EXHIBIT 2.2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED AS OF DECEMBER 27, 2002
AMONG
TRIBUNE BROADCASTING COMPANY,
TRIBUNE DENVER RADIO, INC.,
ACME TELEVISION OF OREGON, LLC,
ACME TELEVISION LICENSES OF OREGON, LLC
AND
ACME COMMUNICATIONS, INC.
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS...................................................... 1
Section 1.1. Definitions................................................ 1
ARTICLE II PURCHASE AND SALE OF PURCHASED ASSETS........................... 8
Section 2.1. Purchase and Sale of Purchased Assets...................... 8
Section 2.2. Excluded Assets............................................ 9
Section 2.3. Assumption of Liabilities.................................. 10
ARTICLE III PURCHASE PRICE AND CLOSING..................................... 13
Section 3.1. Closing Date............................................... 13
Section 3.2. Purchase Price............................................. 13
Section 3.3. Payment of the Closing Date Payment........................ 13
Section 3.4. Closing Date Deliveries.................................... 13
Section 3.5. Further Assurances......................................... 14
Section 3.6. Prorations and Adjustments................................. 14
Section 3.7. Purchase Price Adjustment.................................. 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE ACME ENTITIES............. 16
Section 4.1. Organization............................................... 16
Section 4.2. Subsidiaries and Investments............................... 16
Section 4.3. Authority of the ACME Entities............................. 17
Section 4.4. Financial Statements....................................... 18
Section 4.5. Operations Since Balance Sheet Date........................ 18
Section 4.6. No Undisclosed Liabilities................................. 19
Section 4.7. Taxes...................................................... 20
Section 4.8. Sufficiency of Assets...................................... 20
Section 4.9. Governmental Permits....................................... 21
Section 4.10. Real Property; Real Property Leases....................... 22
Section 4.11. Personal Property......................................... 23
Section 4.12. Personal Property Leases.................................. 24
Section 4.13. Intellectual Property..................................... 24
Section 4.14. Intentionally Omitted..................................... 24
Section 4.15. Title to Purchased Assets................................. 24
Section 4.16. Employees................................................. 25
Section 4.17. Employee Relations........................................ 25
Section 4.18. Contracts................................................. 26
Section 4.19. Status of Contracts....................................... 27
Section 4.20. No Violation, Litigation or Regulatory Action............. 27
Section 4.21. Insurance................................................. 28
Section 4.22. Employee Plans; ERISA..................................... 29
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Section 4.23. Environmental Protection.................................. 29
Section 4.24. Insolvency Proceedings.................................... 30
Section 4.25. Transactions with Affiliates.............................. 31
Section 4.26. No Finder................................................. 31
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 31
Section 5.1. Organization............................................... 31
Section 5.2. Authority of Buyer......................................... 31
Section 5.3. Litigation................................................. 32
Section 5.4. No Finder.................................................. 32
Section 5.5. Qualifications as FCC Licensee............................. 32
Section 5.6. WARN Act................................................... 32
ARTICLE VI ACTION PRIOR TO THE CLOSING DATE................................ 33
Section 6.1. Investigation of the Business.............................. 33
Section 6.2. Notice of Litigation....................................... 33
Section 6.3. FCC Consent; HSR Act Approval; Other Consents and Approvals 33
Section 6.4. Operations of the Station Prior to the Closing Date........ 34
Section 6.5. Third Party Consents....................................... 37
Section 6.6. Environmental Site Assessment.............................. 37
Section 6.7. Public Announcement........................................ 37
Section 6.8. Interim Financial Statements............................... 37
Section 6.9. Administrative Violations.................................. 38
Section 6.10. Bulk Sales Act............................................ 38
Section 6.11. Adverse Developments...................................... 38
Section 6.12. No Solicitation Covenant.................................. 38
Section 6.13. Copies of FCC Applications................................ 41
Section 6.14. Estoppel Certificates / Non-Disturbance Agreement......... 41
Section 6.15. Title Examination; Title Insurance; Surveys............... 41
Section 6.16. Personal Property Leases.................................. 41
Section 6.17. Lien Removal.............................................. 42
ARTICLE VII ADDITIONAL AGREEMENTS.......................................... 42
Section 7.1. Taxes; Sales, Use and Transfer Taxes....................... 42
Section 7.2. Employees; Employee Benefit Plans.......................... 43
Section 7.3. Control of Operations Prior to Closing Date................ 45
Section 7.4. Tax-Free Exchange.......................................... 45
Section 7.5. Covenant Not to Compete or Solicit Business................ 46
Section 7.6. Accounts Receivable........................................ 47
Section 7.7. The Daily Buzz............................................. 48
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ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.................. 48
Section 8.1. No Misrepresentation or Breach of Covenants and Warranties. 48
Section 8.2. No Restraint or Litigation................................. 48
Section 8.3. FCC Consent................................................ 49
Section 8.4. Closing Documents.......................................... 49
Section 8.5. Third Party Consents....................................... 49
Section 8.6. Closing of KPLR Transaction................................ 49
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACME ENTITIES........ 49
Section 9.1. No Misrepresentation or Breach of Covenants and Warranties. 50
Section 9.2. No Restraint or Litigation................................. 50
Section 9.3. FCC Consent................................................ 50
Section 9.4. Closing Documents.......................................... 50
Section 9.5. Closing of KPLR Transaction................................ 50
ARTICLE X INDEMNIFICATION.................................................. 51
Section 10.1. Indemnification by the ACME Entities...................... 51
Section 10.2. Indemnification by Buyer.................................. 52
Section 10.3. Notice of Claims.......................................... 53
Section 10.4. Third Person Claims....................................... 53
Section 10.5. Limitations............................................... 54
ARTICLE XI TERMINATION AND REMEDIES........................................ 55
Section 11.1. Termination............................................... 55
Section 11.2. Notice of Termination..................................... 56
Section 11.3. Effect of Termination..................................... 56
Section 11.4. Liquidated Damages Not a Penalty.......................... 57
ARTICLE XII GENERAL PROVISIONS............................................. 57
Section 12.1. Survival of Representations, Warranties and Obligations... 57
Section 12.2. Confidential Nature of Information........................ 57
Section 12.3. Governing Law............................................. 58
Section 12.4. Notices................................................... 58
Section 12.5. Successors and Assigns.................................... 59
Section 12.6. Access to Records after Closing........................... 59
Section 12.7. Entire Agreement; Amendments.............................. 60
Section 12.8. Interpretation............................................ 60
Section 12.9. Waivers................................................... 60
Section 12.10. Expenses................................................. 60
Section 12.11. Partial Invalidity....................................... 61
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Section 12.12. Execution in Counterparts................................ 61
Section 12.13. Risk of Loss; Damage to Facilities....................... 61
Section 12.14. No Third Party Beneficiaries............................. 62
Section 12.15. Confidentiality Agreement................................ 62
Section 12.16. Performance by Sellers................................... 62
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of December 27, 2002 (this
"Agreement"), is made and entered into by and among Tribune Broadcasting
Company, a Delaware corporation ("TBC"), Tribune Denver Radio, Inc., a Delaware
corporation ("Tribune Denver" and together with TBC, "Buyer"), ACME Television
of Oregon, LLC, a Delaware limited liability company ("ACME Oregon" and a
"Seller"), ACME Television Licenses of Oregon, LLC, a Delaware limited liability
company ("ACME Oregon Licensee" and a "Seller"), and ACME Communications, Inc.,
a Delaware corporation ("Parent" and each of Parent, ACME Oregon and ACME Oregon
Licensee being an "ACME Entity" and collectively, the "ACME Entities").
W I T N E S S E T H :
WHEREAS, Sellers are engaged in the business of owning and operating
television broadcast station KWBP-TV, Channel 32 in Portland, Oregon (the
"Station");
WHEREAS, Parent indirectly owns, beneficially and of record, all of
the membership units of ACME Oregon and ACME Oregon Licensee;
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to
purchase from Sellers, substantially all of the assets, properties and business
relating to the Station, all on the terms and subject to the conditions set
forth herein (the "KWBP Purchase");
WHEREAS, concurrently herewith, TBC, Parent and ACME Television, LLC
have entered into a Stock Purchase Agreement (the "KPLR Stock Purchase
Agreement"), dated as of the date of this Agreement, pursuant to which TBC has
agreed to purchase all of the issued and outstanding shares of capital stock of
ACME Television Holdings of Missouri, Inc. ("ACME Television Missouri") which,
directly and through its subsidiaries, is engaged in the business (the "KPLR
Business") of owning and operating television broadcast station KPLR-TV, Channel
11 in St. Louis, Missouri (such station being "KPLR" and such transaction being
the "KPLR Purchase"); and
WHEREAS, the consummation of the KPLR Purchase and KWBP Purchase are
both conditioned upon the consummation of the other, each as set forth in the
Stock Purchase Agreement and this Agreement, respectively.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among Buyer and the ACME
Entities as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. In this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1 and shall be
equally applicable to both the singular and plural forms, including any
reference to "Sellers" shall include each Seller individually and collectively
and vice versa, and any reference to "Buyer" shall include each
Buyer individually and collectively, and vice versa, unless otherwise specified.
Unless the context requires otherwise, references herein (i) to an agreement,
instrument or other document mean such agreement, instrument or other document
as amended, supplemented and modified from time to time to the extent permitted
by the provisions thereof and by this Agreement and (ii) to a statute mean such
statute as amended from time to time and includes any successor legislation
thereto.
"ACCOUNTS RECEIVABLE" means the rights of Sellers as of the Closing
Date to payment in cash for the sale of advertising time and other goods and
services by the Station (including without limitation goods and services
pursuant to any Barter Agreement or Trade Agreement and reimbursements for
cooperative advertising) prior to the Closing Date.
"ACME ANCILLARY AGREEMENTS" has the meaning specified in Section
4.3(a).
"ACME ENTITY" has the meaning specified in the introductory
paragraph hereof.
"ACME GROUP MEMBER" means each ACME Entity and their Affiliates,
directors, officers, managers, employees and agents and their respective
successors and assigns.
"ACME OREGON" has the meaning specified in the introductory
paragraph hereof.
"ACME OREGON LICENSEE" has the meaning specified in the introductory
paragraph hereof.
"ACME TELEVISION MISSOURI" has the meaning specified in the fourth
recital hereof.
"ADMINISTRATIVE VIOLATION" has the meaning specified in Section 6.9.
"AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
"AGREED ACCOUNTING PRINCIPLES" means generally accepted accounting
principles; provided that with respect to any matter as to which there is more
than one generally accepted accounting principle, Agreed Accounting Principles
means the generally accepted accounting principles applied in the preparation of
the Balance Sheet; provided that, for purposes of the Agreed Accounting
Principles, no known adjustments for items or matters, regardless of the amount
thereof, shall be deemed to be immaterial.
"ALTERNATIVE PROPOSAL" has the meaning specified in Section 6.12(a).
"ASSUMED LIABILITIES" has the meaning specified in Section 2.3(a).
"BALANCE SHEET" has the meaning specified in Section 4.4.
"BALANCE SHEET DATE" has the meaning specified in Section 4.4.
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"BARTER AGREEMENTS" means contracts for the sale of time on the
Station in exchange for programming.
"BUSINESS" has the meaning specified in Section 2.1.
"BUYER" has the meaning specified in the introductory paragraph
hereof.
"BUYER ANCILLARY AGREEMENTS" has the meaning specified in Section
5.2(a)
"BUYER GROUP MEMBER" means TBC and Tribune Denver, their Affiliates,
directors, officers, managers, employees and agents and their respective
successors and assigns.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq.
"CLAIM NOTICE" has the meaning specified in Section 10.3(a).
"CLOSING" has the meaning specified in Section 3.1.
"CLOSING DATE" has the meaning specified in Section 3.1.
"CLOSING DATE ADJUSTMENTS" has the meaning specified in Section
3.6(a).
"CLOSING DATE PAYMENT" has the meaning specified in Section 3.2.
"CODE" means the Internal Revenue Code of 1986.
"COMBINED ALTERNATIVE PROPOSAL" has the meaning specified in Section
6.12(a).
"COMMUNICATIONS ACT" means the Communications Act of 1934.
"CONFIDENTIALITY AGREEMENT" has the meaning specified in Section
12.15.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"DISPUTE DATE" has the meaning specified in Section 3.6(a).
"EMPLOYEE PLANS" has the meaning specified in Section 4.22(a).
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind.
"ENVIRONMENTAL CONDITIONS" means the state of the environment,
including natural resources (e.g. flora and fauna), soil, surface water,
groundwater, any drinking water supply, subsurface strata or ambient air.
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"ENVIRONMENTAL LAWS" means all applicable foreign, federal, state,
district and local Laws, all applicable rules, policy statements and regulations
promulgated thereunder, and all applicable orders, consent decrees, judgments,
governmental notices, permits and governmental demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata), including, without
limitation, (i) laws relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment and (ii) laws relating to
the identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of Hazardous
Substances. Environmental Laws shall include, without limitation, CERCLA, RCRA,
the Toxic Substances Control Act, the Hazardous Materials Transportation Act,
the Clean Water Act, the Safe Drinking Water Act, the Clean Air Act, the
Occupational Safety and Health Act, and all analogous laws promulgated or issued
by any Governmental Body that are enacted and currently in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any Person which is (or at any relevant time
was) a member of a controlled group of corporations within the meaning of Code
Section 414(b), any trade or business which is under common control within the
meaning of Code Section 414(c), and any affiliated service group, within the
meaning of Code Section 414(m) or (o), of which an ACME Entity is (or at any
relevant time was) a member.
"ESCROW AGENT" means Bank One, National Association.
"ESCROW DEPOSIT" means the sum of Five Hundred Thousand Dollars
($500,000), which is being deposited by Buyer or the qualified intermediary
referred to in Section 7.4 with the Escrow Agent within two business (2) days of
the date hereof to secure the obligation of Buyer to close under this Agreement,
with such deposit being held by the Escrow Agent in accordance with the Escrow
Agreement executed among Buyer, the ACME Entities and Escrow Agent on the date
hereof.
"ESTIMATED PRORATIONS" has the meaning specified in Section 3.6(a).
"ESTIMATED PRORATIONS CERTIFICATE" has the meaning specified in
Section 3.6(a).
"ESTIMATED PURCHASE PRICE" has the meaning specified in Section 3.3.
"EXCLUDED ASSETS" has the meaning specified in Section 2.2.
"EXCLUDED LIABILITIES" has the meaning specified in Section 2.3(b).
"EXPENSE" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable out-of-pocket fees and disbursements of: legal counsel;
investigators; expert witnesses; consultants; accountants; and other
professionals), provided that, with respect to non-third Person claims, the term
"Expense" shall only include the foregoing
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expenses and fees if the Indemnified Party is otherwise successful in obtaining
such indemnification pursuant to Article X of this Agreement.
"FCC" means the Federal Communications Commission.
"FCC CONSENT" means action by the FCC granting its consent to the
assignment to Buyer or its Affiliates of the Station Licenses as contemplated by
this Agreement pursuant to appropriate applications filed by the parties with
the FCC.
"FINAL ORDER" shall mean an action by the FCC upon any application
for FCC Consent filed by the parties hereto for FCC consent, approval or
authorization, which action has not been reversed, stayed, enjoined, set aside,
annulled or suspended, and with respect to which action, no protest, petition to
deny, petition for rehearing or reconsideration, appeal or request for stay is
pending, and as to which action the time for filing of any such protest,
petition, appeal or request and any period during which the FCC may reconsider
or review such action on its own authority has expired.
"GOVERNMENTAL BODY" means any foreign, federal, state or local
governmental authority or regulatory body, including the FCC.
"GOVERNMENTAL PERMITS" has the meaning specified in Section 4.9(a).
"HAZARDOUS MATERIALS" means all pollutants, contaminants, chemicals,
wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic,
infectious, radioactive or otherwise hazardous substances or materials (whether
solids, liquids or gases) subject to regulation, control or remediation under
Environmental Laws but excluding materials occurring naturally at or about any
Station Property. By way of example only, the term Hazardous Materials includes
petroleum, urea formaldehyde, flammable, explosive and radioactive materials,
PCBs, pesticides, herbicides, asbestos, acids, metals, solvents and waste
waters.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"INDEMNIFIED PARTY" has the meaning specified in Section 10.3(a).
"INDEMNITOR" has the meaning specified in Section 10.3(a).
"INTELLECTUAL PROPERTY" has the meaning specified in Section
4.13(a).
"KNOWLEDGE OF THE ACME ENTITIES" (or any similar phrase or
derivation thereof) means, as to a particular matter, the actual knowledge that
exists after reasonable inquiry of the following persons: (i) with respect to
Parent: Chief Executive Officer, President and Chief Operating Officer, Chief
Financial Officer and Controller and (ii) with respect to the Station: General
Manager, Chief Engineer, General Sales Manager and Business Manager.
"KPLR" has the meaning specified in the fourth recital hereof.
"KPLR BUSINESS" has the meaning specified in the fourth recital
hereof.
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"KPLR PURCHASE" has the meaning specified in the fourth recital
hereof.
"KPLR STOCK PURCHASE AGREEMENT" has the meaning specified in the
fourth recital hereof.
"KWBP PURCHASE" has the meaning specified in the third recital
hereof.
"LIABILITY" means any and all claims, debts, liabilities,
obligations and commitments of any nature whatsoever, whether known or unknown,
asserted or unasserted, fixed, absolute or contingent, matured or unmatured,
accrued or unaccrued, liquidated or unliquidated or due or to become due,
whenever or however arising (including those arising out of any contract or
tort, whether based in negligence, strict liability or otherwise) and whether or
not the same would be required by generally accepted accounting principles to be
reflected as a liability in financial statements or disclosed in the notes
thereto.
"LOSS" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"MATERIAL ADVERSE EFFECT" means any change or effect, individually
or in the aggregate, that is materially adverse to the business, operations,
properties or condition (financial or otherwise) of the Station, the Business or
the Purchased Assets or on the ability of the ACME Entities to consummate the
transactions contemplated hereby, other than changes relating to generally
applicable economic conditions or the television broadcasting industry in
general.
"OSHA" means the Occupational Safety and Health Act, 29
U.S.C. Sections 651 et seq.
"PARENT" has the meaning specified in the introductory paragraph
hereof.
"PERMITTED ENCUMBRANCE" means (a) liens for Taxes, assessments or
other governmental charges which are not yet due and payable, (b) easements,
servitudes, rights-of-way, covenants, consents, conditions, reservations,
encroachments, minor defects or irregularities in title, variations and other
restrictions affecting the use of any Station Property listed on Schedule 4.10
which in the aggregate do not materially impair the use of the Purchased Assets
for the purposes for which they are or may reasonably be expected to be held,
(c) liens for mechanics, materialmen's and similar encumbrances with respect to
any amounts not yet due and payable and (d) Encumbrances securing payments not
yet due and payable under the leases set forth in Schedule 4.12.
"PERSON" means any person, employee, individual, corporation,
limited liability company, partnership, trust, or any other non-governmental
entity or any governmental or regulatory authority or body.
"PURCHASED ASSETS" has the meaning specified in Section 2.1.
"PURCHASE PRICE" has the meaning specified in Section 3.2.
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"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq.
"REAL PROPERTY" has the meaning specified in Section 4.10(a).
"REAL PROPERTY LEASES" has the meaning specified in Section 4.10(c).
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or property.
"REQUIREMENTS OF LAW" means any foreign, federal, state or local
law, rule or regulation, Governmental Permit or other binding determination of
any Governmental Body.
"SELLER(S)" has the meaning specified in the introductory paragraph
hereof.
"STATION" has the meaning specified in the first recital hereof.
"STATION AGREEMENTS" has the meaning specified in Section 4.19.
"STATION EMPLOYEES" has the meaning specified in Section 4.16(a).
"STATION LICENSES" has the meaning specified in Section 2.1(a).
"STATION PROPERTY" means any real or personal property, plant,
building, facility, structure, underground storage tank, equipment or unit, or
other asset owned, leased or operated by Sellers and used in the Business.
"SUPERIOR PROPOSAL" has the meaning specified in Section 6.12(c).
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means
any federal, state, local or foreign net income, alternative or add-on minimum,
gross income, franchise, gross receipts, property, sales, use, transfer, gains,
license, excise, employment, payroll, withholding or minimum tax, value added,
stamp, environmental or any other tax, custom, duty, governmental fee or other
like assessment or charge of any kind whatsoever, together with any interest or
any penalty, addition to tax or additional amount imposed by any Governmental
Body.
"TAX RETURN" means any return, declaration, report or other
statement, or any other similar filing required to be submitted to any
Governmental Body with respect to any Tax.
"TBC" has the meaning specified in the introductory paragraph
hereof.
"TIME SALES AGREEMENTS" means contracts for the sale of time on the
Station for cash.
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"TRADE AGREEMENTS" means contracts for the sale of time on the
Station in exchange for merchandise or services used or useful for the benefit
of the Station, excluding Barter Agreements.
"TRANSFERRED EMPLOYEES" has the meaning specified in Section 7.2(b).
"TRIBUNE DENVER" has the meaning specified in the introductory
paragraph hereof.
"VALUATION DATE" means the close of business on the last business
day prior to the Closing Date.
ARTICLE II
PURCHASE AND SALE OF PURCHASED ASSETS
SECTION 2.1. PURCHASE AND SALE OF PURCHASED ASSETS. Upon the terms
and subject to the conditions of this Agreement, on the Closing Date, Sellers
shall, and Parent shall cause Sellers to, sell, transfer, assign, convey and
deliver to Buyer, and Buyer shall purchase from Sellers, free and clear of all
Encumbrances (except for Permitted Encumbrances), all of the assets, properties
and business of every kind and description, wherever located, real, personal or
mixed, tangible or intangible, owned or held by Sellers relating to the Station
and the business of the Station (the "Business") as the same shall exist on the
Closing Date (excepting the Excluded Assets) (herein collectively referred to as
the "Purchased Assets"), including, without limitation, all right, title and
interest of Sellers in, to and under:
(a) All licenses, permits, permissions and other authorizations
issued to Sellers for the operation of the Station by the FCC or any other
Governmental Body, including, but not limited to, the Station's digital
television (DTV) license and those other licenses, permits, permissions and
other authorizations listed on Schedule 4.9(a) and the right to use the
Station's call sign, and all applications for modification, extension or renewal
thereof, and any pending applications for any new licenses, permits, permissions
or authorizations pending on the Closing Date with respect to the Station,
including, but not limited to, those listed on Schedule 4.9(a) (the "Station
Licenses");
(b) The Real Property described in Schedule 4.10(a) and any option,
right or contract to purchase, lease, possess or occupy real property described
in Schedule 4.10(a) or (c);
(c) All machinery, equipment (including cameras, computers and
office equipment), auxiliary and translator facilities, transmitting towers,
transmitters, broadcast equipment, antennae, supplies, inventory (including all
films, programs, records, tapes, recordings, compact discs, cassettes, spare
parts and equipment), advertising and promotional materials, engineering plans,
records and data, vehicles, furniture and other personal property owned by
Sellers used in or relating to the Station or the Business, including, without
limitation, the items listed or referred to in Schedule 4.11;
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(d) Subject to Section 6.16, the leased Personal Property listed in
Schedule 4.12 and the agreements under which such Personal Property is so
leased;
(e) The Intellectual Property;
(f) All Station Agreements (other than those listed on Schedule
2.2(g)) and any other contract, agreement or understanding (evidenced in
writing) entered into by Sellers in respect of the Business which (A) is of the
nature described in subsection (ii), (iii), (iv) or (vi) of Section 4.18 but
which, by virtue of its specific terms, is not required to be listed in Schedule
4.18 or (B) is entered into after the date hereof consistent with the provisions
of Section 6.4 of this Agreement;
(g) All advertising customer lists, mailing lists, processes, trade
secrets, know-how and other proprietary or confidential information used in or
relating to the Business;
(h) All of Sellers' rights, claims or causes of action against third
Persons arising under warranties from manufacturers, vendors and others in
connection with the assets, properties, business or operations of the Business
or the Station arising out of transactions occurring prior to the Closing Date,
provided that such rights, claims or causes of action shall constitute Excluded
Assets to the extent they relate to the other Excluded Assets and Excluded
Liabilities pursuant to Section 2.2(d);
(i) All prepaid rentals and other prepaid expenses (except for
prepaid insurance) arising from payments made by Sellers in the ordinary course
of the operation of the Business prior to the Closing Date for goods or services
where such goods or services have not been received at the Closing Date;
(j) All jingles, slogans, commercials and other promotional
materials used in or relating to the Station or the Business;
(k) All books and records (including all computer programs used
primarily in connection with the operation of the Business, the Purchased Assets
or the Station) of Sellers relating to the assets, properties, business and
operations of the Business, the Purchased Assets or the Station 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; and
(l) All other assets or properties not referred to above which are
reflected on the Balance Sheet or acquired by Sellers in the ordinary course of
the Business after the Balance Sheet Date but prior to Closing, 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
(ii) Excluded Assets.
SECTION 2.2. EXCLUDED ASSETS. Notwithstanding the foregoing, the
Purchased Assets shall not include the following (herein referred to as the
"Excluded Assets"):
(a) All cash and cash equivalents (including any marketable
securities or certificates of deposit) of Sellers;
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(b) All Accounts Receivable;
(c) All claims, rights and interests of Sellers in and to any
refunds for any Tax for which the ACME Entities are liable pursuant to Section
7.1;
(d) Any rights, claims or causes of action of Sellers against third
Persons relating to the assets, properties, business or operations of the
Business which may arise in connection with the discharge by Sellers of the
Excluded Liabilities or which relate to the other Excluded Assets;
(e) All bonds held, contracts or policies of insurance and prepaid
insurance with respect to such contracts or policies;
(f) Each Seller's corporate seal, corporate minute books, stock
record books, corporate records relating to incorporation, Tax Returns and
related documents and supporting work papers and any other records relating
thereto (other than real and personal property Taxes, assessments and levies
imposed on the Purchased Assets);
(g) Any contracts, agreements or understandings listed on Schedule
2.2(g);
(h) Any trade name, trademarks, service marks or logos using or
incorporating the name "ACME" or any variation or derivative thereof;
(i) All records and documents relating to Excluded Assets or to
liabilities other than Assumed Liabilities and not relating in any material
respect to the Purchased Assets or the Assumed Liabilities;
(j) Other than the Purchased Assets described in Section 2.1(h), all
of Sellers' rights, claims or causes of action against third Persons relating to
the assets, properties, business or operations of the Business or the Station
arising out of transactions occurring prior to the Closing Date; and
(k) All trusts, trust assets, trust accounts, reserves, insurance
policies or other assets, including but not limited to, those listed in Schedule
4.22 and relating to employees or to funding the employee benefit plans,
agreements or arrangements sponsored, maintained, contributed to, or
administered by Sellers.
SECTION 2.3. ASSUMPTION OF LIABILITIES.
(a) Upon the terms and subject to the conditions of this Agreement,
on the Closing Date, Buyer shall deliver to Sellers an undertaking and
assumption, pursuant to which Buyer 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 Sellers (except to the extent such
obligations and liabilities constitute Excluded Liabilities):
(i) all liabilities and obligations of Sellers to be paid or
performed after the Closing Date under (A) the Station Agreements,
(B) the leases, contracts and other agreements relating to the
Business, the operation of the Station or the
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Purchased Assets to which a Seller is a party not required to be
listed on Schedule 4.18, (C) the leases, contracts and other
agreements entered into by Sellers with respect to the Business
after the date hereof consistent with the terms of Section 6.4 of
this Agreement and (D) all other liabilities and obligations
relating to Buyer's operation or ownership of the Business and
Purchased Assets after the Closing Date, except, in each case, (i)
to the extent such liabilities and obligations, but for a breach or
default by Sellers, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same
arise out of any such breach or default or (ii) to the extent such
liabilities and obligations would be required to be reflected on a
balance sheet as of the Valuation Date with respect to the Purchased
Assets prepared in accordance with the Agreed Accounting Principles
and were not so reflected in the Closing Date Adjustments in
connection with the determination of the Purchase Price pursuant to
Section 3.6; and
(ii) all liabilities in respect of any Tax for which Buyer is
liable pursuant to Section 7.1.
All of the foregoing to be assumed by Buyer hereunder are referred
to herein as the "Assumed Liabilities."
(b) Buyer shall not assume or be obligated for any of, and Sellers
shall, and Parent shall cause Sellers to, solely retain, pay, perform, defend
and discharge all of, liabilities or obligations of any and every kind
whatsoever, direct or indirect, known or unknown, absolute or contingent, not
expressly assumed by Buyer under Section 2.3(a) and, notwithstanding anything to
the contrary in Section 2.3(a), none of the following (herein referred to as
"Excluded Liabilities") shall be "Assumed Liabilities" for purposes of this
Agreement:
(i) All liabilities and obligations to be paid or performed
and arising before the Closing Date in connection with the operation
of the Station and the Business and the ownership of the Purchased
Assets other than those obligations assumed by Buyer pursuant to
Section 2.3(a);
(ii) Any Tax applicable to the ownership or operation of the
Station, the Business or the Purchased Assets prior to the Closing
Date;
(iii) Any liability or obligation in respect of indebtedness
for borrowed money or any intercompany payable or other intercompany
obligation, including pursuant to any agreement listed on Schedule
4.8 or Schedule 4.25 (other than those related to Purchased Assets
for goods or services provided to the Business by third Persons), of
any Seller or any of their Affiliates;
(iv) All liabilities and obligations under Environmental Laws
related to, associated with or arising out of (A) the occupancy,
operation, use or control of any real property prior to the Closing
Date or (B) the operation of the Business prior to the Closing Date,
in each case to the extent existing prior to the Closing Date on, at
or from (1) any such real property (including, without limitation,
all
11
facilities, improvements, structures and equipment thereon, surface
water thereon or adjacent thereto and soil or groundwater
thereunder) or any conditions whatsoever on, under or in such real
property or (2) any real property or facility owned by a third
Person at which Hazardous Materials generated by the Business were
sent prior to the Closing Date;
(v) Any liabilities or obligations, whenever arising (i)
related to, associated with or arising out of any pension, profit
sharing, or welfare employee benefit plan or other employee benefit
plan, program or arrangement providing any of the benefits described
in 3(1) or 3(2) of ERISA, or providing any employment, consulting,
severance, vacation, retirement, post-retirement, bonus, stay bonus,
deferred compensation, incentive compensation, stock ownership,
stock options, stock appreciation rights, stock purchase rights,
phantom stock rights, insurance, worker's compensation, disability,
unemployment, medical, or other benefit; and (ii) relating to any
current, former or retired employees of the Business, including but
not limited to those plans, programs or arrangements listed in
Schedule 4.22 and the obligation to provide continuation coverage as
defined in Section 4980B of the Code ("COBRA Coverage") to any
employee of the Business arising on or prior to Closing;
(vi) Except as otherwise specifically set forth in this
Agreement, any costs and expenses incurred by any Seller incident to
its negotiation and preparation of this Agreement and its
performance and compliance with the agreements and conditions
contained herein;
(vii) Any of each Seller's liabilities or obligations under
this Agreement or the ACME Ancillary Agreements;
(viii) Any liabilities or obligations to be paid or performed
after the Closing Date in connection with the operation of the
Station and the Business and the ownership of the Purchased Assets,
to the extent such liabilities and obligations, but for a breach or
default by Sellers, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same
arise out of any such breach or default.
(ix) Any liabilities or obligations relating to the Excluded
Assets;
(x) Any liabilities or obligations arising out of or relating
to the employment of employees or independent contractors of the
Station or the Business prior to the Closing Date, including,
without limitation, accrued salary, payroll and wages, accrued sick
pay, accrued commissions, accrued "comp" time, accrued vacation
time, and the proper classification of individuals providing
services to Station or the Business as independent contractors or as
employees, as the case may be;
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(xi) Any obligations or liabilities relating to or arising out
of any claims or pending litigation proceedings relating to the
operations of the Business prior to the Closing Date; and
(xii) Subject to the terms of Section 6.2, any obligations or
liabilities relating to the employment prior to the Closing Date
and/or termination prior to the Closing Date by Sellers of any
employees of the Station or the Business.
ARTICLE III
PURCHASE PRICE AND CLOSING
SECTION 3.1. CLOSING DATE. The purchase and sale of the Purchased
Assets provided for in Section 2.1 (the "Closing") shall be consummated at 10:00
A.M., local time, on a date agreed upon by Sellers and Buyer, occurring within
three (3) business days after the conditions set forth in Articles VIII and IX
are satisfied or, if permissible, waived or such other date, as may be agreed
upon by Sellers and Buyer, at the offices of Sidley Xxxxxx Xxxxx & Xxxx, Bank
One Plaza, 10 South Dearborn Street, Chicago, Illinois, or at such other place
or at such other time as shall be agreed upon by Sellers and Buyer (such date
and time being hereinafter called the "Closing Date").
SECTION 3.2. PURCHASE PRICE. The purchase price for the Purchased
Assets (the "Purchase Price") shall be $75,000,000 (the "Closing Date Payment")
as adjusted by the prorations and adjustments provided for in Section 3.6. The
Escrow Deposit shall be applied to the Purchase Price at the Closing.
SECTION 3.3. PAYMENT OF THE CLOSING DATE PAYMENT. At Closing Buyer
shall pay Sellers an amount equal to the Closing Date Payment, as adjusted by
the Estimated Prorations pursuant to Section 3.6 as set forth in the Estimated
Prorations Certificate (such Closing Date Payment as adjusted by the Estimated
Prorations being the "Estimated Purchase Price"), and as reduced by the Escrow
Deposit, by bank wire transfer of immediately available funds to such bank
account or accounts designated by Sellers for such purpose not less than two (2)
business days before the date such payment is required to be made.
SECTION 3.4. CLOSING DATE DELIVERIES.
(a) On the Closing Date, Sellers shall execute and deliver or cause
to be delivered to Buyer (i) a xxxx of sale and assignment of Sellers conveying
all of the Purchased Assets (other than the Real Property described in Schedule
4.10(a)), (ii) general warranty deeds conveying to Buyer the Real Property
described in Schedule 4.10(a), (iii) the legal opinions substantially as set
forth in Exhibits A and B attached hereto, dated as of the Closing Date, to be
delivered by Sellers' counsel and communications counsel, respectively, (iv) all
of the documents and instruments required to be delivered by the ACME Entities
pursuant to Article VIII, (v) copies of the certificates of incorporation or
formation, as applicable, of each ACME Entity, each certified as of a recent
date by the secretary of state of the state of its incorporation or formation,
as applicable, (vi) certificates of good standing of each ACME Entity, each
certified as of a recent date by the secretary of state of the state of its
incorporation or formation, as
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applicable, (vii) a certificate of the secretary or assistant secretary of each
ACME Entity as to its respective bylaws or limited liability company agreement
or similar governing document, as applicable, and the resolutions of its board
of directors and stockholders or members, as applicable, authorizing the
execution and delivery of this Agreement and the transactions contemplated
hereby, (viii) such documents and instruments, if any, as are reasonably
requested by Buyer to evidence that the Purchased Assets at Closing are free and
clear of all Encumbrances other than Permitted Encumbrances and (ix) a
certification of non-foreign status, in form and substance reasonably
satisfactory to Buyer, in accordance with Treasury Regulation
Section 1.1445-2(b).
(b) On the Closing Date, Buyer shall execute and deliver or cause to
be delivered to Sellers (i) the Closing Date Payment, payable in the manner
described in Section 3.3, (ii) all of the documents and instruments required to
be delivered by Buyer pursuant to Article IX, (iii) the legal opinions
substantially as set forth in Exhibit C attached hereto, dated as of the Closing
Date, to be delivered by Buyer's counsel, (iv) copies of the charters of each of
TBC and Tribune Denver, certified as of a recent date by the secretary of state
of its state of incorporation, (v) a certificate of good standing of each of TBC
and Tribune Denver, issued as of a recent date by the secretary of state of the
state of its incorporation, (vi) a certificate of the secretary or assistant
secretary of each of TBC and Tribune Denver as to its bylaws and the resolutions
of its board of directors and stockholders (if applicable) authorizing the
execution and delivery of this Agreement and the transactions contemplated
hereby, (vii) the undertaking and assumption described in Section 2.3(a) and
(viii) a certification of non-foreign status, in form and substance reasonably
satisfactory to Sellers, in accordance with Treasury Regulation Section
1.1445-2(b).
SECTION 3.5. FURTHER ASSURANCES. On the Closing Date and thereafter,
each party hereto shall (i) execute and deliver or cause to be executed and
delivered to the other parties hereto such other bills of sale, deeds,
endorsements, assignments and other good and sufficient instruments of
conveyance and transfer as such party may reasonably request or as may be
otherwise reasonably necessary to vest in such party all the right, title and
interest of Sellers or Buyer, as the case may be, in, to or under any or all of
the Purchased Assets and Assumed Liabilities or Excluded Assets and Excluded
Liabilities, as the case may be, and (ii) take all steps as may be reasonably
necessary to put Sellers or Buyer, as the case may be, in actual possession and
control of all the Purchased Assets and Assumed Liabilities or Excluded Assets
and Excluded Liabilities, as the case may be. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall not constitute an agreement to
assign any license, certificate, approval, authorization, agreement, contract,
lease, easement or other commitment included in the Purchased Assets if an
attempted assignment thereof without the consent of a third Person thereto would
constitute a breach thereof.
SECTION 3.6. PRORATIONS AND ADJUSTMENTS.
(a) Expect as otherwise expressly set forth in this Agreement, the
operation of the Station and the income and normal operating expenses,
including, without limitation, accrued liabilities and prepaid expenses,
attributable thereto through the Valuation Date shall be for the account of
Sellers and thereafter for the account of Buyer. Expenses for goods or services
received both before and after the Valuation Date, real and personal property
Taxes and
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assessments, power and utilities charges, and rents and similar prepaid and
deferred items shall be prorated between Sellers and Buyer as of the Valuation
Date (the "Closing Date Adjustments"). All special assessments and similar
charges or liens imposed against the Purchased Assets in respect of any period
of time through the Valuation Date, whether payable in installments or
otherwise, shall be the responsibility of Sellers, and amounts with respect to
such special assessments, charges or liens in respect of any period of time
after the Valuation Date shall be the responsibility of Buyer, and such charges
shall be adjusted as required hereunder. Three (3) days prior to the Closing
Date, Sellers shall estimate in good faith, all apportionments pursuant to this
Section 3.6 and shall deliver a certified statement of its estimates to Buyer
(which statement shall set forth in reasonable detail the basis for those
estimates) (the "Estimated Prorations Certificate"). At the Closing, Buyer shall
pay to Sellers (through an increase in the Closing Date Payment), or Sellers
shall pay to Buyer (through a reduction in the Closing Date Payment), as the
case may be, the net amount due as a result of the estimated apportionments
(excluding any item that is in dispute) (the "Estimated Prorations"). Within
forty-five (45) days after the Closing, Buyer shall deliver to Sellers a
statement of any adjustments to Sellers' estimate of the apportionments, and
Buyer shall pay to Sellers, or Sellers shall pay to Buyer, as the case may be,
pursuant to Section 3.7 any amount due as a result of the adjustment (or, if
there is any dispute, the undisputed amount). If Sellers dispute Buyer's
determinations, or if at any time after delivery of Buyer's statement of
determinations, Buyer or Sellers determine that any item included in the
apportionments is inaccurate, or that an additional item should be included in
the apportionments, the parties shall confer with regard to the matter and an
appropriate adjustment and payment shall be made as agreed upon by the parties
(or, if they are unable to resolve the matter within 15 days of Sellers' receipt
of Buyer's statement of adjustments (the "Dispute Date"), they shall within 15
days of the Dispute Date mutually select a firm of independent certified public
accountants to resolve the items of disagreement alone, whose decision on the
matter shall be made within 30 days of their selection and shall be binding and
whose fees and expenses shall be borne by each of Sellers and Buyer,
proportionately, in an amount equal the amount of such fees and expenses
multiplied by a fraction, the numerator of which is the difference (with such
difference being deemed in all cases hereunder to be a positive number without
regard to whether such difference is a positive or negative amount) between the
final determination of the independent accountant and the final position taken
by such party upon submission to the independent accountant and the denominator
of which is the difference between the Sellers' and Buyer's positions upon
submission to the independent accountant. If the amount of Taxes which are to be
prorated pursuant to this Section is not known by forty-five (45) days after the
Closing Date, then the amount of such Taxes will be estimated as of such date
and once the amount of such Taxes is known, Buyer shall pay to Sellers, or
Sellers shall pay to Buyer, as the case may be, the net amount due as a result
of the actual apportionment of such Taxes.
(b) Consistent with Sections 2.2(g), 2.3(b)(iii), 7.7 and 7.8
herein, all intercompany obligations of any ACME Entity or its Affiliates and
any of the other agreements referenced in such Sections or in the Schedules
referenced in such Sections shall, with respect to the Purchased Assets and the
Station, have been cancelled prior to the Closing and shall not be taken into
account in the adjustments contemplated by this Section 3.6.
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SECTION 3.7. PURCHASE PRICE ADJUSTMENT. Promptly (but not later than
five business days) after the determination of the Purchase Price pursuant to
Section 3.6 that is final and binding as set forth herein:
(i) if the Purchase Price as finally determined pursuant to
Section 3.6 exceeds the Estimated Purchase Price, Buyer shall pay to
Sellers, by wire transfer of immediately available funds to such
bank accounts of Sellers as Sellers shall designate in writing to
Buyer, the difference between the Purchase Price and the Estimated
Purchase Price; or
(ii) if the Purchase Price as finally determined pursuant to
Section 3.6 is less than the Estimated Purchase Price, Sellers shall
pay to Buyer, by wire transfer of immediately available funds to
such bank accounts of Buyer as Buyer shall designate in writing to
Sellers, the difference between the Purchase Price and the Estimated
Purchase Price.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACME ENTITIES
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the ACME Entities jointly and
severally represent and warrant to Buyer and agree as follows:
SECTION 4.1. ORGANIZATION. Each ACME Entity is a corporation or
limited liability company duly organized, validly existing and in good standing
under the laws of the state of its incorporation or formation, as applicable.
Each Seller is qualified as a foreign corporation to do business in, and is in
good standing under, the laws of the State of Oregon, which is the only
jurisdiction in which the ownership or leasing of the Purchased Assets or the
conduct of the Business requires such qualification. Sellers have the requisite
corporate or limited liability company, as applicable, power and authority to
operate the Station, to own or use, as the case may be, the Purchased Assets and
to carry on the Business.
SECTION 4.2. SUBSIDIARIES AND INVESTMENTS. Sellers do not, directly
or indirectly, (a) own, of record or beneficially, any outstanding voting
securities or other equity interests in any corporation, partnership, joint
venture or other entity which is involved in or relates to the Business, the
Station or the Purchased Assets, or (b) otherwise control any such corporation,
partnership, joint venture or other entity which is involved primarily in or
relates to the Business. Other than its interest in Sellers, Parent does not,
directly or indirectly, (x) own, directly or indirectly, of record or
beneficially, any outstanding voting securities or other equity interests in any
corporation, partnership, joint venture or other entity which is involved
primarily in or relates primarily to the Business, the Station or the Purchased
Assets or (y) otherwise control any such corporation, partnership, joint venture
or other entity which is involved in or relates primarily to the Business, the
Station or the Purchased Assets.
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SECTION 4.3. AUTHORITY OF THE ACME ENTITIES.
(a) Each ACME Entity has the requisite corporate or limited
liability company power (as applicable) and authority to execute and deliver
this Agreement and all of the other agreements and instruments to be executed
and delivered by the ACME Entities pursuant hereto (collectively, the "ACME
Ancillary Agreements"), to consummate the transactions contemplated hereby and
thereby and to comply with the terms, conditions and provisions hereof and
thereof.
(b) The execution, delivery and performance of this Agreement and
the ACME Ancillary Agreements by each ACME Entity (to the extent a party
thereto) have been duly authorized and approved by all necessary action of the
ACME Entities and do not require any further authorization or consent of the
ACME Entities, or their respective stockholders or members, as applicable. This
Agreement is, and each other ACME Ancillary Agreement when executed and
delivered by the ACME Entities and the other parties thereto will be, a legal,
valid and binding agreement of the ACME Entities (to the extent a party thereto)
enforceable in accordance with its respective terms, except in each case as such
enforceability may be limited by bankruptcy, moratorium, insolvency,
reorganization or other similar laws affecting or limiting the enforcement of
creditors' rights generally and except as such enforceability is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Except as set forth in Schedule 4.3(c), none of the execution,
delivery and performance by the ACME Entities of this Agreement or the other
ACME Ancillary Agreements, the consummation by the ACME Entities of any of the
transactions contemplated hereby or thereby or compliance by the ACME Entities
with or fulfillment by the ACME Entities of the terms, conditions and provisions
hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation
or a loss of rights under, or result in the creation or imposition
of any Encumbrance upon any of the Purchased Assets under, (A) the
certificate of incorporation or formation (as applicable) or bylaws,
limited liability company agreement or other similar governing
documents (as applicable) of any ACME Entity, (B) any Station
Agreement or other contract, agreement, note, instrument, mortgage,
lease, license, franchise, permit or other authorization, right,
restriction or obligation to which any Seller is a party or any of
their respective assets or properties is subject or by which any
ACME Entity is bound or otherwise affecting the Purchased Assets or
the Business, (C) any Governmental Permit, (D) any judgment, order,
award or decree to which any ACME Entity is a party or any of the
Purchased Assets, the Station or the Business is subject or by which
any ACME Entity is bound or (E) any statute, other law or regulatory
provision affecting the ACME Entities or the Purchased Assets, the
Station or the Business, except, in the case of (B), (C) or (E), as
would not have a Material Adverse Effect, provided that such
conflict, breach, default or creation of any Encumbrance shall not
prevent the
17
ACME Entities from consummating the transactions contemplated by
this Agreement in accordance with its terms; or
(ii) require the approval, consent, authorization or act of,
or the making by the ACME Entities of any declaration, filing or
registration with, any third Person or any foreign, federal, state
or local court, governmental or regulatory authority or body, except
for such of the foregoing as are necessary pursuant to the HSR Act
or the Communications Act.
SECTION 4.4. FINANCIAL STATEMENTS. Schedule 4.4 contains (a) the
unaudited balance sheets of the Business as of December 31, 2001 and December
31, 2000, respectively, and the related statements of income for the years then
ended and (b) the unaudited balance sheet (the "Balance Sheet") of the Business
as of November 30, 2002 (the "Balance Sheet Date") and the related statements of
income and broadcast cash flows for the eleven months then ended. Except as set
forth in Schedule 4.4, each of such balance sheets and statements of income and
broadcast cash flows have been prepared in accordance with generally accepted
accounting principles consistently applied and present fairly and accurately, in
all material respects, the financial position and results of operations and
broadcast cash flows, as applicable, of the Business as of their respective
dates and for the respective periods covered thereby. None of such balance
sheets and statements or income or broadcast cash flows understate in any
material respect the normal and customary costs and expenses of conducting the
Business or operations of the Station or overstate in any material respect the
revenue generated by the Business and operations of the Station, in either case
as such Business or operations are currently conducted, or are otherwise
materially misleading regarding the operations of the Station. Except as
reflected in such balance sheets and statements of income and broadcast cash
flows or otherwise disclosed to Buyer in writing, no event has occurred since
the Balance Sheet Date that would make such balance sheets and statements of
income and broadcast cash flows misleading in any material respect.
SECTION 4.5. OPERATIONS SINCE BALANCE SHEET DATE.
(a) Except as set forth in Schedule 4.5(a), since the Balance Sheet
Date there has been, in respect of the Station, the Business or the Purchased
Assets:
(i) no change in the financial condition or the results of
operations which has had a Material Adverse Effect;
(ii) no material damage, destruction, loss or claim (whether
or not covered by insurance) or condemnation or other taking; and
(iii) no material adverse change in employee relations.
(b) Except as set forth in Schedule 4.5(b), since the Balance Sheet
Date the operations of the Station and the Business have been conducted only in
the ordinary course and in conformity with past practice. Without limiting the
generality of the foregoing, since the Balance Sheet Date, except as set forth
in such Schedule, the ACME Entities have not, in respect of the Station, the
Business or the Purchased Assets:
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(i) sold, leased, transferred or otherwise disposed of
(including any transfers to any Affiliate of Sellers), or mortgaged
or pledged, or imposed or suffered to be imposed any Encumbrance
(other than Permitted Encumbrances) on, any of the Purchased Assets,
other than personal property having a value, in the aggregate, of
less than $50,000 sold or otherwise disposed of for fair value in
the ordinary course of the Business consistent with past practice;
(ii) canceled any debts owed to or claims held by Sellers
(including the settlement of any claims or litigation) or waived any
right of significant value to the Business other than in the
ordinary course of the Business consistent with past practice;
(iii) created, incurred, guaranteed or assumed, or agreed to
create, incur, guarantee or assume, any indebtedness for borrowed
money in respect of the Business (other than money borrowed or
advances from any Seller or any of their Affiliates in the ordinary
course of the Business consistent with past practice) or entered
into any capitalized leases;
(iv) accelerated collection of notes or accounts receivable
generated by the Business to a date prior to the date such
collection would have occurred in the ordinary course of the
Business;
(v) delayed payment of any account payable or other liability
of the Business beyond its due date or the date when such liability
would have been paid in the ordinary course of the Business
consistent with past practice;
(vi) changed accounting methods, principles or practices,
except insofar as may have been required by law or by a change in
generally accepted accounting principles;
(vii) acquired any real property or undertaken or committed to
undertake capital expenditures exceeding $25,000 in the aggregate;
(viii) made any acquisition (by merger, consolidation,
acquisition of stock or assets or otherwise) of any corporation,
partnership or other business organization or division thereof or
interest therein; or
(ix) entered into any agreement or made any commitment to take
any action described in subparagraphs (i) through (viii) above.
SECTION 4.6. NO UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 4.6 or except for those that would not have a Material Adverse Effect
either individually or in the aggregate, the ACME Entities are not subject, with
respect to the Business, the Station or the Purchased Assets, to any liability
(including, without limitation, unasserted claims, whether known or unknown),
whether absolute, contingent, accrued or otherwise, which is not shown or
reserved for in the Balance Sheet, other than liabilities of the same nature as
those set forth in the
19
Balance Sheet and the notes thereto and incurred in the ordinary course of the
Business after the Balance Sheet Date.
SECTION 4.7. TAXES.
(a) The ACME Entities have, in respect of the Business, the Station
and the Purchased Assets, either filed or caused to be filed all Tax Returns
which are required to have been filed by them under applicable law on or prior
to the date of this Agreement and have paid or made provision for the payment of
all Taxes which have become due pursuant to such Tax Returns or pursuant to any
assessments which have become payable. All monies required to be withheld by the
ACME Entities, including from employees of the Business for income Taxes, social
security and other payroll Taxes, have been collected or withheld, and either
paid to the respective Governmental Bodies, set aside in accounts for such
purpose, or accrued, reserved against and entered upon the books of Sellers.
None of the Purchased Assets are properly treated as owned by Persons other than
Sellers for income Tax purposes. There is no liability for Taxes arising out of
the operation or ownership of the Station or the Business prior to Closing that
could give rise to a lien or Encumbrance on the Station or the Purchased Assets
in the hands of Buyer, excepting any Permitted Encumbrances and excepting any
such lien or Encumbrance arising as a result of actions by Buyer or the failure
of Buyer to perform its obligations under this Agreement.
(b) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code (relating to "FIRPTA").
(c) No payment or other benefit, and no acceleration of the vesting
of any options, payments or other benefits, will be, as a direct or indirect
result of the transactions contemplated by this Agreement, an "excess parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code and the Treasury Regulations thereunder. Except as set forth on
Schedule 4.7(c), no payment or other benefit, and no acceleration of the vesting
of any options, payments or other benefits, will, as a direct or indirect result
of the transactions contemplated by this Agreement, be (or under Section 280G of
the Code and the Treasury Regulations thereunder be presumed to be) a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code and the Treasury Regulations thereunder, without regard to
whether such payment or acceleration is reasonable compensation for personal
services performed or to be performed in the future.
SECTION 4.8. SUFFICIENCY OF ASSETS.
(a) Except as set forth in Schedule 4.8(a) and except for the
Excluded Assets, the Purchased Assets constitute all of the material assets
necessary for or used by Sellers in the conduct of the Business and the
operations of the Station, and are in such good and serviceable condition and
repair (subject to ordinary wear and tear) as is necessary for the conduct of
the Business and the operations of the Station.
(b) Schedule 4.8(b) sets forth a description of all material
services provided by Parent or any Affiliate of Parent (other than Sellers) to
the Business utilizing either (i) assets
20
not owned or leased by Sellers or (ii) employees not listed in Schedule 4.16(a)
and the manner in which the costs of providing such services have been allocated
to Sellers.
SECTION 4.9. GOVERNMENTAL PERMITS.
(a) Sellers own, hold or possess the Station Licenses and all other
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body that are necessary to entitle them to
own or lease, operate and use the assets of the Station and to carry on and
conduct the Business (herein collectively called "Governmental Permits").
Schedule 4.9(a) sets forth a list and brief description of each such
Governmental Permit held by Sellers as of the date of this Agreement.
(b) Except as set forth in Schedule 4.9(b), the ACME Entities have
fulfilled and performed in all material respects their obligations under each of
the Governmental Permits, and no event has occurred or condition or state of
facts exists which constitutes or, after notice or lapse of time or both, would
constitute a material breach or material default under any such Governmental
Permit. No notice of cancellation, of default or of any dispute concerning any
Governmental Permit, or of any event, condition or state of facts described in
the preceding sentence, has been received by the ACME Entities. Except as set
forth in Schedule 4.9(b), each of the Governmental Permits is valid, subsisting
and in full force and effect, and, subject to the receipt of the FCC Consent and
expiration of the waiting period under the HSR Act, may be assigned to Buyer or
its Affiliates in accordance with this Agreement and at the time of assignment
to Buyer or its Affiliates will be in full force and effect, in each case
without (i) the occurrence of any breach, default or forfeiture of rights
thereunder or (ii) the consent, approval or act of, or the making of any filing
with, any Governmental Body or other party (other than the FCC as contemplated
by Section 6.3).
(c) The Station is being operated in accordance with the Station
Licenses and in compliance in all material respects with the Communications Act,
the published rules and regulations thereunder, and all other laws and published
regulations, federal, state and local, applicable to the Station. Sellers have
not received any notice of any violations of the Station Licenses, the
Communications Act or the rules and regulations thereunder. There is no action
by or before the FCC currently pending or, to the Knowledge of the ACME
Entities, threatened to revoke, cancel, rescind, modify or refuse to renew in
the ordinary course any of the Station Licenses. The Station Licenses are
validly issued in the name of ACME Oregon Licensee as listed on Schedule 4.9(a).
Sellers have delivered to Buyer true and complete copies of the Station
Licenses, including any and all amendments and other modifications thereto. The
Station Licenses are in full force and effect, are valid for the balance of the
current license term applicable generally to television stations licensed in the
state where the Station is located, are unimpaired by any acts or omissions of
the ACME Entities or any of their Affiliates, or the employees, agents,
officers, directors or managers, or shareholders or members of the ACME Entities
or any of their Affiliates, and are free and clear of any restrictions which
might limit the operation of the Station in the manner and to the full extent as
it is now operated (other than restrictions under the terms of the Station
Licenses themselves and those restrictions in the Communications Act and the
rules and policies of the FCC generally applicable to television stations of the
same type). There are no applications, proceedings, or complaints pending or, to
the Knowledge of the ACME Entities, threatened before a Governmental Body which
may have
21
a Material Adverse Effect on the Business, the Purchased Assets or the operation
of the Station (other than rulemaking proceedings that apply to the television
broadcasting industry generally). The ACME Entities do not have Knowledge of any
reason why those of the Station Licenses subject to expiration might not be
renewed in the ordinary course for a full term without material modifications or
of any reason why any of the Station Licenses might be revoked. Except as set
forth in Schedule 4.9(c), the Station is in compliance in all material respects
with the FCC's published policy on exposure to radio frequency radiation. No
renewal of any Station License would constitute a major environmental action
under the published rules and regulations of the FCC. As of the date of this
Agreement, to the Knowledge of the ACME Entities, there are no facts which,
under the Communications Act or the published rules and regulations of the FCC,
would disqualify Sellers from assigning the Station Licenses or from
consummating the transactions contemplated herein within the times contemplated
herein. Sellers maintain an appropriate public inspection file at the Station's
studios in accordance with published FCC rules and regulations. Access to the
Station's transmission facilities is restricted in accordance with the published
policies, rules and regulations of the FCC.
SECTION 4.10. REAL PROPERTY; REAL PROPERTY LEASES.
(a) Schedule 4.10(a) contains a brief description of all real
property owned or leased by Sellers in connection with the Business and the
operation of the Station (the "Real Property") and each option held by Sellers
to acquire any Real Property. No real property other than that listed on
Schedule 4.10(a) is used in, held for use in connection with, or necessary for
the conduct of the Business or the operation of the Station. Sellers have
marketable fee simple title (free and clear of any Encumbrances other than
Permitted Encumbrances) to the owned Real Property and have made available or
delivered to Buyer copies of any current title insurance policies with respect
to the Real Property in its possession.
(b) There are no material encroachments upon the Real Property owned
by Sellers nor, to the Knowledge of the ACME Entities, any Real Property leased
by Sellers, by any buildings, structures, or improvements located on adjoining
real estate. To the Knowledge of the ACME Entities, none of the buildings,
structures, or improvements (including without limitation any ground radials,
guy wires or guy anchors) constructed on the Real Property owned by Sellers nor,
to the Knowledge of the ACME Entities, any Real Property leased by Sellers,
encroaches upon adjoining real estate, and all such buildings, structures, and
improvements are constructed in conformity with or are "grandfathered" with
respect to all "setback" lines, easements, and other restrictions, or rights of
record, or that have been established by any applicable building or safety code
or zoning ordinance, except in any case for any of the foregoing which would not
materially impair the ability of Sellers or Buyer to own or operate the Station
or the Business or which would not involve any material cost or expense to cure
or remedy. No utility lines serving the Real Property nor guy wires supporting
any tower pass over the lands of others except where appropriate easements have
been obtained. Neither the whole or any part of the Real Property owned by
Sellers nor, to the Knowledge of the ACME Entities, any Real Property leased by
Sellers are subject to any pending or threatened suit for condemnation or other
taking by any public authority. As of the date of this Agreement, there exists
no writ, injunction, decree, order or judgment, nor any litigation, pending, or
to the Knowledge of the ACME Entities, threatened, relating to Sellers' use,
lease, occupancy or operation of any of the Real Property. Sellers' use and
occupancy of the Real Property complies with all regulations, codes, ordinances,
and statutes
22
of all applicable governmental authorities, including without limitation all
environmental protection and sanitary laws and regulations, occupational safety
and health regulations, and electrical codes, except where such failure to
comply would not be material to the Business. There are no material structural
defects in the buildings, structures, and improvements located on the Real
Property. All towers and other structures on the Real Property are painted and
lighted in accordance, in all material respects, with the requirements of the
Station Licenses, the FCC, the Federal Aviation Administration and all
applicable requirements of federal, state and local law. Each of the towers can
structurally support all of the permitted equipment in accordance with law,
governmental approvals, and sound engineering practices. All Real Property has
legal and insurable access from a public roadway for vehicles and by foot.
(c) Schedule 4.10(c) sets forth a list of each lease or similar
agreement under which any Seller is lessee of, or holds or operates, any Real
Property owned by any third Person, which are the sole and complete agreements
concerning Sellers' use of the leased premises (the "Real Property Leases").
Each Real Property Lease is legal, valid, binding, enforceable and in full force
and effect. No ACME Entity nor, to the Knowledge of the ACME Entities, any other
party is in default, violation or breach in any respect under any Real Property
Lease, and no event has occurred and is continuing that constitutes or, with
notice or the passage of time or both, would constitute a default, violation or
breach thereunder. No amount payable under any Real Property Lease is past due.
The ACME Entities have not received any notice of a default, offset or
counterclaim under any Real Property Lease or any other communication asserting
non-compliance with any Real Property Lease. To the Knowledge of the ACME
Entities, Sellers have the exclusive right to use and occupy that portion of the
premises leased under each Real Property Lease. Each Seller enjoys, in all
material respects, peaceful and undisturbed possession of that portion of the
premises leased by such Seller under the Real Property Leases. Except as set
forth on Schedule 4.10(c), Sellers' interests under the Real Property Leases are
free and clear of all Encumbrances (except for Permitted Encumbrances). Sellers
have made available to Buyer, true and complete copies of the Real Property
Leases, together, in the case of any subleases or similar occupancy agreements,
with copies of all other leases. Except as disclosed in Schedule 4.3(c) or
4.10(c), each Seller has full legal power and authority to assign its rights
under the Real Property Leases to Buyer in accordance with this Agreement on
terms and conditions no less favorable than those in effect on the date hereof,
and such assignment will not affect the validity, enforceability and continuity
of any such lease.
(d) All utilities that are required for the full and complete
occupancy and use of the Real Property, including, without limitation, electric,
water, sewer, telephone and similar services, have been connected and are in
good working order.
SECTION 4.11. PERSONAL PROPERTY. Schedule 4.11 contains a list as of
November 30, 2002 of all machinery, equipment, vehicles, furniture and other
personal property owned or leased by Sellers having an original cost of $10,000
or more and relating to the Business or used or held by Sellers or others for
use by the Station (the "Personal Property") except for Personal Property leases
set forth on Schedule 4.12. The Personal Property is in good operating condition
and repair (reasonable wear and tear excepted), is maintained in compliance with
good engineering practice, is performing satisfactorily, has been properly
maintained, in all material respects, in accordance with the manufacturers'
recommendations and industry practices, is
23
available for immediate use and is otherwise sufficient to permit the Station to
operate in accordance with the Station Licenses and the rules and regulations of
the FCC.
SECTION 4.12. PERSONAL PROPERTY LEASES. Schedule 4.12 contains a
list of each lease or other agreement or right under which a Seller is lessee
of, or holds or operates, any Personal Property owned by a third Person and
relating to the Business or used or held for use by the Station (the "Personal
Property Leases").
SECTION 4.13. INTELLECTUAL PROPERTY. (a) Schedule 4.13(a) contains a
list of (i) all call signs, United States and foreign patents, pending patent
applications, trademark registrations, pending trademark applications, trade
names, service marks, copyrights (registered or unregistered), logos, domain
names, and other similar intangible property rights, issued to, licensed to,
assigned to, filed by, or used to promote or identify the Station, or otherwise
used in connection with the Business by Sellers, and (ii) all agreements,
contracts and understandings therefor (clauses (i) and (ii) being collectively
the "Intellectual Property").
(b) Except as disclosed in Schedule 4.13(b), Sellers either: (i) own
the entire right, title and interest in and to the Intellectual Property listed
in Schedule 4.13(a), free and clear of Encumbrances except for Permitted
Encumbrances; or (ii) have the valid right and license to use the same in the
conduct of the Business and the operations of the Station as currently
conducted.
(c) Except as disclosed in Schedule 4.13(c): (i) all patents and
registrations identified in Schedule 4.13(a) are in force, and all applications
identified in Schedule 4.13(a) are pending without challenge (other than office
actions that may be pending before the Patent and Trademark Office or its
foreign equivalents); (ii) the Intellectual Property owned by Sellers is valid
and enforceable; and (iii) Sellers have the right to bring actions for
infringement or unauthorized use of the Intellectual Property owned by Sellers.
(d) Except as disclosed in Schedule 4.13(d): (i) the ACME Entities
have received no written claim and otherwise have no Knowledge of any claim that
has been made or asserted that alleges the Intellectual Property owned by
Sellers infringes the Intellectual Property of another Person; (ii) no
litigation, arbitration or other proceeding is pending with respect to the
Intellectual Property owned by Sellers; and (iii) no written claim, delivered or
made available to the ACME Entities, has been made or asserted that challenges
the validity or ownership of any Intellectual Property owned by Sellers.
(e) To the Knowledge of the ACME Entities, the operation of the
Station does not infringe any copyright, patent, trademark, trade name, service
xxxx, call sign or other similar right of any third Person. The ACME Entities
have not sold, licensed or otherwise disposed of any of the Intellectual
Property to any Person and Sellers have not agreed to indemnify any Person for
any patent, trademark or copyright infringement.
SECTION 4.14. INTENTIONALLY OMITTED.
SECTION 4.15. TITLE TO PURCHASED ASSETS. Except as set forth on
Schedule 4.15, Sellers have good and marketable title to all of the Purchased
Assets (or a valid leasehold or
24
license interest, in the case of any leased or licensed assets, as applicable),
free and clear of all Encumbrances, except for Permitted Encumbrances.
SECTION 4.16. EMPLOYEES.
(a) Schedule 4.16(a) contains: (i) a list of all individuals
employed by Sellers in connection with the Business; and (ii) the titles,
employer and positions of such employees (the "Station Employees"). Since the
Balance Sheet Date, except as disclosed on Schedule 4.16(a) or as has occurred
in the ordinary course of the Business and consistent as to timing and amount
with past practices, Sellers have not: (A) increased the compensation payable or
to become payable to or for the benefit of any of the Station Employees (other
than normal annual salary increases consistent with past practice), (B) provided
any of the Station Employees with increased security or tenure of employment,
(C) increased the amount payable to any of the Station Employees upon the
termination of such persons' employment, or (D) increased, augmented or improved
benefits granted to or for the benefit of the Station Employees under any bonus,
profit sharing, pension, retirement, deferred compensation, insurance or other
direct or indirect benefit plan or arrangement. Sellers are not a party to any
agreement or arrangement, written or oral, with salaried or non-salaried Station
Employees except as described in Schedule 4.18.
(b) Sellers represent and warrant that they have or shall have
provided, as the case may be, a schedule to Buyer containing a true and accurate
listing of the current rate of compensation provided to the Station Employees as
of the date hereof and as of the Closing Date.
(c) Except as set forth on Schedule 4.16(c), the ACME Entities
represent and warrant as of the date hereof and as of the Closing Date that no
Station Employee is (i) receiving short-term disability benefits or long-term
disability benefits under any plan or program established or maintained by the
ACME Entities or their Affiliates or (ii) on any type of leave other than
vacation leave or sick leave
SECTION 4.17. EMPLOYEE RELATIONS.
(a) Except as set forth on Schedule 4.17(a), in respect of the
Station Employees, Sellers are not a party to any (i) labor collective
bargaining union or similar agreement or (ii) any employment, severance,
incentive or other similar agreement, arrangement, commitment or understanding.
(b) Except as set forth on Schedule 4.17(b), (i) no union or similar
organization represents any Station Employees and, to the Knowledge of the ACME
Entities, no such organization is attempting to organize such employees; (ii)
there are no unfair labor practice charges pending or, to the Knowledge of the
ACME Entities, threatened against the ACME Entities in respect of the Station
Employees; (iii) there is no pending or, to the Knowledge of the ACME Entities,
threatened strike, slowdown, picket, work stoppage or arbitration proceedings
involving labor matters or other labor disputes affecting, Sellers, the
Business, the Purchased Assets or the Station; and (iv) the ACME Entities have
not experienced any strike, work stoppage or other labor difficulties of any
nature at the Station.
25
SECTION 4.18. CONTRACTS. Except as set forth on Schedule 4.18, with
respect to the Business, the operation of the Station or the Purchased Assets,
the ACME Entities are not a party to or bound by:
(i) any contract for the future purchase, lease or sale of
real property;
(ii) any contract entered into in the ordinary course of the
Business for the purchase, rental or use of any recordings,
programming or programming services which is not terminable by
Sellers without penalty on 30 days' notice or less or which provides
for performance over a period of more than 90 days or which involves
the payment after the date hereof of more than $30,000;
(iii) any contract entered into in the ordinary course of the
Business for the purchase of merchandise, supplies or personal
property or for the receipt of services (other than services
referred to in clause (ii) above) which is not terminable by Sellers
on 30 days' notice or less or which provides for performance over a
period of more than 90 days or which involves the payment after the
date hereof of more than $30,000;
(iv) any Time Sales Agreement which was not made in the
ordinary course of the Business and consistent with past practice;
(v) any guarantee of the obligations of the Station's
customers, suppliers or employees;
(vi) any sales agency, advertising representative or
advertising or public relations contract entered into in the
ordinary course of the Business which is not terminable by Sellers
without penalty on 30 days' notice or less or which provides for
payments over a period of more than 90 days or which involves the
payment after the date hereof of more than $30,000;
(vii) any Trade Agreement or Barter Agreement;
(viii) any employee collective bargaining agreement,
employment agreement (other than employment agreements terminable
without premium or penalty on notice of 30 days or less under which
the only monetary obligation is to make current wage or salary
payments and provide current fringe benefits), consulting, advisory
or service agreement, deferred compensation agreement or covenant
not to compete;
(ix) any written contract which the ACME Entities reasonably
anticipate will involve the payment of more than $50,000 in the
years ended December 31, 2002 or 2003;
(x) any partnership, joint venture or other similar agreement
or arrangement;
26
(xi) any agreement or instrument which provides for, or
relates to, the incurrence by Sellers of debt for borrowed money
(except for such agreements or instruments which shall not apply to
Buyer or its Affiliates upon Closing);
(xii) any agreement outside of the ordinary course of the
Business containing any covenant or provision prohibiting Sellers
from engaging in any line or type of business (except for such
agreements which shall not apply to Buyer or its Affiliates upon
Closing);
(xiii) any contract not made in the ordinary course; or
(xiv) any other contract, agreement, commitment, understanding
or instrument which is material to the Station or the Business.
SECTION 4.19. STATUS OF CONTRACTS. Except as set forth in Schedule
4.19 or in any other Schedule hereto, each of the leases, contracts and other
agreements listed in Schedules 4.10(c), 4.12, 4.13(a) and 4.18 (collectively,
the "Station Agreements") constitutes a valid and binding obligation of Sellers
and, to the Knowledge of the ACME Entities, the other parties thereto (subject
to bankruptcy, insolvency, reorganization or other similar laws relating to or
affecting the enforcement of creditors' rights generally) and is in full force
and effect (subject to bankruptcy, insolvency, reorganization or other similar
laws relating to or affecting the enforcement of creditors' rights generally)
and (except as set forth in Schedule 4.3(c) and except for those Station
Agreements which by their terms will expire prior to the Closing Date or will be
otherwise terminated prior to the Closing Date in accordance with the provisions
hereof or at the direction of Buyer) may be transferred to Buyer on terms and
conditions no less favorable than those in effect on the date hereof pursuant to
this Agreement and will be in full force and effect at the time of such
transfer, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party. Each ACME
Entity has fulfilled and performed in all material respects its obligations
under each of the Station Agreements to which it is a party, and no ACME Entity
is in, or alleged to be in, breach or default under any of the Station
Agreements and, to the Knowledge of the ACME Entities, no other party to any of
the Station Agreements has breached or defaulted thereunder, and no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or breach
by any ACME Entity or, to the Knowledge of the ACME Entities, by any such other
party. There are no oral contracts material to the operation of the Business or
the Station. Complete and correct copies of each of the Station Agreements,
together with all amendments thereto, have heretofore been delivered or made
available to Buyer.
SECTION 4.20. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except
as set forth in Schedule 4.20, each ACME Entity has complied with all laws,
published regulations and rules, writs, injunctions, ordinances, franchises,
decrees or orders of any court or of any foreign, federal, state, municipal or
other Governmental Body which are applicable to the Purchased Assets, the
Station or the Business, except where such noncompliance would not be material
to the Business. Without limiting the generality of the foregoing, except as set
forth in Schedule 4.20:
27
(i) there are no unsatisfied judgments outstanding against the
Purchased Assets, the Station or the Business or against the ACME
Entities in respect of the Purchased Assets, the Station or the
Business;
(ii) there are no lawsuits, suits or proceedings pending or,
to the Knowledge of the ACME Entities, threatened against the ACME
Entities in respect of the Purchased Assets, the Station or the
Business;
(iii) there are no claims or investigations pending or, to the
Knowledge of the ACME Entities, threatened against the ACME Entities
in respect of the Purchased Assets, the Station or the Business;
(iv) there is no action, suit or proceeding pending or, to the
Knowledge of the ACME Entities, threatened which questions the
legality or propriety of the transactions contemplated by this
Agreement;
(v) the ACME Entities have not received any written complaints
with respect to the Station causing interference to the transmission
of any other broadcast station or communications facility, and, to
the Knowledge of the ACME Entities, no other broadcast station or
communications facility is causing interference in violation of FCC
rules to the Station's transmissions or the public's reception of
such transmissions;
(vi) each ACME Entity is, with respect to the Business and the
operation of the Station, in compliance with all applicable laws,
rules and regulations relating to the employment of labor, except
where such failure to comply would not be material to the Business;
and
(vii) all material ownership reports, employment reports, Tax
Returns and other material documents required to be filed by Sellers
with the FCC or other Governmental Body in respect of the Purchased
Assets, the Station or the Business have been filed, and all such
documents are complete and accurate in all material respects. Such
items that are material to the Business and as are required to be
placed in the Station's local public inspection files have been
placed in such files.
SECTION 4.21. INSURANCE. Sellers currently maintain policies of fire
and extended coverage and casualty, liability and other forms of insurance in
respect of the Purchased Assets, the Station and the Business (each as listed in
Schedule 4.21), in such amounts and against such risks and losses as will
provide adequate insurance coverage for the replacement cost of the Purchased
Assets, the Station and the Business for all risks normally insured against by a
Person carrying on the same business as Sellers. All insurance policies are in
full force and effect. With respect to the Business, there are no outstanding
claims under any insurance policy or default with respect to provisions in any
such policy.
28
SECTION 4.22. EMPLOYEE PLANS; ERISA.
(a) Schedule 4.22(a) sets forth a list of each benefit and
compensation plan, program and arrangement including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of ERISA and
pension, retirement, post-retirement, profit sharing, deferred compensation,
stock ownership, stock option, stock purchase, stock appreciation rights, stock
bonus, severance or other similar plan relating to the Business, the Station or
the Purchased Assets; each medical, vision, dental, disability or other health
plan; each life insurance plan relating to the Business, the Station or the
Purchased Assets; and any other employee benefit plan relating to the Business,
the Station or the Purchased Assets which covers or has covered employees or
former employees of the ACME Entities (the "Employee Plans"). Schedule 4.22(a)
classifies such Employee Plans as either "Employee Pension Benefit Plans" or
"Employee Welfare Benefit Plans," both as defined in Section 3 of ERISA.
(b) The ACME Entities warrant that the Closing will not result in
the imposition of liability with respect to any multiemployer plan or defined
benefit plan which could be assessed against Buyer.
(c) Each Employee Plan and each related trust agreement, annuity
contract or other funding instrument is in compliance, both as to form and
operation, in all material respects, with applicable law (including, where
applicable, ERISA and the Code).
(d) Each Employee Plan which is intended to be qualified under Code
Section 401(a) satisfies the qualification requirements of the Code in all
material respects, and has been determined by the Internal Revenue Service to be
so qualified, and each trust forming a part of such Employee Plan is exempt from
Tax pursuant to Code Section 501(a). The ACME Entities have no Knowledge of any
fact or set of circumstances that has adversely affected or could reasonably
adversely affect the qualification of such Employee Plan.
(e) No plan which is an employee benefit plan under Section 3(3) of
ERISA has engaged in a transaction that is a Prohibited Transaction as defined
in Section 406 of ERISA and Section 4975 of the Code for which there is no
exemption and with respect to which the ACME Entities have incurred any
Liability which, individually or in the aggregate, would have a Material Adverse
Effect.
(f) Except as set forth in Schedule 4.22(f), the ACME Entities do
not sponsor, maintain or contribute to any Employee Plan that provides health or
death benefits to former employees of the Station other than as required by
Section 4980B of the Code or other applicable laws.
SECTION 4.23. ENVIRONMENTAL PROTECTION. In respect of the Business,
the Station or the Purchased Assets, except as set forth in Schedule 4.23:
(a) During any ACME Entity's (or its Affiliate's) ownership, lease
or use of the real property currently used in the conduct of the Business, and,
to the Knowledge of the ACME Entities, during any former ownership, lease or use
of such real property prior to the ownership, lease or use by the ACME Entities
(or their Affiliates), there have been no spills,
29
discharges or releases of, and the ACME Entities have not placed, held, located,
transported or disposed of any, Hazardous Materials in, from, on or under the
real property currently owned, leased or used in the conduct of the Business, or
to the Knowledge of the ACME Entities, any real property formerly used in the
conduct of the Business that have resulted or could result in any material
investigation or material remedial action by any Governmental Body pursuant to
any Environmental Law and no ACME Entity has any material Liability under any
Environmental Law.
(b) No Station Property or, to the Knowledge of the ACME Entities,
any other real property to which the ACME Entities transported or arranged for
the transportation of any Hazardous Substances is listed or, to the Knowledge of
the ACME Entities, proposed for listing on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA), or on any
similar federal or state list of sites requiring investigation or remediation.
(c) To the Knowledge of the ACME Entities, (i) there are no
structures, improvements, equipment, activities, fixtures or facilities on any
property owned, leased or used by the ACME Entities or in the conduct of the
Business that are constructed with, use or otherwise contain radioactive
materials, asbestos-containing materials, lead, urea formaldehyde or
polychlorinated biphenyls, unless the same are in good condition, ordinary wear
and tear excepted, and in compliance in all material respects with Environmental
Laws, (ii) there are no underground storage tanks, or underground piping
associated with such tanks, except those that comply with applicable
Environmental Laws and (iii) there are no abandoned underground storage tanks
that have not been either abandoned in place or removed pursuant to an
Environmental Law.
(d) There are no liens, restrictive covenants or other land use
restrictions under Environmental Laws on any of the properties owned, or to the
Knowledge of the ACME Entities, leased or used in the conduct of the Business,
and no government actions have been taken, or, to the Knowledge of the ACME
Entities, are in process that could subject any of such properties to such
liens, restrictive covenants or other land use restrictions, and no ACME Entity
is required to place any notice or restriction relating to Hazardous Materials
in any deed to such property.
(e) No ACME Entity has released any Person or waived any rights or
defenses with respect to any Environmental Conditions or any claim arising under
any Environmental Law.
(f) There is no Environmental Report in the possession or control of
the ACME Entities or any of their Affiliates that has not been made available or
delivered to Buyer.
SECTION 4.24. INSOLVENCY PROCEEDINGS. None of the ACME Entities nor
the Purchased Assets are the subject of any pending or threatened insolvency
proceedings of any character, including, without limitation, bankruptcy,
receivership, reorganization, composition or arrangement with creditors,
voluntary or involuntary. In respect of the Purchased Assets, the ACME Entities
have not made an assignment for the benefit of creditors or taken any action in
contemplation of or which would constitute a valid basis for the institution of
any such insolvency proceedings. After giving effect to this transaction, each
ACME Entity (i) will have
30
sufficient capital to carry on its business and transactions, (ii) will be able
to pay its debts as they mature or become due, and (iii) will own assets the
fair value of which will be greater than the sum of its liabilities (including
contingent liabilities) not specifically assumed by Buyer pursuant to the terms
of this Agreement. No ACME Entity is insolvent nor will become insolvent as a
result of entering into this transaction.
SECTION 4.25. TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 4.8(b) or 4.25 or with respect to Excluded Assets, none of Sellers has
been involved in any business relationship with any Affiliate of Sellers, and no
Affiliate of Sellers owns any property or right, tangible or intangible, that is
material to the business and operations of the Stations.
SECTION 4.26. NO FINDER. No ACME Entity or any Affiliate thereof or
any party acting on such Person's behalf has paid or become obligated to pay any
fee or commission to any broker, finder or intermediary, except for Deutsche
Bank Securities Inc. (the fees and expenses of which shall be payable by the
ACME Entities), for or on account of the transactions contemplated by this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to the ACME Entities to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer represents and
warrants to Sellers and agrees as follows.
SECTION 5.1. ORGANIZATION. Each Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and has the requisite corporate power and authority to own or
lease and to operate the properties and assets used in connection with its
business or to be acquired pursuant hereto, and to enter into and perform this
Agreement.
SECTION 5.2. AUTHORITY OF BUYER.
(a) Buyer has the requisite corporate authority to execute and
deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by Buyer pursuant hereto (collectively, the "Buyer
Ancillary Agreements"), to consummate the transactions contemplated hereby and
thereby and to comply with the terms, conditions and provisions hereof and
thereof.
(b) The execution, delivery and performance of this Agreement and
the Buyer Ancillary Agreements by Buyer have been duly authorized and approved
by all necessary action of Buyer and do not require any further authorization or
consent of Buyer or its stockholders. This Agreement is, and each Buyer
Ancillary Agreement when executed and delivered by Buyer and the other parties
thereto will be, a legal, valid and binding agreement of Buyer enforceable in
accordance with its respective terms, except in each case as such enforceability
may be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting
31
the enforcement of creditors' rights generally and except as such enforceability
is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) None of the execution and delivery by Buyer of this Agreement
and the Buyer Ancillary Agreements, the consummation by Buyer of any of the
transactions contemplated hereby or thereby or compliance by Buyer with or
fulfillment by Buyer of the terms, conditions and provisions hereof or thereof
will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation
or a loss of rights under, or result in the creation or imposition
of any Encumbrance upon any assets of Buyer under, the certificate
of incorporation or bylaws of Buyer, any material contract,
agreement, note, instrument, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation, or
any judgment, order, award or decree, to which Buyer is a party or
any of the assets of Buyer is subject or by which Buyer is bound, or
any statute, other law or regulatory provision materially affecting
Buyer or its assets; or
(ii) require the approval, consent, authorization or act of,
or the making by Buyer of any declaration, filing or registration
with, any third Person or any foreign, federal, state or local
court, governmental or regulatory authority or body, except for such
of the foregoing as are necessary pursuant to the HSR Act or the
Communications Act.
SECTION 5.3. LITIGATION. Buyer is not a party to any action, suit or
proceeding pending which, if adversely determined, would reasonably be expected
to restrict the ability of Buyer to consummate the transactions contemplated by
this Agreement. There is no order to which Buyer is subject which would
reasonably be expected to restrict the ability of Buyer to consummate the
transactions contemplated by this Agreement.
SECTION 5.4. NO FINDER. Neither Buyer nor any party acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
SECTION 5.5. QUALIFICATIONS AS FCC LICENSEE. As of the date of this
Agreement, Buyer knows of no fact or circumstance which would, under the
Communications Act, disqualify or preclude it or its assignee from becoming the
FCC licensee of the Station without a waiver of any published FCC rule or
policy. There are no proceedings, complaints, notices of forfeiture, claims or
investigations pending against Buyer or any principal, officer, director, or
owner of Buyer that would materially impair the qualifications of Buyer or its
designated assignee to become a FCC licensee of the Station.
SECTION 5.6. WARN ACT. Buyer has not made or taken, and will not
make or take, any decisions or actions concerning the employees of the Station
after the Closing Date that
32
would require the service of notice under the Worker Adjustment and Retraining
Notification Act of 1988.
ARTICLE VI
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
SECTION 6.1. INVESTIGATION OF THE BUSINESS. Upon the request of
Buyer, the ACME Entities shall afford to the officers, employees and authorized
representatives of Buyer (including, without limitation, independent public
accountants, attorneys and consultants) reasonable access during normal business
hours to the offices, properties, employees and business and financial records
(including computer files, retrieval programs and similar documentation) of the
Business to the extent Buyer shall reasonably deem necessary or desirable and
shall furnish to Buyer or its authorized representatives such additional
information concerning the Business as shall be reasonably requested. Buyer
agrees that any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operations of the Station. It is expressly
understood that, pursuant to this Section 6.1, Buyer, at its sole expense, shall
be entitled to make such engineering inspections of the Station, such
inspections of the Station for the purpose of appraising the Purchased Assets
and such audits of the Station's financial records as Buyer may desire, so long
as the same do not unreasonably interfere with the operation of the Station;
provided, that neither the furnishing of such information to Buyer or its
representatives nor any investigation made heretofore or hereafter by Buyer
shall affect Buyer's right to rely upon any representation or warranty made by
the ACME Entities in this Agreement, each of which shall survive any furnishing
of information to Buyer or its agents, or any investigation by Buyer or its
agents, subject to Section 12.1 hereof.
SECTION 6.2. NOTICE OF LITIGATION. Each party shall promptly notify
the other of any action, suit or proceeding that shall be instituted or
threatened against such party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement. The ACME Entities
shall promptly notify Buyer, and Buyer shall promptly notify the ACME Entities,
of any lawsuit, claim, proceeding or investigation that may be threatened,
brought, asserted or commenced against the other, the Business or the Purchased
Assets which would have been listed in Schedule 4.20 or would be an exception to
Section 5.3, if such lawsuit, claim, proceeding or investigation had arisen
prior to the date hereof.
SECTION 6.3. FCC CONSENT; HSR ACT APPROVAL; OTHER CONSENTS AND
APPROVALS.
(a) As promptly as practicable after the date of the execution of
this Agreement, but in any event no later than ten (10) business days
thereafter, the ACME Entities and Buyer shall file with the FCC applications
requesting its consent to the assignment of the Station Licenses (and any
extensions or renewals thereof) to Buyer or its designated assignee from Sellers
(the "Transfer Applications"). The ACME Entities and Buyer will cooperate in the
preparation of such Transfer Applications and will diligently take, or cooperate
in the taking of,
33
all necessary and commercially reasonable steps, provide any additional
information reasonably required and otherwise use reasonable efforts to obtain
promptly the FCC's consent and approval of the Transfer Applications. Any fees
assessed by the FCC incident to the filing or grant of such applications shall
be borne equally by Buyer and the ACME Entities, with each party responsible for
one half of any such fees assessed. Each of the ACME Entities and Buyer shall
make available to the other, promptly after the filing thereof, copies of all
reports filed by it or its Affiliates on or prior to the Closing Date with the
FCC in respect of the Station.
(b) As promptly as practicable after the execution and delivery of
this Agreement, but in any event no later than fifteen (15) business days
thereafter, the ACME Entities and Buyer shall file with the Federal Trade
Commission and the Antitrust Division of the Department of Justice the
notifications and other information required to be filed by such commission or
department under the HSR Act, or any rules and regulations promulgated
thereunder, with respect to the purchase and sale of the Purchased Assets and
the other transactions contemplated by this Agreement. Each of the ACME Entities
and Buyer covenants to file as promptly as practicable such additional
information as may be requested to be filed by such commission or department.
Each of the ACME Entities and Buyer warrants that all such filings by it will
be, as of the date filed, true and accurate in all material respects and in
accordance with the requirements of the HSR Act and any such rules and
regulations. Each of the ACME Entities and Buyer agrees to make available to the
other such other information as may be required by such commission or department
to be filed as additional information requested by such agencies under the HSR
Act and such rules and regulations. The cost of any filing fees payable under
the HSR Act in connection with the notifications and information described in
this Section 6.3(b) shall be borne equally by Buyer and the ACME Entities.
(c) The ACME Entities and Buyer shall each use reasonable best
efforts to promptly obtain all consents, amendments or permits from Governmental
Bodies, which are required by the terms thereof or this Agreement for the
consummation of the transactions contemplated by this Agreement.
SECTION 6.4. OPERATIONS OF THE STATION PRIOR TO THE CLOSING DATE.
(a) Prior to the Closing Date, except as approved by Buyer, the ACME
Entities shall:
(i) operate and carry on the operations of the Station and the
Business only in the ordinary course consistent with past practices
and published FCC rules and regulations;
(ii) maintain the Purchased Assets in good operating condition
and repair (wear and tear in ordinary usage excepted);
(iii) maintain its books and records in the usual and ordinary
manner, on a basis consistent with prior periods; and
34
(iv) comply in all material respects with all laws, published
rules, ordinances and published regulations applicable to it, to the
Purchased Assets and to the Business and the operations of the
Station.
(b) Prior to the Closing Date, the ACME Entities shall, consistent
with past practice, use their commercially reasonable efforts to:
(i) continue to promote and conduct advertising on behalf of
the Station and the Business at levels substantially consistent with
past practice;
(ii) retain the Station's programming library;
(iii) maintain the business organization of the Station;
(iv) preserve the goodwill of the suppliers, contractors,
licensors, employees, customers, distributors and others having
business relations with the Business or the Station;
(v) maintain the present character and entertainment format of
the Station and the quality of its programs;
(vi) maintain the employment of each current employee who is
necessary for the continued operation of the Station and the
Business as currently operated;
(vii) preserve the Station's present customers and business
relations;
(viii) maintain all inventories at levels consistent with the
Station's prior practices; and
(ix) perform all Station Agreements without default and pay
trade accounts payable in a timely manner; provided, however, that
the ACME Entities may dispute, in good faith, any of its alleged
obligations.
(c) Notwithstanding Sections 6.4(a) and (b), except as expressly
contemplated by this Agreement, except as set forth in Schedule 6.4(c) or except
with the express prior written approval of Buyer (which approval may not be
unreasonably withheld or delayed), the ACME Entities shall not, in respect of
the Station, the Purchased Assets or the Business:
(i) make any material change in the Business or the operations
of the Station;
(ii) make any capital expenditure, or enter into any contract
or commitment therefor, in excess of $25,000 in the aggregate;
(iii) enter into any contract for the purchase of real
property or exercise any option to extend a lease listed in Schedule
4.10(c);
35
(iv) sell, lease (as lessor), transfer or otherwise dispose of
(including any transfers to any Affiliates of Sellers), or mortgage
or pledge, or impose or suffer to be imposed any Encumbrance on, any
of the assets or properties of Sellers, other than inventory and
minor amounts of personal property sold or otherwise disposed of in
the ordinary course of the Business and other than Permitted
Encumbrances;
(v) create, incur or assume, or agree to create, incur or
assume, any indebtedness for borrowed money (other than money
borrowed or advances from any Seller or any of their Affiliates in
the ordinary course of the Business consistent with past practice),
except in the ordinary course of the Business;
(vi) institute any material increase in any profit-sharing,
bonus, incentive, deferred compensation, insurance, pension,
retirement, medical, hospital, disability, welfare or other employee
benefit plan with respect to the Station Employees, other than in
the ordinary course of the Business or as required by any such plan
or Requirements of Law;
(vii) make any material change in the compensation of the
Station Employees, other than changes made in accordance with normal
compensation practices and consistent with past compensation
practices;
(viii) enter into any employment agreement for services to be
performed on behalf of the Station or the Business;
(ix) change the Station's call sign or knowingly acquiesce in
any infringement, unauthorized use or impairment of the Intellectual
Property; or
(x) renew, extend, amend, terminate, or waive any material
right under any Station Agreement or enter into any contract or
commitment or incur any obligation that will be assumed by or be
otherwise binding on Buyer after Closing, except for (a) cash Time
Sales Agreements and production agreements made in the ordinary
course of business consistent with the Station's past practices; (b)
the renewal or extension of any existing contract on its existing
terms in the ordinary course of business (provided that such renewal
or extension does not extend beyond six (6) months except for
program barter agreements listed on Schedule 4.18 where such renewal
or extension may not extend beyond twelve (12) months); (c) other
contracts entered into in the ordinary course of business consistent
with the Station's past practices that do not involve consideration
the value of which, individually, is in excess of $30,000.00 and
which, in the aggregate, is in excess of $40,000.00 measured at
Closing; and (d) trade agreements entered into in the ordinary
course of business that do not involve consideration which,
individually, is in excess of $30,000.00 and which, in the
aggregate, in excess of $40,000.00; provided, that none of such
actions with respect to clauses (a) - (d) result in the modification
or renewal of any Station Agreement in a manner adverse or that
would be adverse upon consummation of the transactions contemplated
hereby to Buyer or the entering into any contract,
36
agreement, undertaking or commitment which would have been required
to be set forth in Schedule 4.18 if in effect on the date hereof or
the entering into any contract which cannot be assigned to Buyer or
a permitted assignee of Buyer without the consent of a third Person.
SECTION 6.5. THIRD PARTY CONSENTS. The ACME Entities shall use
commercially reasonable efforts to obtain the consents of the other contracting
parties to the transactions contemplated hereby to the extent required by the
Station Agreements or Station Licenses requiring such consent. To the extent
that transfer or assignment hereunder by Sellers to Buyer of any Station
Agreement or Station License is not permitted or is not permitted without the
consent of another Person, this Agreement shall not be deemed to constitute an
undertaking to assign the same if such consent is not given or if such an
undertaking otherwise would constitute a breach thereof or cause a loss of
benefits thereunder. The ACME Entities shall use all commercially reasonable
efforts to obtain any and all such third Person consents under all Station
Agreements and Station Licenses; provided, however, that neither the ACME
Entities nor Buyer shall be required to pay or incur any material cost or
expense to obtain any third Person consent that the ACME Entities are not
otherwise required to pay or incur in accordance with the terms of the
applicable Station Agreement or Station License. If any such third Person
consent, approval or waiver is not obtained before the Closing, the parties
shall use reasonable efforts in good faith to cooperate, and to cause each of
their respective Affiliates to cooperate, in effecting any lawful arrangement to
provide to Buyer or its designated Affiliates the economic benefits of the
Station Agreements or Station Licenses for which third Person consents,
approvals, and waivers are being sought after Closing, and to have Buyer or its
designated Affiliates assume and discharge the obligations under the Station
Agreements or Station Licenses from and after the Closing Date.
SECTION 6.6. ENVIRONMENTAL SITE ASSESSMENT. Within thirty (30) days
of the execution of this Agreement, Buyer may obtain a Phase I Environmental
Assessment for each of the parcels of Real Property (the "Environmental
Assessment"). Such Environmental Assessment shall not relieve the ACME Entities
of any obligation with respect to any representation, warranty or covenant of
the ACME Entities in this Agreement or waive any condition to Buyer's
obligations under this Agreement. The cost of completing the Environmental
Assessment shall be paid by Buyer.
SECTION 6.7. PUBLIC ANNOUNCEMENT. None of the ACME Entities, Buyer
or any of their Affiliates shall, without the approval of the other, make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by law or by the rules, regulations or policies of any
national securities exchange or association, in which case the other party shall
be advised and the parties shall use reasonable efforts to cause a mutually
agreeable release or announcement to be issued.
SECTION 6.8. INTERIM FINANCIAL STATEMENTS. The ACME Entities shall
deliver to Buyer, within five (5) business days of their preparation, copies of
any monthly, quarterly or annual financial statements relating to the Business
that may be prepared by them or any of their Affiliates during the period from
the date hereof through the Closing Date. Such financial statements shall fairly
present, in all material respects, the financial position and results of
37
operations of the Business as at the dates and for the periods indicated, and
shall be prepared on a basis consistent and in accordance with the basis upon
which the financial statements included in Schedule 4.4 were prepared.
SECTION 6.9. ADMINISTRATIVE VIOLATIONS. If the ACME Entities receive
any finding, order, complaint, citation or notice prior to the Closing Date
which states that any aspect of the Station's operations violates any rule or
regulation of the FCC or of any other Governmental Body (an "Administrative
Violation"), including, without limitation, any rule or regulation concerning
environmental protection, the employment of labor, or equal employment
opportunity, the ACME Entities shall, if such violation is material to the
Business, promptly notify Buyer of the Administrative Violation and, whether or
not such violation is material to the Business, the ACME Entities shall (i) if
the allegation is valid, use reasonable efforts to remove or correct the
Administrative Violation, and (ii) be responsible for the payment of all costs
associated therewith, including any fines or back pay that may be assessed.
SECTION 6.10. BULK SALES ACT. Buyer waives compliance by the ACME
Entities, in connection with the transactions contemplated hereby, with the
provisions of any applicable bulk transfer laws.
SECTION 6.11. ADVERSE DEVELOPMENTS. The ACME Entities shall promptly
notify Buyer of any unusual or materially adverse developments Known to the ACME
Entities that occur prior to Closing with respect to the Purchased Assets or the
operation of the Station or the Business unrelated to FCC proceedings generally
relating to the television industry or general economic conditions; provided,
however, that the ACME Entities' compliance with the disclosure requirements of
this Section 6.11 shall not relieve the ACME Entities of any obligation with
respect to any representation, warranty or covenant of the ACME Entities in this
Agreement or waive any condition to Buyer's obligations under this Agreement.
SECTION 6.12. NO SOLICITATION COVENANT.
(a) From and after the date of this Agreement, the ACME Entities
shall not, and shall use their respective best efforts to cause their respective
Affiliates, representatives and agents (including, without limitation,
investment bankers, attorneys and accountants) (collectively, their
"Representatives") not to, directly or indirectly, through any officer,
director, agent or otherwise, enter into, solicit, initiate, conduct or continue
any discussions or negotiations with, or knowingly encourage any inquiries or
proposals or offers by, or provide any information to, or otherwise cooperate in
any other way with, any Person or group, other than Buyer and its
representatives and agents, concerning (i) any sale of all or any portion of the
Purchased Assets, the Business or the Station or the capital stock of ACME
Television Missouri or the assets or properties of KPLR or the KPLR Business,
individually or in any combination, to any Person other than Buyer, (ii) any
merger, acquisition, consolidation, recapitalization, liquidation, dissolution
or similar transaction involving the Purchased Assets, the Business or the
Station or the capital stock of ACME Television Missouri or the assets or
properties of KPLR or the KPLR Business, individually or in any combination
(other than the sale of the Purchased Assets to Buyer as contemplated by this
Agreement or the sale of the capital stock of ACME Missouri Television to Buyer
as contemplated by the KPLR Stock Purchase Agreement), or (iii) any transaction
or transactions that would have an effect similar to the transactions described
in
38
(i) or (ii) (any of (i), (ii) and (iii) being an "Alternative Proposal" and any
Alternative Proposal to acquire substantially all of the assets of the Station
(as contemplated by this Agreement) and the capital stock of ACME Television
Missouri (as contemplated in the KPLR Stock Purchase Agreement), in one or more
transactions, or any transaction or transactions that would have an effect
similar to such transactions is referred to herein as a "Combined Alternative
Proposal"). The ACME Entities agree not to release any third Person from, or
waive any provision of, any confidentiality or standstill agreement to which
they (or any of them) are a party with respect to sale of the Purchased Assets,
the Business or the Station or the capital stock of ACME Television Missouri or
the assets or properties of KPLR or the KPLR Business. The ACME Entities shall
cease and cause to be terminated all existing discussions or negotiations with
any Persons conducted heretofore with respect to, or that could reasonably be
expected to lead to, any Alternative Proposal.
(b) Notwithstanding anything in this Agreement to the contrary,
nothing contained in this Section 6.12 will prohibit:
(i) the board of directors of Parent from complying with Rule
14d-9 and Rule 14e-2 promulgated under the Securities Exchange Act
of 1934; provided, however, that none of the ACME Entities nor their
respective boards of directors shall approve or recommend an
Alternative Proposal except pursuant to and in accordance with the
following clause (ii); and
(ii) (A) the ACME Entities (or their Representatives) from
engaging in discussions or negotiations with a third Person
concerning an Alternative Proposal who (without any solicitation,
initiation, encouragement, discussion or negotiation, directly or
indirectly, by or with the ACME Entities or their Representatives
after the date of this Agreement) seeks to initiate such discussions
or negotiations, and furnishing such third Person information
concerning the ACME Entities and their business, properties and
assets if, and only to the extent that, (1) such Person has
submitted a written Alternative Proposal to the board of directors
of Parent which determines in good faith, following consultation
with and after having received the advice of a nationally recognized
firm of outside legal counsel and Parent's financial advisors, that
such Alternative Proposal would reasonably be expected to result in
a Superior Proposal; and (2) three business days before furnishing
such information to or entering into discussions or negotiations
with such Person, the ACME Entities (w) provide prompt, oral and
written notice to Buyer to the effect that they are intending to
furnish information to or enter into discussions or negotiations
concerning an Alternative Proposal with such Person and identify
such Person and the proposed material terms and conditions of such
Alternative Proposal and promptly apprise Buyer of the status and
details (including any amendments or proposed amendments) of any
Alternative Proposal, (x) promptly provide to Buyer any information
regarding the ACME Entities to be provided to any Person making an
Alternative Proposal that was not previously provided to Buyer, (y)
if requested by Buyer, negotiate in good faith with Buyer during
such three business day period with respect to possible revisions to
this Agreement so that the Alternative Proposal that may constitute
a Superior Proposal, in light of such revisions to this
39
Agreement, no longer would constitute a Superior Proposal and (z)
receive from such Person an executed confidentiality agreement in
reasonably customary form on terms not more favorable to such Person
than the terms contained in the Confidentiality Agreement are to
Buyer; and/or
(B) following the receipt by the ACME Entities of a
Superior Proposal and a determination by the board of directors of
Parent, in good faith, after receipt of advice from its outside
legal counsel, that failure to accept such Superior Proposal would
be inconsistent with its fiduciary duties to Parent's stockholders
under applicable law, the ACME Entities from terminating this
Agreement at any time after the fifth business day following Buyer's
receipt of written notice from the ACME Entities that the ACME
Entities have (y) received a Superior Proposal and (z) elected to
terminate this Agreement pursuant to this Section 6.12(b)(ii)(B)
(which notice must specify the material terms and conditions of such
Superior Proposal and the Person making the Superior Proposal);
provided that (1) the conditions set forth in clause (A) above have
been satisfied, (2) prior to such termination, if requested by
Buyer, the ACME Entities shall have negotiated in good faith with
Buyer for such five business day period with respect to possible
revisions to this Agreement so that the Alternative Proposal that
constituted a Superior Proposal, in light of such revisions to this
Agreement, no longer constitutes a Superior Proposal, (3) following
any negotiations contemplated by clause (2) above, the board of
directors of Parent, in good faith and after receipt of advice from
its outside legal counsel and financial advisors, shall have
determined that the Alternative Proposal continues to represent a
Superior Proposal, (4) Parent and ACME Television, LLC shall have
similarly exercised their rights to terminate the KPLR Stock
Purchase Agreement under Section 6.11(b)(ii)(B) therein due to such
Superior Proposal and (5) before or contemporaneously with such
termination the ACME Entities pay to Buyer the amounts owed pursuant
to Section 11.3(ii) of this Agreement and Section 12.3(ii) of the
KPLR Stock Purchase Agreement, and provided, further that after
Buyer's receipt of an initial notice of a Superior Proposal pursuant
to this Section 6.12(b)(ii)(B), the ACME Entities shall be obligated
to promptly notify Buyer of any material change in the terms of such
Superior Proposal and may terminate this Agreement thereafter in
accordance with the terms of this Section 6.12(b)(ii)(B) after
having satisfied the provisions of this Section 6.12(b)(ii)(B) with
respect to each such amended Superior Proposal, except that the five
business days referred to above shall be reduced to three business
days for any such change (but in no event shall the ACME Entities
exercise their right to terminate pursuant to this Section
6.12(b)(ii)(B) fewer than ten business days following Buyer's
receipt of the initial notice of such Superior Proposal).
(c) For purposes of this Agreement, "Superior Proposal" means a
Combined Alternative Proposal, made by a third Person, that the board of
directors of Parent, acting consistent with its fiduciary duties, determines in
good faith (after consultation with its outside legal counsel and financial
advisor) (y) is reasonably capable of being consummated, taking into account all
relevant legal, financial, regulatory and other aspects of the Combined
Alternative
40
Proposal and the source of its financing, on the terms proposed, and (z) would
result in a transaction more favorable to the ACME Entities and the holders of
their respective equity interests than the transactions contemplated by this
Agreement and the KPLR Stock Purchase Agreement considered on an aggregate
basis.
SECTION 6.13. COPIES OF FCC APPLICATIONS. The ACME Entities shall
promptly deliver to Buyer copies of any applications filed with the FCC with
respect to the Station upon filing the same with the FCC.
SECTION 6.14. ESTOPPEL CERTIFICATES / NON-DISTURBANCE AGREEMENT.
(a) The ACME Entities shall use commercially reasonable efforts to
obtain, from the lessors under the Real Property Leases, executed versions of
estoppel certificates in a form reasonably acceptable to Buyer.
(b) Prior to the Closing, the ACME Entities shall obtain a
non-disturbance agreement, in a form reasonably acceptable to Buyer, from
Willamette Industries, Inc. and Entercom Portland, LLC, or their respective
successors or assigns, as the case may be, in favor of the Company with respect
to the lease for the High Camp Communications Site.
SECTION 6.15. TITLE EXAMINATION; TITLE INSURANCE; SURVEYS.
(a) Buyer may, at its expense, conduct a review and examination with
respect to title of the Real Property, and the ACME Entities shall cooperate as
reasonably necessary in completion of such review and examination. If any such
review and examination reflects the existence of any defect, encumbrance, or
other limitation with respect to any such title which would cause a material
limitation or exclusion from the title insurance to be obtained under Section
6.15(b) (a "Title Defect"), the ACME Entities shall use commercially reasonable
efforts to cause such Title Defect to be cleared or otherwise remedied prior to
Closing.
(b) Upon Buyer's request, the ACME Entities shall cooperate with
Buyer to the extent necessary for Buyer to obtain the commitment of a title
insurance company reasonably satisfactory to Buyer to issue ALTA 1992 Form
extended coverage title insurance policies with a zoning endorsement insuring
Buyer's interest in the Real Property (the "Title Commitment"). The costs of any
Title Commitment and the policy to be issued pursuant to such Title Commitment
shall be paid by Buyer.
(c) Buyer, at its expense, may obtain surveys of the Real Property
performed by surveyors reasonably acceptable to Buyer sufficient to remove any
"survey exception" from the title insurance policies to be issued pursuant to
the Title Commitment.
SECTION 6.16. PERSONAL PROPERTY LEASES. Prior to the Closing, Parent
shall cause Sellers to purchase from Xxxxx Fargo Equipment Finance, Inc. and
General Electric Capital Corporation the property leased under the leases with
such entities referenced in Schedule 4.12 and take such other actions so that
such property shall be conveyed by Sellers to Buyer at Closing pursuant to
Section 2.1(c) of this Agreement free and clear of all Encumbrances. Buyer shall
have no Liability, through the proration provisions of Section 3.6 or
41
otherwise, for Sellers' obligations under such leases or with respect to the
purchase of the property relating thereto.
SECTION 6.17. LIEN REMOVAL. Prior to the Closing, the ACME Entities
shall take all necessary action to remove any Encumbrances (except Permitted
Encumbrances), including those referenced in Schedule 4.15, on the Purchased
Assets.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. TAXES; SALES, USE AND TRANSFER TAXES.
(a) The ACME Entities shall be liable for and shall pay all Taxes
(whether assessed or unassessed) applicable to the ownership or operation of 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. Buyer
shall be liable for and shall pay all Taxes (whether assessed or unassessed)
applicable to the ownership or operation of the Business, the Station or the
Purchased Assets, in each case attributable to periods (or portions thereof)
beginning after the Closing Date. For purposes of this Section 7.1(a), 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.
(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 paid
one-half by Buyer and one-half by the ACME Entities. Except as set forth in
Section 6.3, all fees relating to any filing with any Governmental Body required
for transfer and conveyance of the Business, the Station or the Purchased Assets
hereunder, other than amounts (including Taxes) owing to any Governmental Body
as of the date hereof or with respect to events occurring prior to the date
hereof, shall be paid one-half by Buyer and one-half by the ACME Entities.
(c) The ACME Entities or Buyer, 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 ACME Entities or Buyer, as the case may be, in
accordance with the terms of this Section 7.1. 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 liability of each
party, although failure to do so will not relieve the other party from its
liability hereunder.
(d) After the Closing Date, each of the ACME Entities and Buyer
shall (and cause their respective Affiliates to):
(i) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing;
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(ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of the
Business, the Station or the Purchased Assets;
(iii) make available to the other and to any taxing authority
as reasonably requested all information, records, and documents
relating to Taxes of the Business, the Station or the Purchased
Assets;
(iv) provide timely notice to the other in writing of any
pending or threatened Tax audits or assessments relating to Taxes of
the Business, the Station or the Purchased Assets for taxable
periods for which the other may have a liability under this Section
7.1; and
(v) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax audit
or information request with respect to any such taxable period.
SECTION 7.2. EMPLOYEES; EMPLOYEE BENEFIT PLANS. (a) Buyer (or one or
more of its Affiliates) will offer employment on the Closing Date to all active
Station Employees (except for Station Employees identified by Buyer within sixty
days after the date hereof, but in any event prior to the Closing, who shall be
retained by Seller or one of its Affiliates) at the level of salary, wages and
commissions, if applicable, comparable to similarly situated employees of Buyer
and at the place of employment of each such employee immediately prior to the
Closing Date. For purposes of the previous sentence, "active Station Employee"
shall mean the Station Employees who are properly classified as actively at work
at the Station on the Valuation Date or any Station Employee on approved
maternity or paternity leave of absence as of the Valuation Date.
(b) Each Station Employee who accepts employment with Buyer pursuant
to Section 7.2(b) (referred to in this Agreement as a "Transferred Employee")
shall be eligible to become a participant in such employee benefit plans (as
such term is defined in Section 3(3) of ERISA) and such other programs and
arrangements as may be provided to similarly situated employees of Buyer (other
than the Tribune Company Employee Stock Ownership Plan) as soon as practicable
following the closing; provided, however, that Transferred Employees will be
eligible to participate in Buyer's group health plans immediately following the
Closing without waiting periods or exclusion for pre-existing conditions. Buyer
shall not be obligated to provide, nor shall assume any obligation or liability
relating to, COBRA Coverage for any Station Employee or any beneficiary who
incurs a qualifying event on or prior to the Closing Date. To the extent
requested by a Transferred Employee, the ACME Entities shall permit a rollover,
pursuant to Code Section 402(c), to Buyer's 401(k) Plan, in cash, of all of the
individual account balances of such Transferred Employee under the ACME
Entities' 401(k) Plan, including any outstanding plan participant loan
receivables allocated to such accounts subject to compliance with the
requirements of Buyer's 401(k) Plan.
(c) The ACME Entities shall be solely responsible for the Employee
Plans and all obligations and liabilities thereunder. Buyer shall not assume any
of the Employee Plans or any obligation or liability thereunder. The ACME
Entities shall be responsible for, and shall
43
indemnify and hold harmless Buyer from and against any adverse consequences that
Buyer may suffer resulting from, arising out of, relating to, in the nature of,
or caused by, any actions taken by the ACME Entities or their Affiliates or any
ERISA Affiliate pursuant to Section 7.2(a) with respect to an Employee Plan.
(d) Except as otherwise provided in Section 7.2, the ACME Entities
will remain responsible for all claims under the applicable Employee Plans for
health, accident, sickness, and disability benefits deemed incurred prior to the
Closing Date by Station Employees regardless of whether payment is made after
the Closing Date. For all purposes under such Employee Plans, Transferred
Employees will be considered to have terminated employment with the ACME
Entities or their Affiliates as of the Closing Date. For purposes of this
Agreement: (i) a claim for health benefits (including, without limitation,
claims for medical, prescription drug and dental expenses) will be deemed to
have been incurred on the date on which the related medical service or material
was rendered to or received by the Station Employee claiming such benefit, (ii)
a claim for sickness or disability benefits based on an injury or illness
occurring on or prior to the Closing Date will be deemed to have been incurred
prior to the Closing Date, and (iii) in the case of any claim for benefits other
than health benefits and sickness and disability benefits (e.g., life insurance
benefits), a claim will be deemed to have been incurred upon the occurrence of
the event giving rise to such claims.
(e) Any preexisting condition clause or waiting period in any of the
health coverage (including medical, dental and disability coverage) included in
Buyer's benefits programs shall be waived for the Transferred Employees to the
extent such crediting does not result in the duplication of benefits. For
purposes of any eligibility requirements, vesting requirements or differential
benefit provisions based on length of service under any of Buyer's benefit
programs (but not for purposes of pension benefit accruals), service of
Transferred Employees with the ACME Entities or their Affiliates (or any
predecessor thereof) will be treated as service with Buyer or its Affiliates.
Buyer shall ensure that each Transferred Employee receives credit under any
welfare benefit plan of Buyer or its Affiliates for any deductibles or
co-payments paid by such Transferred Employee and his or her dependents for the
calendar year in which the Closing Date occurs under a plan maintained by the
ACME Entities or any Affiliate of the ACME Entities, subject to Buyer's receipt
of such information within two months of the Closing Date. Buyer shall grant
credit to each Transferred Employee for sick leave and vacation time in
accordance with the policies of Buyer applicable generally to its similarly
situated employees after treating service for an ACME Entity, any Affiliate of
an ACME Entity, or any predecessor, as service for Buyer, subject to Buyer's
receipt of such information within two months of the Closing Date. To the extent
any claim with respect to vacation leave or sick leave accrued after the Closing
Date or accrued prior to the Closing Date to the extent Buyer has received a
credit under other provisions of this Agreement is lodged against an ACME Entity
with respect to any Transferred Employee, Buyer shall indemnify, defend, and
hold harmless the ACME Entities from and against any and all Losses, directly or
indirectly, as a result of or based upon or arising from the same.
(f) Buyer shall reimburse the ACME Entities for the costs of
severance benefits for each Station Employee, to the extent provided for
similarly situated employees under the Employee Plans, who does not receive an
offer of employment from Buyer. During the six-month period following the
Closing, Buyer will maintain a severance pay plan or policy for
44
Transferred Employees that provides benefits at least equal to the benefits
provided for such employees under any severance pay plan or policy maintained by
the ACME Entities immediately prior to the Closing. Schedule 4.22(a) sets forth
the level of severance benefits provided by the ACME Entities under any
severance pay plan or policy for such Transferred Employees.
(g) Nothing contained herein, expressed or implied, is intended to
confer upon any Station Employee any right to continued employment for any
period of time by reason of this Agreement. Nothing contained herein is intended
to confer upon any Station Employee any particular term or condition of
employment.
SECTION 7.3. CONTROL OF OPERATIONS PRIOR TO CLOSING DATE.
Notwithstanding anything contained herein to the contrary, the Closing shall not
be consummated prior to the grant of the FCC Consent. The ACME Entities and
Buyer acknowledge and agree that at all times commencing on the date hereof and
ending on the Closing Date, neither Buyer nor any of its employees, agents or
representatives, directly or indirectly, shall, or have any right to, control,
direct or otherwise supervise, or attempt to control, direct or otherwise
supervise any of the management or operations of the Station, it being
understood that the operation, management, control and supervision of all
programs, equipment, operations and other activities of the Station shall be the
sole responsibility, and at all times prior to the Closing Date remain within
the complete control and discretion, of the ACME Entities, subject to the terms
of Section 6.4 of this Agreement.
SECTION 7.4. TAX-FREE EXCHANGE. (a) The ACME Entities acknowledge
that Buyer may desire to make a qualified tax-deferred exchange of certain
property of like-kind for certain of the Purchased Assets pursuant to and in
accordance with Section 1031 of the Code. The ACME Entities shall cooperate, in
good faith, as reasonably requested by Buyer, in enabling Buyer to effectuate
such an exchange, including, without limitation, the assignment of the rights,
but not the obligations, of Buyer pursuant to this Agreement to a "qualified
intermediary" as defined in Treasury Regulation Section 1.1031(k)-1(g)(4). The
ACME Entities' obligation to cooperate with Buyer in order to enable Buyer to
effectuate a qualified, tax-deferred exchange is specifically conditioned upon
the following conditions:
(i) All of the ACME Entities' rights and all of Buyer's
obligations to the ACME Entities in respect of all other provisions
of this Agreement (including the date for Closing) shall not be
adversely affected (including a delay in the granting of the FCC
Consent) by any such exchange, whether or not such exchange is
consummated by Buyer;
(ii) The ACME Entities shall not in any way be liable to Buyer
or any other party whatsoever for any failure of Buyer's proposed
transaction to qualify as a tax-free exchange of like-kind property
under the Code; and
(iii) The ACME Entities shall not bear any cost, expense or
liability as a result of any such tax-deferred exchange and Buyer
shall indemnify the ACME Entities from and against any such costs,
expenses or liabilities.
45
(b) If at any time Buyer determines not to effectuate the purchase
of the Purchased Assets as part of a like-kind exchange, it shall promptly
notify the ACME Entities of this fact. Within sixty (60) days following the
Closing or such notification, whichever is later, Buyer and the ACME Entities
shall negotiate and draft a schedule (the "Asset Allocation") allocating the
consideration paid to the ACME Entities (including the Purchase Price and any
adjustments thereto and the Assumed Liabilities) among the Purchased Assts. The
Allocation Schedule shall be reasonable and shall be prepared in accordance with
Section 1060 of the Code and the Treasury Regulations thereunder. Buyer and the
ACME Entities shall each deliver an executed copy of the agreed Asset Allocation
to the other party. Buyer and Sellers shall each file IRS Form 8594, and all
federal, state and local Tax Returns, in accordance with the Asset Allocation.
Buyer and the ACME Entities each agree to provide the other promptly with any
other information required to complete Form 8594. Notwithstanding anything to
the contrary in this Agreement, the provisions of this Section 7.4(b) shall
survive the Closing for the full period of any applicable statute of limitations
plus sixty (60) days.
SECTION 7.5. COVENANT NOT TO COMPETE OR SOLICIT BUSINESS. In
furtherance of the sale of the Purchased Assets to Buyer hereunder by virtue of
the transactions contemplated hereby and more effectively to protect the value
and goodwill of such Purchased Assets, the ACME Entities covenant and agree
that:
(i) until the third anniversary of the Closing Date, neither
the ACME Entities nor any of their Affiliates will, directly or
indirectly (whether as principal, agent, independent contractor,
partner or otherwise) own, manage, operate, control, provide
consulting or management services for, or otherwise carry on, a
television broadcast station similar to or competitive with the
Business as conducted by Sellers as of the Closing Date (a
"Competitive Business") anywhere within the Portland, Oregon
Designated Market Area (as defined by Xxxxxxx Media Research, Inc.);
or
(ii) until the first anniversary of the Closing Date, neither
the ACME Entities nor any of their Affiliates will induce or attempt
to persuade any current employee, agent or customer of the Business
to terminate such employment, agency or business relationship in
order to enter into any such relationship on behalf of any
Competitive Business;
provided, however, that nothing set forth in this Section 7.5 shall prohibit the
ACME Entities or any of their Affiliates from owning not in excess of 5% in the
aggregate of any class of capital stock of any corporation if such stock is
publicly traded and listed on any national or regional stock exchange or
included on the NASDAQ market system or similar system. In addition, the ACME
Entities covenant and agree that neither they nor any of their Affiliates will
divulge or make use of any trade secrets or other confidential information of
the Business existing as of the Closing Date other than to disclose such secrets
and information to Buyer or its Affiliates, except as required by applicable law
or regulation or by legal process. In the event the ACME Entities or any of
their Affiliates violate any of their obligations under this Section 7.5, Buyer
may proceed against them in law or in equity for such damages or other relief as
a court may deem appropriate. The ACME Entities acknowledge that a violation of
this Section 7.5 may cause Buyer irreparable harm which may not be adequately
compensated for by money damages. The
46
ACME Entities therefore agree that in the event of any actual or threatened
violation of this Section 7.5, Buyer shall be entitled, in addition to other
remedies that it may have, to a temporary restraining order and to preliminary
and final injunctive relief against the ACME Entities or such Affiliate of the
ACME Entities to prevent any violations of this Section 7.5, without the
necessity of posting a bond. It is the intent and understanding of each party
hereto that if, in any action before any court or agency legally empowered to
enforce this Section 7.5, any term, restriction, covenant or promise in this
Section 7.5 is found to be unreasonable and for that reason unenforceable, then
such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency.
SECTION 7.6. ACCOUNTS RECEIVABLE.
(a) As soon as practicable after the Closing, the ACME Entities
shall deliver to Buyer a complete and detailed list of all the Accounts
Receivable. During the period beginning on the Closing Date and ending on the
one hundred twentieth (120th) day after the Closing Date (the "Collection
Period"), Buyer shall use commercially reasonable efforts, as Sellers' agent, to
collect the Accounts Receivable in the usual and ordinary course of business,
using the Station's credit, sales, and other appropriate personnel in accordance
with customary practices which may include referral to a collection agency.
Notwithstanding the foregoing, Buyer shall not be required to institute legal
proceedings on Sellers' behalf to enforce the collection of any Accounts
Receivable. Buyer shall not adjust any Accounts Receivable or grant credit
without Sellers' written consent, and Buyer shall not pledge, secure, or
otherwise encumber such Accounts Receivable or the proceeds therefrom, other
than to the extent such pledge, security or encumbrance arises without any
further action not specifically required by Buyer under Buyer's or its
Affiliates' financing instruments or facilities in the ordinary course of
business. On or before the tenth (10th) Business Day after the end of each
calendar month during the Collection Period, Buyer shall remit to Sellers
collections received by Buyer with respect to the Accounts Receivable, together
with a report of all amounts collected with respect to the Accounts Receivable
during, as the case may be, the period from the Closing or the beginning of such
month through the end of such month, less any reasonable sales commissions or
collection costs paid by Buyer in the ordinary course of its business during the
respective periods with respect to those Accounts Receivable, plus any sales
commission chargebacks taken by Buyer to the extent such sales commissions were
previously deducted in determining the amount to be paid to Sellers hereunder.
(b) Any payments received by Buyer during the Collection Period from
any Person that is an account debtor with respect to any account disclosed in
the list of Accounts Receivable delivered by Sellers to Buyer shall be applied
first to the invoice designated by the account debtor and, if none, such payment
shall be applied to the oldest account which is not disputed. Buyer shall incur
no liability to the ACME Entities for any uncollected account, other than as a
result of Buyer's breach of its obligations under this Section 7.6, in which
case such liability shall not exceed the amount of the disputed Accounts
Receivable. Prior to the end of the Collection Period, neither the ACME
Entities, nor any agent of the ACME Entities, shall make any direct solicitation
of the account debtors for payment. After the end of the Collection Period,
Buyer shall deliver to Sellers all information for the accounts that remain
uncollected, and Sellers shall have the right, at their expense, to assist and
participate with Buyer in the collection of the unpaid Accounts Receivable.
47
(c) At the end of the Collection Period, Buyer shall return to
Sellers all files concerning the collection or attempts to collect the Accounts
Receivable, and Buyer's responsibility for the collection of the Accounts
Receivable shall cease.
SECTION 7.7. THE DAILY BUZZ. From and after Closing, neither Buyer
nor the Station shall have any obligation to air or fund any portion of The
Daily Buzz, a program produced by the ACME Entities or its Affiliates and
currently shown on stations owned or operated, directly or indirectly, by the
ACME Entities. The programming contract for The Daily Buzz is an Excluded Asset
and listed on Schedule 2.2(g) to this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement to consummate the
Closing shall, at the option of Buyer, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:
SECTION 8.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
Warranties.
(a) There shall have been no material breach by any ACME Entity in
the performance of any of its respective covenants and agreements contained
herein.
(b) Each of the representations and warranties of the ACME Entities
contained or referred to herein that is not qualified as to materiality or
Material Adverse Effect shall be true and correct in all material respects on
the Closing Date as though made on the Closing Date (except to the extent that
they expressly speak as of a specific date or time other than the Closing Date,
in which case they need only have been true and correct in all material respects
as of such specified date or time), and each of the representations and
warranties of the ACME Entities contained or referred to herein that is
qualified as to materiality or Material Adverse Effect shall be true and correct
in all respects on the Closing Date as though made on the Closing Date, except
in any case for changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Buyer.
(c) The ACME Entities shall have delivered to Buyer certificates,
dated as of the Closing Date, signed on behalf of each ACME Entity by its
respective President or any Vice President, certifying that the conditions
described in subsections (a) and (b) above have been satisfied.
SECTION 8.2. NO RESTRAINT OR LITIGATION.
(a) Any applicable waiting period under the HSR Act shall have
expired or have been terminated and there shall not be in effect any preliminary
or permanent injunction or other order, decree or ruling by a court of competent
jurisdiction or by a Governmental Body, no statute, rule, regulation or
executive order shall have been promulgated or enacted by a Governmental Body
and there shall not be in effect any temporary restraining order of a court of
48
competent jurisdiction, which, in any case, restrains or prohibits the
transactions contemplated hereby.
(b) There shall not be in existence any suit, action, proceeding or
investigation instigated by a Governmental Body before any court or governmental
agency or body to prohibit the transactions contemplated by this Agreement.
SECTION 8.3. FCC CONSENT.
(a) The FCC Consent shall have been granted, without any condition
or qualification which is materially adverse to Buyer or to the operations of
the Station, provided that if a petition to deny or other third-party objection
is filed with the FCC prior to the date on which the FCC Consent is issued and
becomes a Final Order, and such petition or objection is not withdrawn as of
such date and in the reasonable judgment of Buyer's counsel such objection would
reasonably be expected to result in a reversal or rescission of the FCC Consent,
then Buyer's obligation to effect the Closing shall be subject to the further
condition that the FCC Consent shall have become a Final Order.
(b) Conditions which the FCC Consent, Final Order or any other
order, ruling or decree of any judicial or Governmental Body specifies and
requires to be satisfied prior to transfer of the Station Licenses to Buyer
shall have been satisfied.
SECTION 8.4. CLOSING DOCUMENTS. The ACME Entities shall deliver to
Buyer all of the closing documents specified in Section 3.4(a), all of which
documents shall be dated as of the Closing Date, duly executed and in a form
customary in transactions of this type and reasonably acceptable to Buyer.
SECTION 8.5. THIRD PARTY CONSENTS. Sellers shall have obtained all
consents required under the Station Agreements set forth on Schedule 8.5 in
connection with the consummation of the transactions contemplated by this
Agreement, such that after the Closing Buyer will continue to enjoy all of their
rights and privileges under such Station Agreements subject only to the same
obligations as are currently binding thereunder, pursuant to the present terms
thereof.
SECTION 8.6. CLOSING OF KPLR TRANSACTION. The closing of the KPLR
Purchase shall occur simultaneously with the Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACME ENTITIES
The obligations of the ACME Entities under this Agreement to
consummate the Closing shall, at the option of the ACME Entities, be subject to
the satisfaction on or prior to the Closing Date, of the following conditions:
49
SECTION 9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
Warranties.
(a) There shall have been no material breach by Buyer in the
performance of any of its respective covenants and agreements contained herein.
(b) Each of the representations and warranties of Buyer contained or
referred to herein that is not qualified by materiality shall be true and
correct in all material respects on the Closing Date as though made on the
Closing Date (except to the extent that they expressly speak as of a specific
date or time other than the Closing Date, in which case they need only have been
true and correct in all material respects as of such specified date or time),
and each of the representations and warranties of Buyer contained or referred to
herein that is qualified as to materiality shall be true and correct in all
respects on the Closing Date as though made on the Closing Date, except in any
case for changes therein specifically permitted by this Agreement or resulting
from any transaction expressly consented to in writing by the ACME Entities or
any transaction contemplated by this Agreement.
(c) Buyer shall have delivered to the ACME Entities a certificate
dated as of the Closing Date and signed on behalf of each Buyer by its President
or any Vice President, certifying that the conditions described in subsections
(a) and (b) above have been satisfied.
SECTION 9.2. NO RESTRAINT OR LITIGATION.
(a) Any applicable waiting period under the HSR Act shall have
expired or been terminated and there shall not be in effect any preliminary or
permanent injunction or other order, decree or ruling by a court of competent
jurisdiction or by a Governmental Body, no statute, rule, regulation or
executive order shall have been promulgated or enacted by a Government Body and
there shall not be in effect any temporary restraining order of a court of
competent jurisdiction, which, in any case, restrains or prohibits the
transactions contemplated hereby.
(b) There shall not be in existence any suit, action, proceeding or
investigation instigated by a Governmental Body before any court or governmental
agency or body to prohibit the transactions contemplated by this Agreement.
SECTION 9.3. FCC CONSENT. The FCC Consent shall have been granted,
without any condition or qualification which is materially adverse to the ACME
Entities, notwithstanding that it may not have yet become a Final Order.
SECTION 9.4. CLOSING DOCUMENTS. Buyer shall deliver to the ACME
Entities all of the closing documents specified in Section 3.4(b), all of which
documents shall be dated as of the Closing Date, duly executed and in a form
customary in transactions of this type and reasonably acceptable to Sellers.
SECTION 9.5. CLOSING OF KPLR TRANSACTION. The closing of the KPLR
Purchase shall occur simultaneously with the Closing.
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ARTICLE X
INDEMNIFICATION
SECTION 10.1. INDEMNIFICATION BY THE ACME ENTITIES. The ACME
Entities agree jointly and severally to indemnify and hold harmless each Buyer
Group Member from and against any and all Loss and Expense incurred by such
Buyer Group Member in connection with or arising from:
(i) any breach by the ACME Entities of, or any other failure
of the ACME Entities or their respective Affiliates to perform, any
of their covenants, agreements or obligations in this Agreement or
in any ACME Ancillary Agreement (determined without regard to
materiality or Material Adverse Effect qualifiers);
(ii) any breach of any warranty or the inaccuracy of any
representation of the ACME Entities contained or referred to in this
Agreement or any certificate delivered by or on behalf of the ACME
Entities pursuant hereto (determined without regard to materiality
or Material Adverse Effect qualifiers);
(iii) the failure of the ACME Entities to perform and
discharge any Excluded Liabilities; or
(iv) notwithstanding any waiver by Buyer pursuant to Section
6.10 hereof, any failure to comply with the provisions of any bulk
sales law applicable to the transactions contemplated hereby;
provided, however, that the ACME Entities shall not be required to indemnify and
hold harmless pursuant to clause (ii) with respect to Loss and Expense incurred
by Buyer Group Members until the aggregate amount of all such Loss and Expense
exceeds $250,000 and then only to the extent that the aggregate amount of all
such Loss and Expense exceeds $125,000 and, provided, further, that the
aggregate amount that the ACME Entities shall be required to indemnify and hold
harmless pursuant to clause (ii) with respect to Loss and Expense incurred by
Buyer Group Members shall not exceed $20,000,000. The indemnification provided
for in this Section 10.1 shall terminate twelve (12) months after the Closing
Date (and no claims shall be made by any Buyer Group Member under this Section
10.1 thereafter), except that the indemnification by the ACME Entities shall
continue in any event as to:
(A) the covenants of the ACME Entities set forth in this Agreement,
as to all of which no time limitation shall apply, unless otherwise stated
herein;
(B) the covenants of the ACME Entities set forth in Section 7.5,
which shall terminate one year after the expiration of the noncompetition
period provided for therein;
(C) the representations and warranties contained in Sections 4.7 and
4.23, the covenants of the ACME Entities set forth in Sections 7.1 and
7.4(b) and clause (iv) of this
51
Section 10.1, as to all of which no time limitation shall apply other than
the full period of any applicable statute of limitations plus sixty (60)
days;
(D) the representations and warranties contained in Sections 4.3(b),
4.15 and 4.26 and any Loss or Expense incurred by any Buyer Group Member
in connection with or arising out of the matters described in clause (iii)
of this Section 10.1, as to which no time limitation shall apply; and
(E) any Loss or Expense of which any Buyer Group Member has notified
the ACME Entities in accordance with the requirements of Section 10.3 on
or prior to the date such indemnification would otherwise terminate in
accordance with this Section 10.1, as to which the obligation of the ACME
Entities shall continue until the liability of the ACME Entities shall
have been determined pursuant to this Article X, and the ACME Entities
shall have reimbursed all Buyer Group Members for the full amount of such
Loss and Expense in accordance with this Article X.
SECTION 10.2. INDEMNIFICATION BY BUYER. Buyer agrees to indemnify
and hold harmless each ACME Group Member from and against any and all Loss and
Expense incurred by such ACME Group Member in connection with or arising from:
(i) any breach by Buyer, or any other failure of Buyer to
perform, any of its covenants, agreements or obligations in this
Agreement or in any Buyer Ancillary Agreement (determined without
regard to materiality qualifiers);
(ii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement
or any certificate delivered by or on behalf of Buyer pursuant
hereto (determined without regard to materiality qualifiers); or
(iii) the failure of Buyer to perform or discharge any of the
Assumed Liabilities and Buyer's (or any successor's or assignee's)
operation of the Business and/or the ownership and/or use of the
Purchased Assets after the Closing Date;
provided, however, that Buyer shall not be required to indemnify and hold
harmless pursuant to clause (ii) with respect to Loss and Expense incurred by
ACME Group Members until the aggregate amount of all such Loss and Expense
exceeds $250,000 and then only to the extent that the aggregate amount of all
such Loss and Expense exceeds $125,000. The indemnification provided for in this
Section 10.2 shall terminate twelve (12) months after the Closing Date (and no
claims shall be made by any ACME Group Member under this Section 10.2
thereafter), except that the indemnification by Buyer shall continue in any
event as to:
(A) the covenants of Buyer set forth in this Agreement, as to all of
which no time limitation shall apply, unless otherwise stated herein;
52
(B) the covenants of Buyer set forth in Sections 7.1 and 7.4(b) as
to which no time limitation shall apply other than the full period of any
applicable statute of limitations plus sixty (60) days;
(C) the representations and warranties contained in Sections 5.2(b)
and 5.4 and any Loss or Expense incurred by any ACME Group Member in
connection with or arising out of the failure of Buyer to perform any
Assumed Liabilities, as to which no time limitation shall apply; and
(D) any Loss or Expense of which any ACME Group Member has notified
Buyer in accordance with the requirements of Section 10.3 on or prior to
the date such indemnification would otherwise terminate in accordance with
this Section 10.2, as to which the obligation of Buyer shall continue
until the liability of Buyer shall have been determined pursuant to this
Article X, and Buyer shall have reimbursed all ACME Group Members for the
full amount of such Loss and Expense in accordance with this Article X.
SECTION 10.3. NOTICE OF CLAIMS. (a) If any Buyer Group Member (with
respect to Section 10.1) or any ACME Group Member (with respect to Section 10.2)
believes that it has suffered or incurred any Loss or incurred any Expense, such
Buyer Group Member or ACME Group Member, as the case may be (the "Indemnified
Party"), shall so notify the parties obligated to provide indemnification to
such Indemnified Party (the "Indemnitor") promptly in writing describing such
Loss or Expense, the amount thereof, if known, and the method of computation of
such Loss or Expense, all with reasonable particularity and containing a
reference to the provisions of this Agreement or any certificate delivered
pursuant hereto in respect of which such Loss or Expense shall have occurred (a
"Claim Notice"); provided, however, that the omission by the Indemnified Party
to give notice as provided herein shall not relieve the Indemnitor of its
indemnification obligation under this Article X except to the extent that such
omission results in a failure of actual notice to the Indemnitor and such
Indemnitor is materially damaged as a result of such failure to give notice. If
any action at law or suit in equity is instituted by or against a third Person
with respect to which any Indemnified Party intends to claim any liability or
expense as Loss or Expense under this Article X, such Indemnified Party shall
promptly notify the Indemnitor of such action or suit as specified in this
Section 10.3.
(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) Subject to Section 10.4(b),
the Indemnified Party shall have the right to conduct and control, through one
separate counsel (plus appropriate local counsel) of its choosing, the defense,
compromise or settlement of any third Person claim, action or suit against such
Indemnified Party as to which indemnification will be
53
sought by any Indemnified Party from any Indemnitor hereunder, and in any such
case the Indemnitor shall cooperate in connection therewith and shall furnish
such records, information and testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested by the
Indemnified Party in connection therewith; provided, that the Indemnitor may
participate, through counsel chosen by it and at its own expense, in the defense
of any such claim, action or suit as to which the Indemnified Party has so
elected to conduct and control the defense thereof; and provided further that
the Indemnified Party shall not, without the written consent of the Indemnitor
(which written consent shall not be unreasonably withheld), pay, compromise or
settle any such claim, action or suit, except that no such consent shall be
required if, following a written request from the Indemnified Party, the
Indemnitor shall fail, within fourteen (14) days after the making of such
request, to acknowledge and agree in writing that, if such claim, action or suit
shall be adversely determined, such Indemnitor has an obligation to provide
indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that in
such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) If any third Person claim, action or suit against any
Indemnified Party is solely for money damages or, where the ACME Entities are
the Indemnitor, will have no continuing effect in any material respect on the
Purchased Assets or Buyer or its Affiliates or their respective businesses,
assets or operations, then the Indemnitor shall have the right to conduct and
control, through counsel of its choosing and at its own expense, the defense,
compromise or settlement of any such third Person claim, action or suit against
such Indemnified Party as to which indemnification will be sought by any
Indemnified Party from any Indemnitor hereunder if the Indemnitor has
acknowledged and agreed in writing that, if the same is adversely determined,
the Indemnitor has an obligation to provide indemnification to the Indemnified
Party in respect thereof, and in any such case the Indemnified Party shall
cooperate in connection therewith and shall furnish such records, information
and testimony and attend such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by the Indemnitor in
connection therewith; provided, that the Indemnified Party may participate,
through counsel chosen by it and at its own expense, in the defense of any such
claim, action or suit as to which the Indemnitor has so elected to conduct and
control the defense thereof. Notwithstanding the foregoing, the Indemnified
Party shall have the right to pay, settle or compromise any such claim, action
or suit, provided that in such event the Indemnified Party shall waive any right
to indemnity therefor hereunder unless the Indemnified Party shall have sought
the consent of the Indemnitor to such payment, settlement or compromise and such
consent was unreasonably withheld, in which event no claim for indemnity
therefor hereunder shall be waived.
SECTION 10.5. LIMITATIONS. (a) In any case where an Indemnified
Party recovers from third Persons any amount in respect of a matter with respect
to which an Indemnitor has indemnified it pursuant to this Article X, such
Indemnified Party shall promptly pay over to the Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses incurred by
it in procuring such recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnitor to or on behalf of the Indemnified Party in
respect of such
54
matter and (ii) any amount reasonably 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 equitable or
specific performance remedies, remedies that cannot be waived as a matter of law
and injunctive and provisional relief, if the Closing occurs, this Article X
shall be the exclusive remedy for breaches of this Agreement (including any
covenant, obligation, representation or warranty contained in this Agreement or
in any certificate delivered pursuant to this Agreement).
(c) To the extent of any inconsistency between this Article X and
Section 7.1(c), the provisions of Section 7.1(c) shall control.
(d) Each party agrees to use its commercially reasonable efforts to
mitigate any Loss and Expense that forms the basis for any claim for
indemnification hereunder.
(e) In no event shall a party be entitled to indemnification for
such party's incidental, consequential or punitive damages.
ARTICLE XI
TERMINATION AND REMEDIES
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 ACME Entities and
Buyer;
(ii) by the ACME Entities in the event of a material breach by
Buyer of any of its agreements, representations or warranties
contained in this Agreement or if any of the representations or
warranties of Buyer contained in this Agreement shall have been
inaccurate in any material respect when made, and the failure of
Buyer to cure such breach within thirty (30) days after receipt of
written notice from the ACME Entities requesting such breach to be
cured;
(iii) by Buyer in the event of a material breach by the ACME
Entities of any of their respective agreements, representations or
warranties contained in this Agreement or if any of the
representations or warranties of the ACME Entities contained in this
Agreement shall have been inaccurate in any material respect when
made, and the failure of the ACME Entities to cure such breach
within thirty (30) days after receipt of written notice from Buyer
requesting such breach to be cured;
(iv) by the ACME Entities or Buyer if any court of competent
jurisdiction in the United States or other United States
Governmental Body shall have issued a final and non-appealable
order, decree or ruling permanently
55
restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby;
(v) by Buyer, pursuant to the provisions of Section
12.13(a)(ii) hereof;
(vi) by Buyer, pursuant to the provisions of Section 12.13(b)
hereof;
(vii) by the ACME Entities or Buyer if the Closing shall not
have occurred within one year after the date of this Agreement (or
such later date as may be mutually agreed to by the ACME Entities
and Buyer); provided, however, that the right to terminate this
Agreement under this Section 11.1(a)(vii) shall not be available to
any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or resulted in, the failure
of the Closing to occur prior to such date; and
(viii) by the ACME Entities as contemplated by Section
6.12(b)(ii)(B).
SECTION 11.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to Section 11.1 shall give notice of such termination to
the other party to this Agreement.
SECTION 11.3. EFFECT OF TERMINATION. In the event that this
Agreement shall be terminated pursuant to this Article XI, all further
obligations of the parties under this Agreement (other than the provisions of
Sections 12.2 and 12.10) shall be terminated without further liability of any
party to the other; provided that
(i) nothing herein shall relieve any party from liability for
any breach of this Agreement;
(ii) if this Agreement is terminated pursuant to Section
11.1(a)(viii), the ACME Entities shall pay Buyer $2,700,000, by wire
transfer of same day funds before or contemporaneously with such
termination, as liquidated damages as full and final settlement of
all claims of Buyer under this Agreement and there shall be no
further remedies of Buyer hereunder; provided that, if at or prior
to such termination by the ACME Entities pursuant to Section
11.1(a)(viii) any of the ACME Entities have materially breached
Section 6.12 of this Agreement, such fee and expenses described
above shall not constitute liquidated damages or full and final
settlement of all claims of Buyer and neither the provisions of this
Section 11.3(ii) nor the payment or receipt of the fees and expenses
described above shall limit Buyer's remedies hereunder for such
breach; and
(iii) if (A) the Agreement is terminated by the ACME Entities
pursuant to Section 11.1(a)(ii), (B) at the time of such termination
all of the conditions contained in Articles VIII and IX to the
parties' respective obligations to consummate the Closing have been
satisfied (or upon delivery of the certificates described in
Sections 8.1 and 9.1 would be satisfied) or waived by the party
entitled to the benefit thereof or such conditions have not been
satisfied solely by
56
reason of Buyer's wrongful failure to fulfill its obligations under
this Agreement, (C) notwithstanding a request by the ACME Entities
to consummate the Closing, Buyer violates its obligations under
Section 3.1 to consummate the Closing, and (D) no ACME Entity is
otherwise in material breach hereunder, then Buyer shall pay to the
ACME Entities, taken as a whole, an amount equal to $2,200,000 plus
the ACME Entities shall be entitled to the Escrow Deposit, together
with 50% of all interest and other proceeds from the investment of
the Escrow Deposit; Buyer and the Escrow Agent, respectively, shall
make such payments within five (5) business days after the ACME
Entities' notice of termination to Buyer and the Escrow Agent in
accordance with the terms of this Agreement and the Escrow
Agreement, as liquidated damages as full and final settlement of all
claims of the ACME Entities under this Agreement and there shall be
no further remedies of the ACME Entities hereunder.
SECTION 11.4. LIQUIDATED DAMAGES NOT A PENALTY. With respect to the
liquidated damages provided for in Section 11.3, the ACME Entities and Buyer
agree that neither the damage that may be suffered by Buyer if this Agreement is
terminated pursuant to Section 11.1(a)(viii) nor the damage that may be suffered
by the ACME Entities if the transactions contemplated by this Agreement are not
consummated as a result of Buyer's wrongful failure to close hereunder in
accordance with Section 11.3(iii), is readily ascertainable and as such
liquidated damages on the date hereof are a reasonable estimate of such damages
and are intended to compensate the injured party(ies) for any such damage and
are not intended to be construed as a penalty.
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS. All representations, warranties, covenants and obligations
contained in this Agreement shall survive the consummation of the transactions
contemplated by this Agreement; provided, however, that, except as otherwise
provided in Article X or herein, the representations and warranties contained in
Articles IV and V of this Agreement shall terminate twelve (12) months after the
Closing Date. Notwithstanding the foregoing or anything to the contrary
contained in this Agreement, the representations and warranties contained in
Sections 4.3(b), 4.15, 4.26, 5.2(b) and 5.4 shall survive without limitation and
the representations and warranties contained in Sections 4.7 and 4.23 shall
survive for the full period of any applicable statute of limitations plus sixty
(60) days. Except as otherwise provided herein, no claim shall be made for the
breach of any representation or warranty contained in Article IV or V after the
date on which such representations and warranties terminate as set forth in this
Section.
SECTION 12.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence all documents, materials and other information
which it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
57
consummated, each party will, upon request, return to or destroy the other party
all copies of nonpublic documents and materials which have been furnished in
connection therewith. Without limiting the right of either party to pursue all
other legal and equitable rights available to it for violation of this Section
12.2 by the other party, it is agreed that other remedies cannot fully
compensate the aggrieved party for such a violation of this Section 12.2 and
that the aggrieved party shall be entitled to injunctive relief to prevent a
violation or continuing violation hereof.
SECTION 12.3. GOVERNING LAW. This Agreement and the transactions
contemplated hereby shall be governed by and construed in accordance with the
laws of the State of Delaware without reference to its choice of law rules.
SECTION 12.4. NOTICES. All notices or other communications required
or permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally or by messenger or facsimile (or, with
respect to facsimiles, if not sent on a business day, on the first business day
after) or 24 hours after having been sent by registered or certified mail or
when delivered by private courier addressed as follows:
If to Buyer, to:
Tribune Broadcasting Company
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: 312-222-3203
with copies to:
Tribune Company
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and General Counsel
Facsimile: 000-000-0000
and
Sidley Xxxxxx Xxxxx & Xxxx
Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: 312-853-7036
If to the ACME Entities, to:
ACME Communications, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile: 000-000-0000
58
with a copy to:
O'Melveny & Xxxxx LLP
1999 Avenue of the Stars, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
SECTION 12.5. SUCCESSORS AND ASSIGNS.
(a) The rights of any party under this Agreement shall not be
assignable by such party hereto prior to the Closing without the written consent
of the other parties hereto. Notwithstanding the foregoing, (i) Buyer may assign
all or a part of its rights under this Agreement prior to the Closing to a
"qualified intermediary" within the meaning of Treasury Regulation Section
1.1031(k)-1(g)(4) without the prior written consent of the ACME Entities;
provided, however that Buyer shall remain primarily liable for all of its
obligations under this Agreement, (ii) either party may assign from all or a
part of its rights under this Agreement to an Affiliate of the assigning party,
and (iii) either party may assign all or a part of its rights under this
Agreement in the case of a merger, consolidation or change of control.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon any Person other than the parties and successors and assigns permitted by
this Section 12.5 any right, remedy or claim under or by reason of this
Agreement.
SECTION 12.6. ACCESS TO RECORDS AFTER CLOSING.
(a) For a period of six years after the Closing Date, the ACME
Entities and their representatives shall have reasonable access to all of the
books and records of the Business transferred to Buyer hereunder to the extent
that such access may reasonably be required by the ACME Entities in connection
with matters relating to or affected by the operations of the Business prior to
the Closing Date. Such access shall be afforded by Buyer upon receipt of
reasonable advance notice and during normal business hours. The ACME Entities
shall be solely responsible for any costs or expenses incurred by them pursuant
to this Section 12.6(a). If Buyer shall desire to dispose of any of such books
and records prior to the expiration of such six-year period, it shall, prior to
such disposition, give the ACME Entities a reasonable opportunity, at the ACME
Entities' expense, to segregate and remove such books and records as the other
party may select.
59
(b) For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Business which the ACME Entities or any of their Affiliates may
retain after the Closing Date. Such access shall be afforded by the ACME
Entities and their Affiliates upon receipt of reasonable advance notice and
during normal business hours. Buyer shall be solely responsible for any costs
and expenses incurred by it pursuant to this Section 12.6(b). If the ACME
Entities or any of their Affiliates shall desire to dispose of any of such books
and records prior to the expiration of such six-year period, the ACME Entities
shall, prior to such disposition, give Buyer a reasonable opportunity, at
Buyer's expense, to segregate and remove such books and records as the other
party may select.
SECTION 12.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the
Exhibits and Schedules referred to herein and the other documents delivered
pursuant hereto contain the entire understanding of the parties hereto with
regard to the subject matter contained herein or therein, and supersede all
prior agreements, understandings or intents between or among any of the parties
hereto. The parties hereto, by mutual agreement in writing, may amend, modify
and supplement this Agreement.
SECTION 12.8. INTERPRETATION. Article titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. The Schedules and Exhibits referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. Any items disclosed in the Schedules shall be referenced
to the applicable Section and subsection, if applicable, of the Agreement to
which such items relate. Any references in this Agreement to "herein," "hereto,"
"hereof," "herewith" or "hereunder" shall be to this Agreement as a whole. As
used in this Agreement, the word "including" is not limiting and the word "or"
is not exclusive. Whenever the word "dollar" or the symbol "$" is used in this
Agreement, such word or symbol shall mean United States dollars. All parties
have participated in the negotiation and review of this Agreement and no
provision of this Agreement shall be construed more strictly against any party.
All remedies provided for hereunder are cumulative except as otherwise provided
in this Agreement.
SECTION 12.9. WAIVERS. Any term or provision of this Agreement may
be waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
SECTION 12.10. EXPENSES. Except as otherwise expressly provided
herein, each of the ACME Entities and Buyer will pay all of its own respective
costs and expenses incident to its negotiation and preparation of this Agreement
and to its performance and compliance with all agreements and conditions
contained herein on its part to be performed or complied with, including the
fees, expenses and disbursements of its counsel and accountants.
60
SECTION 12.11. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
SECTION 12.12. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties and delivered to each of the ACME Entities and
Buyer.
SECTION 12.13. RISK OF LOSS; DAMAGE TO FACILITIES.
(a) Risk of Loss. The risk of loss or damage to the Purchased Assets
shall be on the ACME Entities prior to the Closing Date and thereafter shall be
on Buyer. Notwithstanding anything in this Agreement to the contrary, including,
without limitation, Section 10.1, if any of the Purchased Assets is damaged or
destroyed prior to the Closing Date (any such event being referred to as an
"Event of Loss") and such Event of Loss shall materially affect the operations
of the Station, and repair or replacement cannot be accomplished by the
scheduled Closing Date but can be accomplished within 30 days after that date,
the ACME Entities may postpone the Closing Date for that 30-day period in order
to undertake such repair or replacement; if, however, the repair or replacement
cannot be accomplished within that 30-day period, Buyer may elect:
(i) to consummate the Closing and accept all the Purchased
Assets as is, in which event the ACME Entities shall assign to Buyer
at the Closing all of their rights under any insurance policies and
to all insurance proceeds covering that Event of Loss (less amounts
due to the assigning party for repairs or replacements of the
property prior to the Closing); or
(ii) to terminate this Agreement without liability on the part
of the ACME Entities or Buyer.
If the Closing Date is postponed beyond the time specified in Section
11.1(a)(vii), the parties shall amend their application to the FCC to request an
extension of the date of Closing.
(b) Failure of Broadcast Transmission. The ACME Entities shall give
prompt written notice to Buyer if the regular broadcast transmissions of the
Station in the normal and usual manner are interrupted or discontinued. If such
interruption occurs for more than seventy-two (72) hours, whether or not
consecutive, during any period of thirty (30) consecutive days, then Buyer may,
at its option: (i) terminate this Agreement without liability on the part of the
ACME Entities or Buyer, or (ii) proceed with the Closing in the manner set forth
in Section 12.13(a)(i).
61
SECTION 12.14. NO THIRD PARTY BENEFICIARIES. The ACME Entities and
Buyer do not intend by the execution, delivery or performance of this Agreement
to confer a benefit upon any Person not a party to this Agreement.
SECTION 12.15. CONFIDENTIALITY AGREEMENT. Subject to the provisions
of Section 6.12, the provisions of the Non-Disclosure Agreement dated January
24, 2001, as amended November 14, 2002, between Tribune Company and Parent (the
"Confidentiality Agreement"), shall remain in full force and effect through the
Closing and shall not be superseded by the terms of this Agreement unless and
until the Closing occurs; provided, however, that in the event that the Closing
occurs, such Confidentiality Agreement shall automatically be terminated and be
of no further force or effect.
SECTION 12.16. PERFORMANCE BY SELLERS. On behalf of Sellers, Parent
hereby covenants and agrees to take all necessary action to cause Sellers to
discharge, perform, comply and otherwise satisfy their obligations under this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
ACME COMMUNICATIONS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ACME TELEVISION OF OREGON, LLC
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ACME TELEVISION LICENSES OF OREGON,
LLC
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
TRIBUNE BROADCASTING COMPANY
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
TRIBUNE DENVER RADIO, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
EXHIBIT A
ACME ENTITY CORPORATE OPINIONS (TO BE GIVEN BY O'MELVENY & XXXXX LLP)
1. Each of ACME Television of Oregon, LLC and ACME Television Licenses
of Oregon, LLC is a limited liability company duly formed and
validly existing in good standing under the laws of the State of
Delaware.
2. The execution, delivery and performance by ACME Television of
Oregon, LLC and ACME Television Licenses of Oregon, LLC of the Asset
Purchase Agreement and each of the ACME Ancillary Agreements to
which it is a party have been duly authorized by all necessary
action under the Delaware Limited Liability Company Act and the
organizational documents described on Exhibit A on the part of ACME
Television of Oregon, LLC and ACME Television Licenses of Oregon,
LLC, and the Asset Purchase Agreement and each of the ACME Ancillary
Agreements to which it is a party has been duly executed and
delivered by each of ACME Television of Oregon, LLC and ACME
Television Licenses of Oregon, LLC.
3. The execution, delivery and performance of the Asset Purchase
Agreement and each of the ACME Ancillary Agreements to which ACME
Communications, Inc. is a party have been duly authorized by all
necessary corporate action on the part of ACME Communications, Inc.,
and the Asset Purchase Agreement and each of the ACME Ancillary
Agreements to which it is a party has been duly executed and
delivered by ACME Communications, Inc.
4. The Asset Purchase Agreement and each of the ACME Ancillary
Agreements constitutes the legally valid and binding obligation of
each ACME Entity that is a party to such agreement, enforceable
against such ACME Entity in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors'
rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered
in a proceeding in equity or at law.
EXHIBIT B
ACME ENTITY FCC OPINIONS (GIVEN BY XXXXXXXXX XXXXXXX XXXXX & XXXXXXXX LLP)
1. ___________________ has been authorized by the FCC to hold the FCC
licenses, permits and authorizations as listed in Exhibit A hereto
(the "FCC Licenses"). All of such FCC Licenses are in full force and
effect. The FCC Licenses include all FCC licenses, permits and
authorizations issued by the FCC under Part 73 of the FCC `s rules
necessary to operate the Station on the frequencies and in the
communities of license listed in Exhibit A.
2. To our knowledge, the FCC Licenses are not subject to any condition
or requirement, other than conditions or requirements that appear on
the face of the FCC Licenses or pertain to the FCC Licenses under
generally applicable rules or policies of the FCC
3. The FCC has granted its consent to the assignment of the Station to
Buyer (the "FCC Consent"). The time within which any party in
interest other than the FCC may seek administrative or judicial
reconsideration or review of such consent has expired and, to our
knowledge, no petition for such reconsideration or review was timely
filed with the FCC or with a court of competent jurisdiction. The
time set forth in the FCC rules within which the FCC may review such
consent on its own motion has expired and, to our knowledge, the FCC
has not undertaken such review.
4. Except for rulemaking proceedings or similar proceedings of general
applicability to entities such as the Companies or to facilities
such as the Station, to our knowledge, there is not now pending any
action or proceeding by or before the FCC with respect to the
Station or the FCC Licenses.
EXHIBIT C
BUYER OPINIONS (TO BE GIVEN BY XXXX XXXXXX, BUYER INTERNAL COUNSEL)
1. Each of Tribune Broadcasting Company and Tribune Denver Radio, Inc.
(each a "Buyer Entity") is a corporation duly formed and validly
existing in good standing under the laws of the State of Delaware.
2. The execution, delivery and performance by each Buyer Entity of the
Asset Purchase Agreement and each of the Buyer Ancillary Agreements
to which it is a party have been duly authorized by all necessary
corporate action on the part of such Buyer Entity, and the Asset
Purchase Agreement and each of the Buyer Ancillary Agreements to
which it is a party has been duly executed and delivered by such
Buyer Entity.
3. The Asset Purchase Agreement and each of the Buyer Ancillary
Agreements constitutes the legally valid and binding obligation of
each Buyer Entity that is a party to such agreements, enforceable
against such Buyer Entity in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors'
rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered
in a proceeding in equity or at law.
