Stations in the Ordinary Course of Business; provided,
however, each Seller shall cause to be brought current as of the Transfer Date
all payments that are due and payable under Program Contracts as originally
contracted; (c) maintain books of account, records, and files with respect to
the business and operations of the Stations in substantially the same manner as
heretofore; and (d) maintain the Assets in customary repair, maintenance and
condition, except to the extent of normal wear and tear, and repair or replace,
consistently with the Ordinary Course of Business, any Asset that may be
damaged or destroyed; notwithstanding the foregoing, Buyer acknowledges that no
Seller shall be obligated to spend any funds on capital expenditures after the
date hereof, except for the repair or replacement of Assets that may be damaged
or destroyed.
6.2.3. MAINTAIN FCC LICENSES.
Maintain the validity of the FCC Licenses, and comply in all material
respects with all requirements of the FCC Licenses and the rules and
regulations of the FCC.
6.2.4. NETWORK AFFILIATION.
Use commercially reasonable efforts to maintain in full force and
effect the present network affiliation agreements for the Stations (and any and
all modifications and renewals thereof).
6.2.5. STATION CONTRACTS.
Pay and perform obligations in the Ordinary Course of Business under
the Station Contracts and under any Additional Agreements that shall be entered
into pursuant to Section 6.1.6, in accordance with the respective terms and
conditions of such Station Contracts and in accordance with the TBA Agreement.
6.2.6. TAXES.
Pay or discharge all Taxes when due and payable.
6.2.7. ACCESS.
Subject to the cooperation of the Trustee and the Heritage
Subsidiaries, cause to be afforded to representatives of Buyer reasonable
access during normal business hours to offices, properties, assets, books and
records, contracts and reports of the Stations, as Buyer shall from time to
time reasonably request; provided, however, that (a) such investigation shall
only be upon reasonable notice and shall not unreasonably disrupt the personnel
or operations of any Seller Party or the Stations, and (b) under no
circumstances shall any Seller Party be required to provide access to Buyer or
any representative of Buyer (i) any information or materials subject to
confidentiality agreements with third parties required to be kept confidential
by applicable Laws, or (ii) any privileged attorney-client communications or
attorney work product. All requests for access to the offices, properties,
assets, books and records, contracts and reports of the Stations shall be made
to such representatives as Sellers
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shall designate in writing, who shall be solely responsible for coordinating
all such requests and all access permitted hereunder. Buyer acknowledges and
agrees that neither Buyer nor its representatives shall contact any of the
employees, customers, suppliers, partners, or other associates or Affiliates of
any Seller Party or the Stations, in connection with the transactions
contemplated hereby, whether in person or by telephone, mail or other means of
communication, without the specific prior written authorization of such
representatives of Sellers. Subject to and in accordance with the terms of
this Section 6.2.7, each Seller shall, and shall use its commercially
reasonable efforts to enforce such rights under the Heritage Agreement to cause
each other Seller Party to, cooperate in all reasonable respects with Buyer's
request to conduct an audit of any financial information of the Stations as
Buyer may reasonably determine is necessary to satisfy any public company
reporting requirements pursuant to the Securities Act of 1933 or the Securities
Exchange Act of 1934 including, without limitation, (a) using commercially
reasonable efforts to obtain the consent of auditors to permit Buyer, any
Affiliate of Buyer and their respective auditors to have access to such
auditors' work papers, and (b) consenting to such access by Buyer. Under no
circumstance shall the preparation of any financial statements pursuant to such
audit: (a) require any Seller Party to change or modify any accounting policy,
(b) cause any unreasonable disruption in the business or operations of any
Station, or (c) cause any delay that is more than de minimis in any internal
reporting requirements of any Seller Party. All costs and expenses incurred in
connection with the preparation of (and assimilation of relevant information
for) any such financial statements shall be paid by Buyer.
6.2.8. INSURANCE.
Maintain in full force and effect all of its existing casualty,
liability, and other insurance in amounts not less than those in effect on the
date hereof.
6.2.9. FINANCIAL STATEMENTS.
Prior to Sellers' acquisition of the Stations from the Heritage
Subsidiaries, provide Buyer with, to the extent received by Seller in
connection with the Heritage Agreement (a) unaudited monthly statements of
assets and liabilities relating to the business and operations of the Stations,
and monthly statements of revenues and expenses reflecting the results of
business and operations of the Stations for January 1998 and for each month
thereafter, within thirty (30) days after the end of each such month, and (b)
weekly sales pacing reports for the Stations and copies of any financial
statements. After Sellers' acquisition of the Stations from the Heritage
Subsidiaries and prior to the Transfer Date, provide Buyer with (a) unaudited
monthly statements of assets and liabilities relating to the business and
operations of the Stations, and monthly statements of revenues and expenses
reflecting the results of business and operations of the Stations for the month
following the month such financial statements were last provided and for each
month thereafter, within thirty (30) days after the end of each such month, and
(b) weekly sales pacing reports for the Stations and copies of any financial
statements.
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6.2.10. CONSENTS.
(a) Take all reasonable action required to obtain all consents,
approvals and agreements of any third parties necessary to authorize, approve
or permit the consummation of the transactions contemplated by this Agreement,
including, without limitation, any consent of the parties to the Station
Contracts designated as necessary in Schedule 3.4 in order to consummate the
transactions contemplated hereby (collectively, the "Restricted Contracts").
Notwithstanding anything to the contrary set forth in this Agreement or
otherwise, to the extent that the consent or approval of any third party is
required under any Restricted Contract, such Seller shall only be required to
use reasonable efforts (not involving the payment by such Seller of any money
to any party to any such Restricted Contract, except to the extent required by
Section 6.2.10(b)) to obtain such consents and approvals, and in the event that
such Seller fails to obtain any such consent or approval, Buyer shall have no
right to terminate this Agreement.
(b) Notwithstanding anything to the contrary in clause (a) above, each
Seller shall, and shall use its commercially reasonable efforts to enforce such
rights under the Heritage Agreement to cause a Heritage Subsidiary to retain
until such time as any required consents shall have been obtained by such
Seller, all rights to and under any Station Contract which requires the consent
of any other party thereto for assignment to Buyer if such consent has not been
obtained on the Closing Date (the "Deferred Contract"). Until the assignment
of the Deferred Contract, (i) each Seller shall continue to use all
commercially reasonable efforts and Buyer shall cooperate with Sellers to
obtain the consent and/or to remove any other impediments to such assignment,
and (ii) Sellers and Buyer agree to cooperate in any lawful arrangement to
provide (to the extent permitted without breach of such Deferred Contract) that
Buyer shall receive the benefits of such interest after the Closing Date to the
same extent as if it were the lessee thereunder; provided, however, if Buyer
shall fail to receive such benefits after the Closing Date for any Leased
Property that is a main transmitter tower site or a studio site for any Station
(the "Designated Properties"), Sellers agree to make such payments as are
necessary for Buyer to receive such benefits as long as the aggregate amount of
all such payments does not exceed Two Hundred Thousand Dollars ($200,000) for
all such Designated Properties under this Agreement. If, subsequent to the
Closing, any Seller shall obtain required consents to assign any Deferred
Contract, the Deferred Contract for which consent to assign has been obtained
shall at that time be deemed to be conveyed, granted, bargained, sold,
transferred, setover, assigned, released, delivered and confirmed to Buyer,
without need of further action by any Seller or of future documentation.
6.2.11. CORPORATE ACTION.
Take all corporate action (including, without limitation, all
shareholder action), under the Law of any state having jurisdiction over
such Seller necessary to effectuate the transactions contemplated by this
Agreement and the other Seller Documents.
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6.2.12. ENVIRONMENTAL AUDIT.
Subject to the cooperation of the Trustee, permit Buyer and Buyer's
agents, as soon as practical after the date hereof and upon Buyer's request
therefor, access to the Real Property and the Leased Property for the purpose
of conducting, at Buyer's expense, Phase I and Phase II environmental
audits. Any such environmental audits shall be conducted by a reputable
environmental investigatory firm of Buyer's choice subject to the reasonable
approval of Sellers and in a manner as will not unreasonably interfere with the
normal business and operations of any of the Stations.
6.2.13. HERITAGE AGREEMENT.
Consummate the acquisition of the Assets in accordance with all of the
provisions of the Heritage Agreement and use commercially reasonable efforts to
pursue in a timely manner any claims relating to the Stations that Sellers may
have under the Heritage Agreement.
6.3. CONFIDENTIALITY.
Each Seller shall, at all times, maintain strict confidentiality with
respect to all documents and information furnished to such Seller by or on
behalf of Buyer. Nothing shall be deemed to be confidential information that:
(a) is known to a Seller at the time of its disclosure to such Seller; (b)
becomes publicly known or available to a Seller other than through disclosure
by such Seller; (c) is received by a Seller from a third party not actually
known by such Seller to be bound by a confidentiality agreement with or
obligation to Buyer; or (d) is independently developed by a Seller.
Notwithstanding the foregoing provisions of this Section 6.3, each Seller may
disclose such confidential information (a) to the extent required or deemed
advisable to comply with applicable Laws; (b) to its officers, directors,
employees, representatives, financial advisors, attorneys, accountants, and
agents with respect to the transactions contemplated hereby (so long as such
parties agree to maintain the confidentiality of such information); (c) to the
Heritage Subsidiaries and the Trustee, as necessary, with respect to the
transactions contemplated hereby (so long as such parties agree to maintain the
confidentiality of such information); and (d) to any Governmental Authority in
connection with the transactions contemplated hereby. In the event this
Agreement is terminated, each Seller will return to Buyer all documents and
other material prepared or furnished by Buyer relating to the transactions
contemplated hereunder, whether obtained before or after the execution of this
Agreement.
6.4. HERITAGE ACQUISITION.
Upon receipt of a written notice by Sellers from Buyer that the Buyer
is prepared to proceed with the Non-License Transfer hereunder simultaneously
with (or immediately following) the acquisition of the Stations from the
Heritage Subsidiaries, Sellers agree to acquire the Stations from the Heritage
Subsidiaries as promptly as possible to the extent permitted under the Heritage
Agreement. Notwithstanding the foregoing, nothing in the
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preceding sentence shall constitute a waiver by Buyer of any conditions
precedent to Buyer's obligation to proceed with the Non-License Transfer.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Sellers as follows:
7.1. CONFIDENTIALITY.
Buyer shall, at all times prior to the Non-License Transfer and the
Closing, maintain strict confidentiality with respect to all documents and
information furnished to Buyer by or on behalf of a Seller. Nothing shall be
deemed to be confidential information that: (a) is known to Buyer at the time
of its disclosure to Buyer; (b) becomes publicly known or available other than
through disclosure by Buyer; (c) is received by Buyer from a third party not
actually known by Buyer to be bound by a confidentiality agreement with or
obligation to a Seller; or (d) is independently developed by Buyer.
Notwithstanding the foregoing provisions of this Section 7.1, Buyer may
disclose such confidential information (a) to the extent required or deemed
advisable to comply with applicable Laws; (b) to its officers, directors,
partners, employees, representatives, financial advisors, attorneys,
accountants, agents, underwriters, lenders, investors and any other potential
sources of financing with respect to the transactions contemplated hereby (so
long as such parties agree to maintain the confidentiality of such
information); and (c) to any Governmental Authority in connection with the
transactions contemplated hereby. In the event this Agreement is terminated,
Buyer will return to Sellers all documents and other material prepared or
furnished by Sellers relating to the transactions contemplated by this
Agreement, whether obtained before or after the execution of this Agreement.
7.2. CORPORATE ACTION.
Prior to the Non-License Transfer and the Closing, Buyer shall take all
corporate action (including, without limitation, all shareholder action), under
the Laws of any state having jurisdiction over Buyer necessary to effectuate
the transactions contemplated by this Agreement and the other Buyer Documents.
7.3. ACCESS.
From and after the Transfer Date for a period of three (3) years, Buyer
shall cause to be afforded to representatives of Sellers and the Heritage
Subsidiaries reasonable access during normal business hours to the offices,
books and records, contracts and reports of the Stations which relate to the
operations of the Stations during the period during which the Stations were
owned by the Sellers or the Heritage Subsidiaries, as Sellers or the Heritage
Subsidiaries shall from time to time reasonably request; provided, however,
that (a) such
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investigation shall only be upon reasonable notice and shall not unreasonably
disrupt the personnel or operations of Buyer or the Stations, and (b) under no
circumstances shall Buyer be required to provide access to any Seller, any
Heritage Subsidiary or any representatives of any Seller or any Heritage
Subsidiary (i) any information or materials subject to confidentiality
agreements with third parties required to be kept confidential by applicable
Laws, or (ii) any privileged attorney-client communications or attorney work
product. All requests for access to the offices, books and records, contracts
and reports of the Stations shall be made to such representatives as Buyer
shall designate in writing, who shall be solely responsible for coordinating
all such requests and all access permitted hereunder. Buyer agrees not to
dispose of any such books and records, contracts and reports of the Stations
which relate to the operations of the Stations during the period during which
the Stations were owned by Sellers or the Heritage Subsidiaries without
consulting with Sellers prior to disposal thereof and taking any reasonable
action requested by Sellers with respect to retention and transfer to Sellers
thereof.
7.4. COLLECTION OF RECEIVABLES.
At the earlier of the Non-License Transfer or the Closing, Sellers
shall assign the Accounts Receivable to Buyer for collection purposes only,
and, within ten (10) business days after the Transfer Date, Seller shall
furnish to Buyer a list of the Accounts Receivable by accounts and the amounts
then owing. Buyer agrees, for a period of one hundred fifty (150) days
following the Transfer Date, without any requirement to litigate to collect the
Accounts Receivable, to use its reasonable efforts (with at least the care and
diligence Buyer uses to collect its own accounts receivable) to collect for
Sellers the Accounts Receivable and to remit to Sellers (or their designees) on
the fifth day following the last day of each month occurring during such one
hundred fifty (150) day period (or, if any such day is a Saturday, Sunday or
holiday, on the next day on which banking transactions are resumed),
collections received by Buyer with respect to the Accounts Receivable. Buyer
shall not make any referral or compromise of any Accounts Receivable to a
collection agency or attorney for collection and shall not compromise for less
than full value any Account Receivable without the prior written consent of
Sellers. Any Account Receivable not collected by Buyer within one hundred
fifty (150) days following the Closing Date shall revert to Sellers (or their
designees). Buyer shall reassign, without recourse to Buyer, each Account
Receivable and deliver to Sellers, all records relating thereto on the same day
as it remits to Sellers (or their designees) the collections received. All
payments in respect of the Accounts Receivable received during the one hundred
fifty (150) day period shall be first applied to the oldest balance then due on
the Accounts Receivable unless the account debtor indicates in writing that
payment is to be applied otherwise due to a dispute over an Account Receivable.
Buyer agrees, upon the reasonable request of Sellers, to furnish to Sellers
periodic reports on the status of its Accounts Receivable. Buyer shall have no
right to set-off any amounts collected for Accounts Receivable for any amounts
owed to Buyer by Sellers; provided, however, that Buyer shall have the right to
seek indemnification in accordance with the terms and conditions of this
Agreement.
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ARTICLE 8.
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLERS AND BUYER
8.1. POSSESSION AND CONTROL.
Between the date hereof and the Closing Date, Buyer shall not directly
or indirectly control, supervise or direct, or attempt to control, supervise or
direct, the business and operations of the Stations, and such operation,
including complete control and supervision of all programming, shall be the
sole responsibility of the owners of the Stations, except as contemplated by
the LMA Agreement after the Non-License Transfer. On and after the Closing
Date, Sellers shall have no control over, or right to intervene, supervise,
direct or participate in, the business and operations of the Stations.
8.2. RISK OF LOSS.
The risk of loss or damage by fire or other casualty or cause to the
Assets until the Transfer Date shall be upon Sellers. Except as otherwise
provided in Section 9.3, in the event of loss or damage prior to the Transfer
Date with respect to which Sellers have adequate replacement cost insurance and
which has not been restored, replaced, or repaired as of the Transfer Date,
Buyer shall proceed with the Non-License Transfer or the Closing, as
applicable, and receive at the Non-License Transfer or the Closing, as
applicable, the insurance proceeds or an assignment of the right to receive
such insurance proceeds, as applicable, to which Sellers otherwise would be
entitled, whereupon Sellers shall have no further liability to Buyer for such
loss or damage.
8.3. PUBLIC ANNOUNCEMENTS.
Sellers and Buyer shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or the transactions contemplated herein and shall not issue any such
press release or make any such public statement without the prior written
consent of the other parties hereto, which shall not be unreasonably withheld;
provided, however, that a party may, without consulting with the other parties,
issue such press release or make such public statement as may be required by
Law or any listing agreement with a national securities exchange to which STC
or Xxxxxxxx is a party if it has used all reasonable efforts to consult with
the other party and to obtain such party's consent but has been unable to do so
in a timely manner.
8.4. EMPLOYEE MATTERS.
8.4.1. Upon the earlier of the Non-License Transfer or the
Closing, Buyer shall offer employment to each of the employees of the Stations
(including those on leave of absence, whether short-term, long-term, family,
maternity, disability, paid, unpaid or other), at a comparable salary, position
and place of employment as held by each such employee
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immediately prior to the Transfer Date (such employees who are given such
offers of employment and accept such offers are referred to herein as the
"Transferred Employees"); provided, however, that the two (2) employees of the
Stations designated in the TBA Agreement shall continue as employees of Sellers
and shall not become Transferred Employees hereunder until the Closing.
Nothing in this Section 8.4.1 is intended to guarantee employment for any
Transferred Employee for any length of time after the Transfer Date.
8.4.2. Except as provided otherwise in this Section 8.4,
Sellers shall pay, discharge and be responsible for (a) all salary and wages
arising out of or relating to the employment of the employees of the Stations
prior to the Transfer Date and (b) any employee benefits arising under the
Benefit Plans of any Seller Party, any Heritage Subsidiary and their Affiliates
during the period prior to the Transfer Date. From and after the Transfer
Date, Buyer shall pay, discharge and be responsible for all salary, wages and
benefits arising out of or relating to the employment of the Transferred
Employees by Buyer on and after the Transfer Date. Buyer shall be responsible
for all severance Liabilities, and all COBRA Liabilities for any Transferred
Employees of the Stations terminated by Buyer on or after the Transfer Date,
including, without limitation all Liabilities under the retention and severance
agreements set forth on Schedule 8.4.8 (subject to the reimbursement
obligations of Sellers set forth in Section 8.4.8).
8.4.3. Buyer shall cause all Transferred Employees as of the
Transfer Date to be eligible to participate in its "employee welfare benefit
plans" and "employee pension benefit plans" (as defined in Section 3(1) and
3(2) of ERISA, respectively) of Buyer in which similarly situated employees of
Buyer are generally eligible to participate; provided, however, that all
Transferred Employees and their spouses and dependents shall be eligible for
coverage immediately after the Transfer Date (and shall not be excluded from
coverage on account of any pre-existing condition) to the extent provided under
such plans with respect to Transferred Employees.
8.4.4. For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service in any such plan for which a Transferred Employee may be eligible after
the Transfer Date, Buyer shall ensure that, to the extent permitted by law,
service by such Transferred Employee with any Seller, any Heritage Subsidiary
or any Affiliate of Sellers or the Heritage Subsidiaries shall be deemed to
have been service with Buyer. In addition, Buyer shall ensure that each
Transferred Employee receives credit under any welfare benefit plan of Buyer
for any deductibles or co-payments paid by such Transferred Employee and his or
her dependents for the current plan year under a plan maintained by any Seller,
any Heritage Subsidiary or any Affiliate of Sellers or the Heritage
Subsidiaries. Buyer shall grant credit to each Transferred Employee for all
sick leave in accordance with the policies of Buyer applicable generally to its
employees after giving effect to service for any Seller or any Heritage
Subsidiary as service for Buyer. To the extent taken into account in
determining the Final Proration Amount, Buyer shall assume and discharge
Liabilities of Sellers for the payment of all unused vacation leave accrued by
Transferred Employees as of the Transfer Date. To the extent any claim with
respect to such accrued vacation leave is lodged against Sellers, with respect
to any Transferred Employee, Buyer shall indemnify, defend and
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hold harmless Sellers from and against any and all losses, directly or
indirectly, as a result of, or based upon or arising from the same.
8.4.5. As soon as practicable following the Transfer Date,
Buyer shall establish and maintain a defined contribution plan or plans (which
may be a preexisting plan or plans (the "Buyer's Plan") intended to be
qualified under Section 401(a) and 401(k) of the Code for the benefit of the
Transferred Employees. Effective as of the Transfer Date, Sellers shall, and
shall use their commercially reasonable efforts to enforce such rights under
the Heritage Agreement to cause the Heritage Subsidiaries to, cause appropriate
amendments to be made to all retirement savings plans to which any Transferred
Employees participate (the "Sellers' Plan") to provide that the Transferred
Employees shall be fully vested in their accounts under the Sellers' Plan. As
soon as practicable after the Transfer Date, Buyer shall take all necessary
action to qualify the Buyer's Plan under the applicable provisions of the Code
(including but not limited to Section 401), if it is not yet so qualified, and
Buyer and Sellers shall make any and all filings and submissions to the
appropriate governmental agencies required to be made by them in connection
with the transfer of assets described hereafter. As soon as practicable
following the earlier of the receipt of a favorable determination letter from
the Internal Revenue Service regarding the qualified status of both the
Sellers' Plan and the Buyer's Plan (each as amended to the date of transfer) or
sooner, if Sellers and Buyer so agree, Sellers shall, and shall use their
commercially reasonable efforts to enforce such rights under the Heritage
Agreement to, cause the Heritage Subsidiaries to cause to be transferred to the
Buyer's Plan, in cash and in kind, all of the individual account balances of
Transferred Employees under the Sellers' Plan, including any outstanding plan
participant loan receivables allocated to such accounts.
8.4.6. Buyer acknowledges and agrees that Buyer's obligations
pursuant to this Section 8.4 are in addition to, and not in limitation of,
Buyer's obligation to assume the employment contracts set forth on Schedule
2.1.8.
8.4.7. Except as otherwise provided in this Section 8.4 or in
any employment, severance or retention agreements of any Transferred Employees,
all Transferred Employees shall be at-will employees, and Buyer may terminate
their employment or change their terms of employment at will. No employee (or
beneficiary of any employee) of the Stations may xxx to enforce the terms of
this Agreement, including specifically this Section 8.4, and no employee or
beneficiary shall be treated as a third party beneficiary of this Agreement.
Except to the extent provided for herein, Buyer may cover the Transferred
Employees under existing or new benefit plans, programs, and arrangements, and
may amend or terminate any such plans, programs, or arrangements at any time.
8.4.8. To the extent that Sellers receive any severance
payments from the Heritage Subsidiaries in connection with the termination of
employment by Sellers or Buyer of a general manager for the Stations in
accordance with the terms of the Heritage Agreement, Sellers shall pay any such
amounts received from the Heritage Subsidiaries to Buyer within five (5) days
of receipt.
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8.5. DISCLOSURE SCHEDULES.
Prior to Sellers' acquisition of the Stations from the Heritage
Subsidiaries, Sellers shall have the right from time to time to update or
correct Schedules 2.1.5, 2.1.6, 2.1.9, 2.1.10, 3.4 and 3.17 attached hereto
solely to reflect actions by Sellers or the Heritage Subsidiaries after the
date hereof which are not prohibited by Section 6.1 of the Heritage Agreement
or this Agreement. From and after Sellers' acquisition of the Stations from
the Heritage Subsidiaries and prior to the Transfer Date, Sellers shall have
the obligation to update or correct Schedules 2.1.5, 2.1.6, 2.1.9, 2.1.10, 3.4
and 3.17 attached hereto solely to reflect actions by Sellers which are not
prohibited by Section 6.1 hereof. The inclusion of any fact or item on a
Schedule referenced by a particular section in this Agreement shall, should the
existence of the fact or item or its contents, be relevant to any other
section, be deemed to be disclosed with respect to such other section whether
or not an explicit cross-reference appears in the Schedules.
8.6. BULK SALES LAWS.
Buyer hereby waives compliance by Sellers, in connection with the
transactions contemplated hereby, with the provisions of any applicable bulk
transfer laws.
8.7. TAX MATTERS.
Each party hereto represents, warrants, covenants and agrees that for
tax purposes the sale of Assets (except for the License Assets) is not
effective until the Transfer Date, and the sale of the License Assets is not
effective until the Closing Date. Seller and Buyer agree that all Tax returns
and reports shall be filed consistent with the sale of Assets taking place as
aforesaid.
8.8. PRESERVATION OF BOOKS AND RECORDS.
For a period of three (3) years after the Closing Date, Sellers agree
not to dispose of, and agree to provide Buyer reasonable access to, any
material books or records in possession of Sellers immediately after the
Transfer Date that relate to the business or operations of the Stations prior
to the Transfer Date.
8.9. TBA AGREEMENT.
At the Non-License Transfer pursuant to Section 11.2, Buyer and Sellers
shall enter into a time brokerage agreement for the Stations substantially in
the form of Exhibit E hereto (the "TBA Agreement").
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ARTICLE 9.
CONDITIONS PRECEDENT TO
OBLIGATIONS OF BUYER
The obligations of Buyer to purchase the Assets and to consummate the
Non-License Transfer or proceed with the Closing, as applicable, are subject to
the satisfaction (or waiver in writing by Buyer) at or prior to the Non-License
Transfer or the Closing, as applicable, of each of the following conditions:
9.1. CLOSING UNDER THE HERITAGE AGREEMENT.
Sellers shall have acquired the Assets pursuant to the terms of the
Heritage Agreement.
9.2. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Sellers made in this Agreement
shall be true and correct on and as of the Non-License Transfer Date or the
Closing Date, as applicable, with the same effect as though such
representations and warranties had been made on and as of the Non-License
Transfer Date or the Closing Date, as applicable (except as modified by the
Schedules updated after the date hereof in accordance with Section 8.5 and
except for representations and warranties that speak as of a specific date or
time other than the Non-License Transfer Date or the Closing Date, as
applicable (which need only be true and correct in all material respects as of
such date or time)), and the covenants and agreements of Sellers required to be
performed on or before the Non-License Transfer Date or the Closing Date, as
applicable, in accordance with the terms of this Agreement shall have been
performed in all respects, except to the extent that the failure of such
representations and warranties to be true and correct and the failure to
perform such covenants shall not have, when considered together, had a material
adverse effect on any material FCC Licenses or on the broadcast transmissions
of any Station (a "Transmission Defect"); provided, however, if a Transmission
Defect exists as of the Non-License Transfer Date or the Closing Date, as
applicable, then either or both of Sellers and Buyer shall be entitled, by
written notice to the other, to postpone the Non-License Transfer Date or the
Closing Date, as applicable, for a period of up to sixty (60) days to resume
such Station's broadcast transmission.
9.3. NO TRANSMISSION DEFECTS.
There shall not exist any loss or damage at any of the Stations which
has resulted in the regular broadcast transmission of such Station (including
its effective radiated power) to be diminished in any material respect;
provided, that if any such loss or damage does exist, then either or both of
Sellers and Buyer shall be entitled, by written notice to the other, to
postpone the Non-License Transfer Date or the Closing Date, as applicable, for
a period of up to sixty (60) days to resume such Station's broadcast
transmission.
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9.4. DELIVERY OF DOCUMENTS.
Sellers shall have delivered to Buyer all contracts, agreements,
instruments and documents required to be delivered by Sellers to Buyer pursuant
to Section 11.4.
9.5. FCC ORDER.
The FCC Order shall have been issued with respect to each Station;
provided, however, that there shall be no requirement that the FCC Order shall
have been issued as of the Non-License Transfer Date.
9.6. XXXX-XXXXX-XXXXXX.
All applicable waiting periods under Xxxx-Xxxxx-Xxxxxx shall have
expired or terminated.
9.7. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any court
or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement.
ARTICLE 10.
CONDITIONS PRECEDENT TO
OBLIGATION OF SELLERS
The obligations of Sellers to sell, transfer, convey and deliver the
Assets and to consummate the Non-License Transfer or to proceed with the
Closing, as applicable, are subject to the satisfaction (or waiver in writing
by Sellers) at or prior to the Non-License Transfer or the Closing, as
applicable, of each of the following conditions:
10.1. CLOSING UNDER THE HERITAGE AGREEMENT.
Sellers shall have acquired the Assets pursuant to the terms of the
Heritage Agreement.
10.2. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Buyer made in this Agreement
shall be true and correct in all material respects on and as of the Non-License
Transfer Date or the Closing Date, as applicable, with the same effect as
though such representations and warranties had been made on and as of the
Non-License Transfer Date or the Closing Date, as applicable, (except for
representations and warranties that speak as of a specific date or time other
than the
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Non-License Transfer Date or the Closing Date, as applicable, (which need only
be true and correct in all material respects as of such date or time)), and the
covenants and agreements of Buyer required to be performed on or before the
Non- License Transfer Date or the Closing Date, as applicable, in accordance
with the terms of this Agreement shall have been performed in all material
respects.
10.3. DELIVERY BY BUYER.
Buyer shall have delivered to Sellers the Purchase Price in accordance
with Section 2.5 and all contracts, agreements, instruments and documents
required to be delivered by Buyer to Seller pursuant to Section 11.5.
10.4. FCC ORDER.
The FCC Order shall have been issued with respect to each Station;
provided, however, that there shall be no requirement that the FCC Order shall
have been issued as of the Non-License Transfer Date.
10.5. XXXX-XXXXX-XXXXXX.
All applicable waiting periods under Xxxx-Xxxxx-Xxxxxx shall have
expired or terminated.
10.6. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any court
or Governmental Authority of competent jurisdiction shall be in effect that
restrains or prohibits the transactions contemplated by this Agreement.
ARTICLE 11.
CLOSING; NON-LICENSE TRANSFER
11.1. CLOSING.
11.1.1. To the extent not previously transferred pursuant to
the Non-License Transfer, the closing for all of the Assets hereunder (the
"Closing") shall be held on a date specified by Buyer that is within ten (10)
days after the later of (a) the date on which all applicable waiting periods
under Xxxx-Xxxxx-Xxxxxx shall have expired or terminated, or (b) the date on
which all of the FCC Orders for all Stations shall have been issued (the date
on which the Closing shall occur pursuant to this Section 11.1 is referred to
herein as the "Closing Date").
11.1.2. If the Closing shall not have occurred on or prior to
such date which is two (2) years after the date of this Agreement due to the
failure to receive an FCC Order for
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reasons relating solely to Buyer's qualifications, Buyer shall designate a
successor licensee and the parties will cooperate to secure the necessary
governmental approvals to cause the designated successor to become the
licensee. If the Closing shall not have occurred on or prior to such date
which is four (4) years after the date of this Agreement due to the failure to
receive an FCC Order for reasons relating solely to any Seller, Sellers shall
jointly and severally indemnify, defend and hold Buyer harmless from and
against any and all actual Losses incurred by Buyer as a result of the FCC's
failure to issue such FCC Order by such date for such reasons. All proceeds
received from a transfer of the License Assets to any such successor licensee
shall be for Buyer; provided, however, to the extent Buyer has not incurred any
Losses for which the Sellers have indemnified Buyer pursuant to the preceding
sentence, Sellers shall receive the amount of TWO MILLION DOLLARS ($2,000,000)
which would otherwise have been payable to Sellers at Closing pursuant to
Section 2.5.2.
11.1.3. If the Closing shall not have occurred on or prior to
such date which is four (4) years after the date of this Agreement, Sellers and
Buyer acknowledge and agree to cooperate and use commercially reasonable
efforts to consummate the sale to a third party of both the License Assets and
the Non-License Assets in an orderly and mutually satisfactory manner (the
"Third Party Sale"). At the closing of the Third Party Sale pursuant to this
Section 11.1.3, (a) up to Two Million Dollars ($2,000,000) of the proceeds
therefrom shall be paid directly to Sellers by wire transfer of immediately
available funds to an account identified by Sellers in writing, and (b) any
proceeds therefrom in excess of the Two Million Dollars ($2,000,000), if any,
shall be paid directly to Buyer by wire transfer of immediately available funds
to an account identified by Buyer writing.
11.2. NON-LICENSE TRANSFER.
11.2.1. Notwithstanding anything to the contrary herein,
provided that the conditions set forth in Article 9 (except for Section 9.5)
and Article 10 (except for Section 10.4) shall have been satisfied and the
Closing shall not have occurred, there shall be a closing (the "Non-License
Transfer") for the purchase and sale of all of the Assets, other than the
License Assets, upon the earlier to occur of (a) such date which is
seventy-five (75) days after the date of this Agreement (the "Outside Date"),
or (b) any date prior to the Outside Date specified by Buyer in writing at
least five (5) days prior to such date (the date on which the Non-License
Transfer shall occur pursuant to this Section 11.2.1 is referred to herein as
the "Non-License Transfer Date"). The parties acknowledge and agree that if
the conditions set forth in Article 9 (except for Section 9.5) and Article 10
(except for Section 10.4) are not satisfied as of the Outside Date, the Outside
Date shall be such date which is ten (10) days after satisfaction of all such
conditions (subject to rights of Sellers and Buyer to terminate this Agreement
prior to such date in accordance with Article 13).
11.2.2. At the Non-License Transfer, Sellers shall sell,
assign, transfer, convey and deliver to Buyer free and clear of any
Encumbrances other than Permitted Encumbrances, and Buyer shall purchase,
acquire, pay for and accept from Sellers, all right, title and interest of
Sellers in, to and under the Assets, other than the License Assets.
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11.3. TIME AND PLACE OF NON-LICENSE TRANSFER AND CLOSING.
The Closing and the Non-License Transfer shall be held at 10:00 A.M.
local time on the Closing Date and the Non-License Transfer Date,
respectively, at the offices of Xxxxx & Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx,
Xxxxx 0000, XxXxxx, Xxxxxxxx, or at such other time and place as the parties
may agree.
11.4. DELIVERIES BY SELLERS.
At the Non-License Transfer and the Closing, as applicable, Sellers
shall deliver to Buyer the following:
11.4.1. AGREEMENTS AND INSTRUMENTS.
The following bills of sale, assignments and other instruments of
transfer duly executed by Sellers:
(a) a Xxxx of Sale;
(b) an Assignment of FCC Licenses; provided that the
Assignment of Licenses shall not be delivered at a
Non-License Transfer;
(c) an Assignment of Contracts and Leases;
(d) an Assumption Agreement;
(e) certificates of title with respect to the motor
vehicles listed on Schedule 2.1.9 or if any such
motor vehicles are leased by a Seller, an
assignment of such lease;
(f) special or limited warranty deeds for all Real
Property in the form appropriate to the
jurisdictions in which such Real Property is
located; and
(g) the TBA Agreement.
11.4.2. CONSENTS.
Copies of all consents Sellers have been able to obtain to effect the
assignment to Buyer of the Station Contracts listed on Schedule 3.4.
11.4.3. CERTIFIED RESOLUTIONS.
A copy of the approval of the board of directors and the stockholders
of each Seller, certified as being correct and complete and then in full force
and effect, authorizing the execution, delivery and performance of this
Agreement, and of the other Seller Documents, and the consummation of the
transactions contemplated hereby and thereby.
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11.4.4. OFFICERS' CERTIFICATES.
(a) A certificate of each Seller certifying the matters set forth in
Section 9.2; and
(b) A certificate of each Seller as to the incumbency of the
representatives of such Seller executing this Agreement or any of the other
Seller Documents on behalf of such Seller, and true and correct copies of the
organizational documents of each Seller.
11.4.5. GOOD STANDING CERTIFICATES.
To the extent available from the applicable jurisdictions, certificates
as to the formation and/or good standing of each Seller issued by the
appropriate governmental authorities in the states of organization and each
jurisdiction in which such Seller is qualified to do business, each such
certificate (if available) to be dated a date not more than a reasonable number
of days prior to the Transfer Date.
11.5. DELIVERIES BY BUYER.
At the Non-License Transfer and the Closing, Buyer shall deliver to
Sellers the following:
11.5.1. PURCHASE PRICE PAYMENT.
The Purchase Price in the amount and manner set forth in Section 2.5.
11.5.2. AGREEMENTS AND INSTRUMENTS.
The Assumption Agreement and other instruments of transfer duly
executed by Buyer.
11.5.3. CERTIFIED RESOLUTIONS.
Copies of the resolutions of the board of directors and stockholder of
Buyer, certified as being correct and complete and then in full force and
effect, authorizing the execution, delivery and performance of this Agreement
and of the other Buyer Documents, and the consummation of the transactions
contemplated hereby and thereby.
11.5.4. OFFICERS' CERTIFICATE.
(a) A certificate of Buyer signed by an officer of Buyer certifying the
matters set forth in Section 10.2; and
(b) A certificate signed by the Secretary of Buyer as to the incumbency
of the officers of Buyer executing this Agreement or any of the other Buyer
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Documents on behalf of Buyer, and true and correct copies of the organizational
documents of Buyer.
ARTICLE 12.
SURVIVAL; INDEMNIFICATION
12.1. SURVIVAL OF REPRESENTATIONS.
12.1.1. Unless otherwise set forth herein (including, without
limitation, Section 12.1.2), all representations and warranties, covenants and
agreements of Sellers and Buyer contained in or made pursuant to this Agreement
or in any certificate furnished pursuant hereto shall survive the Non-License
Transfer Date or the Closing Date, as applicable, and shall remain in full
force and effect to the following extent: (a) representations and warranties
with respect to the Non-License Assets shall survive for a period of twelve
(12) months after the Non-License Transfer Date, (b) representations and
warranties with respect to the License Assets shall survive for a period of
twelve (12) months after the Closing Date, (c) the covenants and agreements
with respect to the Non-License Assets which by their terms survive the
Non-License Transfer Date shall continue in full force and effect until fully
discharged (but not beyond the expiration of twelve (12) months after the
Non-License Transfer Date), (d) the covenants and agreements with respect to
the License Assets which by their terms survive the Closing Date shall continue
in full force and effect until fully discharged (but not beyond the expiration
of twelve (12) months after the Closing Date), and (e) any representation,
warranty, covenant or agreement that is the subject of a claim which is
asserted in a reasonably detailed writing prior to the expiration of the
survival period set forth in this Section 12.1.1, shall survive with respect to
such claim or dispute until the final resolution thereof.
12.1.2. No claim for indemnification may be made pursuant to
this Article 12 after the survival period set forth in this Section 12.1.
12.2. INDEMNIFICATION BY SELLERS.
Subject to the conditions and provisions of Section 12.4 and Section
12.5, from and after the Transfer Date, Sellers jointly and severally agree to
indemnify, defend and hold harmless Buyer from and against and in any respect
of, on a net after-tax basis, any and all Losses, asserted against, resulting
to, imposed upon or incurred by Buyer, directly or indirectly, by reason of or
resulting from: (a) any failure by Sellers to pay, perform or discharge any
Liabilities not assumed by Buyer pursuant hereto; (b) the business or
operations of the Stations during the period prior to the Transfer Date (except
to the extent Buyer has assumed the Liability for any such Losses pursuant
hereto); (c) any misrepresentation or breach of the representations and
warranties of any Seller contained in or made pursuant to this Agreement or any
other Seller Document; (d) any breach by Sellers of any covenants of Sellers
contained in or made pursuant to this Agreement or any other Seller Document;
or (e) the failure of any Seller to comply with the provisions of any
applicable bulk transfer law.
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12.3. INDEMNIFICATION BY BUYER.
Subject to the conditions and provisions of Section 12.4 and Section
12.5, from and after the Transfer Date, Buyer hereby agrees to indemnify,
defend and hold harmless Sellers from, against and with respect of, on a net
after-tax basis, any and all Losses, asserted against, resulting to, imposed
upon or incurred by Sellers, directly or indirectly, by reason of or resulting
from: (a) any failure by Buyer to pay, perform or discharge any Liabilities
assumed by Buyer pursuant hereto; (b) the business or operations of the
Stations during the period from and after the Transfer Date; (c) any
misrepresentation or breach of the representations and warranties of Buyer
contained in or made pursuant to this Agreement or any other Buyer Document; or
(d) any breach by Buyer of any covenants of Buyer contained in or made pursuant
to this Agreement or any other Buyer Document.
12.4. LIMITATIONS ON INDEMNIFICATION.
12.4.1. Notwithstanding any other provision of this Agreement
to the contrary, in no event shall Losses include a party's incidental,
consequential or punitive damages, regardless of the theory of recovery. Each
party hereto agrees to use reasonable efforts to mitigate any losses which form
the basis for any claim for indemnification hereunder.
12.4.2. Notwithstanding any other provision of this Agreement
to the contrary, Sellers shall not be liable to Buyer in respect of any
indemnification hereunder except to the extent that the aggregate amount of
Losses of Buyer under this Agreement exceeds Five Hundred Thousand Dollars
($500,000) (the "Basket Amount"), and then only to the extent of the excess
over the amount of Two Hundred Fifty Thousand Dollars ($250,000); provided,
however, that the aggregate amount of Losses of Buyer under this Agreement
shall not exceed Four Million Dollars ($4,000,000) (the "Indemnity Cap");
further provided, however, the Basket Amount shall not be applicable to any
amounts owed in connection with the determination of the Proration Amount
pursuant to Section 2.6, to the payment or reimbursement obligations of Sellers
under Sections 8.2 and 8.4.8, or to the indemnities set forth in Section
12.2(a) or Section 12.2(b); further provided, however, the Indemnity Cap shall
not be applicable (i) if the transfer of the License Assets to Buyer has not
occurred on or prior to such date which is four (4) years from the date of this
Agreement as a result of a default under, or breach of, any of the terms of
this Agreement by Sellers, (ii) if the Closing has not occurred on or prior to
such date which is four (4) years from the date of this Agreement under the
circumstances described in the second sentence of Section 11.1.2, or (iii) in
the event of fraud.
12.4.3. Notwithstanding any other provision of this Agreement
to the contrary, Buyer acknowledges and agrees that the maximum aggregate
liability of Sellers pursuant to this Agreement to Buyer and any third parties
for any and all Losses shall not exceed the Indemnity Cap, regardless of whether
Buyer seeks indemnification pursuant to this Article 12, regardless of the form
of action, whether in contract or tort, including negligence, and regardless of
whether or not Sellers are notified of the possibility of damages to Buyer or
any other third party; provided, however, the Indemnity Cap shall not be
applicable if the transfer of
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the License Assets to Buyer has not occurred on or prior to such date which is
four (4) years from the date of this Agreement as a result of a default under,
or breach of, any of the terms of this Agreement by Sellers, (ii) if the
Closing has not occurred on or prior to such date which is four (4) years from
the date of this Agreement under the circumstances described in the second
sentence of Section 11.1.2, or (iii) in the event of fraud.
12.4.4. Each party (a "recipient party") shall notify the
other party in writing (the "representing party") reasonably promptly of any
perceived breach by the representing party of which the recipient party has
knowledge of any representations, warranties, covenants and agreements, and of
any Losses (including a brief description of the same) of the recipient party
caused thereby. In the event of any breach that is cured prior to the Transfer
Date in accordance with the terms of this Agreement, the representing party
shall have no obligation under Section 12.2 or Section 12.3 or otherwise to
indemnify the recipient party with respect to such Losses.
12.5. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of Sellers and of Buyer hereunder with
respect to their respective indemnities pursuant to this Article 12, resulting
from any Losses, shall be subject to the following terms and conditions:
12.5.1. The party seeking indemnification (the "Indemnified
Party") must give the other party or parties, as the case may be (the
"Indemnifying Party"), notice of any such Losses promptly after the Indemnified
Party receives notice thereof; provided that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual damage by reason
of such failure.
12.5.2. The Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
of such Losses at the Indemnifying Party's risk and expense.
12.5.3. In the event that the Indemnifying Party shall elect
not to undertake such defense, or, within a reasonable time after notice from
the Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof). In such event, the
Indemnifying Party shall pay to the Indemnified Party, in addition to the other
sums required to be paid hereunder, the costs and expenses incurred by the
Indemnified Party in connection with such defense, compromise or settlement as
and when such costs and expenses are so incurred.
12.5.4. Anything in this Section 12.5 to the contrary
notwithstanding, (a) if there is a reasonable possibility that Losses may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party
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shall have the right, at its own cost and expense, to participate in the
defense, compromise or settlement of the Losses, (b) the Indemnifying Party
shall not, without the Indemnified Party's written consent, settle or
compromise any Losses or consent to entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect
of such Losses in form and substance satisfactory to the Indemnified Party, and
(c) in the event that the Indemnifying Party undertakes defense of any Losses,
the Indemnified Party, by counsel or other representative of its own choosing
and at its sole cost and expense, shall have the right to consult with the
Indemnifying Party and its counsel or other representatives concerning such
Losses and the Indemnifying Party and the Indemnified Party and their
respective counsel or other representatives shall cooperate with respect to
such Losses and (d) in the event that the Indemnifying Party undertakes defense
of any Losses, the Indemnifying Party shall have an obligation to keep the
Indemnified Party informed of the status of the defense of such Losses and
furnish the Indemnified Party with all documents, instruments and information
that the Indemnified Party shall reasonably request in connection therewith.
12.6. CURE OF BREACH.
Notwithstanding any other provision of this Agreement to the contrary,
a breach by Sellers of any representations and warranties or a failure to
perform any covenant or agreement hereunder may be cured by Sellers prior to
the Transfer Date (a) by reducing the Purchase Price in an amount equal to the
Losses to Buyer caused by such breach, (b) by making payment to a third party
or taking other action to discharge the Losses, (c) by placing an amount equal
to the Losses in an escrow account under an escrow arrangement reasonably
satisfactory to Sellers and Buyer or (d) a combination of the foregoing. If
the foregoing actions fully cure the breach, Sellers shall have no obligation
under Section 12.2 or otherwise to indemnify Buyer with respect to the Losses
caused by such breach; if such actions partially cure the breach, Sellers shall
continue to have an obligation under Section 12.2 to indemnify Buyer with
respect to the remaining portion of the Losses caused by such breach.
ARTICLE 13.
TERMINATION
13.1. TERMINATION BY THE PARTIES.
This Agreement may be terminated at any time prior to the Closing by:
13.1.1. the mutual consent of Sellers and Buyer;
13.1.2. Sellers in accordance with, and subject to, the terms
and conditions of Section 14.1; and
13.1.3. Buyer if any loss or damage at a Station described in
Section 9.3 shall not have been cured within the sixty (60) day period
described in Section 9.3.
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13.1.4. Buyer if the closing of the Heritage Agreement with
respect to the Stations shall not have occurred on or prior to July 16, 1998.
13.2. AUTOMATIC TERMINATION.
This Agreement shall automatically terminate without further action by
the parties upon the termination of the Heritage Agreement in accordance with
its terms.
13.3. EFFECT OF TERMINATION.
13.3.1. In the event this Agreement is terminated as provided
in Sections 13.1.1, 13.1.3, 13.1.4 and 13.2, Buyer shall receive the immediate
return of the Letter of Credit, this Agreement shall be deemed null, void and
of no further force or effect, and the parties hereto shall be released from
all future obligations hereunder; provided, however, that the obligations of
Buyer and Sellers set forth in Sections 6.3 and 7.1 (which relate to
confidentiality), and Section 15.3 (which relates to payment of certain
expenses), shall survive such termination and the parties hereto shall have any
and all remedies to enforce such obligations provided at law or in equity or
otherwise (including, without limitation, specific performance).
13.3.2. In the event this Agreement is terminated as provided
in Section 13.1.2, this Agreement shall be deemed null, void and of no further
force or effect, and the parties hereto shall be released from all future
obligations hereunder; provided, however, that the obligations of Buyer and
Sellers set forth in Sections 6.3 and 7.1 (which relate to confidentiality),
Article 14 (which relates to remedies and the Letter of Credit) and Section
15.3 (which relates to payment of certain expenses), shall survive such
termination and the parties hereto shall have any and all remedies to enforce
such obligations provided at law or in equity or otherwise (including, without
limitation, specific performance).
ARTICLE 14.
REMEDIES
14.1. DEFAULT BY BUYER.
If Buyer shall default in the performance of its obligations under this
Agreement in any material respect and such default is not cured within thirty
(30) days after notice thereof (it being understood that Buyer shall have no
right to such thirty (30) day cure period with respect to a payment default
under Section 2.5), and provided that Sellers shall not then be in material
default in the performance of their obligations hereunder, Sellers shall be
entitled, by written notice to Buyer, to terminate this Agreement, and as the
sole and exclusive remedy of Sellers under this Agreement, to receive the
Deposit by drawing on the Letter of Credit in accordance with the terms of the
Deposit Escrow Agreement and the Letter of Credit (without
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set-off, deduction or counterclaim) as liquidated damages, and upon such
payment Buyer shall be discharged from all further liability under this
Agreement.
14.2. LIQUIDATED DAMAGES.
Sellers and Buyer have provided for the amount of the Deposit to be
liquidated damages as a remedy for Sellers after having considered carefully
the anticipated and actual xxxxx and losses that would be incurred if Buyer
defaults and thus fails to perform its obligations to consummate the
transactions contemplated hereunder, the difficulty of ascertaining at this
time the actual amount of damages, special and general, that Sellers will
suffer in such event, and the inconvenience or nonfeasibility of otherwise
obtaining an adequate remedy in such event.
14.3. SPECIFIC PERFORMANCE.
Sellers acknowledge that the Assets to be sold and delivered to Buyer
pursuant to this Agreement are unique and that Buyer has no adequate remedy
at law if Sellers shall fail to perform any of their obligations hereunder, and
Sellers therefore confirm and agree that Buyer's right to specific performance
is essential to protect the rights and interests of Buyer. Accordingly, in
addition to any other remedies which Buyer may have hereunder or at law or in
equity or otherwise, Sellers hereby agree that Buyer shall have the right to
have all obligations, undertakings, agreements and other provisions of this
Agreement specifically performed by Sellers and that Buyer shall have the right
to obtain an order or decree of such specific performance in any of the courts
of the United States or of any state or other political subdivision thereof.
ARTICLE 15.
GENERAL PROVISIONS
15.1. ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION.
Buyer agrees that it will, at any time, prior to, at or after the
Transfer Date, take or cause to be taken such further actions, and execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments and obtain such consents, as may be reasonably
requested by Sellers in connection with the consummation of the purchase and
sale contemplated by this Agreement. Sellers agree that they will, at any
time, prior to, at or after the Transfer Date, take or cause to be taken such
further actions, and execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments and obtain such
consents, as may be reasonably requested by Buyer in connection with the
consummation of the purchase and sale contemplated by this Agreement.
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15.2. BROKERS.
Each Seller represents to Buyer that such Seller has not engaged, or
incurred any unpaid liability (for any brokerage fees, finders' fees,
commissions or otherwise) to, any broker, finder or agent in connection with
the transactions contemplated by this Agreement; except for Xxxxxxx Xxxxx
Xxxxxx (whose fee is the sole responsibility of Buyer), Buyer represents to
Sellers that Buyer has not engaged, or incurred any unpaid liability (for any
brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder
or agent in connection with the transactions contemplated by this Agreement;
and Seller agrees to indemnify Buyer, and Buyer agrees to indemnify Sellers,
against any claims asserted against the other party for any such fees or
commissions by any person purporting to act or to have acted for or on behalf
of the indemnifying party. Notwithstanding any other provision of this
Agreement, this representation and warranty shall survive the Transfer Date
without limitation and shall not be subject to the Basket Amount contained in
Section 12.4.
15.3. EXPENSES AND TAXES.
Each party hereto shall pay its own expenses incurred in connection
with this Agreement and in the preparation for and consummation of the
transactions provided for herein. Notwithstanding the foregoing, Buyer, on the
one hand, and Sellers, on the other hand, shall each pay one-half of (a) all
sales (including, without limitation, bulk sales), use, documentary, stamp,
gross receipts, registration, transfer, conveyance, excise, recording, license
and other similar Taxes and fees ("Transfer Taxes") applicable to, imposed upon
or arising out of the sale by Sellers and the purchase by Buyer of the Assets
whether now in effect or hereinafter adopted and regardless of which party such
Transfer Tax is imposed upon (except for any Taxes incurred by Sellers from any
gain realized on the sale of the Assets hereunder, which Taxes shall be the
sole responsibility of Sellers), (b) any FCC filing fees incurred in connection
with the assignment of the FCC Licenses to Buyer, (c) any fees and expenses
incurred in connection with any HSR Filings, and (d) the fees and expenses of
Xxxxxxxx & Xxxxxx for the environmental site assessments performed on the Real
Property as disclosed on Schedule 3.16.
15.4. NOTICES.
All notices, demands, requests, or other communications which may be or
are required to be given or made by any party to any other party pursuant to
this Agreement shall be in writing and shall be hand delivered, mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, delivered by overnight air courier, or transmitted by telegram, telex,
or facsimile transmission addressed as follows:
If to Buyer:
STC Broadcasting, Inc.
0000 0xx Xxxxxx Xxxxx
Xxxxx 000
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St. Petersburg, Florida 33703
Attn: Xxxxx Xxxx
Fax: (000) 000-0000
with copies (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
and to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, Xx.
Fax: (000) 000-0000
If to any Seller:
Xxxxxxxx Broadcast Group, Inc.
0000 X. 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, President
Fax: (000) 000-0000
with copies (which shall not constitute notice) to:
Xxxxxx & Xxxxxxxx, P.A.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
and to:
Xxxxxxxx Communications, Inc.
0000 X. 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
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or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall be given or
made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex) the answerback being deemed conclusive but not exclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
15.5. WAIVER.
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other instrument or
document given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any default
or any acquiescence therein. No single or partial exercise of any such right,
power or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any party hereto unless made in writing and signed by
the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.
15.6. BENEFIT AND ASSIGNMENT.
15.6.1. No Seller shall assign this Agreement, in whole or in
part, whether by operation of law or otherwise, without the prior written
consent of Buyer and any purported assignment contrary to the terms hereof
shall be null, void and of no force and effect. The Buyer shall not assign
this Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Sellers and any purported assignment
contrary to the terms hereof shall be null, void and of no force and effect;
provided, however, Buyer shall be entitled, without the consent of Sellers, to
assign Buyer's rights and interests hereunder (in whole or in part as to any
Station) (a) prior to the Transfer Date, to any Person that directly or
indirectly is in control of, or is controlled by, or is under common control
with Buyer; further provided, however, that Buyer gives Seller written notice
thereof and such assignee shall be responsible for all representations,
covenants and agreements of Buyer hereunder as if such assignee was a party
hereto, and that any such assignment shall not relieve Buyer of any of its
Liabilities hereunder; and (b) from and after the Transfer Date, to any Person.
15.6.2. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns as permitted hereunder. No Person, other than the parties hereto and
their respective successors and assigns as permitted hereunder, is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
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15.7. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the Schedules and Exhibits hereto and the
other instruments and documents referred to herein or delivered pursuant
hereto, contains the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior oral or written agreements,
commitments or understandings with respect to such matters. No amendment,
modification or discharge of this Agreement shall be valid or binding unless
set forth in writing and duly executed by each of the parties hereto.
15.8. SEVERABILITY.
If any part of any provision of this Agreement or any other contract,
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
15.9. HEADINGS.
The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect
the meaning, construction or scope thereof.
15.10. GOVERNING LAW.
This Agreement, the rights and obligations of the parties hereto, and
any claims or disputes relating thereto, shall be governed by and construed
under and in accordance with the laws of the State of New York, excluding the
choice of law rules thereof.
15.11. SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts, none of which
need contain the signatures of all parties, each of which shall be deemed to be
an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Asset
Purchase Agreement, or has caused this Asset Purchase Agreement to be duly
executed and delivered in its name on its behalf, all as of the day and year
first above written.
STC BROADCASTING OF VERMONT, INC.
By:/s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Title: Chief Financial Officer
TUSCALOOSA BROADCASTING, INC.
By:/s/ Xxxxx X. Xxx
--------------------------------
Name: Xxxxx X. Xxx
Title: Treasurer and Secretary
WPTZ LICENSEE, INC.
By:/s/ Xxxxx X. Xxx
--------------------------------
Name: Xxxxx X. Xxx
Title: Treasurer and Secretary
WNNE LICENSEE, INC.
By:/s/ Xxxxx X. Xxx
--------------------------------
Name: Xxxxx X. Xxx
Title: Treasurer and Secretary
61
ANNEX I
DEFINITIONS
"ACCOUNTING FIRM" shall have the meaning set forth in Section 2.6.2.
"ACCOUNTS RECEIVABLE" means all cash accounts receivable with respect
to the Stations as of the end of the broadcast day immediately preceding the
Transfer Date.
"ADDITIONAL AGREEMENTS" shall have the meaning set forth in Section
6.1.6(a).
"AFFILIATE" shall mean, with respect to any Person, any other Person
that, (a) directly or indirectly is in control of, is controlled by, or is
under common control with, the first Person, (b) is an officer, director,
trustee, partner (general or limited), employee or holder of five percent (5%)
or more of any class of any voting or non-voting securities or other equity in
the first Person, (c) is an officer, director, trustee, partner (general or
limited), employee or holder of five percent (5%) or more of any class of the
voting or non-voting securities or other equity in any Person which directly or
indirectly is in control of, is controlled by, or is under common control with,
the first Person, and (d) any Family of any individual included in (a), (b) or
(c). For purposes of this definition, "control" (including with correlative
meanings "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of either (X) five percent (5%) or more of
the voting power of the securities having ordinary voting power for the
election of directors of the first Person, or (Y) the power to direct or cause
the direction of the management or policies of the first Person (whether
through ownership of securities, partnership interests or any other ownership
or debt interests, by contract or otherwise).
"AGREEMENT" shall have the meaning set forth in the Preamble.
"APPLICANT" shall have the meaning set forth in Section 4.5.2.
"ASSETS" shall have the meaning set forth in Section 2.1.
"ASSIGNMENT OF CONTRACTS AND LEASES" means that certain Assignment of
Contracts and Leases, dated as of the Transfer Date and executed by Sellers,
substantially in the form attached hereto as Exhibit C.
"ASSIGNMENT OF FCC LICENSES" means that certain Assignment of FCC
Licenses, dated as of the Closing Date and executed by Sellers, substantially
in the form attached hereto as Exhibit B.
"ASSUMED LIABILITIES" mean the Liabilities assumed by Buyer pursuant to
Section 2.8.
"ASSUMPTION AGREEMENT" means that certain Assumption Agreement, dated
the Transfer Date and executed by Buyer and Sellers, substantially in the form
attached hereto as Exhibit D.
62
"BALANCE SHEET" shall have the meaning set forth in Section 3.5.1.
"BASE PURCHASE PRICE" shall have the meaning set forth in Section 2.4.
"BASKET AMOUNT" shall have the meaning set forth in Section 12.4.2.
"BENEFIT ARRANGEMENT" means any benefit arrangement, obligation, custom,
or practice, whether or not legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to present or former directors,
employees, agents, or independent contractors, other than any obligation,
arrangement, custom or practice that is a Plan, including, without limitation,
employment agreements, executive compensation arrangements, incentive programs
or arrangements, sick leave, vacation pay, plant closing benefits, salary
continuation for disability, consulting, or other compensation arrangements,
workers' compensation, retirement, deferred compensation, bonus, stock option or
purchase, hospitalization, medical insurance, life insurance, tuition
reimbursement or scholarship programs, perquisite, company cars, any plans
subject to Code Section 125, and any plans providing benefits or payments in the
event of a change of control, change in ownership, or sale of a substantial
portion (including all or substantially all) of the assets of any business or
portion thereof, in each case with respect to any present or former employees,
directors, or agents.
"BENEFIT PLANS" shall have the meaning set forth in Section 3.14.1.
"XXXX OF SALE" means that certain Xxxx of Sale and Assignment of
Assets, dated as of the Transfer Date and executed by Sellers, substantially
in the form attached hereto as Exhibit A.
"BUYER DOCUMENTS" shall mean, collectively, this Agreement, the Deposit
Escrow Agreement, the Assumption Agreement and the TBA Agreement.
"BUYER'S PLAN" shall have the meaning set forth in Section 8.4.5.
"CLOSING" shall have the meaning set forth in Section 11.1.1.
"CLOSING DATE" shall have the meaning set forth in Section 11.1.1.
"CODE" means the Internal Revenue Code of 1986, as amended, and all
Laws promulgated pursuant thereto or in connection therewith.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"CURRENT BALANCE SHEET DATE" shall have the meaning set forth in
Section 3.5.2.
"DEFERRED CONTRACT" shall have the meaning set forth in Section
6.2.10(b).
"DEPOSIT" shall have the meaning set forth in Section 2.3.
ANNEX I-2
63
"DEPOSIT ESCROW AGENT" means Xxxxxx Xxxxx Bank.
"DEPOSIT ESCROW AGREEMENT" means that certain Escrow Agreement dated as
of the date hereof by and among Buyer, Sellers and the Deposit Escrow Agent.
"DESIGNATED PROPERTIES" shall have the meaning set forth in Section
6.2.10(b).
"DMA" means the designated market area for a particular television or
radio station as determined by the X.X. Xxxxxxx Co.
"ENCUMBRANCES" mean any mortgages, pledges, liens, security interests,
defects in title, easements, rights-of-way, encumbrances, restrictions and any
other matters affecting title.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, ("CERCLA") as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("XXXX"), 42 U.S.C. Section 9601 et
seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 et
seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
9601 et seq.; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the
Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act
("CAA"), 42 U.S.C. Section 7401 et seq.; or any other applicable federal,
state, or local laws relating to Hazardous Materials generation, production,
use, storage, treatment, transportation or disposal, or the protection of the
environment from Hazardous Materials
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"ERISA AFFILIATE" means any person that, together with any Seller
Party, would be or was prior to March 17, 1997 treated as a single employer
under Section 414 of the Code or Section 4001 of ERISA.
"EXCLUDED ASSETS" shall have the meaning set forth in Section 2.2.
"FAMILY" of an individual includes (a) the individual, (b) the
individual's spouse and former spouses and any other natural person who resides
with such individual, (c) any other natural person who is related to the
individual or any person described in the preceding clause (b) within the
second degree.
"FCC" means the Federal Communications Commission.
"FCC APPLICATIONS" shall have the meaning set forth in Section 5.1.
"FCC LICENSES" shall have the meaning set forth in Section 2.1.1.
ANNEX I-3
64
"FCC ORDER" means an order or orders of the FCC, or of the Chief, Mass
Media Bureau of the FCC, acting under delegated authority, consenting to the
assignment to Buyer of the FCC Licenses for the Stations.
"FINAL PRORATION AMOUNT" shall have the meaning set forth in Section
2.6.2.
"GOVERNMENTAL AUTHORITY" means any agency, board, bureau, court,
commission, department, instrumentality or administration of the United States
government, any foreign government, any state government or any local or other
governmental body in a state, territory or possession of the United States or
the District of Columbia.
"XXXX-XXXXX-XXXXXX" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and all Laws promulgated pursuant thereto
or in connection therewith.
"HAZARDOUS MATERIALS" means any wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants, including without limitation, substances defined
as "hazardous wastes," "hazardous substances," "toxic substances," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, any Environmental Laws.
"HERITAGE SUBSIDIARIES" shall have the meaning set forth in the
Recitals.
"HERITAGE AGREEMENT" shall have the meaning set forth in the Recitals.
"HMSI" shall have the meaning set forth in the Recitals.
"HSR FILING" shall have the meaning set forth in Section 5.2.
"INDEMNITY CAP" shall have the meaning set forth in Section 12.4.2.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the respective
meanings set forth in Section 12.5.1.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
2.1.4.
"LAWS" means any federal, state or local law, foreign law, statute,
code, ordinance, regulation, order, writ, injunction, judgment or decree
applicable to the specified Person and to the businesses and assets thereof.
"LEASED PROPERTY" shall have the meaning set forth in Section 2.1.2(b).
"LETTER OF CREDIT" shall have the meaning set forth in Section 2.3.
"LIABILITIES" shall mean, 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
ANNEX I-4
65
reflected, or required by generally accepted accounting principles to be
reflected, in such Person's balance sheets or other books and records.
"LICENSE ASSETS" shall mean the FCC Licenses and the other Assets
described on Schedule I hereto.
"LMA" means any time brokerage agreement, local marketing arrangement,
joint sales agreement, joint operating agreement, limited management agreement
or other similar agreement or contract.
"LOSSES" means any and all demands, claims, complaints, actions or
causes of action, suits, proceedings, investigations, arbitrations,
assessments, losses, damages, liabilities, obligations (including those arising
out of any action, such as any settlement or compromise thereof or judgment or
award therein) and any costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets or financial condition of the Stations taken as a whole,
except for any such material adverse effect resulting from (a) general economic
conditions applicable to the television broadcast industry, (b) general
conditions in the markets in which the Stations operate, (c) circumstances that
are not likely to recur and either have been substantially remedied or can be
substantially remedied without substantial cost or delay, or (d) the refusal by
Buyer to consent to any new Program Contract.
"MULTIEMPLOYER PLAN" means any Plan described in Section 3(37) of
ERISA.
"NETWORK AGREEMENT" shall have the meaning set forth in Section 2.1.8.
"NON-LICENSE ASSETS" shall mean the Assets, other than the License
Assets.
"NON-LICENSE TRANSFER" shall have the meaning set forth in Section
11.2.1.
"NON-LICENSE TRANSFER DATE" shall have the meaning set forth in Section
11.2.1.
"OPERATING CONTRACTS" shall have the meaning set forth in Section
2.1.9.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
the Stations consistent with past practices of the Heritage Subsidiaries both
with respect to type and amount; any actions taken pursuant to the requirements
of law or contracts existing on the date hereof shall be deemed to be action in
the Ordinary Course of Business.
"OUTSIDE DATE" shall have the meaning set forth in Section 11.2.1.
"PERMITTED ENCUMBRANCES" means (a) Encumbrances of a landlord, or other
statutory lien not yet due and payable, or a landlord's liens arising in the
Ordinary Course of Business, (b) Encumbrances arising in connection with
equipment or maintenance financing or
ANNEX I-5
66
leasing under the terms of the Station Contracts set forth on the Schedules
which have been made available to Buyer, (c) Encumbrances arising pursuant to
the terms of leases on Real Property or Leased Property as set forth on
Schedule 2.1.1 and Schedule 2.1.9 which are subject to any lease or sublease to
a third party, (d) Encumbrances for Taxes not yet due and payable or which are
being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on Seller's books in accordance
with generally accepted accounting principles, (e) Encumbrances that do not
materially detract from the value of any of the Assets or materially interfere
with the use thereof as currently used, or (f) those Encumbrances on Schedule
3.8.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, other form
of business or legal entity or Governmental Authority.
"PLAN" means any plan, program or arrangement, whether or not written,
that is or was an "employee benefit plan" as such term is defined in Section
3(3) of ERISA and (a) which was or is established or maintained by any Seller
Party or any ERISA Affiliate for the benefit of any current or former employees
of the Stations; (b) to which any Seller Party contributed or was obligated to
contribute or to fund or provide benefits or had any liability (whether actual
or contingent) with respect to any of its assets or otherwise for the benefit
of any current or former employees of the Stations; or (c) which provides or
promises benefits to any person who performs or who has performed services for
the Stations and because of those services is or has been (i) a participant
therein or (ii) entitled to benefits thereunder.
"PROGRAM CONTRACTS" shall have the meaning set forth in Section 2.1.5.
"PRORATION AMOUNT" shall have the meaning set forth in Section 2.6.1.
"PRORATION ITEMS" shall mean any power and utility charges, business
and license fees (including retroactive adjustments thereof), sales and
service charges, commissions, special assessments, and rental payments and
personal and real estate Taxes and assessments with respect to the Real
Property, taxes (except for Taxes arising from the transfer of the Assets
hereunder), deposits, Trade-out Agreements, accrued vacation, unused sick leave
and other similar prepaid and deferred items and any other operating expenses
incurred in the Ordinary Course of Business (except with respect to Program
Contracts, only those payments due and payable during the month in which the
Transfer Date occurs shall be prorated). The parties acknowledge and agree that
there shall be excluded from Proration Items the following: (a) severance pay
relating to any employee of any Seller who shall have been terminated prior to
the Transfer Date, and (b) any Liabilities not being assumed by Buyer in
accordance with Section 2.8.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.4.
"QUALIFIED PLAN" means a Plan that satisfies, or is intended by any
Seller Party to satisfy, the requirements for tax qualification described in
Section 401 of the Code including,
ANNEX I-6
67
without limitation, any Plan that was terminated on or after July 1, 1989, as
to which any Seller Party may have any actual or contingent liability.
"REAL PROPERTY" shall have the meaning set forth in Section 2.1.2(a).
"RESTRICTED CONTRACTS" shall have the meaning set forth in Section
6.2.10(a).
"SCHEDULES" shall mean the disclosure schedules delivered by Seller to
Buyer in connection herewith.
"SELLER DOCUMENTS" shall mean, collectively, this Agreement, the
Deposit Escrow Agreement, the Assignment of Contracts and Leases, the Xxxx of
Sale, the Assignment of FCC Licenses, the Assumption Agreement and the TBA
Agreement.
"SELLER PARTIES" shall mean, collectively, Sellers, HMC and the
Heritage Subsidiaries.
"SELLER TAX RETURNS" means all federal, state, local, foreign and other
applicable Tax returns, declarations of estimated Tax reports required to be
filed by any Seller or any of the Heritage Subsidiaries in connection with the
business and operations of the Stations (without regard to extensions of time
permitted by law or otherwise).
"SELLERS' PLAN" shall have the meaning set forth in Section 8.4.5.
"STATION" and "STATIONS" shall have the meaning set forth in the
Recitals.
"STATION CONTRACTS" shall have the meaning set forth in Section 2.1.9.
"STC" shall have the meaning set forth in the Recitals.
"TAXES" means all federal, state and local taxes (including, without
limitation, income, profit, franchise, sales, use, real property, personal
property, ad valorem, excise, employment, social security and wage withholding
taxes) and installments of estimated taxes, assessments, deficiencies, levies,
imports, duties, license fees, registration fees, withholdings, or other
similar charges of every kind, character or description imposed by any
Governmental Authorities.
"TBA AGREEMENT" shall have the meaning set forth in Section 8.9.
"THIRD PARTY SALE" shall have the meaning set forth in Section 11.1.3.
"TIME SALES AGREEMENTS" shall have the meaning set forth in Section
2.1.7.
"TRADE-OUT AGREEMENTS" shall have the meaning set forth in Section
2.1.6.
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68
"TRANSFER DATE" shall mean the earlier of the Non-License Transfer Date
or the Closing Date.
"TRANSFER TAXES" shall have the meaning set forth in Section 15.3.
"TRANSFERRED EMPLOYEES" shall have the meaning set forth in Section
8.4.1.
"TRANSMISSION DEFECT" shall have the meaning set forth in Section 9.2.
"TRUSTEE" shall have the meaning set forth in the Recitals.
"WELFARE PLAN" means an "employee welfare benefit plan" as such term is
defined in Section 3(1) of ERISA.
"WFFF" shall have the meaning set forth in the Recitals.
"WNNE" shall have the meaning set forth in the Recitals.
"WPTZ" shall have the meaning set forth in the Recitals.
ANNEX I-8
