Exhibit 4.3
EXECUTION COPY
OPTION AGREEMENT
Dated as of February 11, 2003
by and between
XXXXXX TELECASTING OF SOUTHERN CALIFORNIA LLC
and
AZTECA INTERNATIONAL CORPORATION
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS..................................................................................................... 2
SECTION 1.1 Definitions ........................................................................... 2
ARTICLE II THE OPTION..................................................................................................... 10
SECTION 2.1 Grant of Option ....................................................................... 10
SECTION 2.2 Option Exercise Procedures ............................................................ 11
ARTICLE III PURCHASE AND SALE OF PURCHASED ASSETS ........................................................................ 12
SECTION 3.1 Purchase and Sale of Purchased Assets ................................................. 12
SECTION 3.2 Excluded Assets ....................................................................... 14
SECTION 3.3 Assumption of Liabilities ............................................................. 15
SECTION 3.4 Excluded Liabilities .................................................................. 15
SECTION 3.5 Closing Date .......................................................................... 16
SECTION 3.6 Purchase Price ........................................................................ 16
SECTION 3.7 Payments at the Closing ............................................................... 16
SECTION 3.8 Closing Date Deliveries ............................................................... 17
SECTION 3.9 Further Assurances .................................................................... 18
SECTION 3.10 Allocation ............................................................................ 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER .................................................................. 19
SECTION 4.1 Organization; Subsidiaries ............................................................ 19
SECTION 4.2 Authority of the Seller; No Conflicts ................................................. 19
SECTION 4.3 Financial Statements .................................................................. 20
SECTION 4.4 Operations Since Balance Sheet Date ................................................... 20
SECTION 4.5 No Undisclosed Liabilities ............................................................ 21
SECTION 4.6 Taxes ................................................................................. 21
SECTION 4.7 Sufficiency of Assets.................................................................. 22
SECTION 4.8 Governmental Permits .................................................................. 22
SECTION 4.9 Real Property Leases .................................................................. 24
SECTION 4.10 Personal Property ..................................................................... 25
SECTION 4.11 Personal Property Leases .............................................................. 25
SECTION 4.12 Intellectual Property 25
SECTION 4.13 Title to Purchased Assets ............................................................. 26
SECTION 4.14 Contracts ............................................................................. 26
SECTION 4.15 Status of Contracts ................................................................... 26
SECTION 4.16 No Violation, Litigation or Regulatory Action ......................................... 27
SECTION 4.17 Insurance ............................................................................. 28
SECTION 4.18 Environmental Protection .............................................................. 28
SECTION 4.19 Insolvency Proceedings ................................................................ 29
SECTION 4.20 No Third Party Options ................................................................ 29
SECTION 4.21 Citizenship ........................................................................... 29
SECTION 4.22 No Finder ............................................................................. 29
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TABLE OF CONTENTS
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SECTION 4.23 No Representation as to Transferability of the Governmental Permits ................... 29
SECTION 4.24 Disclosure of Information to the Optionee ............................................. 30
SECTION 4.25 Aggregate Material Adverse Effect ..................................................... 30
SECTION 4.26 Exclusive Representations and Warranties; Seller's Disclosure Schedules ............... 30
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE OPTIONEE ................................................................. 30
SECTION 5.1 Organization .......................................................................... 30
SECTION 5.2 Authority of the Optionee ............................................................. 30
SECTION 5.3 Litigation ............................................................................ 31
SECTION 5.4 No Finder ............................................................................. 31
SECTION 5.5 Investment Representations ............................................................ 32
SECTION 5.6 Optionee's Reliance ................................................................... 32
ARTICLE VI ACTION PRIOR TO THE CLOSING DATE............................................................................... 32
SECTION 6.1 Preserve Accuracy of Representations; Incurrence of Liabilities; Notification ......... 32
SECTION 6.2 FCC Consent; HSR Act Approval; Other Consents and Approvals of Governmental Authorities 33
SECTION 6.3 Compliance with the Optionee LMA; Operation of the Station Prior to the Closing ....... 34
SECTION 6.4 Third Party Consents .................................................................. 35
SECTION 6.5 Bulk Sales Act ........................................................................ 35
SECTION 6.6 Additional Covenant ................................................................... 35
SECTION 6.7 Memorandum of Option Agreement......................................................... 35
SECTION 6.8 HSR Act Approval Regarding Effectiveness .............................................. 35
ARTICLE VII ADDITIONAL AGREEMENTS ........................................................................................ 36
SECTION 7.1 Taxes; Sales, Use and Transfer Taxes .................................................. 36
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER ............................................................... 38
SECTION 8.1 No Misrepresentation or Breach of Covenants and Warranties ............................ 38
SECTION 8.2 No Restraint or Litigation ............................................................ 39
SECTION 8.3 FCC Consent ........................................................................... 39
SECTION 8.4 Closing Deliveries .................................................................... 39
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF OPTIONEE ............................................................... 39
SECTION 9.1 No Misrepresentation or Breach of Covenants and Warranties ............................ 39
SECTION 9.2 No Restraint or Litigation ............................................................ 40
SECTION 9.3 FCC Consent ........................................................................... 40
SECTION 9.4 Closing Deliveries .................................................................... 40
ARTICLE X INDEMNIFICATION................................................................................................. 40
SECTION 10.1 Indemnification by the Seller ......................................................... 40
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SECTION 10.2 Indemnification by the Optionee ....................................................... 41
SECTION 10.3 Notice of Claims ...................................................................... 42
SECTION 10.4 Third Person Claims ................................................................... 42
SECTION 10.5 Limitations ........................................................................... 43
ARTICLE XI TERMINATION.................................................................................................... 44
SECTION 11.1 Termination ........................................................................... 44
ARTICLE XII GENERAL PROVISIONS............................................................................................ 46
SECTION 12.1 Amendment ............................................................................. 46
SECTION 12.2 Entire Agreement ...................................................................... 46
SECTION 12.3 Successors and Assigns ................................................................ 46
SECTION 12.4 Confidentiality ....................................................................... 47
SECTION 12.5 Notices ............................................................................... 48
SECTION 12.6 Counterparts .......................................................................... 49
SECTION 12.7 Headings; Gender ...................................................................... 50
SECTION 12.8 Rule of Construction .................................................................. 50
SECTION 12.9 Remedies .............................................................................. 50
SECTION 12.10 Specific Performance .................................................................. 50
SECTION 12.11 Consent to Jurisdiction ............................................................... 50
SECTION 12.12 GOVERNING LAW.......................................................................... 51
SECTION 12.13 Access to Records after Closing ....................................................... 51
SECTION 12.14 Schedules ............................................................................. 51
SECTION 12.15 Time is of the Essence ................................................................ 51
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Table of Schedules
Schedule 4.1 Subsidiaries
Schedule 4.2 No Conflicts
Schedule 4.3 Financial Statements
Schedule 4.4 Absence of Certain Changes
Schedule 4.5 Liabilities
Schedule 4.6 Taxes
Schedule 4.7 Sufficiency of Assets
Schedule 4.8(a) FCC Licenses
Schedule 4.8(b) Governmental Permits
Schedule 4.8(c) Compliance with Governmental Permits
Schedule 4.9(a) Real Property Leases
Schedule 4.10 Personal Property
Schedule 4.11 Personal Property Leases
Schedule 4.12(a) Intellectual Property
Schedule 4.12(c) IP Licenses
Schedule 4.12(d) Infringement
Schedule 4.14 Contracts
Schedule 4.15 Status of Contracts
Schedule 4.16 Violations, Litigation and Regulatory Actions
Schedule 4.17 Insurance Policies
Schedule 4.18 Environmental
Schedule 5.2 Optionee Conflicts, Consents and Required Filings
Schedule 5.3 Optionee Litigation
Table of Exhibits
Exhibit 3.8(a)(i)(1) Xxxx of Sale
Exhibit 3.8(a)(i)(2) Assignment Agreement
Exhibit 3.8(a)(i)(3) IP Assignment Agreement
Exhibit 3.8(a)(i)(4) Lease Assignment Agreement
Exhibit 6.7 Memorandum of Option Agreement
Exhibit 8.1(b) Optionee Closing Certificate
Exhibit 9.1(b) Seller Closing Certificate
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OPTION AGREEMENT
OPTION AGREEMENT, dated as of February 11, 2003 (this "Agreement"), by and
between Xxxxxx Telecasting of Southern California LLC, a Delaware limited
liability company (the "Seller") and Azteca International Corporation, a
Delaware corporation (and, together with any Permitted Transferee, the
"Optionee").
RECITALS
The Seller is the owner and operator, and its wholly-owned subsidiary,
Xxxxxx Southern California License, LLC, a Delaware limited liability company
("PSC License"), is the licensee, of the television station KAZA-TV NTSC Channel
54 in Avalon, California (the "Station").
Messrs. Xxxxx X. Xxxxxx, LeBon X. Xxxxxxxxxxx and Xxxxxx X. Xxxxx and
Xxxxxx Telecasting Companies, a Nevada corporation ("PTC"), collectively, own,
beneficially and of record, all of the issued and outstanding equity interests
of the Seller.
The Seller (as successor to Xxxxxx Telecasting of Southern California, LLC,
a California limited liability company) and the Optionee are parties to that
certain Amended and Restated Equity Option Agreement, dated as of December 31,
2001 (the "Existing Equity Option Agreement").
Certain disputes have arisen between TV Azteca, S.A. de C.V., a sociedad
anonima de capital variable incorporated under the laws of Mexico ("TVA"), the
ultimate parent of the Optionee, and the Optionee, on the one hand, and the
Seller and certain Affiliates (as defined below) of the Seller, on the other
hand, in connection with the Existing Equity Option Agreement and certain other
agreements between them.
TVA, the Optionee, the Seller and certain Affiliates of the Seller desire
to settle such disputes among them and, in furtherance thereof, have entered
into that certain Settlement Agreement (the "Settlement Agreement"), dated as of
the date hereof, by and among TVA, the Optionee, the Seller, Messrs. Xxxxxx,
Abercrombie and Xxxxx, PTC, and certain other Affiliates of the Seller.
It is a condition to the consummation of the transactions contemplated by
the Settlement Agreement that the Seller and the Optionee concurrently enter
into that certain Local Marketing Agreement, dated as of the date hereof, as the
same may be amended from time to time (the "Optionee LMA").
It is also a condition to the consummation of the transactions contemplated
by the Settlement Agreement that the Seller and the Optionee concurrently enter
into this Agreement.
The Seller wishes to grant to the Optionee, and the Optionee desires to
receive from the Seller, an option to purchase certain assets relating to the
Station, all on the terms and subject to the conditions set forth in this
Agreement.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein, and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1:
"Affiliate" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. For the purposes of
this definition, the term "controls," "is controlled by" or "under common
control with" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Affiliation Agreement" means that certain Second Amended and Restated
Station Affiliation Agreement, of even date herewith, by and between the
Optionee and the Seller, with respect to the Station.
"Agreement" has the meaning specified in the preamble.
"Amended and Restated Credit Agreement" means the Amended and Restated
Credit Agreement, dated as of the date hereof, by and between the Seller as
borrower and the Optionee as lender.
"Amended and Restated Note" has the meaning specified in the Amended and
Restated Credit Agreement.
"Assumed Liabilities" has the meaning specified in Section 3.3.
"Balance Sheet" has the meaning specified in Section 4.3.
"Balance Sheet Date" has the meaning specified in Section 4.3.
"Barter Agreements" means contracts for the sale of time on the Station in
exchange for programming.
"Business" means the conduct of the business of the Station.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the State of New York or Mexico City, Mexico are
authorized or required by law or executive order to close.
"Cash Component" has the meaning specified in Section 3.7(a)(i).
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"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act, 42 X.X.X.xx.xx. 9601 et seq., any amendments thereto, any
successor statutes, and any regulations promulgated thereunder.
"Claim Notice" has the meaning specified in Section 10.3(a):
"Claims" means any actions, suits, proceedings, claims, complaints,
disputes, arbitrations or investigations.
"Closing" has the meaning specified in Section 3.5.
"Closing Date" has the meaning specified in Section 3.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as amended.
"Copyrights" means copyrights and mask works, including all renewals and
extensions thereof, copyright registrations and applications for registration
thereof, and non-registered copyrights.
"Cut-Off Date" means (i) the date which is the third anniversary of the
Option Effective Date or (ii) if the Optionee LMA is terminated pursuant to
Section 13 thereof or pursuant to Section 12.2 thereof as a result of the
Optionee's Breach (as defined in the Optionee LMA), the earlier of (x) the third
anniversary of the Option Effective Date and (y) the first anniversary of the
date the Optionee LMA is terminated.
"Environment" means ambient air, surface water and ground water (including
potable water, navigable water and wetlands), the land surface or subsurface
strata, the workplace, natural resources (e.g., flora and fauna) or as otherwise
defined in any Environmental Law.
"Environmental Conditions" means the state of the Environment, including
natural resources (e.g. flora and fauna), soil, surface water, groundwater, any
drinking water supply, subsurface strata or ambient air.
"Environmental Laws" means all applicable Requirements of Law relating to
healthy, safety, pollution or protection of the Environment (including, without
limitation, ambient air, surface water, ground water, land surface, or
subsurface strata), including, without limitation, (i) laws relating to
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment and (ii) laws relating to the identification, generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
recovery, transport or other handling of Hazardous Materials. Environmental Laws
shall include, without limitation, CERCLA, RCRA, the Toxic Substances Control
Act, as amended, the Hazardous Materials Transportation Act, as amended, the
Clean Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean
Air Act, as amended, OSHA, as amended, and all analogous laws promulgated or
issued by any Governmental Authority that are enacted and currently in effect.
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"Event of Loss" has the meaning specified in Section 12.14.
"Excluded Assets" has the meaning specified in Section 3.2.
"Excluded Liabilities" has the meaning specified in Section 3.3.
"Exercise Period" has the meaning specified in Section 2.2(a).
"Existing Affiliation Agreement" means the Amended and Restated Station
Affiliation Agreement, dated as of December 31, 2001, by and between the Seller
(as successor to Xxxxxx Telecasting of Southern California, LLC, a California
limited liability company) and the Optionee, with respect to the Station.
"Existing Equity Option Agreement" has the meaning specified in the
recitals.
"Expense" means any and all expenses incurred in connection with
investigating, defending or asserting any Claim incident to any matter
indemnified against in this Agreement (including, without limitation, court
filing fees, court costs, arbitration fees or costs, witness fees, and
reasonable fees and disbursements of legal counsel, investigators, expert
witnesses, consultants, accountants and other professionals).
"Extended Cut-Off Date" has the meaning specified in Section 11.1(b).
"Extension Request" has the meaning specified in Section 11.1(b).
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its unconditional consent to
the assignment to the Optionee (or a Permitted Transferee) of the Governmental
Permits as contemplated by Section 6.2(a)(i) of this Agreement.
"FCC Licenses" has the meaning specified in Section 4.8(a).
"Final Order" means an FCC Consent as to which the time for filing a
request for administrative or judicial review, or for instituting administrative
review sua sponte, shall have expired without any such filing having been made
or notice of such review having been issued; or, in the event of such filing or
review sua sponte, as to which such filing or review shall have been disposed of
favorably to the grant and the time for seeking further relief with respect
thereto shall have expired without any request for such further relief having
been filed.
"FIRPTA" means the Foreign Investment in Real Property Act of 1980.
"GAAP" means generally accepted accounting principles in the United States
applied on a consistent basis.
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"Governmental Authority" (i) when used herein in connection with any
representation, warranty, covenant, agreement or obligation of the Seller, means
the government of the United States of America and any state, city, locality or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing Governmental
Authorities referred to in this clause (i); and (ii) when used herein connection
with any representation, warranty, covenant, agreement or obligation of the
Optionee, means the governments of the United States of America and Mexico and
any state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing Governmental Authorities referred to in this clause (ii).
"Governmental Permits" means all licenses, certificates, variances,
filings, permissions, franchises, permits, privileges, immunities, approvals and
other authorizations from a Governmental Authority that are necessary to entitle
the Seller to own or lease, operate and use its assets, to carry on and conduct
the Business and to use the Station's call letters as conducted or used as of
the date hereof.
"Hazardous Materials" means all pollutants, contaminants, chemicals,
wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic,
infectious, radioactive or otherwise hazardous substances or materials (whether
solids, liquids or gases) subject to regulation, control or remediation under
Environmental Laws. By way of example only, the term Hazardous Materials
includes petroleum, urea formaldehyde, flammable, explosive and radioactive
materials, PCBs, pesticides, herbicides, asbestos, acids, metals, solvents and
waste waters.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"HSR Clearance Certificate" means a certificate, duly executed on behalf of
the Optionee by a director of the Optionee, certifying that, with respect to the
filing, if any, required under Section 6.2(a)(ii) or Section 6.8, the applicable
waiting period under the HSR Act has expired or been terminated.
"HSR Opinion" means an opinion of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
LLP, counsel to the Optionee, stating that no filing is required under the HSR
Act in connection with the effectiveness of this Agreement and the Optionee LMA
or, if applicable, that no such filing is required prior to the giving of the
Option Exercise Notice, which opinion in either case shall be satisfactory to
the Seller in its sole and absolute discretion (it being understood that an
opinion in the form of opinion previously delivered to the Seller's counsel by
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP shall be satisfactory to the
Seller).
"HSR Option Effectiveness Filing Period" has the meaning specified in
Section 6.8.
"Indemnified Party" has the meaning specified in Section 10.3(a).
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"Indemnitor" has the meaning specified in Section 10.3(a).
"Intellectual Property" shall mean all of the following, as they exist
anywhere in the world: Patents, Trademarks, Copyrights, Trade Secrets, Software,
Internet Assets and IP Licenses.
"Internet Assets" means domain names, Internet addresses and other computer
identifiers, web sites, web pages and similar rights and items.
"IP Licenses" means all licenses, sublicenses, distributor agreements or
permissions, including, without limitation, the right to receive royalties or
any other consideration relating to any Station Intellectual Property.
"Knowledge" means (a) with respect to the Seller, the actual knowledge
(without inquiry) of Xxxxx X. Xxxxxx, LeBon X. Xxxxxxxxxxx or Xxxxxx X. Xxxxx
and (b) with respect to the Optionee, the actual knowledge (without inquiry) of
Xxxx X. Xxxxxxx, Xxxxx Xxxxxx or Xxxxxxxxx Xxxxxxx.
"Lease Assignment Agreement" has the meaning specified in Section
3.8(a)(i).
"Leased Real Property" has the meaning specified in Section 4.10(b).
"Lien" means, with respect to any property, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation,
security interest or encumbrance of any kind, any other type of preferential
arrangement in respect of such property or any filing of any financing statement
under the UCC or any other similar notice of Lien under any similar notice or
recording statute of any Governmental Authority, including any easement,
right-of-way or other encumbrance on title to Real Property, in each of the
foregoing cases whether voluntary or imposed by law, and any agreement to give
any of the foregoing; (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such property; and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LMA Effective Period" means the period from and including the Effective
Date (as defined in the Optionee LMA) during which the Optionee LMA is in full
force and effect (but specifically excluding the period of continued payments
under Section 12.2 of the Optionee LMA).
"Loss" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, deficiencies
or other charges.
"Material Adverse Effect" means a material adverse effect (a) on the
Purchased Assets, the Seller's ability to operate the Station and the Business
as they exist and are being operated on the date of this Agreement or the
Closing Date, as applicable or (b) on the ability of the Seller to consummate
the transactions contemplated hereby.
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"Option" has the meaning specified in Section 2.1.
"Option Effective Date" has the meaning specified in Section 2.1.
"Option Exercise Notice" has the meaning specified in Section 2.2(a).
"Option Expert" means the person who is serving as the FCC Expert pursuant
to the terms of the Optionee LMA or, if no person is then serving as the FCC
Expert, or if the FCC Expert does not accept such assignment hereunder, another
individual who has been appointed as a successor FCC Expert pursuant to Section
15.8 of the Optionee LMA; if the Seller and the Optionee fail to appoint an
Option Expert within five (5) days after the Submitting Party notifies the
Responding Party of the Submitting Party's intention to petition the Option
Expert pursuant to Section 11.1(b), the Seller and Optionee shall request the
American Arbitration Association in New York City to select the Option Expert
within two (2) Business Days after such five-day period; provided, however, that
the Option Expert selected by the American Arbitration Association shall not
follow the rules promulgated by the American Arbitration Association but shall
instead abide by the provisions of this Agreement.
"Option Expert Decision" has the meaning specified in Section 11.1(b).
"Optionee" has the meaning specified in the preamble.
"Optionee Ancillary Agreements" has the meaning specified in Section
5.2(a).
"Optionee Closing Certificate" has the meaning specified in Section 8.1(c).
"Optionee Group Member" means the Optionee, its Affiliates, directors,
officers, employees and agents and their respective successors and assigns.
"Optionee LMA" has the meaning specified in the recitals to this Agreement.
"Orders" means any judgment, injunction, writ, award, decree or order
issued by any Governmental Authority.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C. xx.xx. 651
et seq., any amendment thereto, any successor statute, and any regulations
promulgated thereunder.
"Patents" means patents, patent applications and inventions, designs and
improvements described and claimed therein, patentable inventions and other
patent rights.
"Payment Date" has the meaning specified in Section 6.7.
"Permitted Affiliate Transferee" has the meaning specified in
Section12.3(b).
"Permitted Lien" means (a) Liens for Taxes, assessments or other
governmental charges which are not yet due and payable, (b) with respect to any
of the Purchased Assets and the Seller's leasehold interest under any of the
Real Property Leases, including, without
7
limitation, the Tower Lease, any Lien which does not materially interfere with
the use of Station, the Purchased Assets or such leasehold interest in the
manner in which it is being used as of the date of this Agreement, (c) Liens
arising as a result of any action taken by Optionee or any failure by Optionee
to take an action required under the Optionee LMA, and (d) Liens arising or
permitted pursuant to the terms of the Amended and Restated Credit Agreement.
"Permitted Transferee" has the meaning specified in Section 12.3.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Personal Property" has the meaning specified in Section 4.10.
"Personal Property Leases" has the meaning specified in Section 4.11.
"Prohibited Contract" has the meaning specified in Section 6.3(b)(ii).
"Proration Date" has the meaning specified in Section 7.1(a)(ii).
"PSC License" has the meaning specified in the recitals.
"PTC" has the meaning specified in the recitals.
"Purchase Price" has the meaning specified in Section 3.6.
"Purchased Assets" has the meaning specified in Section 3.1.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C. xx.xx.
6901 et seq., and any successor statute, and any regulations promulgated
thereunder.
"Real Property" has the meaning specified in Section 3.1(b).
"Real Property Leases" has the meaning specified in Section 4.9(a).
"Release" means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, escaping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into or through the indoor or outdoor Environment or into
or out of any property, including the movement of Hazardous Materials through or
in the air, soil, surface water, groundwater or property.
"Requirements of Law" means, as to any Person, any law, statute, treaty,
rule, regulation, right, privilege, qualification, license or franchise or
determination of an arbitrator or a court or other Governmental Authority or
stock exchange, in each case applicable to or binding upon such Person or any of
its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated hereby.
8
"Responding Party" has the meaning specified in Section 11.1(b).
"Responding Party Review Period" has the meaning specified in Section
11.1(b).
"Seller" has the meaning specified in the preamble.
"Seller Ancillary Agreements" has the meaning specified in Section 4.2(a).
"Seller Closing Certificate" has the meaning specified in Section 9.1(b).
"Seller Group Member" means the Seller and its Affiliates, directors,
officers, members, employees and agents and its respective successors and
assigns.
"Seller Property" means any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
owned, leased or operated by the Seller or any of its Affiliates and used in the
operation of the Station.
"Settlement Agreement" has the meaning specified in the recitals.
"Settlement Amount" has the meaning specified in Section 3.7(b).
"Software" means computer software programs, including, without limitation,
all source code, object code, specifications, designs and documentation related
thereto.
"Station" has the meaning specified in the recitals.
"Station Agreements" has the meaning specified in Section 4.14.
"Station Intellectual Property" means the Intellectual Property owned or
licensed by the Seller or any Subsidiary for use primarily in connection with
the operation of the Station or the Purchased Assets or otherwise primarily
associated with the identification of the Station, excluding any Intellectual
Property primarily used in connection with a business of the Seller or any of
its Subsidiaries unrelated to the Station or the Purchased Assets.
"Submitting Party" has the meaning specified in Section 11.1(b).
"Subsidiaries" means any corporation, partnership, association or other
business entity of which securities or other ownership interests representing
more than 50% of the ordinary voting power or more than 50% of the general
partnership or managing member interests are, at the time any determination is
being made, owned, controlled or held by the Seller and/or one or more
Subsidiaries of the Seller.
"Tax Returns" means all returns, reports, forms or other information filed
or required to be filed with respect to any Tax.
"Taxes" means (i) any and all federal, state, provincial, local, foreign
and other taxes, levies, fees, imposts, duties, and similar governmental charges
(including any interest, fines, assessments, penalties or additions to tax
imposed in connection therewith or with respect
9
thereto) including, without limitation, taxes imposed on, or measured by,
income, franchise, profits or gross receipts, ad valorem, value added, capital
gains, sales, goods and services, use, real or personal property, capital stock,
license, branch, payroll, estimated withholding, employment, social security (or
similar), unemployment, compensation, utility, severance, production, excise,
stamp, occupation, premium, windfall profits, transfer and gains taxes, and
customs duties, and (ii) any transferee liability in respect of any items
described in clause (i) above.
"Tower" means the transmission tower on the land subject to the lease
agreement by and between American Tower L.P. and the United States Forest
Service.
"Tower Lease" has the meaning specified in Section 4.9(b).
"Trade Secrets" means trade secrets, know-how, inventions, processes,
procedures, databases, confidential business information and other proprietary
or confidential information and rights (whether or not patentable or subject to
copyright, mask work or trade secret protection).
"Trademarks" means trademarks, service marks, trade dress, trade names,
brand names, designs, logos, or corporate names, whether registered or
unregistered, and all registrations and applications for registration thereof,
and all goodwill related thereto.
"Transaction Document" has the meaning specified in the Settlement
Agreement.
"Transfer Application" has the meaning specified in Section 6.2(a)(i).
"TVA" has the meaning specified in the recitals.
ARTICLE II
THE OPTION
Section 2.1 Grant of Option.
(a) The Seller hereby grants to the Optionee, effective as of the Option
Effective Date, the exclusive right and option (the "Option") to purchase, on
the Closing Date, the Purchased Assets and assume the Assumed Liabilities. The
Option shall become effective and may be exercised only if:
(i) the PTSC Debt (as defined in the Amended and Restated Credit
Agreement), including any accrued and unpaid interest, is not paid in full on or
prior to midnight New York City time on (x) May 31, 2003 or (y) if the Seller
delivers to the Optionee timely written notice pursuant to clause (i)(B) of the
definition of "Maturity Date" in the Amended and Restated Credit Agreement, June
30, 2003;
(ii) an EchoStar Injunction (as defined in the Amended and Restated
Credit Agreement) shall not have been issued prior to (x) June 1, 2003 or (y) if
the Seller has
10
exercised its right to extend the Maturity Date pursuant to clause (i)(B) of the
definition thereof in the Amended and Restated Credit Agreement, July 1, 2003;
(iii) (x) the Optionee shall have delivered to the Seller an HSR
Opinion on or prior to midnight New York City time on the last day of the HSR
Option Effectiveness Filing Period or (y) if the Optionee shall have made an
initial filing under the HSR Act pursuant to Section 6.8 on or prior to the last
day of the HSR Option Effectiveness Filing Period, the statutory waiting period
under the HSR Act in connection with such filings shall have expired and the
Optionee shall have delivered to the Seller an HSR Clearance Certificate on or
prior to midnight New York City time on April 30, 2003; and
(iv) concurrently with the effectiveness of the Option, the Optionee
LMA becomes effective, and there is an "Effective Date" thereunder, in
accordance with its terms (the relevant date, the "Option Effective Date").
(b) This Agreement shall automatically terminate and shall be void ab
initio as follows:
(i) if the Amended and Restated Note is paid in full prior to (x) June
1, 2003 or (y) if the Seller has exercised its right to extend to Maturity Date
pursuant to clause (i)(B) of the definition thereof in the Amended and Restated
Credit Agreement, July 1, 2003, then this Agreement shall automatically
terminate and shall be void ab initio upon such payment;
(ii) if an EchoStar Injunction shall have been issued prior to (x)
June 1, 2003 or (y) if the Seller has exercised its right to extend the Maturity
Date pursuant to clause (i)(B) of the definition thereof in the Amended and
Restated Credit Agreement, July 1, 2003, then this Agreement shall automatically
terminate and shall be void ab initio upon the issuance of the EchoStar
Injunction;
(iii) if the Optionee fails to deliver to the Seller an HSR Opinion
and the Optionee fails to make the initial filing under the HSR Act pursuant to
Section 6.8 prior to midnight New York City time on the last day of the HSR
Option Effectiveness Filing Period, then this Agreement shall automatically
terminate and shall be void ab initio at midnight New York City time on the last
day of the HSR Option Effectiveness Filing Period; or
(iv) if the statutory waiting period under the HSR Act in connection
with filings under the HSR Act pursuant to Section 6.8 has not expired on or
prior to April 30, 2003, then this Agreement shall automatically terminate and
shall be void ab initio at midnight New York City time on April 30, 2003.
(c) Notwithstanding anything to the contrary in this Agreement, if the last
sentence of Section 3.2.2 of the Optionee LMA is applicable, the parties shall
negotiate in good faith an alternative to the transactions contemplated in this
Agreement, the Optionee LMA and the Settlement Agreement.
Section 2.2 Option Exercise Procedures.
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(a) If the statutory waiting period under the HSR Act in connection with
all filings made pursuant to Section 6.2(a)(ii) or Section 6.8 shall have
expired, the Optionee may exercise the Option by (x) giving written notification
(the "Option Exercise Notice") of such exercise to the Seller and (y) delivering
an HSR Clearance Certificate to the Seller, at any time commencing on the Option
Effective Date and ending at 5:00 p.m., New York City time, on the date that is
six (6) months prior to the third anniversary of the Option Effective Date (the
"Exercise Period"); provided, however, that: (i) if the Optionee LMA is
terminated pursuant to Section 13 thereof, then the Exercise Period shall end on
the date that is the earlier of (x) the date that is six (6) months prior to the
third anniversary of the Option Effective Date and (y) the date that is the
three (3) month anniversary of the date the Optionee LMA is terminated pursuant
to Section 13 thereof; and (ii) if the Optionee LMA is terminated pursuant to
Section 12.2 thereof as a result of the Optionee's Breach (as defined in the
Optionee LMA), then the Exercise Period shall end on the date that is the
earlier of (A) the date that is six (6) months prior to the third anniversary of
the Option Effective Date and (B) the date that is the two (2) month anniversary
of the date the Optionee LMA is terminated pursuant to Section 12.2 thereof.
(b) If the Optionee delivers the Option Exercise Notice during the Exercise
Period which is not withdrawn pursuant to this Section 2.2(b), the Seller and
the Optionee shall be required to consummate the purchase and sale of the
Purchased Assets, and the assumption of the Assumed Liabilities, subject to the
terms and conditions of this Agreement. The Optionee may withdraw any Option
Exercise Notice delivered during the Exercise Period by giving written notice of
such withdrawal to the Seller at any time prior to midnight New York City time
on the date that is the last day of the Exercise Period. If the Optionee
withdraws an Option Exercise Notice pursuant to the preceding sentence, the
Optionee may not thereafter give an Option Exercise Notice and the Optionee
shall promptly reimburse all of the reasonable and documented expenses incurred
by the Seller in connection with the Seller's or any of its Subsidiaries'
compliance with this Agreement in reliance on such Option Exercise Notice.
Notwithstanding anything contained in this Agreement to the contrary, (i) if the
Optionee does not deliver the Option Exercise Notice during the Exercise Period,
then, at midnight New York City time on the date that is the last day of the
Exercise Period, the Option shall no longer be exercisable and the Option and
this Agreement shall automatically terminate and shall be of no further force or
effect, or (ii) if the Optionee withdraws an Option Exercise Notice pursuant to
this Section 2.2(b), then, on the date and at the time such withdrawal notice is
deemed to have been given to the Seller pursuant to Section 12.5, the Option
shall no longer be exercisable and the Option and this Agreement shall
automatically terminate and shall be of no further force or effect, in each case
except as prescribed in Section 6.7 and Section 11.1(c).
ARTICLE III
PURCHASE AND SALE OF PURCHASED ASSETS
Section 3.1 Purchase and Sale of Purchased Assets. Upon the terms and
subject to the conditions of this Agreement, on the Closing Date, the Seller
shall, and shall cause its Subsidiaries to, sell, transfer, assign, convey and
deliver to the Optionee and the Optionee shall purchase from the Seller and its
Subsidiaries, free and clear of all Liens (except for Permitted Liens), all of
the rights, assets and properties (other than the Excluded Assets) owned, held
or used by the Seller or its Subsidiaries primarily in the operation of the
Station as the same
12
shall exist on the Closing Date (collectively, the "Purchased Assets"),
including, without limitation, all right, title and interest of the Seller and
its Subsidiaries in, to and under:
(a) All Governmental Permits owned, held or possessed by the Seller or any
of its Subsidiaries, including, without limitation, those listed in Schedule
4.8(a) and those granting the Seller or any of its Subsidiaries the right to use
the Station's call letters, and all applications for modification, extension or
renewal thereof, and any applications for any Governmental Permits pending on
the Closing Date;
(b) All interest of the Seller and its Subsidiaries in all real property
(including, without limitation, leaseholds, licenses, rights-of-way, easements,
and other interests of every kind and description in and to real property),
buildings, transmitters, antennae, transmitting towers, fixtures and
improvements used or held for use, or to be used or held for use, in the
operation of the Station, including, without limitation, the Leased Real
Property and any additions and improvements thereto or between the date of this
Agreement and the Closing Date (collectively, the "Real Property"), and any
option, right or contract to purchase, lease or occupy any Real Property;
(c) All machinery, electrical devices, cables, tools, hardware, equipment
(including computers and office equipment), broadcast equipment, supplies,
inventory (including all programs, records, tapes, recordings, digital video
discs, compact discs, cassettes, spare parts and equipment), motor vehicles,
advertising and promotional materials, engineering plans, records and data,
furniture and other personal property owned by the Seller or any of its
Subsidiaries on the date of this Agreement, used or useful in the operation of
or relating to the operation of the Station, including, without limitation, the
Personal Property and any option, right or contract to purchase, lease or use
any of the foregoing, but excluding any modification, deletion, replacement or
improvement thereto made or acquired by the Optionee, or disposed of by the
Seller or any of its Subsidiaries or the Optionee, between the date of this
Agreement and the Closing Date in accordance with the terms of this Agreement or
the Optionee LMA or disposed or used up by the Optionee under the Optionee LMA;
(d) The Station Intellectual Property, including, without limitation, the
right to use the trade name "KAZA", but excluding all accounting and payroll
software;
(e) (i) All Station Agreements and (ii) any other contract, agreement or
understanding (evidenced in writing) entered into by the Seller or any of its
Subsidiaries in respect of the Station, the Business or the Purchased Assets
which is entered into after the date of this Agreement consistent with the
provisions of Section 6.3 (other than any Prohibited Contract not agreed to in
writing by the Optionee) or by or at the direction of the Optionee in accordance
with the terms of the Optionee LMA;
(f) All advertising customer lists, mailing lists, used or useful in the
operation of or relating to the Station;
(g) Any rights, claims or causes of action of the Seller and its
Subsidiaries against third parties arising under warranties from manufacturers,
vendors and others in connection with the Purchased Assets or the Station;
13
(h) All jingles, slogans, commercials and other promotional materials used
or useful in the operation of or relating to the Station;
(i) All books and records of the Seller and its Subsidiaries primarily
relating to the rights, assets, properties and operations of the Station or the
Purchased Assets including, without limitation, all files, logs, programming
information and studies, technical information and engineering data, news and
advertising studies or consulting reports and sales correspondence relating
primarily to the Station or the Purchased Assets, but excluding any and all
books and records relating to Taxes and any and all books and records (including
computer programs) relating to a business of the Seller or any of its
Subsidiaries unrelated to the Purchased Assets or the Station; and
(j) All other assets or properties not referred to above, which are used or
held for use primarily in connection with the operation of the Station or the
Purchased Assets and are reflected on the Balance Sheet or acquired by the
Seller or any of its Subsidiaries in the ordinary course of the Business after
the Balance Sheet Date but prior to the Closing Date, except (i) any such assets
or properties disposed of after the Balance Sheet Date in the ordinary course of
the Business consistent with the terms of this Agreement and the Optionee LMA
and (ii) the Excluded Assets.
Section 3.2 Excluded Assets. Notwithstanding the foregoing, the Purchased
Assets shall not include the following rights, assets and properties owned, held
or used by the Seller or its Subsidiaries, as the same shall exist on the
Closing Date (collectively, the "Excluded Assets"):
(a) All cash and cash equivalents (including any marketable securities or
certificates of deposit), accounts receivable, notes receivable and similar
assets;
(b) deposits, prepaid rentals and other prepaid expenses of the Seller and
its Subsidiaries as they exist as of the Option Effective Date;
(c) Any rights, claims or causes of action of the Seller and its
Subsidiaries against third parties relating to the rights, assets, properties,
business or operations of the Station arising out of transactions occurring
prior to the Closing Date, except those referred to in Section 3.1(b);
(d) The Seller's limited liability company seal, minute books, equity or
member record books, records relating to formation, Tax returns and related
documents and supporting work papers and any other records and returns relating
to Taxes, assessments and similar governmental levies (other than real and
personal property Taxes, assessments and levies imposed on the Purchased
Assets);
(e) The contracts, agreements or understandings of the Seller and its
Subsidiaries other than the Station Agreements;
(f) All books, records and documents of the Seller or any of its
Subsidiaries relating to Taxes, the rights, assets, properties and operations of
the Excluded Assets and the liabilities of the Seller or any of its
Subsidiaries, other than Assumed Liabilities, and all other
14
books, records and documents of the Seller and any of its Subsidiaries not
primarily relating to the Purchased Assets or the Assumed Liabilities;
(g) All trusts, trust assets, trust accounts, reserves or other assets
relating to employees or to funding the employee benefit plans, agreements or
arrangements sponsored, maintained, contributed to, or administered by the
Seller or any of its Subsidiaries;
(h) Any rights of or payment due to the Seller under or pursuant to this
Agreement, the Optionee LMA or the other agreements with the Optionee
contemplated by the Settlement Agreement;
(i) All accounting and payroll software owned, leased, licensed or used by
the Seller and any of its Subsidiaries; and
(j) assets subject to any Prohibited Contract not agreed to in writing by
the Optionee.
Section 3.3 Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, the Optionee shall assume and
be obligated for, and shall agree to pay, perform and discharge in accordance
with their terms, the following obligations and liabilities of the Seller:
(a) All liabilities and obligations of the Seller or any of its
Subsidiaries under (A) the Station Agreements and (B) the leases, contracts and
other agreements entered into by the Seller or any of its Subsidiaries with
respect to the Station, the Business or the Purchased Assets after the date of
this Agreement consistent with the provisions of Section 6.3 (including any
Prohibited Contract agreed to in writing by the Optionee) or by or at the
direction of the Optionee in accordance with the terms of the Optionee LMA;
(b) All liabilities, expenses and obligations arising from or relating to
the operation of the Station or the Purchased Assets during the LMA Effective
Period (other than (i) indebtedness of the Seller or any of its Subsidiaries for
borrowed money or services from an Affiliate, (ii) any intercompany liabilities
and (iii) any liabilities or obligations of the Seller under the Optionee LMA);
and
(c) All liabilities, expenses and obligations arising under, or relating
to, Orders pertaining to the Station or the Purchased Assets on and after the
Option Effective Date and all liabilities, expenses and obligations incurred
under the Governmental Permits on and after the Closing Date.
All of the foregoing liabilities, expenses and obligations are referred to
herein as the "Assumed Liabilities."
Section 3.4 Excluded Liabilities. The Optionee shall not assume or be
obligated for any of the liabilities and obligations of the Seller or any
Subsidiary of the Seller other than the Assumed Liabilities or as otherwise
expressly set forth in this Agreement (collectively, the "Excluded
Liabilities").
15
Section 3.5 Closing Date. The purchase and sale of the Purchased Assets
provided for in Section 3.1 and assignment and assumption of the Assumed
Liabilities provided for in Section 3.3 (the "Closing") shall be consummated at
5:00 p.m., New York City time, on a date occurring within five (5) Business Days
after the conditions set forth in Articles VIII and IX are satisfied or, if
permissible, waived in writing by the party which has the benefit of such
condition in its sole and absolute discretion (other than delivery of items to
be delivered at the Closing and other than satisfaction of those conditions that
by their nature are to be satisfied at the Closing, it being understood that the
occurrence of the Closing shall remain subject to the delivery of such items and
the satisfaction or waiver of such conditions at the Closing) or such other date
as may be agreed upon by the Seller and the Optionee but in no event after
midnight New York City time on the then applicable Cut-Off Date or, if the then
applicable Cut-Off Date is extended pursuant to Section 11.1(b), midnight New
York City time on the Extended Cut-Off Date, at the offices of Xxxx Xxxxxxx LLP,
425 Park Avenue, New York, New York, or at such other place and time as shall be
agreed upon by the Seller and the Optionee (such date and time being hereinafter
called the "Closing Date"). Each of the Parties hereto acknowledges that time is
of the essence and that this Agreement may be terminated by either party subject
only to Section 11.1(a)(iv) if the Closing has not been consummated on or prior
to midnight New York City time on the then applicable Cut-Off Date or, if the
then applicable Cut-Off Date is extended pursuant to Section 11.1(b), midnight
New York City time on the Extended Cut-Off Date.
Section 3.6 Purchase Price. The total purchase price for the Purchased
Assets shall be equal to U.S. $250,000,000 (the "Purchase Price"), payable as
provided in Section 3.7.
Section 3.7 Payments at the Closing.
(a) At the Closing, in full satisfaction of the Purchase Price and certain
other obligations, the Optionee shall, subject to the provisions of clauses (b)
and (c) of this Section 3.7:
(i) Pay the Seller in accordance with Section 3.7(c) an amount (the
"Cash Component") equal to: (A) the Purchase Price, less (B) (1) the sum of any
and all amounts owed by the Seller to the Optionee under the terms of (x) the
Amended and Restated Credit Agreement and (y) the Amended and Restated Note, and
(2) the Settlement Amount, if any, owed to the Optionee by the Seller pursuant
to Section 3.7(b)(iii); and
(ii) Deliver to the Seller the Amended and Restated Note, marked
"cancelled".
(b) At the Closing, the Seller or the Optionee, as the case may be, shall
pay in accordance with Section 3.7(c) or, in the case of clause (iii) of this
Section 3.7(b), offset such amount from the Cash Component in accordance with
Section 3.7(a)(i), as follows:
(i) An amount (which may be a positive or negative number) equal to
(x) the sum of any and all amounts owed by the Optionee to the Seller under the
terms of the Optionee LMA and any other Transaction Document, in each case on
and as of the Closing Date, less (y) the sum of any and all amounts owed by the
Seller to the Optionee under the terms of
16
any other Transaction Document, in each case on and as of the Closing Date (the
"Settlement Amount");
(ii) If the Settlement Amount is a positive number, the Optionee shall
pay the Seller the absolute value of such Settlement Amount; and
(iii) If the Settlement Amount is a negative number, the Optionee
shall deduct from the Cash Component, in accordance with Section 3.7(a)(i), the
absolute value of such Settlement Amount.
(c) The payment of the Cash Component shall be made by bank wire transfer
of immediately available funds denominated in U.S. dollars to such bank account
or accounts as is/are designated by the Seller for such purpose not less than
two (2) Business Days before the date such payment is required to be made. The
payment of the Settlement Amount pursuant to Section 3.7(b)(ii) shall be made by
bank wire transfer of immediately available funds denominated in U.S. dollars to
such bank account or accounts as is/are designated by the Seller for such
purpose not less than two (2) Business Days before the date such payment is
required to be made.
Section 3.8 Closing Date Deliveries.
(a) Upon the Closing, the Seller and each of its Subsidiaries, as
applicable, shall execute and/or deliver or cause to be delivered to the
Optionee the following, at the expense of the Seller and in proper form for
recording when appropriate:
(i) (1) a xxxx of sale, substantially in the form attached hereto as
Exhibit 3.8(a)(i)(1) (the "Xxxx of Sale"), (2) an assignment and assumption
agreement, substantially in the form attached hereto as Exhibit 3.8(a)(i)(2)
(the "Assignment Agreement"), (3) an intellectual property assignment and
assumption agreement, substantially in the form attached hereto as Exhibit
3.8(a)(i)(3) (the "IP Assignment Agreement"), and (4) a lease assignment and
assumption agreement, substantially in the form attached hereto as Exhibit
3.8(a)(i)(4) (the "Lease Assignment Agreement"), in each case dated as of the
Closing Date and appropriately executed by the Seller or a Subsidiary of the
Seller;
(ii) a copy of the certificate of formation of the Seller and each of
its Subsidiaries, certified as of a recent date by the Secretary of State of the
State of Delaware;
(iii) a certificate of good standing of the Seller and each of its
Subsidiaries, issued as of a recent date by the Secretary of State of the State
of Delaware;
(iv) a certification of non-foreign status, in form and substance
reasonably satisfactory to the Optionee, in accordance with Treas. Reg.
ss.1.1445-2(b); and
(v) such documents and instruments, if any, as are reasonably
requested by the Optionee to evidence that the Purchased Assets at Closing are
free and clear of all Liens other than Permitted Liens.
17
(b) Upon the Closing, the Optionee shall execute and/or deliver or cause to
be delivered to the Seller, at the expense to the Optionee:
(i) the Cash Component, the Amended and Restated Note marked
"cancelled" and the Settlement Amount, if applicable, pursuant to Section 3.7;
(ii) any other documentation reasonably requested by the Seller to
evidence satisfaction of the Seller's obligations under the Amended and Restated
Credit Agreement and release of any Liens arising thereunder including, without
limitation, UCC termination statements, pay-off letters and other appropriate
release documentation;
(iii) the Xxxx of Sale, Assignment Agreement, IP Assignment Agreement
and Lease Assignment Agreement, in each case dated as of the Closing Date and
appropriately executed by the Optionee;
(iv) a copy of the charter of the Optionee, certified as of a recent
date by the secretary of state of the State of Delaware; and
(v) a certificate of good standing of the Optionee, issued as of a
recent date by the secretary of state of the State of Delaware.
Section 3.9 Further Assurances.
(a) On the Closing Date, the Seller and each of its Subsidiaries, as
applicable, shall take all steps as may be reasonably necessary to put the
Optionee in actual possession and control of all the Purchased Assets. From time
to time following the Closing, the Seller and each of its Subsidiaries, as
applicable, shall execute and deliver, or cause to be executed and delivered, to
the Optionee such other instruments of conveyance and transfer as the Optionee
may reasonably request or as may be otherwise necessary to more effectively
convey and transfer to, and vest in, the Optionee and put the Optionee in
possession of, any part of the Purchased Assets.
(b) From time to time following the Closing, the Optionee shall execute and
deliver, or cause to be executed and delivered, to the Seller such other
undertakings and assumptions as the Seller may reasonably request or as may be
otherwise necessary to more effectively evidence the Optionee's assumption of
and obligation to pay, perform and discharge the Assumed Liabilities.
Section 3.10 Allocation. The parties hereto shall report the transactions
contemplated by this Agreement for federal and state tax purposes in a manner
consistent with the allocation of the Purchase Price (and any Assumed
Liabilities that are properly included in the Optionee's tax basis for the
Purchased Assets) to be mutually agreed upon by the Seller and the Optionee,
acting reasonably and in good faith, within sixty (60) days after the Closing
Date, and agree not to take any position inconsistent therewith in any Tax
return, in any Tax refund or in any Tax-related litigation.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF
THE SELLER
Each of the following representations and warranties is made by Seller and
its Subsidiaries as of the date of this Agreement and not as of any other date,
unless another date is specified in this Agreement with respect to a particular
representation or warranty. Seller and its Subsidiaries are making no
representation or warranty as to any matter concerning Optionee's power and
authority or legal right to hold this Option, to exercise this Option, to
acquire the Governmental Permits, or to be assigned any other Governmental
Permit, or otherwise to consummate the transactions contemplated hereby, whether
under the Communications Act or any other Requirement of Law and no
representation or warranty being made by Seller or its Subsidiaries shall be
interpreted to relate to any such matter.
Section 4.1 Organization; Subsidiaries.
(a) The Seller and each of its Subsidiaries are limited liability companies
duly organized, validly existing and are in good standing under the laws of the
State of Delaware. The Seller and each of its Subsidiaries are qualified as
foreign limited liability companies to do business in, and in good standing
under, the laws of the State of California. The Seller and its Subsidiaries have
the requisite limited liability company power and authority to own or lease and
operate the Station and the Purchased Assets.
(b) Schedule 4.1 identifies each of the Subsidiaries of the Seller and its
jurisdiction of incorporation. Except as set forth on Schedule 4.1, the Seller
owns 100% of the outstanding equity interests in each such Subsidiary.
Section 4.2 Authority of the Seller; No Conflicts.
(a) The Seller has the requisite limited liability company power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by the Seller at the Closing
pursuant hereto (collectively, the "Seller Ancillary Agreements"), to consummate
the transactions contemplated hereby and thereby and to comply with the terms,
conditions and provisions hereof and thereof.
(b) The execution, delivery and performance of this Agreement by the Seller
have been, and the execution, delivery and performance of the Seller Ancillary
Agreements when executed and delivered by the Seller will be, duly authorized
and approved by all necessary limited liability company action of the Seller and
do not or will not require any further authorization or consent of the Seller,
its members or any of its Subsidiaries. This Agreement is, and each other Seller
Ancillary Agreement, when executed and delivered by the Seller, will be, a
legal, valid and binding agreement of the Seller enforceable in accordance with
its respective terms, except in each case as such enforceability may be limited
by bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting or limiting the enforcement of creditors' rights generally and except
as such enforceability is subject to general principles of
19
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(c) Except as set forth in Schedule 4.2, none of the execution, delivery
and performance by the Seller of this Agreement or the Seller Ancillary
Agreements, the consummation by the Seller of any of the transactions
contemplated hereby or thereby or compliance by the Seller with, or fulfillment
by the Seller of, the terms, conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of any Lien upon any of the Purchased
Assets under, the certificate of formation or operating agreement of the Seller
or any of its Subsidiaries, any Station Agreement, any Governmental Permit or
any Order to which the Seller or any of its Subsidiaries is a party or to which
any of the Purchased Assets, the Station or the Business is subject or by which
the Seller or any of its Subsidiaries is bound, or any Requirement of Law
affecting the Seller, any of its Subsidiaries, any of the Purchased Assets, the
Station or the Business except for any such conflicts, breaches or other
occurrences of the type referred to above, which would not individually or in
the aggregate have a Material Adverse Effect or prevent the consummation by the
Seller of the transactions contemplated hereby.
(ii) require the approval, consent, authorization or act of, or the
making by the Seller or any of its Subsidiaries of any declaration, filing or
registration with, any third party or any Governmental Authority, except for
such of the foregoing as are necessary pursuant to the HSR Act, the
Communications Act or the rules and regulations of the FCC, and except for any
such approvals, consents, authorizations or other actions of the type referred
to above which would not individually or in the aggregate have a Material
Adverse Effect or prevent the consummation by the Seller of the transactions
contemplated hereby.
Section 4.3 Financial Statements. Schedule 4.3 contains the unaudited
balance sheet (the "Balance Sheet") of the Business as of December 31, 2002 (the
"Balance Sheet Date"), and the related statement of income for the year then
ended. Except as set forth in Schedule 4.3, the Balance Sheet and statement of
income have been prepared in accordance with GAAP, except for the absence of
notes and normal year-end adjustments and the write-off of certain intercompany
indebtedness. The Balance Sheet and the statement of income present fairly and
accurately, in all material respects, the financial position and results of
operations of the Business as of the Balance Sheet Date and for the period
covered thereby.
Section 4.4 Operations Since Balance Sheet Date.
(a) Except as set forth in Schedule 4.4, during the period from the Balance
Sheet Date to the date of this Agreement, inclusive:
(i) To the Knowledge of the Seller, there has not been any change in
the financial condition or the results of operations of the Station or the
Business which has had or would reasonably be expected to have a Material
Adverse Effect;
20
(ii) To the Knowledge of the Seller, there has not been any damage,
destruction, loss or claim (whether or not covered by insurance) or condemnation
or other taking which has had or would reasonably be expected to have a Material
Adverse Effect;
(iii) Neither the Seller nor any of its Subsidiaries has, in respect
of the Station, the Business or the Purchased Assets, sold, leased, transferred
or otherwise disposed of (including any transfers to any Affiliate of the
Seller), or mortgaged or pledged, or imposed or suffered to be imposed any Lien
(other than Permitted Liens) on, any of the Purchased Assets, other than
Personal Property sold or otherwise disposed of in the ordinary course of the
Business consistent with past practice; or
(iv) Neither the Seller nor any of its Subsidiaries has, in respect of
the Station, the Business or the Purchased Assets, entered into any agreement or
made any commitment to take any action described in subparagraph (iii) above.
Section 4.5 No Undisclosed Liabilities. Except as set forth in Schedule
4.5, to the Knowledge of the Seller, neither the Seller or any of its
Subsidiaries is subject, with respect to the Business, the Station or the
Purchased Assets, to any liability (including, without limitation, Claims),
whether absolute, contingent, accrued or otherwise, which is not shown or
reserved for in the Balance Sheet, other than liabilities of the same nature as
those set forth in the Balance Sheet and the notes thereto and incurred in the
ordinary course of the Business after the Balance Sheet Date and liabilities not
required to be shown or reserved for under GAAP and except for liabilities which
would not individually or in the aggregate have a Material Adverse Effect.
Section 4.6 Taxes.
(a) As of the date of this Agreement, the Seller, and each Subsidiary of
the Seller, has been treated as a partnership or a disregarded entity for
federal income tax purposes for all times and, therefore, neither the Seller nor
any of its Subsidiaries has any liability for any federal income taxes.
(b) As of the date of this Agreement, Seller and each of its Subsidiaries
has timely filed or caused to be filed all material Tax Returns required to be
filed by it, all such Tax Returns are true, complete, and correct in all
material respects, and the Seller and each of its Subsidiaries has paid, or
provided adequate reserves (in accordance with GAAP), for all deficiencies or
other assessments of any material Tax owed by it (whether or not shown on any
Tax Return). Except as set forth on Schedule 4.6 hereto, as of the date of this
Agreement, no Tax deficiency has been proposed in writing against the Seller or
any of its Subsidiaries. Except as set forth on Schedule 4.6 hereto, as of the
date of this Agreement, no audit of any Tax Return of the Seller or any of its
Subsidiaries has been proposed in writing or is in progress. No audit of any Tax
Return of the Seller or any of its Subsidiaries has been conducted within the
five (5) taxable years of the Seller or any of its Subsidiaries preceding the
date of this Agreement . As of the date of this Agreement, no extension of time
with respect to any date on which any Tax Return was or is to be filed with
respect to the Seller or any of its Subsidiaries is in force and no waiver or
agreement by the Seller or any of its Subsidiaries is in force for the extension
of time for the assessment or payment of any Tax.
21
(c) There are no Tax Liens on any of the Purchased Assets or on the
Optionee's title or use of the Purchased Assets.
(d) As of the date of this Agreement, no claim has ever been made by a
taxing authority in a jurisdiction where the Seller or any of its Subsidiaries
does not currently file Tax Returns that the Seller or any of its Subsidiaries
is or may be subject to taxation by such jurisdiction.
(e) None of the Purchased Assets is "tax exempt use property" within the
meaning of Section 168(h) of the Code.
(f) None of the Purchased Assets is subject to a lease made pursuant to
Section 168(f)(8) of the Code.
Section 4.7 Sufficiency of Assets. Except as set forth in Schedule 4.7 and
except for the Excluded Assets and certain corporate governance and managerial
services provided by the Seller or one or more Affiliates of the Seller to the
Business, the Purchased Assets constitute all of the assets necessary for or
used by the Seller and its Subsidiaries in the operation of the Station as
operated as of the date hereof.
Section 4.8 Governmental Permits.
(a) PSC License, a Subsidiary of the Seller, directly holds all of the
licenses, permits or other authorizations issued by the FCC relating to or
necessary for the operation of the Station (the "FCC Licenses"). Schedule 4.8(a)
sets forth a list of all of the FCC Licenses (other than auxiliary service
licenses and FCC registrations for receive-only earth stations) held by PSC
License and sets forth the expiration date, if any, of each such FCC License. To
the Knowledge of the Seller, each FCC License, at the time of its issuance, was
duly and validly issued by the FCC. To the Knowledge of the Seller, no event has
occurred or circumstance exists which permits, or after notice or lapse of time
or both would permit, the revocation, suspension, termination or non-renewal of
any FCC License, other than (i) events that may occur or circumstances that may
arise after the date of this Agreement as a result of the Optionee's failure to
fulfill its obligations under the Optionee LMA, and (ii) circumstances of
general applicability to the television broadcast industry as a whole. As of the
date of this Agreement, each of the FCC Licenses is in full force and effect,
and PSC License is in substantial compliance therewith with no known conflict
with the valid rights of others. At the Closing, each FCC License will be in
full force and effect (other than as provided in the rules and policies of the
FCC generally applicable to the television broadcast industry as a whole), and
PSC License will be in substantial compliance therewith with no known conflict
with the valid rights of others, except where the failure to be in full force
and effect or in substantial compliance results from the failure of the Optionee
to fulfill its obligations under the Optionee LMA.
(b) To the Knowledge of the Seller, the Seller and its Subsidiaries own,
hold or possess all Governmental Permits (other than the FCC Licenses), except
for such Governmental Permits, of which the failure to own, hold or possess
would not, individually or in the aggregate, have a Material Adverse Effect.
Schedule 4.8(b) sets forth a list and brief description of each such
Governmental Permit (other than the FCC Licenses) owned, held or
22
possessed by the Seller and its Subsidiaries as of the date of this Agreement,
and the name of the holder thereof.
(c) Except with respect to programming being provided to the Seller under
the Affiliation Agreement and the Existing Affiliation Agreement about which the
Seller and its Subsidiaries make no representation or warranty, and except as
set forth in Schedule 4.8(c), the Seller and each of its Subsidiaries has
fulfilled and performed in all material respects its obligations under each of
the Governmental Permits, except where the failure to fulfill or perform such
obligations would not individually or in the aggregate have a Material Adverse
Effect, and no event has occurred or condition or state of facts exists which
constitutes or, after notice or lapse of time or both, would constitute a breach
or default under any such Governmental Permit except for such breaches or
defaults as would not individually or in the aggregate have a Material Adverse
Effect. No written notice of cancellation, of default or of any dispute
concerning any Governmental Permit, has been received by the Seller or any of
its Subsidiaries. Except as set forth in Schedule 4.8(c), each of the
Governmental Permits is valid, subsisting and in full force and effect, except
where the failure to be so would not individually or in the aggregate have a
Material Adverse Effect.
(d) Except with respect to programming being provided to the Seller under
the Affiliation Agreement and the Existing Affiliation Agreement about which the
Seller and its Subsidiaries make no representation or warranty, to the Knowledge
of the Seller, the Station is being operated in accordance with the Governmental
Permits and in compliance in all material respects with the Communications Act,
the rules and regulations thereunder, and all other Requirements of Law
applicable to the Station. Neither the Seller nor any of its Subsidiaries has
received any written notice of any violations of the Governmental Permits, the
Communications Act or the rules and regulations thereunder. To the Knowledge of
the Seller, there is no action by or before the FCC currently pending or
threatened to revoke, cancel, rescind, modify or refuse to renew in the ordinary
course any of the Governmental Permits, other than circumstances of general
applicability to the television broadcast industry as a whole. The Governmental
Permits are validly issued in the name of the Seller or a Subsidiary of the
Seller. The Seller has delivered to the Optionee true and complete copies of the
Governmental Permits, including any and all amendments and other modifications
thereto. The Governmental Permits are in full force and effect, are valid for
the balance of the current license term applicable generally to television
stations licensed to communities in the state where the Station is located, are
unimpaired by any acts or omissions of the Seller or any of its Affiliates, or
the employees, agents, officers or directors, or members of the Seller or any of
their Affiliates, and are free and clear of any restrictions which might limit
the full operation of the Station in the manner and to the full extent as it is
now operated (other than restrictions under the terms of the Governmental
Permits themselves). Neither the Seller nor any of its Subsidiaries has received
any written notice of any violations of the Governmental Permits, the
Communications Act or the rules and regulations thereunder. To the Knowledge of
the Seller, there are no applications or Claims pending or threatened which may
individually or in the aggregate have a Material Adverse Effect (other than
rulemaking proceedings that apply to the television broadcasting industry
generally). Neither the Seller nor any of its Subsidiaries is aware of any
reason why those of the Governmental Permits subject to expiration might not be
renewed in the ordinary course for a full term without material qualifications,
except to the extent of any contrary rules and policies of the FCC of general
applicability to the television broadcast industry as a whole, or of any reason
why any of the
23
Governmental Permits might be revoked. No renewal of any Governmental Permits
would constitute a major environmental action under the current rules and
regulations of the FCC. The Seller maintains an appropriate public inspection
file at the Station's studios in accordance with FCC rules and regulations.
Access to the Station's transmission facilities is restricted in accordance with
the policies, rules and regulations of the FCC.
Section 4.9 Real Property Leases.
(a) Leased Properties. To the Knowledge of the Seller, Schedule 4.9(a)
contains a true and complete list of all leases, subleases, licenses and other
agreements (collectively, the "Real Property Leases") under which either the
Seller or any of its Subsidiaries uses or occupies or has the right to use or
occupy, now or in the future, any real property (the real property covered by
such Real Property Leases, the "Leased Real Property"). The Seller heretofore
has delivered or caused to be delivered to the Optionee a copy of all of the
Real Property Leases set forth on Schedule 4.9(a) (including all modifications,
amendments and supplements) to the extent, and in the form, that such Real
Property Leases are in the possession of the Seller or any Subsidiary of the
Seller. All of such Real Property Leases are in full force and effect; all rent
and other sums and charges payable by the Seller or any of its Subsidiaries as
tenant thereunder are current; to the Knowledge of the Seller, each other Person
that is a party to any such Real Property Lease is in material compliance with
all applicable terms and requirements of such Real Property Lease; to the
Knowledge of the Seller no event has occurred or condition or set of
circumstances exists that (with or without notice or lapse of time or both) (A)
constitutes a default or breach on the part of the lessee under any such Real
Property Lease or (B) gives any Person the right to terminate or cancel any such
Real Property Lease; neither the Seller nor any of its Subsidiaries has given to
or received from any other Person any written notice or other communication
regarding any alleged breach of or default under any such Real Property Lease
except in the case of each of the representations above where the inaccuracy of
the representation would not individually or in the aggregate have a Material
Adverse Effect. The Seller or its Subsidiary, as applicable, holds the leasehold
interest in each such Real Property Lease free and clear of all Liens, subject
only to Permitted Liens. To the Knowledge of the Seller, either (i) the Seller
or its Subsidiary, as lessee under the Real Property Leases, is entitled to
non-disturbance from the holders of all mortgages (or deeds of trust) on the
lessor's interests in the Leased Real Property or (ii) the Real Property Leases
are superior to such mortgages or deeds of trust.
(b) Tower Lease. To the Knowledge of the Seller, (i) the Seller has
delivered to the Optionee a true, correct and complete copy of its lease with
American Tower L.P. relating to the Tower (the "Tower Lease"), and (ii) the
representations and warranties contained in the third sentence of Section 4.9(a)
are true and correct with respect to the Tower Lease (except that for purposes
of this clause (ii), all references in such sentence to the Real Property
Leases, and to Seller and its Subsidiaries, shall be deemed, respectively,
references to the Tower Lease and the lessee thereunder).
(c) Entire Premises. The Leased Real Property constitutes all of the Real
Property.
24
(d) Condemnation. Neither the Seller nor any of its Subsidiaries has
received written notice of, and to the Knowledge of the Seller, there are not
any pending, threatened or contemplated condemnation proceedings affecting the
Real Property or any part thereof, or any sale or other disposition of the Real
Property or any part thereof in lieu of condemnation.
Section 4.10 Personal Property. Schedule 4.10 contains a list of all
personal property owned or leased by the Seller or any of its Subsidiaries as of
the date of this Agreement having an original cost of $1,000 or more used, held
by the Seller or any of its Subsidiaries for the operation of the Station, or
necessary for the operation of the Station as it is being operated as of the
date hereof (the "Personal Property").
Section 4.11 Personal Property Leases. Schedule 4.11 contains a list of
each lease or other agreement or right under which the Seller or any of its
Subsidiaries is lessee of, or holds or operates, any Personal Property owned by
a third party used, held for use by the Station, or necessary to operate the
Station as it is being operated as of the date hereof (the "Personal Property
Leases").
Section 4.12 Intellectual Property.
(a) Except as disclosed in Schedule 4.12(a), to the Knowledge of the
Seller, the Seller and its Subsidiaries either: (i) own the entire right, title
and interest in and to the Station Intellectual Property, free and clear of
Liens except for Permitted Liens or (ii) have the valid right and license to use
the same in the operations of the Station as currently conducted except where
the failure to own or have the right to use such items would not individually or
in the aggregate have a Material Adverse Effect.
(b) Except as disclosed in Schedule 4.12(a) and except where it would not
individually or in the aggregate have a Material Adverse Effect: (i) the Station
Intellectual Property is valid and enforceable; and (ii) the Seller or a
Subsidiary has the right to bring actions for infringement or unauthorized use
of the Station Intellectual Property.
(c) Schedule 4.12(c) sets forth all material IP Licenses under which the
Seller or a Subsidiary is a (i) licensor, or (ii) licensee, distributor or
reseller. The Seller or such Subsidiary has substantially performed all
obligations imposed on it pursuant to IP Licenses except where the failure to do
so would not individually or in the aggregate have a Material Adverse Effect,
and is not, nor to the Knowledge of the Seller is another party thereto, in
breach of or default thereunder in any respect, nor is there any event that with
notice or lapse of time or both would constitute a default thereunder except
where such breach or default would not individually or in the aggregate have a
Material Adverse Effect.
(d) Except as disclosed in Schedule 4.12(d):
(i) To the Knowledge of the Seller, no Person is infringing upon or
otherwise violating the rights of the Seller or any or its Subsidiaries in
respect of Station Intellectual Property;
(ii) No litigation is pending and, to the Knowledge of the Seller, no
Claim has been made, or is threatened, against the Seller or any Subsidiary, (i)
alleging that the
25
Seller or any Subsidiary has infringed any intellectual property rights of
others, or (ii) opposing or attempting to cancel any of the Station Intellectual
Property.
(e) To the Knowledge of the Seller, neither the operation of the Station,
nor the Station Intellectual Property, products or services owned, used,
developed, provided, sold, licensed, imported or otherwise exploited by the
Seller and its Subsidiaries, or made for, used or sold by or licensed to the
Seller or any Subsidiary by any Person as of the date of this Agreement,
infringes or otherwise violates the Intellectual Property rights of others.
Neither the Seller nor any Subsidiary has sold, licensed or otherwise disposed
of any of the Station Intellectual Property to any Person or agreed to indemnify
any Person for any Patent, Trademark or Copyright infringement.
(f) To the Knowledge of the Seller, neither the Seller nor any Subsidiary
is, or as a result of the execution and delivery of this Agreement or the
performance of its obligations hereunder, will be, in violation of any agreement
relating to any Station Intellectual Property.
Section 4.13 Title to Purchased Assets. The Seller and its Subsidiaries
have a valid license interest in the Governmental Permits free and clear of all
Liens, except Permitted Liens. The Seller and its Subsidiaries have good and
marketable title (or a valid leasehold or license interest, in the case of any
leased or licensed assets, as applicable), to all of the Purchased Assets (other
than the Governmental Permits) free and clear of all Liens, except for Permitted
Liens and where the failure to have good and marketable title (or a valid
leasehold or license interest) would not individually or in the aggregate have a
Material Adverse Effect.
Section 4.14 Contracts. Set forth in Schedule 4.14 is a list of each
contract, lease or other agreement relating to the operation of the Station or
the Purchased Assets to which the Seller or any Subsidiary of the Seller is a
party as of the date of this Agreement (collectively with the Real Property
Leases, the Tower Lease, the Personal Property Leases and the IP Licenses, the
"Station Agreements").
Section 4.15 Status of Contracts. Except as set forth in Schedule 4.15 or
in any other Schedule hereto, each of the Station Agreements constitutes a valid
and binding obligation of the Seller or Subsidiary party thereto and, to the
Knowledge of the Seller, the other parties thereto (subject to bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights generally) and is in full force and effect
(subject to bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights generally) except
where the failure of such Station Agreement to be binding or in full force and
effect would not individually or in the aggregate have a Material Adverse
Effect. The Seller and each Subsidiary have fulfilled and performed in all
material respects their respective obligations under each of the Station
Agreements to which they are parties except where the failure to fulfill or
perform such obligations would not individually or in the aggregate have a
Material Adverse Effect, and neither the Seller nor any Subsidiary is in, or
alleged to be in, breach or default under any of the Station Agreements and,
except for such breaches or defaults as would not individually or in the
aggregate have a Material Adverse Effect, to the Knowledge of the Seller, no
other party to any of the Station Agreements has breached or defaulted
thereunder, and no event has occurred and no condition or state of facts exists
which, with the passage of time or the giving of notice or both, would
constitute such a
26
default or breach by the Seller or Subsidiary party thereto except for such
breaches or defaults as would not individually or in the aggregate have a
Material Adverse Effect or, to the Knowledge of the Seller, by any such other
party. There are no oral contracts material to the operation of the Business or
the Station. Copies of each of the Station Agreements together with all
amendments thereto to the extent and in the form that any such Station Agreement
(or amendment thereto) is in the possession of the Seller, have heretofore been
delivered or made available to the Optionee by the Seller.
Section 4.16 No Violation, Litigation or Regulatory Action. Except as set
forth in Schedule 4.16:
(a) To the Knowledge of the Seller, the Seller and each of its Subsidiaries
has complied in all material respects with, and is not in violation of any,
Orders applicable to the Seller, such Subsidiary, the Purchased Assets, the
Station or the Business. To the Knowledge of the Seller, the Seller and each of
its Subsidiaries has complied with, and is not in violation of, any Requirements
of Law, except where such non-compliance or violation would not individually or
in the aggregate have a Material Adverse Effect. Without limiting the generality
of the foregoing:
(i) To the Knowledge of the Seller, there are no unsatisfied Orders
outstanding against the Seller, any Subsidiary, the Purchased Assets, the
Station or the Business;
(ii) To the Knowledge of the Seller, there are no Claims pending or
threatened against the Seller or any Subsidiary in respect of the Purchased
Assets, the Station or the Business; and
(iii) To the Knowledge of the Seller, there is no Claim pending or
threatened which questions the legality or propriety of the transactions
contemplated by this Agreement or the Optionee LMA;
(b) The Station's transmitting and studio equipment is operating in all
material respects in accordance with the terms and conditions of the
Governmental Permits and all underlying construction permits and the rules,
regulations and policies of the FCC, including, without limitation, all
regulations concerning equipment authorization. The Station is not causing
interference in violation of FCC rules to the transmission of any other
broadcast station or communications facility and neither the Seller nor any
Subsidiary has received any written complaints with respect thereto and, no
other broadcast station or communications facility is causing interference in
violation of FCC rules to the Station's transmissions or the public's reception
of such transmissions;
(c) Neither the Seller nor any Subsidiary has received written notification
in the past two (2) years from the FCC that the employment practices of the
Seller or such Subsidiary fail to comply with FCC rules and policies; and
(d) Except where the failure to have done so would not individually or in
the aggregate have a Material Adverse Effect (i) all ownership reports,
employment reports, tax returns and other documents required to be filed by the
Seller and its Subsidiaries with the FCC or other Governmental Authority have
been filed, (ii) such items as are required to be placed in
27
each Station's local public inspection files have been placed in such files,
(iii) all proofs of performance and measurements that are required to be made by
the Seller and its Subsidiaries with respect to the Station's transmission
facilities have been completed and filed at each Station and (iv) all
information contained in the foregoing documents is true, complete and accurate
in all material respects.
Section 4.17 Insurance. The Seller and/or its Subsidiaries maintain
policies of fire and extended coverage and casualty, liability and other forms
of insurance in respect of the Purchased Assets and the Station. All such
insurance policies are in full force and effect. With respect to the Purchased
Assets and the Station, there are no outstanding Claims under any insurance
policy or default with respect to provisions in any such policy, which Claim or
default, individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect. Complete and correct copies of all such insurance
policies have heretofore been delivered or made available to the Optionee by the
Seller and are listed on Schedule 4.17.
Section 4.18 Environmental Protection. In respect of the Business and the
Purchased Assets, except as set forth in Schedule 4.18:
(a) To the Knowledge of the Seller, as of the date of this Agreement (i)
the Seller and its Subsidiaries are in material compliance with all applicable
Environmental Laws; the Seller and its Subsidiaries hold and are in compliance
with all material licenses, permits, approvals or other authorizations of any
Governmental Authority required under Environmental Laws for the operation of
the Business as conducted on the date of this Agreement, and (ii) no
modification or change to the operations of the Business will be required upon
the renewal of any such licenses, permits, approvals or other authorizations of
any Governmental Authority other than modifications or changes required due to
changes in Requirements of Law occurring after the date hereof;
(b) To the Knowledge of the Seller, there are no Claims arising under
Environmental Laws or principles of common law relating to safety, health,
pollution or protection of the Environment pending or threatened against the
Seller or any Subsidiary, (ii) there are no Orders pending or, to the Knowledge
of the Seller, threatened relating to compliance with or liability under any
Environmental Law, and (iii) to the Knowledge of the Seller, neither the Seller
nor any Subsidiary has any liability under any Environmental Law, except where
such liability would not individually or in the aggregate have a Material
Adverse Effect;
(c) To the Knowledge of the Seller, there have been no Releases of
Hazardous Materials in, on or under the Real Property currently owned, leased or
used by the Seller or its Subsidiaries that could result in any material
investigation or material remedial action by any Governmental Authority pursuant
to any Environmental Law;
(d) To the Knowledge of the Seller, no Real Property or any property to
which the Seller or any Subsidiary transported or arranged for the
transportation of any Hazardous Materials is listed or proposed for listing on
the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as
defined in CERCLA), or on any similar federal or state list of sites requiring
investigation or remediation;
28
(e) To the Knowledge of the Seller, (i) there are no structures,
improvements, equipment, activities, fixtures or facilities on any property
owned, leased or used by the Seller or its Subsidiaries that are constructed
with, use, or otherwise contain, radioactive materials, asbestos-containing
materials, lead, urea formaldehyde or polychlorinated biphenyls, unless same are
in good condition, ordinary wear and tear excepted, and in compliance in all
material respects with Environmental Laws, (ii) there are no underground storage
tanks, or underground piping associated with such tanks, except those that
comply with applicable Environmental Laws and (iii) there are no abandoned
underground storage tanks that have not been removed in compliance with
Environmental Laws;
(f) To the Knowledge of the Seller, there are no liens, restrictive
covenants or other land use restrictions under Environmental Laws on any of the
properties owned, leased or used by the Seller or its Subsidiaries, and no
government actions have been taken, or are in process that could subject any of
such properties to such liens, restrictive covenants or other land use
restrictions, and neither the Seller nor any Subsidiary is required to place any
notice or restriction relating to Hazardous Materials in any deed to such
property;
(g) Neither the Seller nor any Subsidiary has released any Person or waived
any rights or defenses with respect to any Environmental Conditions or any Claim
arising under any Environmental Law; and
(h) There is no material environmental report in the possession or control
of the Seller or any of its Affiliates relating to the current or prior business
of the Seller that has not been delivered to the Optionee.
Section 4.19 Insolvency Proceedings. None of the Seller, any Subsidiary or
any of the Purchased Assets are the subject of any pending or, to the Knowledge
of the Seller, threatened insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary. In respect of the
Purchased Assets, neither the Seller nor any Subsidiary has made an assignment
for the benefit of creditors, fraudulent conveyances, preferences, or transfers
nor has the Seller or any Subsidiary taken any action in contemplation of the
institution of any such insolvency proceedings.
Section 4.20 No Third Party Options. There are no agreements with, options
or rights of, or commitments to any Person, other than the Optionee, to acquire
any of the Purchased Assets or any interest therein.
Section 4.21 Citizenship. The Seller is not a "foreign person" as defined
in Section 1445(f)(3) of the Code.
Section 4.22 No Finder. None of the Seller nor any party acting on behalf
of the Seller has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary, for or on account of the transactions
contemplated by this Agreement.
Section 4.23 No Representation as to Transferability of the Governmental
Permits. The Seller makes no representation or warranty as to any matter
concerning the power
29
and authority or legal right of the Optionee or any Permitted Transferee to
acquire the Governmental Permits.
Section 4.24 Disclosure of Information to the Optionee. To the Knowledge of
the Seller, the Seller has provided, in all material respects, the information
relating to the Station or the Purchased Assets which has been requested by the
Optionee.
Section 4.25 Aggregate Material Adverse Effect. To the Knowledge of the
Seller, there are no facts, events or circumstances that the Seller has not
disclosed in the representations and warranties contained in this Article IV
(including the Schedules hereto) solely because of a "Material Adverse Effect"
exception or qualifier to any such representation and warranty which, in the
aggregate, have or would reasonably be expected to have a Material Adverse
Effect.
Section 4.26 Exclusive Representations and Warranties; Seller's Disclosure
Schedules. Other than the representations and warranties set forth in this
Article IV, the Seller is not making any other representation or warranty,
express or implied, with respect to the Business, the Station or the Purchased
Assets. The information included in any Schedule to this Agreement delivered by
the Seller shall be deemed to have been included in every other Schedule to this
Agreement delivered by the Seller as though such information were fully set
forth in such Schedule.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE OPTIONEE
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Optionee represents and
warrants to the Seller and agrees as follows.
Section 5.1 Organization. The Optionee is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Optionee is qualified as a foreign corporation to do business under the laws
of the State of California. The Optionee has the requisite corporate power and
authority to own or lease and operate its assets and properties.
Section 5.2 Authority of the Optionee.
(a) The Optionee has the requisite corporate power and authority to execute
and deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by the Optionee pursuant hereto (collectively, the
"Optionee Ancillary Agreements"), to consummate the transactions contemplated
hereby and thereby and to comply with the terms, conditions and provisions
hereof and thereof.
(b) The execution, delivery and performance of this Agreement and the
Optionee Ancillary Agreements by the Optionee have been duly authorized and
approved by all necessary corporate action of the Optionee and do not require
any further authorization or
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consent of the Optionee or its stockholders. This Agreement is, and each
Optionee Ancillary Agreement when executed and delivered by the Optionee and the
other parties thereto will be, a legal, valid and binding agreement of the
Optionee enforceable in accordance with its respective terms, except in each
case as such enforceability may be limited by bankruptcy, moratorium,
insolvency, reorganization or other similar laws affecting or limiting the
enforcement of creditors' rights generally and except as such enforceability is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) Except as set forth in Schedule 5.2, none of the execution and delivery
by the Optionee of this Agreement and the Optionee Ancillary Agreements, the
consummation by the Optionee of any of the transactions contemplated hereby or
thereby or compliance by the Optionee with or fulfillment by the Optionee of the
terms, conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of any Lien upon any assets of the
Optionee under, the certificate of incorporation or bylaws of the Optionee, any
indenture, note, mortgage, lease, guaranty or material agreement, or any Order,
to which the Optionee is a party or any of the assets of the Optionee is subject
or by which the Optionee is bound, or any Requirement of Law affecting the
Optionee or its assets except for any such conflicts, breaches or other
occurrences of the type referred to above, which would not individually or in
the aggregate have a material adverse effect on the Optionee or prevent the
consummation by the Optionee of the transactions contemplated hereby; or
(ii) require the approval, consent, authorization or act of, or the
making by the Optionee of any declaration, filing or registration with, any
third party or Governmental Authority, except for such of the foregoing as are
necessary pursuant to the HSR Act, the Communications Act or the rules and
regulations of the FCC, and except for any such approvals, consents,
authorizations or other actions of the type referred to above which would not
individually or in the aggregate have a material adverse effect on the Optionee
or prevent the consummation by the Optionee of the transactions contemplated
hereby.
Section 5.3 Litigation. Except as set forth in Schedule 5.3, to the
Knowledge of the Optionee, neither the Optionee nor any Affiliate of the
Optionee is a party to any Claim pending or, to the Knowledge of the Optionee,
threatened which, if adversely determined, would reasonably be expected to
restrict the ability of the Optionee to consummate the transactions contemplated
by this Agreement. To the Knowledge of the Optionee, there is no Order to which
the Optionee or any Affiliate of the Optionee is subject which would restrict
the ability of the Optionee to consummate the transactions contemplated by this
Agreement.
Section 5.4 No Finder. Neither the Optionee nor any party acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
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Section 5.5 Investment Representations.
(a) The Optionee is familiar with the Station, the Business and the
Purchased Assets and has had the opportunity to obtain such information about
the Business, the Station and the Purchased Assets as it has requested.
(b) The Optionee has knowledge and experience in financial and business
matters relating to its potential investment in the Business, the Station and
the Purchased Assets pursuant to an exercise of the Option and is capable of
evaluating the merits and risks of such investment and is able to bear the
economic risk of such investment for an indefinite period of time. The Optionee
qualifies as an "accredited investor" under Rule 501 (a) promulgated under the
Securities Act of 1933, as amended.
(c) The Optionee has knowledge and experience with respect to the
Communications Act and other laws applicable to its power and authority or legal
right to hold the Option, to exercise the Option, to acquire the Governmental
Permits or otherwise consummate the transactions contemplated hereby, whether
under the Communications Act or any other law.
Section 5.6 Optionee's Reliance. The Optionee acknowledges that neither the
Seller, any Subsidiary of the Seller nor any other Person has made, and the
Optionee has not relied upon, any representation or warranty (expressed or
implied), except as expressly set forth in this Agreement (and the Schedules
hereto) or the certificates to be delivered pursuant to this Agreement by the
Seller at the Closing.
ARTICLE VI
ACTION PRIOR TO THE CLOSING DATE
Each of the Seller and the Optionee covenant and agree to take the
following actions between the date hereof and the Closing Date:
Section 6.1 Preserve Accuracy of Representations; Incurrence of
Liabilities; Notification.
(a) The Seller shall refrain from taking any action which would reasonably
be expected to render any representation or warranty contained in Sections 4.1,
4.2, 4.6(c), 4.6(e), 4.6(f), 4.8(a), 4.9(b), 4.13, 4.19, 4.20 and 4.21
inaccurate in any material respect as of the Closing Date. The Optionee shall
refrain from taking any action which would reasonably be expected to render any
representation or warranty contained in Sections 5.1, 5.2, 5.5 and 5.6
inaccurate as of the Closing Date.
(b) From the date hereof until the Closing Date, the Seller shall not
willfully and intentionally incur, for the purpose of causing the condition
contained in Section 9.1(a) not to be satisfied as of the Closing Date, any
liabilities or obligations relating to the Station or the Purchased Assets that
would have individually or in the aggregate a Material Adverse Effect.
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(c) Each party shall promptly notify the other of any Claim that shall be
instituted or threatened (in writing) against such party to restrain, prohibit
or otherwise challenge the legality of any transactions contemplated hereby. The
Seller or any of its Subsidiaries shall notify the Optionee if the Seller or any
of its Subsidiaries receives any written finding, Order, complaint, citation or
notice prior to the Closing Date which states that any aspect of the Station's
operations violates any rule or regulation of the FCC or of any other
Governmental Authority, including, without limitation, any Requirement of Law
concerning environmental protection, the employment of labor or equal employment
opportunity.
Section 6.2 FCC Consent; HSR Act Approval; Other Consents and Approvals of
Governmental Authorities.
(a) Prior to the Optionee's exercise of the Option, the Optionee shall give
the Seller written notice of its intention to deliver an Option Exercise Notice
reasonably in advance of the actual delivery of the Option Exercise Notice to
enable the Seller and the Optionee (or its Permitted Transferee) to (1) make the
requisite filings with the FCC and under the HSR Act in accordance with this
Section 6.2(a), and (2) allow the statutory waiting period under the HSR Act to
expire, in each case prior to the Optionee's delivery of the Option Exercise
Notice. As promptly as practicable after the date of the Seller's receipt of
such written notice, but in any event no later than fifteen (15) days
thereafter:
(i) The Seller and the Optionee (or its Permitted Transferee) shall
prepare and cause to be filed with the FCC an application or applications
requesting the FCC's consent to the assignment of the FCC Licenses (and any
extensions or renewals thereof) to the Optionee (or its Permitted Transferee)
from the Seller (collectively, the "Transfer Application"). The parties agree
that they shall prosecute the Transfer Application in good faith and with due
diligence and each of the Seller and the Optionee (or its Permitted Transferee)
shall take all reasonable and necessary action on its part to obtain the FCC's
consent and approval of any Transfer Applications. The Seller and the Optionee
(or its Permitted Transferee) agree that they shall furnish all information
required for any Transfer Application or other filing to be made with the FCC
pursuant to this Section 6.2(a)(i) in connection with the transactions
contemplated by this Agreement and shall promptly comply with all requests by
the FCC for additional information or documentation in connection with any
Transfer Application. Any fees assessed by the FCC incident to the filing or
grant of the Transfer Application and any other application(s) contemplated by
this Section 6.2(a)(i) shall be borne by the Optionee (or its Permitted
Transferee). Each of the Seller and the Optionee (or its Permitted Transferee)
shall make available to the other, promptly after the filing or filings thereof,
copies of all reports filed by it or its Affiliates on or prior to the Closing
Date with the FCC in respect of the Station. The parties shall not intentionally
take, or fail to take, any action which would reasonably be expected to
materially delay the receipt of the FCC Consent.
(ii) Each of the Seller and the Optionee (or its Permitted Transferee)
shall prepare and file with the Federal Trade Commission and the Antitrust
Division of the Department of Justice a Pre-Merger Notification and Report Form
under the HSR Act and thereafter make any other required submissions under the
HSR Act, or any rules and regulations promulgated thereunder, in connection with
the Optionee's potential exercise of the Option, the purchase and sale of the
Purchased Assets and the other transactions contemplated hereby. The
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Seller and the Optionee (or its Permitted Transferee) shall respond as promptly
as practicable to all inquiries or requests received from the Federal Trade
Commission, the Antitrust Division of the Department of Justice or any other
Governmental Authority for additional information or documentation pertaining to
antitrust matters. The parties shall cooperate with each other in connection
with the making of all such filings and responses. Each of the Seller and the
Optionee (or its Permitted Transferee) warrants that all such filings by it will
be, as of the date filed, true and accurate in all material respects and in
accordance with the requirements of the HSR Act and any such rules and
regulations. Each of the Seller and the Optionee (or its Permitted Transferee)
agrees to make available to the other, prior to the filing thereof, such
non-confidential information as may be required by such commission or department
to be filed as additional information requested by such agencies under the HSR
Act and such rules and regulations. The cost of any filing fees payable under
the HSR Act in connection with the notifications and information described in
this Section 6.2(a)(ii) shall be borne by the Optionee (or its Permitted
Transferee).
(b) The Seller and the Optionee (or its Permitted Transferee) shall each
use commercially reasonable efforts to obtain all consents, amendments or
permits from Governmental Authorities, which are required by the terms thereof
or this Agreement for the consummation of the transactions contemplated by this
Agreement.
Section 6.3 Compliance with the Optionee LMA; Operation of the Station
Prior to the Closing.
(a) From the date hereof until the Closing Date, (i) during the LMA
Effective Period, each of the Seller and the Optionee agree that it will use its
commercially reasonable efforts to be in compliance with its obligations under
the Optionee LMA and (ii) during all other periods, the Seller and its
Subsidiaries shall (x) operate and carry on the operations of the Station and
the Business consistent, in all material respects, with the Communications Act
and the rules and regulations of the FCC promulgated thereunder and otherwise
comply in all material respects with Requirements of Law applicable to the
Seller, its Subsidiaries, the Purchased Assets, the Business and the operation
of the Station and (y) comply in all material respects with the Tower Lease.
(b) From the date hereof until the Option Effective Date and during the LMA
Effective Period, and, as to clauses (iii) and (iv) of this Section 6.3(b) only,
until the Closing Date, except as expressly permitted by this Agreement, the
Optionee LMA, the Amended and Restated Credit Agreement or the express prior
written approval of the Optionee, neither the Seller nor any of its Subsidiaries
shall, in respect of the Station:
(i) make any material change in the Business or the operations of the
Station;
(ii) enter into any lease, contract or agreement pertaining to the
Business, the Station or the Purchased Assets that (1) has a term which extends
beyond the Closing Date and is not terminable at any time by the Seller (or its
successors or assigns) upon thirty (30) days (or less) notice or (2) requires
payments by the Seller (or its successors or assigns) of more than $12,000
during any consecutive twelve (12) month period (any such lease,
34
contract or agreement, a "Prohibited Contract"); provided that the Seller may
enter into a Prohibited Contract so long as any such Prohibited Contract is not
part of the Purchased Assets or Assumed Liabilities and the assets subject to
such Prohibited Contract are not part of the Purchased Assets;
(iii) sell, lease (as lessor), transfer or otherwise dispose of, or
mortgage or pledge, or impose or suffer to be imposed any Lien (other than
Permitted Liens) on, any of the Purchased Assets; or
(iv) acquiesce in any infringement, unauthorized use or impairment of
any Station Intellectual Property or change the Station's call signs.
Section 6.4 Third Party Consents. The Seller and the Optionee shall use all
commercially reasonable efforts to obtain any and all third party consents,
approvals or waivers necessary or advisable under the Station Agreements. If any
such third party consent, approval or waiver is not obtained before the Closing,
the parties shall use commercially reasonable efforts in good faith to
cooperate, and to cause each of their respective Affiliates to cooperate, in
effecting any lawful arrangement to provide to the Optionee or its designated
Affiliates the economic benefits of the Station Agreements for which third party
consents, approvals, and waivers are being sought after Closing, and to have the
Optionee or its designated Affiliates assume and discharge the obligations under
the Station Agreements from and after the Closing Date.
Section 6.5 Bulk Sales Act. The Optionee agrees to indemnify, defend, and
hold the Seller harmless against any Claims, liabilities, costs, or expenses,
including reasonable attorneys' fees (but excluding any Excluded Liabilities),
that the Seller may incur as a result of the failure to comply with the bulk
sales provisions of the Uniform Commercial Code or similar laws with respect to
the transactions contemplated hereby.
Section 6.6 Additional Covenant. Each of the Seller and the Optionee shall
take all commercially reasonable efforts to cause the consummation of the
transactions contemplated by this Agreement. The Seller and the Optionee shall
not take any action that is inconsistent with their respective obligations under
this Agreement or that could reasonably be expected to hinder or delay the
consummation of the transactions contemplated by this Agreement.
Section 6.7 Memorandum of Option Agreement. Upon the request of the
Optionee after the Option Effective Date and subject to the prior written
consent of the respective lessor under a Real Property Lease, the Seller shall
execute and deliver a memorandum of option agreement in substantially the form
attached hereto as Exhibit 6.7 for filing by the Optionee in the appropriate
real property office of the county in which such Real Property Lease is
recorded.
Section 6.8 HSR Act Approval Regarding Effectiveness. Within thirty (30)
days after the date hereof (the "HSR Option Effectiveness Filing Period"), each
of the Seller and the Optionee shall prepare and file with the Federal Trade
Commission and the Antitrust
35
Division of the Department of Justice a Pre-Merger Notification and Report Form
under the HSR Act and thereafter make any other required submissions under the
HSR Act, or any rules and regulations promulgated thereunder, in connection with
the effectiveness of this Agreement and the Optionee LMA; provided, however,
that if the Optionee delivers an HSR Opinion to the Seller on or prior to
midnight New York City time on the last day of the HSR Option Effectiveness
Filing Period, neither the Seller nor the Optionee will be required to make any
filings pursuant to this Section 6.8. If filings are required pursuant to this
Section 6.8, the Seller and the Optionee shall respond as promptly as
practicable to all inquiries or requests received from the Federal Trade
Commission, the Antitrust Division of the Department of Justice or any other
Governmental Authority for additional information or documentation pertaining to
antitrust matters. The parties shall cooperate with each other in connection
with the making of all such filings and responses. Each of the Seller and the
Optionee warrants that all such filings by it will be, as of the date filed,
true and accurate in all material respects and in accordance with the
requirements of the HSR Act and any such rules and regulations. Each of the
Seller and the Optionee agrees to make available to the other, prior to the
filing thereof, such non-confidential information as may be required by such
commission or department to be filed as additional information requested by such
agencies under the HSR Act and such rules and regulations. The cost of any
filing fees payable under the HSR Act in connection with the notifications and
information described in this Section 6.8 shall be borne by the Optionee. If
filings are required pursuant to this Section 6.8 and the Optionee fails to make
the initial filing under the HSR Act prior to midnight New York City time on the
last day of the HSR Option Effectiveness Filing Period, then this Agreement
shall automatically terminate and shall be void ab initio at midnight New York
City time on the last day of the HSR Option Effectiveness Filing Period. If the
initial filings under the HSR Act are made prior to the HSR Option Effectiveness
Filing Period and the statutory waiting period under the HSR Act in connection
with such filings has not expired on or prior to April 30, 2003, then this
Agreement shall automatically terminate and shall be void ab initio at midnight
New York City time on April 30, 2003. Except as set forth in the Amended and
Restated Credit Agreement and the Optionee LMA, the termination of this
Agreement pursuant to the two preceding sentences shall be the Seller's sole and
exclusive remedy for the failure of the Optionee to make the initial filing
under the HSR Act pursuant to this Section 6.8 or for the failure of the
statutory waiting period under the HSR Act to have expired on or prior to April
30, 2003.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Taxes; Sales, Use and Transfer Taxes.
(a) (i) The Seller shall be liable for and shall pay all Taxes (whether
assessed or unassessed) applicable to the Business, the Station or the Purchased
Assets, in each case attributable to periods (or portions thereof) ending on or
prior to the Closing Date, but not including any such Taxes attributable to the
LMA Effective Period other than income, Franchise or similar Taxes of the Seller
or its direct or indirect owners. The Optionee shall be liable for and shall pay
all Taxes (whether assessed or unassessed) applicable to the Business, the
Station or the Purchased Assets, in each case attributable to periods (or
portions thereof) beginning after the Closing Date and all such Taxes
attributable to the LMA Effective Period other than income,
36
Franchise or similar Taxes of the Seller or its direct or indirect owners. For
purposes of this Section 7.1(a), (i) any period beginning before and ending
after the Closing Date shall be treated as two partial periods, one ending on
the Closing Date and the other beginning after the Closing Date, (ii) any period
beginning before the LMA Effective Period and ending during the LMA Effective
Period shall be treated as two partial periods, one ending on the day
immediately preceding the Effective Date (as defined in the Optionee LMA) and
the other beginning on the Effective Date (as defined in the Optionee LMA),
(iii) any period beginning during the LMA Effective Period and ending after the
LMA Effective Period shall be treated as two partial periods, one ending on the
last day of the LMA Effective Period and the other beginning on the day
immediately after the last day of the LMA Effective Period, and (iv) any period
beginning before the LMA Effective Period and ending after the LMA Effective
Period shall be treated as two or three partial periods (as applicable), one
ending on the day immediately preceding the Effective Date (as defined in the
Optionee LMA), the second being the LMA Effective Period and, if the LMA
Effective Period terminates prior to the Closing, the third beginning on the day
immediately after the last day of the LMA Effective Period.
(ii) All Taxes other than income, franchise or similar Taxes relating
to a time period beginning in one partial period and ending in another partial
period (as described in Section 7.1(a)(i) above) shall be prorated (based on the
most recent available tax statement, latest tax valuation and latest tax bills)
as of the first day of the second partial period (and again as of the first day
of the third partial period, if applicable) (the "Proration Date"). If the
Proration Date occurs before the tax rate is fixed for the then current fiscal
or calendar year, whichever is applicable, the proration of the corresponding
Taxes shall be estimated on the basis of the tax rate for the last preceding
year applied to the latest assessed valuation, and once the actual amount of
such Taxes is known, the Optionee shall pay the Seller or the Seller shall pay
the Optionee, as the case may be, as an adjustment to Purchase Price, the net
amount due as a result of the actual apportionment of such Taxes taking into
account any such Taxes for which the Seller has been, or has the right to be,
reimbursed pursuant to the terms of the Optionee LMA. The Seller's estimated
accrued liability (to the Closing) for any of the above described taxes and
charges that are due and payable after the Closing, to the extent practicable,
shall be made as a credit against the amount payable at the Closing by the
Optionee.
(b) Any sales, use or other transfer Taxes payable by reason of transfer
and conveyance of the Business, the Station or the Purchased Assets hereunder
and any documentary stamp or transfer Taxes payable by reason of the real estate
or interests therein included in the Purchased Assets shall be borne by the
Optionee. Except as set forth in Section 6.3, all fees relating to any filing
with any Governmental Authority required for transfer and conveyance of the
Business, the Station or the Purchased Assets hereunder, other than amounts
(including Taxes) owing to any Governmental Authority as of the date hereof or
with respect to events occurring prior to the date hereof, shall be borne by the
Optionee.
(c) The Seller or the Optionee, as the case may be, shall provide
reimbursement for any Tax paid by the other party, all or a portion of which is
the responsibility of the Seller or the Optionee, as the case may be, in
accordance with the terms of this Agreement. Within a reasonable time prior to
the payment of any said Tax, the party paying such Tax shall give notice to the
other party of the Tax payable and the portion which is the
37
liability of each party, although failure to do so will not relieve the other
party from its liability hereunder.
(d) If requested by the Optionee in writing during the Exercise Period, the
Seller agrees within twenty (20) days of such request, to (i) advise the
Optionee of any audits of any material Tax Return of the Seller or any of its
Subsidiaries conducted during the period beginning on the date of this Agreement
and ending on the date of such advice; (ii) to provide the Optionee with copies
of all material Tax audit reports affecting the Purchased Assets or the Business
that have been issued during the period beginning on the date of this Agreement
and ending on the date that such documents are provided; and (iii) to advise the
Optionee of any changes that would make it impossible for the Seller to make the
representations and warranties set forth in Section 4.6(a), Section 4.6(b); and
Section 4.6(d) as of the Closing Date; provided, however, that Seller's
inability to make such representations and warranties as of the date of such
advice shall in no way be treated as a breach of any such representation and
warranty.
(e) Any expenses of the type specified in Schedule 10.1 of the Optionee LMA
(other than Taxes) shall be prorated for the periods described in Section
7.1(a)(i) in a manner similar to that set forth in Section 7.1(a) with respect
to Taxes.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF SELLER
The obligations of the Seller under this Agreement to consummate the
Closing shall, at the option of the Seller, be subject to the satisfaction or
waiver by the Seller in writing, on or prior to the Closing Date, of the
following conditions:
Section 8.1 No Misrepresentation or Breach of Covenants and Warranties.
(a) Each of the representations and warranties of the Optionee contained in
Sections 5.1, 5.2, 5.5 and 5.6 that is not qualified as to materiality shall be
true and correct in all material respects on the Closing Date as though made on
the Closing Date and each of the representations and warranties of the Optionee
contained Sections 5.1, 5.2, 5.5 and 5.6 that is qualified as to materiality
shall be true and correct in all respects on the Closing Date as though made on
the Closing Date, except in any case to the extent that they expressly speak as
of a specific date or time other than the Closing Date, in which case they need
only have been true and correct in all material respects as of such specified
date or time, and except for changes therein (i) specifically permitted by this
Agreement or the Optionee LMA or (ii) resulting directly from any transaction
specifically consented to in writing by the Seller.
(b) The Optionee shall have delivered to the Seller a certificate in the
form attached hereto as Exhibit 8.1(b), dated as of the Closing Date, signed on
behalf of the Optionee by its President or Chief Financial Officer, certifying
that the condition described in subsection (a) above has been satisfied (the
"Optionee Closing Certificate"). The condition set forth in Section 8.1(a) shall
be deemed to have been satisfied if, at the Closing, the Optionee delivers the
Optionee Closing Certificate to the Seller.
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Section 8.2 No Restraint or Litigation.
(a) Any applicable waiting period under the HSR Act shall have expired or
have been terminated and there shall not be in effect any preliminary or
permanent injunction or other Order by a Governmental Authority, no Requirement
of Law shall have been promulgated or enacted by a Governmental Authority and
there shall not be in effect any temporary restraining order of a court of
competent jurisdiction, which, in any case, restrains or prohibits the
transactions contemplated hereby.
(b) There shall not be in existence any Claim instigated by a Governmental
Authority before any court or governmental agency or body to prohibit the
transactions contemplated by this Agreement; provided, however, that this
condition may not be invoked by the Seller if any such action, suit or
proceeding was solicited or encouraged by, or instituted as a result of any act
or omission of, the Seller in material breach of this Agreement.
Section 8.3 FCC Consent. The FCC Consent shall have been granted, without
any condition or qualification which is materially adverse to the Seller, and
shall have become a Final Order.
Section 8.4 Closing Deliveries. The Optionee shall deliver to the Seller
all of the closing deliveries specified in Section 3.8(b).
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF OPTIONEE
The obligations of the Optionee under this Agreement to consummate the
Closing shall, at the option of the Optionee, be subject to the satisfaction or
waiver by the Optionee in writing on or prior to the Closing Date, of the
following conditions:
Section 9.1 No Misrepresentation or Breach of Covenants and Warranties.
(a) Each of the representations and warranties of the Seller contained in
Sections 4.1, 4.2, 4.6(c), 4.6(e), 4.6(f), 4.8(a), 4.9(b), 4.13, 4.19, 4.20 and
4.21 that is not qualified by materiality shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date and
each of the representations and warranties of the Seller contained in Sections
4.1, 4.2, 4.6(c), 4.6(e), 4.6(f), 4.8(a), 4.9(b), 4.13, 4.19, 4.20 and 4.21 that
is qualified as to materiality shall be true and correct in all respects on the
Closing Date as though made on the Closing Date, except in any case to the
extent that they expressly speak as of a specific date or time other than the
Closing Date, in which case they need only have been true and correct as of such
specified date or time, and except for changes therein (i) specifically
permitted by this Agreement or the Optionee LMA, (ii) resulting directly from
any transaction specifically consented to in writing by the Optionee or any
transaction contemplated by this Agreement or the Optionee LMA or (iii)
resulting from the Optionee's performance under the Optionee LMA.
(b) The Seller shall have delivered to the Optionee a certificate in the
form attached hereto as Exhibit 9.1(b), dated as of the Closing Date, signed on
behalf of the Seller by
39
its manager and each of its members, certifying that the condition described in
subsection (a) above has been satisfied (the "Seller Closing Certificate"). The
condition set forth in Section 9.1(a) shall be deemed to have been satisfied if,
at the Closing, the Seller delivers the Seller Closing Certificate to the
Optionee.
Section 9.2 No Restraint or Litigation.
(a) Any applicable waiting period under the HSR Act shall have expired or
been terminated and there shall not be in effect any preliminary or permanent
injunction or other Order by a Governmental Authority, no Requirement of Law
shall have been promulgated or enacted by a Governmental Authority and there
shall not be in effect any temporary restraining order of a court of competent
jurisdiction, which, in any case, restrains or prohibits the transactions
contemplated hereby.
(b) There shall not be in existence any Claim instigated by a Governmental
Authority before any court or governmental agency or body to prohibit the
transactions contemplated by this Agreement; provided, however, that this
condition may not be invoked by the Optionee if any such action, suit or
proceeding was solicited or encouraged by, or instituted as a result of any act
or omission of, the Optionee in breach of this Agreement.
Section 9.3 FCC Consent. The FCC Consent shall have been granted, without
any condition or qualification which is materially adverse to the Optionee or to
the operations of the Station, and shall have become a Final Order.
Section 9.4 Closing Deliveries. The Seller shall deliver to the Optionee
all of the closing deliveries specified in Section 3.8(a).
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification by the Seller. The Seller agrees to indemnify
and hold harmless each Optionee Group Member from and against any and all Loss
and Expense incurred by such Optionee Group Member in connection with or arising
from:
(i) any willful or intentional, material breach by the Seller of any
of its covenants, agreements or obligations in this Agreement or in any of the
Seller Ancillary Agreements;
(ii) any willful or intentional, material breach of any representation
or warranty of the Seller contained in this Agreement or any certificate
delivered by or on behalf of the Seller at the Closing pursuant hereto;
(iii) the failure of the Seller to perform and discharge any Excluded
Liabilities; or
(iv) any and all fines and penalties imposed on the Optionee as a
result of the Seller's breach of the Optionee LMA.
40
The indemnification provided for in this Section 10.1 shall terminate 18 months
after the Closing Date (and no claims shall be made by any Optionee Group Member
under this Section 10.1 thereafter), except that the indemnification by the
Seller shall continue in any event as to:
(A) the representations and warranties of the Seller set forth in Sections
4.2, 4.6 and 4.13 and the covenants of the Seller set forth in Sections 6.1 (to
the extent that such Section applies to the representations and warranties
contained in Section 4.6), 7.1 or 12.4, as to all of which no time limitation
shall apply other than the full period of any applicable statute of limitations
plus sixty (60) days;
(B) any Loss or Expense incurred by any Optionee Group Member in connection
with or arising out of the matters described in clause (iii) of this Section
10.1, as to which no time or recovery amount limitation shall apply; and
(C) any Loss or Expense of which any Optionee Group Member has notified the
Seller in accordance with the requirements of Section 10.3 on or prior to the
date such indemnification would otherwise terminate in accordance with this
Section 10.1, as to which the obligation of the Seller shall continue until the
liability of the Seller shall have been determined pursuant to this Article X,
and the Seller shall have reimbursed all the Optionee Group Members for the full
amount of such Loss and Expense in accordance with this Article X.
Section 10.2 Indemnification by the Optionee. The Optionee agrees to
indemnify and hold harmless each Seller Group Member from and against any and
all Loss and Expense incurred by such Seller Group Member in connection with or
arising from:
(i) any willful or intentional, material breach by the Optionee, or
any other failure of the Optionee to perform, any of its covenants, agreements
or obligations in this Agreement or in any Optionee Ancillary Agreement;
(ii) any willful or intentional, material breach of any warranty or
the inaccuracy of any representation of the Optionee contained or referred to in
this Agreement or any certificate delivered by or on behalf of the Optionee
pursuant hereto;
(iii) the failure of the Optionee to perform or discharge any of the
Assumed Liabilities; or
(iv) any and all fines and penalties imposed on the Seller or any of
its Subsidiaries as a result of the Optionee's operation of the Station under,
or breach of, the Optionee LMA or with respect to the effectiveness of this
Agreement and the Optionee LMA as a result of not making the filings referred to
in Section 6.8 pursuant to the proviso in the first sentence thereof.
The indemnification provided for in this Section 10.2 shall terminate 18 months
after the Closing Date (and no claims shall be made by any Seller Group Member
under this Section 10.2 thereafter), except that the indemnification by the
Optionee shall continue in any event as to:
(A) the representations and warranties of the Optionee set forth in Section
5.2 and the covenants of the Optionee set forth in Sections 7.1 or 12.4, as to
all of which no time
41
limitation shall apply other than the full period of any applicable statute of
limitations plus sixty (60) days;
(B) any Loss or Expense incurred by any Seller Group Member in connection
with or arising out of the failure of the Optionee to perform any Assumed
Liabilities, as to which no time or recovery amount limitation shall apply;
(C) any Loss or Expense incurred by any Seller Group Member in connection
with or arising out of the matters described in clauses (iii) and (iv) of this
Section 10.2, as to which no time limitation shall apply; and
(D) any Loss or Expense of which any Seller Group Member has notified the
Optionee in accordance with the requirements of Section 10.3 on or prior to the
date such indemnification would otherwise terminate in accordance with this
Section 10.2, as to which the obligation of the Optionee shall continue until
the liability of the Optionee shall have been determined pursuant to this
Article X, and the Optionee shall have reimbursed all the Seller Group Members
for the full amount of such Loss and Expense in accordance with this Article X.
Section 10.3 Notice of Claims.
(a) Any Optionee Group Member or Seller Group Member seeking
indemnification hereunder (the "Indemnified Party") shall give promptly to the
party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a written notice (a "Claim Notice") describing in reasonable
detail the facts giving rise to the claim for indemnification hereunder and
shall include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of
this Agreement or any other agreement, document or instrument executed hereunder
or in connection herewith upon which such claim is based. The failure of any
Indemnified Party to give the Claim Notice promptly as required by this Section
10.3 shall not affect such Indemnified Party's rights under this Article X
except to the extent such failure is actually prejudicial to the rights and
obligations of the Indemnitor.
(b) After the giving of any Claim Notice pursuant hereto, the amount of
indemnification to which an Indemnified Party shall be entitled under this
Article X shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Losses and Expenses suffered by it.
Section 10.4 Third Person Claims.
(a) In order for a party to be entitled to any indemnification provided for
under this Agreement in respect of, arising out of or involving a Claim or
demand made by any third Person against the Indemnified Party, such Indemnified
Party must notify the Indemnitor in
42
writing, and in reasonable detail, of the third Person Claim promptly after
receipt by such Indemnified Party of written notice of the third Person Claim.
Thereafter, the Indemnified Party shall promptly deliver to the Indemnitor
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to the third Person Claim. Notwithstanding the
foregoing, should a party be physically served with a complaint with regard to a
third Person Claim, the Indemnified Party must notify the Indemnitor with a copy
of the complaint within five (5) Business Days after receipt thereof and shall
deliver to the Indemnitor within seven (7) Business Days after the receipt of
such complaint copies of notices and documents (including court papers)
physically served upon the Indemnified Party relating to the third Person Claim.
The failure of any Indemnified Party to give the Claim Notice promptly (or in
five (5) Business Days in the case of service of a complaint upon the
Indemnified Party) as required by this Section 10.4 shall not affect such
Indemnified Party's rights under this Article X except to the extent such
failure is actually prejudicial to the rights and obligations of the Indemnitor.
(b) In the event of the initiation of any legal proceeding against the
Indemnified Party by a third Person, the Indemnitor shall have the sole and
absolute right after the receipt of notice, at its option and at its own
expense, to be represented by counsel of its choice and to control, defend
against, negotiate, settle or otherwise deal with any Claim or demand which
relates to any loss, liability or damage indemnified against hereunder;
provided, however, that the Indemnified Party may participate in any such
proceeding with counsel of its choice and at its expense. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such Claim or demand. To the extent the
Indemnitor elects not to defend such Claim or demand, and the Indemnified Party
defends against or otherwise deals with any such Claim or demand, the
Indemnified Party may retain counsel, reasonably acceptable to the Indemnitor,
at the expense of the Indemnitor, and control the defense of such Claim or
demand. Neither the Indemnitor nor the Indemnified Party may settle any such
Claim or demand which settlement obligates the other party to pay money, to
perform obligations or to admit liability, without the consent of the other
party, such consent not to be unreasonably withheld. After any final judgment or
award shall have been rendered by a court, arbitration board or administrative
agency of competent jurisdiction and the time in which to appeal therefrom has
expired, or a settlement shall have been consummated, or the Indemnified Party
and the Indemnitor shall arrive at a mutually binding agreement with respect to
each separate matter alleged to be indemnified by the Indemnitor hereunder, the
Indemnified Party shall forward to the Indemnitor notice of any sums due and
owing by it with respect to such matter and the Indemnitor shall pay all of the
sums for which indemnification under this Article X is provided so owing to the
Indemnified Party by wire transfer, certified or bank cashier's check within
thirty (30) days after the date of such notice.
(c) To the extent of any inconsistency between this Section 10.4 and
Section 7.1(c), the provisions of Section 7.1(c) shall control.
Section 10.5 Limitations.
(a) In any case where an Indemnified Party actually recovers from third
Persons any amount in respect of a matter with respect to which an Indemnitor
has indemnified it pursuant to this Article X, such Indemnified Party shall
promptly pay over to the Indemnitor the amount so recovered (after deducting
therefrom the full amount of the expenses incurred by it in
43
procuring such recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnitor to or on behalf of the Indemnified Party in
respect of such matter and (ii) any amount expended by the Indemnitor in
pursuing or defending any Claim arising out of such matter.
(b) Except in Claims of common law fraud or except for remedies that cannot
be waived as a matter of law and injunctive and provisional relief, if the
Closing occurs, this Article X shall be the sole and exclusive remedy for
breaches of this Agreement (including any covenant, obligation, representation
or warranty contained in this Agreement or in any certificate delivered pursuant
to this Agreement); provided, however, that nothing contained herein shall limit
the parties' obligations, rights or remedies under the Optionee LMA, the Amended
and Restated Credit Agreement, the Amended and Restated Note or any other
Transaction Document.
ARTICLE XI
TERMINATION
Section 11.1 Termination.
(a) Notwithstanding anything contained in this Agreement to the contrary,
this Agreement may be terminated at any time prior to the Closing:
(i) by the mutual written consent of the Seller and the Optionee;
(ii) by the Optionee in the event of a willful and intentional,
material breach by the Seller of any of its agreements, representations or
warranties contained in this Agreement, and the failure of the Seller to cure
such breach within thirty (30) days after receipt of written notice from the
Optionee requesting such breach to be cured;
(iii) by the Seller or the Optionee if any court of competent
jurisdiction in the United States or other United States Governmental Authority
shall have issued a final and non-appealable Order permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby;
(iv) by the Seller or the Optionee, if the Closing shall not have
occurred by midnight New York City time on the then applicable Cut-Off Date, or
if extended pursuant to Section 11.1(b), the then applicable Extended Cut-Off
Date; provided, however, that the right to terminate this Agreement under this
Section 11.1(a)(iv) shall not be available to any party whose failure to fulfill
any obligation under this Agreement shall have been the cause of, or resulted
in, the failure of the Closing to occur prior to such date;
(v) automatically as described in Section 2.1(b), Section 2.2(b) or
Section 6.8; or
(vi) automatically upon the issuance, prior to (x) June 1, 2003 or (y)
if the Seller has exercised its right to extend the Maturity Date pursuant to
clause (i)(B) of the
44
definition thereof in the Amended and Restated Credit Agreement, July 1, 2003,
of an EchoStar Injunction (as defined in the Amended and Restated Credit
Agreement).
(b) At any time prior to the granting of the FCC Consent and its becoming a
Final Order but in any event not later than midnight New York City time on the
fifteenth (15th) Business Day preceding the then applicable Cut-Off Date, either
the Seller or the Optionee may provide the other party with written notice of
its intention to submit an Extension Request to the Option Expert pursuant to
this Section 11.1(b) (the party providing such written notice shall be referred
to as the "Submitting Party" and the other party shall be referred to as the
"Responding Party"); provided that no party who has failed to fulfill any of its
obligations under Section 6.2(a)(i) may be a Submitting Party. Upon receipt of
such written notice by Responding Party, the Submitting Party and Responding
Party shall identify the Option Expert pursuant to the procedures set forth in
the definition of "Option Expert" in Section 1.1. Within five (5) Business Days
after the Option Expert is identified by the parties, the Submitting Party may
petition the Option Expert to extend the then applicable Cut-Off Date, pursuant
to the authority of the Option Expert contained in this Section 11.1(b), by
submitting a written statement (the "Extension Request") to the Option Expert
and the Responding Party at the address and in a manner specified in Section
12.5. The Extension Request shall include a detailed description of all actions
taken by the parties pursuant to Section 6.2(a)(i) and all proceedings or
communications between the FCC and the Submitting Party concerning the Transfer
Application, together with a copy of all relevant written materials submitted to
the FCC. The Responding Party shall have five (5) Business Days (the "Responding
Party Review Period") after its receipt of the Extension Request to submit a
written statement to the Option Expert and the Submitting Party responding to
the Extension Request, which statement may include a rebuttal to the positions
set forth in the Extension Request and a detailed description of all
communications between the FCC and the Responding Party regarding the Transfer
Application. The Option Expert shall have the authority, based solely on the
Extension Request and any written statement submitted in response thereto (if
any was submitted within the Responding Party Review Period), to extend the then
applicable Cut-Off Date to a date that is the three (3) month anniversary of the
then applicable Cut-Off Date (the "Extended Cut-Off Date") upon a finding by the
Option Expert that (x) the FCC Consent (whether or not granted at the time of
the Option Expert's review of the Extension Request) is not likely to become a
Final Order on or prior to the then applicable Cut-Off Date, and (y) the FCC
Consent (whether or not granted at the time of the Option Expert's review of the
Extension Request) is reasonably likely to become a Final Order by the date that
would be the Extended Cut-Off Date. The Option Expert shall submit his finding
in writing (the "Option Expert Decision") to the parties, at the addresses and
in a manner specified in Section 12.5, within five (5) Business Days after the
expiration of the Responding Party Review Period. The Option Expert Decision
shall be binding and conclusive on the parties. The fees and expenses of the
Option Expert shall be borne by the Submitting Party. The parties acknowledge
that time is of the essence with respect to this Section 11.1(b) and that the
Option Expert shall not consider any Extension Request or responses thereto not
submitted to the Option Expert within the time periods specified in this Section
11.1(b). For the avoidance of doubt, the timing of the Extension Request and
Option Expert Decision is at the risk of the Submitting Party and no extension
of the then applicable Cut-Off Date shall be effective under this Section
11.1(b) unless the Submitting Party and Responding Party receive the Option
Expert Decision prior to midnight New York City time on the then applicable
Cut-Off Date.
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(c) In the event that this Agreement shall be terminated pursuant to any of
the provisions of Section 11.1(a), all further obligations of the parties under
this Agreement (other than the provisions of this Article XI, Article X and
Sections 12.4) shall be terminated without further liability of any party to the
other; provided that nothing herein shall relieve any party from liability for
any breach of this Agreement.
(d) Notwithstanding anything herein to the contrary, if the Amended and
Restated Note is paid in full on or prior to midnight New York City time on the
Option Effective Date, this Agreement shall automatically terminate and be void
ab initio.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Amendment. Any amendment, supplement or modification of or to
any provision of this Agreement, and any waiver of any provision of this
Agreement shall be effective (i) only if it is made or given in writing and
signed by each of the Optionee and the Seller and (ii) only in the specific
instance and for the specific purpose for which made or given. No failure to
exercise and no delay in exercising on the part of any party hereto any right,
remedy, power or privilege provided in this Agreement or by statute or at law or
in equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. No course of dealing between the parties hereto shall operate as a
waiver of any right, power or privilege hereunder of any such party. Each and
every default by any of the parties under this Agreement shall give rise to a
separate cause of action hereunder, and separate suits may be brought under this
Agreement as each cause of action arises.
Section 12.2 Entire Agreement. This Agreement, together with the exhibits
and schedules hereto, and the other Transaction Documents are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to such
subject matter, including, without limitation, the Terminated Agreements (as
defined in the Settlement Agreement).
Section 12.3 Successors and Assigns.
(a) This Agreement shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto. Except as otherwise
provided below in this Section 12.3, no assignment of any rights or delegation
of any obligations provided for herein may be made by any party without the
express written consent of the other party hereto.
(b) The Seller may assign this Agreement to an Affiliate to whom the Seller
transfers all of the Purchased Assets and its interests in the Station (the
"Permitted Affiliate
46
Transferee"); provided, however, that (i) the Permitted Affiliate Transferee
qualifies under the Communications Act and all other Requirements of Law to
become a holder of the Governmental Permits (including, without limitation, the
FCC Licenses), (ii) each representation and warranty described in Section 9.1(a)
is true and correct in all respects as to the Permitted Affiliate Transferee, as
though the Permitted Affiliate Transferee were substituted for the Seller
throughout the representations and warranties described in Section 9.1(a), (iii)
the Seller gives written notice to the Optionee at least ten (10) Business Days
prior to the assignment to the Permitted Affiliate Transferee, setting forth the
ownership structure of the Permitted Affiliate Transferee, and (iv) the Seller
and the Permitted Affiliate Transferee execute and deliver to the Optionee an
undertaking in form and substance reasonably satisfactory to the Optionee in
which the Seller and the Permitted Affiliate Transferee confirm that (x) the
conditions set forth in clauses (i) and (ii) have been complied with in all
respects, (y) the Permitted Affiliate Transferee has the power, authority and
legal right to consummate the Closing, to transfer the Governmental Permits and
to otherwise consummate the transactions contemplated by this Agreement, and (z)
the Seller and the Permitted Affiliate Transferee are jointly and severally
liable for the representations and warranties described in Section 9.1(a), as
modified to include the statements set forth in such undertaking, and agree that
they are bound as the "Seller" hereunder. No such assignment by the Seller shall
relieve the Seller of any of its obligations hereunder.
(c) The Optionee may assign its rights and obligations under this Agreement
to another Person (the "Permitted Transferee"), provided, that such assignment
shall only be effective simultaneously with the Closing, and provided further,
that (i) the Permitted Transferee qualifies under the Communications Act and all
other Requirements of Law to become a holder of the Governmental Permits
(including, without limitation, the FCC Licenses), (ii) each representation and
warranty described in Section 8.1(a) is true and correct in all respects as to
the Permitted Transferee, as though the Permitted Transferee were substituted
for the Optionee throughout the representations and warranties described in
Section 8.1(a), (iii) the Optionee gives written notice to the Seller at least
ten (10) Business Days prior to the assignment to the Permitted Transferee,
setting forth the ownership structure of the Permitted Transferee, and (iv) the
Optionee and the Permitted Transferee execute and deliver to the Seller an
undertaking in form and substance reasonably satisfactory to the Seller in which
the Optionee and the Permitted Transferee confirm that (x) the conditions set
forth in clauses (i) and (ii) have been complied with in all respects, (y) the
Permitted Transferee has the power, authority and legal right to exercise the
Option, to acquire the Governmental Permits and to otherwise consummate the
transactions contemplated by this Agreement, and (z) the Optionee and the
Permitted Transferee are jointly and severally liable for the representations
and warranties described in Section 8.1(a), as modified to include the
statements set forth in such undertaking, and agree that they are bound as the
"Optionee" hereunder. No such assignment by the Optionee shall relieve the
Optionee of any of its obligations hereunder. If there is such an assignment,
only the Permitted Transferee, and not the Optionee, shall have the right to
purchase the Purchased Assets at the Closing, and such right and obligation may
not be re-assigned to the Optionee; provided, however, that nothing contained in
this sentence shall be construed to restrict the Optionee's ability to own an
equity interest in the Permitted Transferee to the maximum extent permitted by
the Communications Act and the rules and regulations of the FCC promulgated
thereunder.
Section 12.4 Confidentiality. No statement announcing in any way the
transactions contemplated by this Agreement shall be issued by (i) any of the
Optionee Group
47
Members, without the prior written consent of the Seller as to the specific
content of such statement, such consent not to be unreasonably withheld or
delayed, (ii) any of the Seller Group Members, without the prior written consent
of the Optionee as to the specific content of such statement, such consent not
to be unreasonably withheld or delayed; provided that this Section 12.4 shall
not apply (a) in the event such disclosure is required by any pending litigation
or any Requirement of Law (as determined in good faith by counsel to the
Optionee or the Seller, as applicable), including if a court of competent
jurisdiction or a duly authorized Governmental Authority requires any such
statement in a Final Order or (b) if there is a Requirement of Law (as
determined in good faith by counsel to the Optionee or the Seller, as
applicable) for the filing of this Agreement or any other Transaction Document
with a Governmental Authority or any disclosure related thereto to any
Governmental Authority; and, provided, further, that the parties hereto are
expressly authorized to disclose to any and all Persons the structure and tax
aspects of the transactions contemplated hereby and all materials of any kind
that are provided to the parties related to such structure and tax aspects.
Section 12.5 Notices. All notices, demands and other communications
hereunder shall be made in writing and shall be sent by registered or certified
first-class mail, return receipt requested, courier service or personal
delivery:
(i) if to the Seller,
c/x Xxxxxx Telecasting Companies
000 Xxxxx Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
with a copy to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Attention: Xxxx Xxxx Xxxxxx, Esq.
Xxxxx Xxxxxxxxxx, Esq.
and
Xxxx, Xxxxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Xx., Esq.
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(ii) if to the Optionee,
c/o TV Azteca, S.A. de C.V.
Periferico Sur 4121
Col. Xxxxxxx xx Xxxxxxxx
X.X. 00000 Xxxxxx
Delegacion Tlalpan
Mexico, D.F.
Tel: 000-000-0-0000-0000
Attention: Lic. Xxxxxxxxx X. Xxxxxxx Xxxxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Tel: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Xxx Xxxxx, Esq.
and
Xxxxx & Xxxxxxx L.L.P
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxxxx X. Xxxxxx, Esq.
All such notices, demands and other communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; and when
delivered by courier, if delivered by commercial courier service; and when
actually received by the intended recipient, if mailed; provided, however, that
if any notice, demand or other communication is delivered or received, as the
case may be, after 5:00 P.M. New York City time on a Business Day or delivered
or received, as the case may be, on a day that is not a Business Day, such
notice, demand or communication shall be deemed to have been duly given pursuant
to this Section 12.5 on the next succeeding Business Day. Any party may by
notice given in accordance with this Section 12.5 designate another address or
Person for receipt of notices hereunder, but such notice shall be effective only
upon actual receipt
Section 12.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Execution and delivery of
this Agreement by exchange of facsimile copies bearing the facsimile signature
of a party hereto shall constitute a valid and binding execution and delivery of
this Agreement by such party. Such facsimile copies shall constitute enforceable
original documents.
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Section 12.7 Headings; Gender. The headings in this Agreement are inserted
for convenience of reference only and shall not affect the interpretation of
this Agreement. As used herein, masculine pronouns shall include the feminine
and neuter, neuter pronouns shall include the masculine and feminine, and the
singular shall be deemed to include the plural.
Section 12.8 Rule of Construction. The general rule of construction for
interpreting a contract, which provides that the provisions of a contract should
be construed against the party preparing the contract, is waived by the parties
hereto. Each party acknowledges that such party was represented by separate
legal counsel in this matter who participated in the preparation of this
Agreement or such party had the opportunity to retain counsel to participate in
the preparation of this Agreement but elected not to do so.
Section 12.9 Remedies. Except as otherwise provided herein, no remedy
herein conferred or reserved is intended to be exclusive of any other available
remedy or remedies, and each and every remedy shall be cumulative and shall be
in addition to every remedy under this Agreement or now or hereafter existing at
law or in equity.
Section 12.10 Specific Performance. The parties recognize that if, prior to
Closing, a party breaches this Agreement and refuses to perform under the
provisions of this Agreement, monetary damages alone would not be adequate to
compensate the non-breaching party for its injury. The non-breaching party shall
therefore be entitled, in addition to any other remedies that may be available
(including, without limitation, the provisions of Section 10.1 (relating to
indemnification)), to obtain specific performance of the terms of this Agreement
prior to Closing. If any action is brought by the non-breaching party to enforce
this Agreement, the breaching party shall waive the defense in any such action
that there is an adequate remedy at law and interpose no opposition, legal or
otherwise, as to the propriety of specific performance as a remedy hereunder,
and the breaching party agrees that the non-breaching party shall have the right
to seek specific performance without being required to prove actual damages,
post bond, or furnish other security. This Section 12.10 shall not limit the
non-breaching party's ability to seek damages in the event such party elects to
terminate this Agreement as a result of the breaching party's default hereunder
instead of seeking specific performance.
Section 12.11 Consent to Jurisdiction. Any Claim arising out of or relating
to this Agreement or the transactions contemplated hereby shall be brought by
the parties and heard and determined only in Delaware Chancery Court, unless
Delaware Chancery Court determines that it does not have jurisdiction over such
Claim, in which case such Claim may be brought by the parties and heard and
determined only in Delaware state court or a federal court sitting in Delaware.
The parties hereto consent to jurisdiction before, and waive any objections of
venue to, the Delaware Chancery Court, Delaware state court and any federal
court sitting in Delaware. Each party agrees not to assert, by way of motion, as
a defense or otherwise, in any such Claim, that it is not subject personally to
the jurisdiction of any such courts, that such Claim is brought in an
inconvenient forum, that the venue of such Claim is improper or that this
Agreement or the subject matter hereof may not be enforced in or by any such
courts. Each party further irrevocably submits to the jurisdiction of Delaware
Chancery Court, Delaware state court and any federal court sitting in Delaware
in any such Claim. Each of the parties irrevocably consents to service of
process in the manner provided for notices in Section 12.5. Nothing herein
50
contained shall be deemed to affect the right of any party to serve process in
any manner permitted by law.
Section 12.12 GOVERNING LAW. THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW THEREOF.
Section 12.13 Access to Records after Closing. For a period of six (6)
years after the Closing Date the Seller and its representatives shall have
reasonable access to all of the books and records of the Station, the Business
and the Purchased Assets transferred to the Optionee hereunder to the extent
that such access may reasonably be required by the Seller in connection with
matters relating to or affected by the operations of the Station prior to the
Closing Date. Such access shall be afforded by the Optionee upon receipt of
reasonable advance notice and during normal business hours. The Seller shall be
solely responsible for any costs or expenses incurred by it pursuant to this
Section 12.13. If the Optionee shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, it shall, prior to such
disposition, give the Seller a reasonable opportunity, at the Seller's expense,
to segregate and remove such books and records as the Seller may select.
For a period of six (6) years after the Closing Date, the Optionee and its
representatives shall have reasonable access to all of the books and records
relating to the Station which the Seller or any of its Affiliates may retain
after the Closing Date. Such access shall be afforded by the Seller and its
Affiliates upon receipt of reasonable advance notice and during normal business
hours. The Optionee shall be solely responsible for any costs and expenses
incurred by it pursuant to this Section 12.13. If the Seller or any of its
Affiliates shall desire to dispose of any of such books and records prior to the
expiration of such six-year period, the Seller shall, prior to such disposition,
give the Optionee a reasonable opportunity, at the Optionee's expense, to
segregate and remove such books and records as the Optionee may select.
Section 12.14 Schedules. For the purposes of the Schedules hereto, any
information, item or other disclosure set forth in any Schedule shall be deemed
to have been set forth in all other Schedules if it is reasonably apparent that
such information, item or other disclosure is likewise applicable to such other
Schedule. The disclosure of particular information in the Schedules shall not,
solely by virtue of such disclosure, be construed to mean that such information
is material or creates a measure of materiality for purposes of this Agreement.
Section 12.15 Time is of the Essence. The parties agree that time is of the
essence in connection with the exercise of the Option and the consummation of
the purchase and sale of the Purchased Assets and the other transactions
contemplated hereby, including, without limitation, with respect to all notice
and performance dates under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
AZTECA INTERNATIONAL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxxxxxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Director
By: /s/ Xxxxxx Xxxxxx Xxxxxx
------------------------------------------------
Name: Xxxxxx Xxxxxx Xxxxxx
Title: Director
XXXXXX TELECASTING OF SOUTHERN CALIFORNIA LLC
By: XXXXXX TELECASTING COMPANIES, its Manager
By: /s/ Xxxxx Xxxxxx
------------------------------------------------
Name: Xxxxx Xxxxxx
Title: President
