EXHIBIT 10.15
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
September 3, 2002, by and between SMITH TELEVISION GROUP, INC. ("STG"), a Nevada
corporation, SMITH TELEVISION LICENSE HOLDINGS, INC., a Nevada corporation
("STLH" and together with STG, "SELLER") and GRAY TELEVISION, INC., a Georgia
corporation ("BUYER").
WHEREAS, STLH is the licensee of television broadcast station
KOLO-TV, Channel 8, Reno, Nevada (the "STATION"), pursuant to certain
authorizations issued by the FCC, and Seller operates the Station and owns and
leases certain assets used in connection with the operation of the Station; and
WHEREAS, Seller desires to sell, assign and transfer the assets and
business of the Station as described below, and Buyer desires to acquire the
assets and business of the Station as described below, and to assume certain
liabilities of Seller and the Station as described below, all on the terms
described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Capitalized terms used herein without definition shall have the
respective meanings assigned thereto in Annex I attached hereto and incorporated
herein for all purposes of this Agreement (such definitions to be equally
applicable to both the singular and plural forms of the terms defined). Unless
otherwise specified, all references herein to "Articles" or "Sections" are to
Articles or Sections of this Agreement. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
ARTICLE 2.
SALE AND PURCHASE OF ASSETS;
PURCHASE PRICE; ASSUMPTION OF LIABILITIES
2.1. ASSET SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, Seller shall sell,
assign, transfer, convey and deliver to Buyer, and Buyer shall purchase,
acquire, pay for and accept from Seller, all right, title and interest of Seller
in, to and under all real, personal and mixed assets, rights,
benefits and privileges, both tangible and intangible, wheresoever located,
owned, leased, used or held for use by Seller in connection with the business or
operations of the Station (collectively, the "ASSETS"); but excluding the
Excluded Assets described in Section 2.2.
The Assets shall include, without limitation, all right, title and t
12 12 0 interest of Seller in, to and under the following:
2.1.1. FCC LICENSES.
All licenses, permits and other authorizations issued by the
FCC to Seller for the operation of the Station (the "FCC LICENSES"), including
without limitation those listed in Schedule 2.1.1, and all applications
therefor, together with any renewals, extensions or modifications thereof and
additions thereto.
2.1.2. REAL AND LEASED PROPERTY INTERESTS.
(a) All the real property which is used or held for use in
connection with the business and operations of the Station including all land,
fee interests, easements and other interests of every kind and description in
real property, buildings, structures, fixtures, appurtenances, towers and
antennae, and other improvements thereon owned by Seller which are used or held
for use in connection with the business and operations of the Station ("REAL
PROPERTY"), including all of those items listed or described in Schedule 2.1.2.
(b) All the real property leasehold interests which are used
or held for use in connection with the business and operations of the Station
including leases and subleases of any land, easements and other real property
leasehold interests of every kind and description in real property, buildings,
structures, fixtures, appurtenances, towers and antennae, and other improvements
thereon leased by Seller in connection with the business and operations of the
Station ("LEASED PROPERTY"), including all of those items listed or described in
Schedule 2.1.2.
2.1.3. TANGIBLE PERSONAL PROPERTY.
All of the furniture, fixtures, furnishings, machinery,
computers, equipment, inventory, spare parts, supplies, office materials and
other tangible property of every kind and description maintained, owned, leased,
used or held for use by Seller in connection with the business and operations of
the Station, including those items which are set forth and identified in
Schedule 2.1.3 (which identifies those having a book value in excess of Ten
Thousand Dollars ($10,000)), together with any replacements thereof and
additions thereto made before the Closing Date, and less any retirements or
dispositions thereof made before the Closing Date in the ordinary course of
business consistent with past practice.
2.1.4. INTELLECTUAL PROPERTY.
All of the service marks, copyrights, franchises, trademarks,
trade names, domain names, jingles, slogans, logotypes, trade secrets,
confidential information,
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technical and computer data, documentation and software (including any "off the
shelf" or "shrink wrapped" computer software, programs or licenses), business
and marketing plans and all other intangible assets maintained, owned, used or
held for use by Seller in connection with the business and operations of the
Station (including any and all applications, registrations, extensions and
renewals relating thereto) (collectively, the "INTELLECTUAL PROPERTY"), and all
of the rights, benefits and privileges associated therewith, including those set
forth and identified in Schedule 2.1.4 and the right to use the "KOLO" call
letters for the Station.
2.1.5. PROGRAM CONTRACTS.
Except for the Excluded Contracts, the program licenses and
contracts under which Seller is authorized to broadcast programs on the Station
(collectively the "PROGRAM CONTRACTS"), including, (a) all program (cash and
non-cash) licenses and contracts listed on Schedule 2.1.5, and (b) any other
such program contracts that are entered into between the date of this Agreement
and the Closing Date in accordance with the terms of this Agreement.
2.1.6. TRADE-OUT AGREEMENTS.
Except for the Excluded Contracts, all contracts and
agreements (excluding Program Contracts) pursuant to which Seller has sold,
traded or bartered commercial air time on the Station in consideration for any
property or services in lieu of or in addition to cash (collectively, the
"TRADE-OUT AGREEMENTS"), including those set forth and identified in Schedule
2.1.6.
2.1.7. BROADCAST TIME SALES AGREEMENT.
Except for the Excluded Contracts, all contracts and
agreements pursuant to which Seller has sold commercial air time on the Station
for cash (collectively the "TIME SALES AGREEMENTS").
2.1.8. OPERATING CONTRACTS.
Except for the Excluded Contracts, the other contracts and
agreements entered into by Seller in connection with the business and operations
of the Station, including those listed on Schedule 2.1.8 (including employment
agreements and talent contracts, collective bargaining agreements, the Network
Affiliation Agreement and any national and local advertising representation
agreements for the Station), together with all contracts and agreements that
will be entered into between the date of this Agreement and the Closing Date in
accordance with the terms of this Agreement (collectively, the "OPERATING
CONTRACTS" and together with the Program Contracts, and the Trade-out Agreements
and the Time Sales Agreements, the "STATION CONTRACTS"); provided, that, in each
case, unless Buyer otherwise accepts such contract or agreement in writing,
neither the Program Contracts, the Trade-Out Agreements, the Time Sales
Agreements or the Operating Contracts will include (a) any contract or agreement
that is required by Section 3.14.1 to be, but which is not, described on any of
Schedules 2.1.5, 2.1.6 or 2.1.8, or (b) any contract or agreement that is
entered into in breach of any of Sections 6.1.3, 6.1.4, 6.1.5
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or 6.1.6 (collectively, such contracts and agreements described in clauses (a)
and (b), together with the contracts listed on Schedules 2.2.10, the "EXCLUDED
CONTRACTS").
2.1.9. VEHICLES.
All automotive equipment and motor vehicles maintained, owned,
leased, used or held for use by Seller in connection with the business and
operations of the Station, including those set forth and described in Schedule
2.1.9.
2.1.10. FILES AND RECORDS.
All engineering, business and other books, papers, logs,
files, and accounting, financial and other records pertaining to the business
and operations of the Station, but not the documents, books and records
described in Section 2.2.6.
2.1.11. AUXILIARY FACILITIES.
All translators, earth stations, and other auxiliary
facilities, and all applications therefor, owned, leased, used or held for use
by Seller in connection with the business and operations of the Station.
2.1.12. PERMITS AND LICENSES.
All permits, approvals, orders, authorizations, consents,
licenses, certificates, franchises, exemptions of, or filings or registrations
with, any court or Governmental Authority (other than the FCC) in any
jurisdiction, which have been issued or granted to or are owned, used or held
for use by Seller in connection with the business and operations of the Station
and all pending applications therefor.
2.1.13. GOODWILL.
The business of the Station as a "going concern," customer
relationships and goodwill.
2.1.14 ACCOUNTS RECEIVABLE.
All Accounts Receivable of the Station, except for any
intercompany receivable reflected on the Current Balance Sheet and any
additional intercompany receivables incurred after the date hereof and prior to
the Closing in the ordinary course of business consistent with past practice of
the Station.
2.1.15 DEPOSITS AND PREPAID EXPENSES.
All deposits and prepaid expenses of the Station.
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2.2. EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this Agreement,
there shall be excluded from the Assets and retained by Seller, the following
assets (collectively, the "EXCLUDED ASSETS"):
2.2.1. CASH.
All cash and cash equivalents owned by Seller and on hand on
the day immediately preceding the Closing Date.
2.2.2. PERSONAL PROPERTY DISPOSED OF.
All tangible personal property disposed of or consumed in the
ordinary course of business consistent with past practice of the Station as
permitted by this Agreement.
2.2.3. INSURANCE.
All contracts of insurance and all insurance plans and the
assets thereof.
2.2.4. EMPLOYEE PLANS AND ASSETS.
All Plans, Benefit Arrangements, Qualified Plans and Welfare
Plans and the assets thereof.
2.2.5. RIGHT TO TAX REFUNDS.
Any and all claims of Seller with respect to any Tax refunds.
2.2.6. CERTAIN BOOKS AND RECORDS.
All of (a) Seller's organizational documents and other
corporate records, and originals of account books of original entry, (b)
duplicated copies of any books, records, accounts, checks, payment records, Tax
records (including payroll, unemployment, real estate and other Tax records) and
other similar books, records and information of Seller relating to the business
or operations of the Station prior to the Closing Date, (c) all records prepared
by or on behalf of Seller in connection with the sale of the Station, and (d)
all records and documents to the extent relating to any Excluded Assets.
2.2.7. RIGHTS UNDER THIS AGREEMENT.
All of the rights of Seller under or pursuant to this
Agreement or any other rights in favor of Seller pursuant to the other
agreements contemplated hereby or thereby.
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2.2.8. NAME.
All rights to the name "Smith", "Smith Television", and any
logo or variation thereof and the goodwill associated therewith.
2.2.9. SECURITIES.
All capital stock or other securities of any direct or
indirect subsidiary of Seller.
2.2.10. EXCLUDED CONTRACTS AND UNRELATED ASSETS.
The contracts, agreements and any other assets listed on
Schedule 2.2.10, and the rights of Seller under the Excluded Contracts.
2.3 DEPOSIT.
For and in partial consideration of the execution and delivery of
this Agreement, simultaneously with the execution and delivery of this
Agreement, Buyer is depositing with the Seller the amount of One Million Five
Hundred Thousand Dollars ($1,500,000) in cash, such amount to be held as an
earnest money deposit (the "DEPOSIT"), in accordance with the terms and
conditions of this Agreement.
2.4. PURCHASE PRICE.
For and in consideration of the conveyances and assignments
described herein and in addition to the assumption of Liabilities as set forth
in Section 2.7, Buyer agrees to pay to Seller, and Seller agrees to accept from
Buyer, an amount equal to Forty-One Million Five Hundred Thousand Dollars
($41,500,000) (the "PURCHASE PRICE").
2.5. PAYMENT OF PURCHASE PRICE.
The Purchase Price, less the amount of any Deposit paid to Seller on
the date hereof, shall be paid by Buyer to Seller at the Closing by wire
transfer of immediately available funds to an account or accounts which will be
identified by Seller not less than two (2) business days prior to the Closing
Date.
2.6. ALLOCATION OF PURCHASE PRICE.
As promptly as reasonably practicable following execution of this
Agreement, Seller and Buyer agree to retain a mutually acceptable appraisal firm
experienced in appraisals of television broadcast assets (the "APPRAISAL FIRM")
to appraise the classes of Assets of the Station based on the Purchase Price for
the Station. The Appraisal Firm shall be instructed to perform such appraisal
and deliver a written report thereof to Seller and Buyer as soon as
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reasonably practicable (the "APPRAISAL REPORT"). Seller, on the one hand, and
Buyer, on the other hand, shall each pay one-half (1/2) of the fees, costs and
expenses of the Appraisal Firm whether or not the transactions contemplated
hereby are consummated. Seller and Buyer each represent, warrant, covenant and
agree with each other that the Purchase Price shall be allocated among the
classes of Assets for the Station as set forth in the Appraisal Report. Seller
and Buyer agree, pursuant to Section 1060 of the Code, that the Purchase Price
shall be allocated in accordance with this Section 2.6, and that all Tax returns
and reports shall be filed consistent with such allocation. Notwithstanding any
other provision of this Agreement, the provisions of this Section 2.6 shall
survive the Closing Date without limitation.
2.7. ASSUMPTION OF LIABILITIES.
2.7.1. ASSUMED LIABILITIES
At the Closing, Buyer shall assume, and shall agree to pay, perform
and discharge as and when the same become due and payable or are required to be
performed only the following Liabilities of Seller (the "ASSUMED LIABILITIES"):
(a) all Liabilities arising on or after, and relating to the period from and
after, the Closing Date under the Station Contracts and the FCC Licenses, (b)
all Liabilities for accrued payroll for the current pay period (excluding any
obligations to pay any bonuses) and accrued vacation or accrued sick leave for
Transferred Employees as of the Closing Date which were incurred (i) in the
ordinary course of business consistent with past practice of the Station and
(ii) as permitted in accordance with the terms of this Agreement, and (c) any
trade accounts payable of the Station as of the Closing Date (other than a trade
account payable to any Affiliate of Seller) which remain unpaid and are not over
thirty (30) days past due, and which were incurred (i) in the ordinary course of
business consistent with past practice of the Station and (ii) as permitted in
accordance with the terms of this Agreement. Notwithstanding the foregoing or
anything to the contrary set forth in this Agreement, the Assumed Liabilities
shall not include any Excluded Liabilities or any Liability under any Excluded
Contract.
2.7.2. EXCLUDED LIABILITIES
"Excluded Liabilities" shall mean every Liability of Seller
other than the Assumed Liabilities. The Excluded Liabilities shall remain the
sole responsibility of and shall be retained, paid, performed and discharged
solely by Seller. Excluded Liabilities shall include:
(a) any Liability under any Station Contract assumed by Buyer
pursuant to Section 2.7.1 which arises after the Closing Date but which arises
out of or relates to any breach of such Station Contract that occurred prior to
the Closing Date;
(b) any Liability for Income Taxes, including (i) any Income
Taxes arising as a result of Seller's operation of its business or ownership of
the Station prior to the Closing Date;
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(c) any Liability under any Station Contract not assumed by
Buyer under Section 2.7.1, including any Liability arising out of or relating to
Seller's credit facilities or any security interest related thereto;
(d) any Environmental Claim arising out of or relating to the
operation of Seller's business or Seller's leasing, ownership or operation of
real property;
(e) except for the accrued payroll, accrued vacation and
accrued sick leave of Transferred Employees as of the Closing Date which is
assumed by Buyer as set forth in Section 2.7.1(b), any Liability under the
Benefit Plans or relating to payroll, bonus, vacation, sick, leave, worker's
compensation, unemployment benefits, pension benefits, employee stock option or
profit-sharing plans, health care plans or benefits, or any other employee plans
or benefits of any kind for Seller's employees or former employees, or both;
(f) except for any Station Contracts, any Liability under any
employment, severance, retention or termination agreement with any employee of
Seller or any of its Affiliates;
(g) any Liability arising out of or relating to any employee
grievance whether or not the affected employees are hired by Buyer;
(h) any Liability of Seller to any shareholder of Seller or
Affiliate of Seller;
(i) any Liability to indemnify, reimburse or advance amounts
to any officer, director, employee or agent of Seller;
(j) any Liability to distribute to any of Seller's
shareholders or otherwise apply all or any part of the consideration received
hereunder;
(k) any Liability arising out of any Proceeding pending as of
the Closing Date, whether or not set forth in the Schedules;
(l) any Liability arising out of any Proceeding commenced
after the Closing Date and arising out of, or relating to, any occurrence or
event happening prior to the Closing Date;
(m) any Liability arising out of or resulting from Seller's
non-compliance with any legal requirement or order, injunction, decree, ruling,
assessment or arbitration award of any Governmental Authority or arbitrator;
(n) any Liability of Seller under this Agreement or any other
Seller Document; and
(o) any Liability of Seller based upon Seller's acts or
omissions occurring after the Closing Date.
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(p) any Liability under Section 7 of that certain Employment
Agreement for the Vice-President and General Manager of the Station dated
December 21, 2000 and identified as containing this Excluded Liability on
Schedule 2.1.8.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY SELLER
Seller represents and warrants to Buyer as follows:
3.1. ORGANIZATION AND STANDING.
Each Seller is duly organized, validly existing and in good standing
under the laws of the State of Nevada and is duly qualified to do business and
is in good standing in any jurisdiction where such qualification is necessary,
except for those jurisdictions where the failure to be so qualified would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Each Seller has the corporate power and authority to own, lease
and otherwise to hold and operate the Assets, to carry on the business of the
Station as now conducted, and to enter into and perform the terms of this
Agreement, the other Seller Documents and the transactions contemplated hereby
and thereby.
3.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and of the
other Seller Documents, and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate actions of each Seller (none of which actions has been modified or
rescinded and all of which actions are in full force and effect). This Agreement
constitutes, and upon execution and delivery each other Seller Document will
constitute, a valid and binding agreement and obligation of each Seller,
enforceable against each Seller in accordance with its respective terms, except
as the same may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws of general applicability relating to or affecting
creditors' rights generally and by the application of general principles of
equity.
3.3. COMPLIANCE WITH LAWS.
Each Seller is in compliance in all material respects with all Laws
applicable to such Seller's business or operation of the Station, the Assets, or
the Station. Each Seller has obtained and holds all material permits, licenses
and approvals (none of which has been modified or rescinded and all of which are
in full force and effect) from all Governmental Authorities necessary in order
to conduct the operations of the Station as presently conducted.
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3.4. CONSENTS AND APPROVALS; NO CONFLICTS.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by each Seller, will not
require any consent, approval, authorization or other action by, or filing with
or notification to, any Person in connection with any Station Contract, except
that certain of the Station Contracts may be assigned only with the consent of
third parties, as specified in Schedule 3.4.1.
3.4.2 The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by each Seller, will not
require any consent, approval, authorization or other action by, or filing with
or notification to, any Governmental Authority, except as follows: (a) consents
to the assignment of the FCC Licenses to Buyer by the FCC, and (b) filings, if
any, with respect to real estate transfers and real estate transfer taxes.
3.4.3. Assuming all consents, approvals, authorizations and other
actions described in Section 3.4.1 and Section 3.4.2 have been obtained and all
filings and notifications described in Section 3.4.1 and Section 3.4.2 have been
made, the execution, delivery and performance of this Agreement and the other
Seller Documents by each Seller do not and will not (a) conflict with or violate
any material Law applicable to each Seller, the Assets or the Station or by
which any of the Assets or the Station is subject or affected, (b) conflict with
or result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under any material
contract or agreement to which Seller is a party or by which each Seller is
bound or to which any of the Assets or the Station is subject or affected, (c)
result in the creation of any Encumbrance upon the Assets, or (d) conflict with
or violate the organizational documents of each Seller.
3.5. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
3.5.1. Seller has provided to Buyer the unaudited balance sheet of
the Station as of June 30, 2002 (the "CURRENT BALANCE SHEET") and as of December
31, 2001 and the unaudited statement of operations of the Station for the six
(6) month period ended June 30, 2002 and the ten (10) month period ended
December 31, 2001. The financial statements referred to in this Section 3.5.1
(a) present fairly the financial position of the Station as of the respective
dates and the results of operations for the respective periods indicated, and
(b) have been prepared in accordance with GAAP (except that the financial
statements referred to in this Section 3.5.1 do not contain all footnotes
required under GAAP and do not include statements of cash flows).
3.5.2. There exist no Liabilities of the Station relating to, or
arising out of, the business or operations of the Station, contingent or
absolute, matured or unmatured, known or unknown, except (a) as reflected on the
Current Balance Sheet, (b) obligations under executory contracts or commitments
described on Schedules 2.1.5, 2.1.6 and 2.1.8 or under executory contracts or
commitments not required to be disclosed thereon (but not liabilities for
breaches thereof), and (c) for Liabilities that were incurred after June 30,
2002, in the ordinary course of business consistent with past practice or
otherwise in accordance with the terms and conditions of
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this Agreement (none of which is a material liability for breach of contract,
breach of warranty, tort or infringement or a claim or lawsuit).
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since June 30, 2002, there has been no Material Adverse Effect.
Since June 30, 2002, Seller has conducted the business of the Station in the
ordinary course of business consistent with past practice, and Seller has not
(a) incurred loss of, or injury to, any of the Assets as the result of any fire,
explosion, flood, windstorm, earthquake, labor trouble, riot, accident, act of
God or public enemy or armed forces, or other casualty, except for such losses
or injuries which have been cured in accordance with Section 8.2; (b) incurred,
or become subject to, any Liability with respect to the Station, except current
Liabilities incurred in the ordinary course of business consistent with past
practice; (c) mortgaged, pledged or subjected to any Encumbrance any of the
Assets other than Encumbrances in connection with Liabilities arising under any
credit or loan agreement between Seller and its lenders; (d) sold, exchanged,
transferred or otherwise disposed of any Assets, or canceled any debts or
claims; (e) entered into any transactions with respect to the Station other than
in the ordinary course of business consistent with past practice; (f) made any
material change in any method of accounting or accounting practice with respect
to the Station; (g) made or committed to make any payments or other transfers in
connection with, or in contemplation of, the transactions contemplated by this
Agreement or the other Seller Documents, or (h) made any agreement to do any of
the foregoing with respect to the Station.
3.7. ABSENCE OF LITIGATION.
Except as set forth on Schedule 3.7, there is no action, suit,
investigation, claim, arbitration or litigation pending or, to the knowledge of
Seller, threatened against Seller with respect to the Station.
3.8. ASSETS.
Except as set forth on Schedule 3.8, the Assets include all of the
assets or property owned, leased, used or held for use in the business or
operations of the Station as presently conducted. Seller is the owner of, and
has good title to, or has a good and valid leasehold or license interest in and
to, the Assets free and clear of any Encumbrances, except for and subject only
to (a) the Permitted Encumbrances, (b) those Encumbrances listed in Schedule
3.8, which shall be discharged and removed on or prior to the Closing Date, and
(c) as to the Real Property, those Encumbrances listed in Schedule 3.10 which,
to the extent so indicated in Schedule 3.10, shall be discharged and removed on
or prior to the Closing Date. At the Closing, Buyer shall acquire good title to,
and all right, title and interest in and to the Assets, free and clear of all
Encumbrances, except for the Permitted Encumbrances.
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3.9. FCC MATTERS.
Seller holds the FCC Licenses listed as held by Seller on Schedule
2.1.1. The FCC Licenses constitute all of the licenses, permits and
authorizations from the FCC that are necessary or required for and/or used in
the business and operations of the Station. The FCC Licenses are valid and in
full force and effect through the dates set forth on Schedule 2.1.1. The Station
has been operated by Seller in all material respects in accordance with the
terms of the FCC Licenses and the Communications Act. Except as set forth on
Schedule 3.9, no application, action or proceeding is pending for the renewal or
modification of any of the FCC Licenses, and, except for actions or proceedings
affecting television broadcast stations generally, no application, complaint,
action or proceeding is pending or, to Seller's knowledge, threatened that may
result in the (a) the revocation, modification, non-renewal or suspension of any
of the FCC Licenses, (b) the issuance of a cease-and-desist order, (c) the
imposition of any administrative or judicial sanction with respect to the
Station or (d) the denial of an application for renewal. Seller has no knowledge
of any facts, conditions or events relating to Seller or the Station including
compliance by Seller with the Children's Television Act, that would reasonably
be expected to cause the FCC to deny the assignment of the FCC Licenses as
provided for in this Agreement. Seller has filed with the FCC all reports, forms
and statements required by the FCC to be filed by Seller relating to the
Station, including applications for renewal of authority required by applicable
Laws.
3.10. REAL PROPERTY.
3.10.1. Seller has good and marketable title to the Real Property
listed in Schedule 2.1.2, free and clear of all Encumbrances, except for (a)
those items listed in Schedule 3.10 (which, to the extent so indicated on
Schedule 3.10, shall be discharged and removed on or prior to the Closing Date),
and (b) Permitted Encumbrances. Schedule 2.1.2 sets forth the address and the
legal description of each parcel of real property owned by Seller and used or
held for use in the operation of the Station.
3.10.2. Seller has a valid leasehold interest in all Leased Property
listed as leased by Seller in Schedule 2.1.2. Schedule 2.1.2 lists all leases,
subleases and other occupancy agreements (the "LEASES") pursuant to which any of
the Leased Property is leased by Seller. Seller is the owner and holder of all
the Leased Property purported to be granted by the Leases. Each Lease is in full
force and effect and constitutes a legal, valid and binding obligation of, and
is legally enforceable against Seller and, to the knowledge of Seller, each
other party thereto, and grants the leasehold interest it purports to grant.
Seller has complied with all of the material provisions of the Leases and is not
in default thereunder in any material respect, and there has not occurred any
event which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a default by Seller or, to
the knowledge of Seller, any other parties to the Leases.
3.10.3. The Real Property and the Leased Property listed in Schedule
2.1.2 constitute all of the real property owned, leased, used or held for use in
the business or operations
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of the Station. Except as set forth in Schedule 3.10 and except for any
Permitted Encumbrances, other than Seller, no Person occupies or has the current
or future right to occupy, the Real Property (or the Leased Property in a manner
that would infringe Seller's right with respect thereto).
3.10.4. All buildings, structures, fixtures and other improvements
on the Real Property are in sufficient operating condition and adequate repair
(ordinary wear and tear excepted) for the purposes to which they are currently
devoted.
3.10.5. To the knowledge of Seller, no portion of the Real Property
or any building, structure, fixture or improvement thereon is the subject of, or
affected by, any condemnation, eminent domain or inverse condemnation proceeding
currently instituted or pending.
3.10.6. Seller has delivered to Buyer copies of all title policies
and surveys with respect to the Real Property which are in the possession of
Seller or any Affiliate of Seller.
3.11. CONDITION OF TANGIBLE ASSETS.
Except as set forth on Schedule 3.11, all tangible Assets presently
in use are in good operating condition and good repair (ordinary wear and tear
excepted) for the purposes to which they are currently devoted.
3.12. INTELLECTUAL PROPERTY.
Schedule 2.1.4 contains a true, correct and complete listing of all registered
or applied-for Intellectual Property owned or licensed by or registered in the
name of Seller which is used in the business and operations of the Station.
Except as set forth in Schedule 3.4.1, all Intellectual Property owned or
licensed by Seller and used or held for use in the business and operations of
the Station is transferable to Buyer by the sole act and deed of Seller. Except
as set forth in Schedule 3.4.1, no consent on the part of, notice to or filing
with any other person is necessary in connection with the transfer to Buyer of
such Intellectual Property. No royalty is payable to any Person as a result of
or with respect to the use of any Intellectual Property. Seller owns or
possesses pursuant to a valid and enforceable license, all rights to use all
such Intellectual Property material to the conduct of the business of the
Station. Seller does not have any knowledge and Seller has not received any
notice to the effect that the conduct of the business of the Station may
infringe, misappropriate or conflict with any Intellectual Property right or
other legally protectable right of another. Seller has the right to the use of
the call letters "KOLO-TV" pursuant to the rules and regulations of the FCC.
Seller has no knowledge of any claim by another Person contesting the validity,
enforceability, use or ownership of any Intellectual Property or any grounds for
the same.
3.13. REPORTS AND RECORDS.
All material returns, reports and statements relating to the Station
required to be
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filed by Seller with the FCC or any other Governmental
Authority have been filed and when filed were correct and complete in all
material respects. All such reports, returns and statements shall continue to be
filed on a current basis until the Closing Date, and will be correct and
complete in all material respects when filed. All documents required by the
FCC's rules to be placed in the Station's public files by Seller has been placed
and are being held in such files. All logs and business records of every type
and nature relating to the business and operations of the Station have been
maintained in all material respects in accordance with the rules and regulations
of the FCC.
3.14. STATION CONTRACTS.
3.14.1. The Station Contracts set forth in Schedules 2.1.5, 2.1.6
and 2.1.8 are all of the contracts and agreements relating to the Assets, to the
Station or to the business and operations thereof, other than (a) Time Sales
Agreements entered into in the ordinary course of business consistent with past
practice; and (b) contracts and agreements which are not Subject Agreements and
which do not require payments of more than Ten Thousand Dollars ($10,000) per
contract per year or One Hundred Fifty Thousand Dollars ($150,000) per year in
the aggregate. Complete and correct copies of all Station Contracts have been
made available to Buyer.
3.14.2. Except as set forth on Schedule 3.14.2, Seller represents
and warrants to Buyer that (a) each Station Contract is in full force and
effect; (b) Seller is not in breach or default of the terms of any Station
Contract in any material respect; (c) none of the material rights of Seller
under any Station Contract will be subject to termination or modification, nor
will a default occur, as a result of the consummation of the transactions
contemplated hereby, except to the extent that failure to obtain the prior
consent to assignment thereof (to the extent set forth on Schedule 3.4.1) of any
party thereto shall or could be interpreted to constitute a termination or
modification of or a default under any such Station Contract; and (d) to the
knowledge of Seller, no other party to any Station Contract is in material
breach or default of the terms thereunder.
3.15. TAXES.
3.15.1. Seller has (or, in the case of returns becoming due after
the date hereof and on or before the Closing Date, will have prior to the
Closing Date) duly filed all Seller Tax Returns required to be filed by Seller
on or before the Closing Date with respect to all applicable Taxes. In the case
of any Seller Tax Returns which receive an extension for their date of filing,
such Seller Tax Returns will be considered due on, and not considered required
to be filed before, the extended due date. All of the Seller Tax Returns are
(or, in the case of returns becoming due after the date hereof and on or before
the Closing Date, will be) true and complete in all material respects. Seller:
(a) has paid all Taxes due to any Governmental Authority in connection with any
of the Seller Tax Returns; or (b) has established (or, in the case of amounts
becoming due after the date hereof, prior to the Closing Date will have
established) adequate reserves (in conformity with GAAP consistently applied)
for the payment of such Taxes.
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3.15.2. There is no action, suit, proceeding, audit, investigation
or claim pending or, to the knowledge of Seller, threatened in respect of any
Taxes associated with, or which would become a lien against, the Assets or
operations of the Station for which Seller may become liable, nor has any
deficiency or claim for any such Taxes been proposed, asserted or, to the
knowledge of Seller, threatened. There is no Station Contract, waiver or consent
providing for an extension of time with respect to the assessment or collection
of any Taxes associated with, or which would become a lien against, the Assets
or operations of the Station against Seller, and no power of attorney granted by
Seller with respect to any related tax matters is currently in force.
3.16. EMPLOYEE BENEFIT PLANS.
3.16.1. Schedule 3.16 lists all Plans and Benefit Arrangements
maintained by or contributed to by Seller, or with respect to which Seller has
any liability, for the benefit of the employees of the Station (collectively,
the "BENEFIT PLANS"). Each Benefit Plan has been maintained in substantial
compliance with its terms and with the requirements prescribed by applicable
Law, including ERISA and the Code.
3.16.2. Schedule 3.16 sets forth a list of all Qualified Plans. All
Qualified Plans and any related trust agreements or annuity agreements (or any
other funding document) have been maintained in compliance with ERISA and the
Code (including the requirements for Tax qualification described in Section 401
thereof). The trusts established under such Plans are exempt from federal income
taxes under Section 501(a) of the Code.
3.16.3. Schedule 3.16 lists all funded Welfare Plans that provide
benefits to current employees of Seller or its beneficiaries. The funding under
each Welfare Plan does not exceed and has not exceeded the limitations under
Sections 419A(b) and 419A(c) of the Code. Seller is not subject to taxation on
the income of any Welfare Plan's welfare benefit fund (as such term is defined
in Section 419(e) of the Code) under Section 419A(g) of the Code.
3.16.4. Except as required by applicable Law, Seller has no
post-retirement medical, life insurance or other benefits promised, provided or
otherwise due now or in the future to current, former or retired employees of
the Station.
3.16.5. Except as set forth in Schedule 3.16, Seller has (a) filed
or caused to be filed all returns and reports on the Plans that it is required
to file and (b) paid or made adequate provision for all fees, interest,
penalties, assessments or deficiencies that have become due pursuant to those
returns or reports or pursuant to any assessment or adjustment that has been
made relating to those returns or reports. All other fees, interest, penalties
and assessments that are payable by or for Seller has been timely reported,
fully paid and discharged. There are no unpaid fees, penalties, interest or
assessments due from Seller or from any other person that are or could become an
Encumbrance on any Asset or could otherwise adversely affect the business of the
Station or Assets. Seller has collected or withheld all amounts that are
required to be collected or withheld by Seller to discharge its obligations, and
all of those amounts have been paid to the appropriate Governmental Authority or
set aside in appropriate accounts for future
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payment when due. Seller has furnished to Buyer true and complete copies of all
documents setting forth the terms and funding of each Plan (including copies of
each severance benefit arrangement and vacation pay plan).
3.16.6. Seller has not incurred any material Liability to the
Pension Benefit Guaranty Corporation (other than premium payments) or otherwise
under Title IV of ERISA, including any withdrawal liability, or under the Code,
with respect to any employee pension plan covering employees of the Station that
either Seller (or any other Person that, together with Seller, is treated as a
single employer under Section 414 of the Code) maintain or have maintained or to
which either Seller contributes, has contributed or is required to contribute.
3.17. LABOR RELATIONS.
3.17.1. Except as set forth in Schedule 3.17.1, there are no
strikes, work stoppages, grievance proceedings, union organization efforts, or
other controversies pending or threatened between Seller and any union or
collective bargaining unit representing such employees. Seller is in compliance
in all material respects with all Laws relating to the employment or the
workplace, including provisions relating to wages, hours, collective bargaining,
safety and health, work authorization, equal employment opportunity, immigration
and the withholding of income taxes, unemployment compensation, worker's
compensation, employee privacy and right to know and social security
contributions. Except as set forth in Schedule 3.17.1 hereto, there are no
collective bargaining agreements relating to the Station or the business and
operations thereof and Seller has not agreed to recognize any union or other
collective bargaining unit, nor has any union or collective bargaining unit been
certified as representing any employees of Seller.
3.17.2. Schedule 3.17.2 sets forth a true and complete list of all
employees of the Station and each such employee's position, salary and date of
hire.
3.18. ENVIRONMENTAL MATTERS.
3.18.1. Except as disclosed on Schedule 3.18, Seller, with respect
to the Station, has materially complied with and is currently in compliance in
all material respects with Environmental and Safety Requirements and Seller has
not received any oral or written notice, report or information regarding any
Environmental Claims or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) or any corrective, investigatory or remedial
obligations arising under Environmental and Safety Requirements which relate to
the Station.
3.18.2. Without limiting the generality of Section 3.18.1, Seller,
with respect to the Station, has obtained and complied in all material respects
with, and is currently in compliance in all material respects with, all permits,
licenses and other authorizations that may be required pursuant to any
Environmental and Safety Requirements for the occupancy of properties or
facilities of the Station or for the operation of the Station.
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3.18.3. Neither this Agreement nor the other Seller Documents, nor
the consummation of the transactions contemplated hereby or thereby, shall
impose any obligations on Seller for (a) site investigation or cleanup, (b)
notification to or consent of any government agencies or third parties under any
Environmental and Safety Requirements (including any so called
"transaction-triggered" or "responsible property transfer" laws and
regulations), or (c) to record or deliver to any Person any disclosure document
or statement pertaining to material environmental matters.
3.18.4. None of the following exists at any property or facility
owned, occupied or operated by Seller with respect to the Station: (a)
underground storage tanks or surface impoundments; (b) asbestos-containing
material in any form or condition; (c) materials or equipment containing
polychlorinated biphenyls; or (d) landfills.
3.18.5. Except as disclosed on Schedule 3.18, Seller, with respect
to the Station, has not treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled or Released any Hazardous Materials or
owned, occupied or operated any facility or property, so as to give rise to any
past or present material Environmental Claims or liabilities of Seller for
response costs, natural resource damages or attorneys' fees pursuant to CERCLA
or any other Environmental and Safety Requirements.
3.18.6. Without limiting the generality of Section 3.18.5, no facts,
events or conditions relating to the past or present properties, facilities or
operations of Seller with respect to the Station shall prevent, hinder or limit
continued material compliance with Environmental and Safety Requirements, give
rise to any material corrective, investigatory or remedial obligations pursuant
to Environmental and Safety Requirements or give rise to any other material
Environmental Claims or material liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental and Safety
Requirements, including those material liabilities relating to onsite or offsite
Releases or threatened Releases of Hazardous Materials, substances or wastes,
personal injury, property damage or natural resources damage.
3.18.7. Seller, with respect to the Station, has not, either
expressly or by operation of law, assumed or undertaken any material liability
or corrective investigatory or remedial obligation of any other Person relating
to any Environmental and Safety Requirements.
3.18.8. No material Environmental Lien has attached to any property
owned, leased or operated by Seller with respect to the Station.
3.18.9. Seller has provided to Buyer true and complete copies of all
assessments, reports, data, results of investigations or audits, and all other
information that is in the possession of or reasonably available to Seller
regarding environmental matters pertaining to, or the environmental condition
of, the Station, or the material compliance (or material noncompliance) by
Seller with respect to the Station as to any Environmental and Safety
Requirements, and all documents prepared related thereto are listed on Schedule
3.18.
3.19. TRANSACTIONS WITH AFFILIATES.
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Except as set forth on Schedule 3.19, Seller is not now, and since
March 1, 2001 has not been, a party, directly or indirectly, to any contract,
lease, arrangement or transaction which is material to the business or
operations of the Station, whether for the purchase, lease or sale of property,
for the rendition of services or otherwise, with any Affiliate of Seller, or any
officer, director, employee, proprietor, partner or shareholder of Seller.
3.20. INSURANCE.
Schedule 3.20 contains a list and brief summary of all policies of
title, property, fire, casualty, liability, life, workmen's compensation, libel
and slander, and other forms of insurance of any kind relating to the Assets or
the business and operations of the Station and held by Seller. All such
policies: (a) are in full force and effect; (b) are sufficient for compliance in
all material respects by Seller with all requirements of Law and of all material
agreements to which Seller is party; and (c) are valid, outstanding, and
enforceable policies.
3.21. CABLE SYSTEMS.
Set forth on Schedule 3.21 is information concerning cable carriage
with respect to the Station. The information disclosed on Schedule 3.21 is true,
correct and complete in all material respects.
(a) Schedule 3.21(a) hereto contains a complete and accurate list of
all cable television systems carrying the signal of each of the Station;
(b) Schedule 3.21(b) hereto contains a complete and accurate list of
all Market Cable Systems on which the Station made a must-carry election for the
current must-carry election period (by default or otherwise) and on which the
Station is not currently carried;
(c) Schedule 3.21(c) hereto contains a complete and accurate
description of all retransmission consent agreements and/or copyright
indemnification agreements, if any, entered into on behalf of the Station;
(d) Schedule 3.21(d) hereto contains a complete and accurate list of
all retransmission consent elections made by the Station;
(e) Schedule 3.21(e) hereto contains a complete and accurate list of
all Market Cable Systems, if any, which are carrying the Station and which have
notified Seller or the Station of such Market Cable System's intention to delete
Station from carriage or to change the channel position of the Station on such
cable system, other than pursuant to any agreement described in clause (c)
above;
(f) Schedule 3.21(f) hereto contains a list (with copies having been
delivered to Buyer) of each notice, if any, received by the Station from any
Market Cable System alleging that the Station does not deliver an adequate
quality signal, as defined in Section 76.55(c)(3) of the FCC Regulations, to
such Market Cable System's principal headend
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(other than any such notice as to which such failure has been remedied or been
determined not to exist), and all further correspondence between the Station and
any such Market Cable System relating to such notice;
(g) Schedule 3.21(g) hereto contains a complete and accurate list of
all pending petitions for special relief to modify the area in which the Station
is entitled to demand must-carriage pursuant to Sections 76.55(c) and (e) of the
FCC Regulations; and
(h) Schedule 3.21(h) hereto contains a complete and accurate list of
must-carry complaints, if any, filed on behalf of the Station.
3.22. DIGITAL TELEVISION.
On September 5, 2001, the FCC released an order changing the
Station's digital television ("DTV") channel from Channel 23 to Channel 9. The
FCC Licenses listed in Schedule 2.1.1 include the Station's DTV construction
permit and a pending modification application.
3.23. STATEMENTS TRUE AND CORRECT.
To the actual knowledge of Seller (and not involving any constructive
knowledge), the representations and warranties made by Seller in this Article 3
do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the representations and warranties contained in
this Article 3 not misleading in any material respect.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Seller as follows:
4.1. ORGANIZATION AND STANDING.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and is duly qualified to do
business as a foreign corporation where such qualification is necessary, unless
the failure to be so qualified would not materially and adversely affect Buyer's
ability to consummate the transactions contemplated by this Agreement. Buyer has
the full power and authority to enter into and perform the terms of this
Agreement and the other Buyer Documents and to carry out the transactions
contemplated hereby and thereby.
4.2. AUTHORIZATION.
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The execution, delivery and performance of this Agreement and of the
other Buyer Documents, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
actions of Buyer (none of which actions has been modified or rescinded and all
of which actions are in full force and effect). This Agreement constitutes, and
upon execution and delivery each such other Buyer Document will constitute, a
valid and binding agreement and obligation of Buyer, enforceable against Buyer
in accordance with its respective terms, except as the same may be limited by
bankruptcy, insolvency,
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reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
4.3. COMPLIANCE WITH LAWS.
Buyer has obtained and holds all material permits, licenses and
approvals (none of which will have been modified or rescinded and all of which
shall be in full force and effect) from all Governmental Authorities necessary
in order to conduct the operations of the Station as presently conducted and to
own, use and maintain the Assets.
4.4. CONSENTS AND APPROVALS; NO CONFLICTS.
4.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Buyer, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority where the failure to make
such filing or obtain such consent would reasonably be expected to have a
material adverse effect on Buyer's ability to consummate the transactions
contemplated by this Agreement, except as follows: (a) approvals of the
assignment of the FCC Licenses to Buyer by the FCC, and (b) based upon Seller's
representations set forth in Section 3.4.1, certain of the Station Contracts may
be assigned only with the consent of third parties, as specified in Schedule
3.4.1.
4.4.2. Assuming all consents, approvals, authorizations and other
actions described in Section 4.4.1 have been obtained and all filings and
notifications described in Section 4.4.1 have been made, the execution, delivery
and performance of this Agreement and the other Buyer Documents by Buyer do not
and will not (a) conflict with or violate any Law applicable to Buyer, (b)
conflict with or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) of any
contract or agreement to which Buyer is a party or by which Buyer is bound, or
(c) conflict with or violate the organizational documents of Buyer.
4.5. QUALIFICATION OF BUYER.
Buyer is legally, technically, financially and otherwise qualified
under the Communications Act and all rules, regulations and policies of the FCC
to acquire and operate the Station. To Buyer's knowledge, there are no facts or
proceedings which would reasonably be expected to disqualify Buyer under the
Communications Act or otherwise from acquiring or operating the Station or would
cause the FCC not to approve the assignment of the FCC Licenses to Buyer. No
waiver of any FCC rule or policy is necessary to be obtained for the grant of
the applications for the assignment of the FCC Licenses to Buyer.
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4.6 AVAILABILITY OF FUNDS.
Buyer will have on the Closing Date sufficient funds to enable Buyer
to consummate the transactions contemplated hereby.
4.7. STATEMENTS TRUE AND CORRECT.
To the actual knowledge of Buyer and not involving any constructive
knowledge), the representations and warranties made by Buyer in this Article 4
do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the representations and warranties contained in
this Article 4 not misleading in any material respect.
ARTICLE 5.
FCC CONSENT
As promptly as practicable and no later than five (5) business
days following the execution of this Agreement, Seller and Buyer shall jointly
file an application for the Station with the FCC requesting the consent of the
FCC to the assignment of the FCC Licenses for the Station to Buyer (the
"Assignment Applications"). Seller and Buyer will diligently take, or fully
cooperate in the taking of, all necessary and proper steps, and provide any
additional information reasonably requested in order to obtain promptly the
requested consents and approvals of the Assignment Applications by the FCC;
provided, however, that none of the parties hereto shall have any obligation to
participate in any evidentiary hearing.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees with Buyer as follows:
6.1. NEGATIVE COVENANTS.
Pending and prior to the Closing Date, Seller will not, without the
prior written consent of Buyer, do or agree to do any of the following with
respect to the Station or the Assets:
6.1.1. DISPOSITIONS.
Sell, assign, lease, license or otherwise transfer or dispose
of any of the Assets other than the disposition in the ordinary course of
business consistent with past practice of items that are replaced prior to the
Closing Date with items of comparable or superior value and utility in the
operation of the Station.
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6.1.2. ACCOUNTING PRINCIPLES AND PRACTICES.
Change or modify any of the accounting principles or practices
or any method of applying such principles or practices currently employed with
respect to the Station, except as required by GAAP.
6.1.3. TRADE-OUT AGREEMENTS.
Enter into any Trade-out Agreement, except in the ordinary
course of business consistent with past practice not to exceed Twenty-Five
Thousand Dollars ($25,000) in the aggregate.
6.1.4. BROADCAST TIME SALES AGREEMENTS.
Enter into any Time Sales Agreement except in the ordinary
course of business consistent with past practice.
6.1.5. NETWORK AFFILIATION AGREEMENTS AND LOCAL MARKETING
ARRANGEMENTS.
Acquire or enter into any network affiliation agreements,
local marketing arrangements, joint operating agreements, time brokerage
agreements or other similar contracts or renew, extend, amend, alter, modify or
otherwise change any of such existing contracts.
6.1.6. ADDITIONAL AGREEMENTS.
Acquire or enter into any new Station Contracts not referred
to in Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend, amend, alter,
modify or otherwise change any existing Station Contract, except, in any such
case, for Station Contracts which are not Subject Agreements and which (after
any such renewal, extension, amendment, alteration, modification or other
change) require payments of less than Twenty-Five Thousand Dollars ($25,000) per
contract per year and no greater than Two Hundred Thousand Dollars ($200,000)
per year in the aggregate (collectively, "ADDITIONAL AGREEMENTS"), copies of
which Additional Agreements shall be provided to Buyer at or prior to the
Closing Date.
6.1.7. BREACHES.
Do or omit to do any act which will cause a material breach of
any Station Contract.
6.1.8. EMPLOYEE MATTERS.
Except as set forth on Schedule 6.1.8, enter into or become
subject to any employment, labor, union, or professional service contract or
agreement not terminable at will (or renew, extend, amend, alter, modify or
otherwise change any existing contract or
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agreement), without cost or obligation other than to pay accrued salary or wages
at the normally applicable rate through the time of termination, or any bonus,
pension, insurance, profit sharing, incentive, deferred compensation, severance
pay, retirement, hospitalization, employee benefit, or other similar plan; or
increase the compensation payable or to become payable to any employee, or pay
or arrange to pay any bonus payment to any employee.
6.1.9. ACTIONS AFFECTING FCC LICENSES.
Take any action which may jeopardize the validity or
enforceability of or rights under the FCC Licenses.
6.1.10. PROGRAMMING.
Program or broadcast any Program Contract or syndicated
program, except in the ordinary course of business consistent with past
practice.
6.1.11. AFFILIATED TRANSACTIONS.
Except for the transactions described in Schedule 3.19, enter
any transaction with any Affiliate of Seller, including any renewal, extension,
modification or other change in, any existing contract or agreement to which an
Affiliate of Seller is a party or any other transaction involving an Affiliate
of Seller which will have continued effectiveness after the Closing Date.
6.1.12. COLLECTION OF ACCOUNTS RECEIVABLE.
Collect any accounts receivable of the Station other than in
the ordinary course of business consistent with past practice.
6.2. AFFIRMATIVE COVENANTS.
Pending and prior to the Closing Date, Seller will with respect to
the Station and the Assets:
6.2.1. PRESERVE EXISTENCE.
Preserve their respective corporate existences and business
organizations intact, maintain their existing franchises and licenses, use
commercially reasonable efforts to preserve for Buyer the relationships of the
Station with suppliers, customers, employees and others with whom the Station
has business relationships, and keep all Assets substantially in their present
condition, ordinary wear and tear excepted.
6.2.2. NORMAL OPERATIONS.
Subject to the terms and conditions of this Agreement
(including Section 6.1) (a) carry on the business and activities of the Station,
including the sale of
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advertising time, entering into other contracts and agreements, or purchasing
and scheduling of programming, in the ordinary course of business consistent
with past practice; (b) pay or otherwise satisfy all obligations (cash and
barter) of the Station in the ordinary course of business consistent with past
practice; (c) maintain books of account, records, and files with respect to the
Station in substantially the same manner as heretofore; and (d) maintain the
Assets in customary repair, maintenance and condition, except to the extent of
normal wear and tear, and repair or replace, consistently with the ordinary
course of business consistent with past practice, any Asset that may be damaged
or destroyed; notwithstanding the foregoing, Buyer acknowledges that Seller
shall not be obligated to spend any funds on capital expenditures after the date
hereof, except for the repair or replacement of Assets that may be damaged or
destroyed.
6.2.3. MAINTAIN FCC LICENSES.
Maintain the validity of the FCC Licenses, and comply in all
material respects with all requirements of the FCC Licenses and the rules,
policies and regulations of the FCC and all other applicable Laws.
6.2.4. NETWORK AFFILIATION.
Use reasonable efforts to maintain in full force and effect
the present Network Affiliation Agreement for the Station (and any and all
modifications and renewals thereof).
6.2.5. STATION CONTRACTS.
Pay and perform its obligations in the ordinary course of
business consistent with past practice under the Station Contracts and under any
Additional Agreements that shall be entered into between the date hereof and the
Closing Date pursuant to Section 6.1.6, in accordance with the respective terms
and conditions of such Station Contracts.
6.2.6. TAXES.
Pay or discharge all Taxes when due and payable in the
ordinary course of business consistent with past practice.
6.2.7. CORPORATE ACTION.
Take all corporate action (including all shareholder action)
under the Laws of any state having jurisdiction over Seller necessary to
effectuate the transactions contemplated by this Agreement and by the other
Seller Documents.
6.2.8. ACCESS.
(a) Give to Buyer and its representatives reasonable access
during normal business hours to all of the employees, properties, books and
records of Seller that relate to the Station and furnish Buyer and its
representatives with such information concerning
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the Station as Buyer may reasonably require, including such access and
cooperation as may be necessary to allow Buyer and its representatives to
interview the employees, to examine the books and records of the Station, and to
inspect the Real Property and other Assets (which right of access shall not be
exercised in any way which would unreasonably interfere with the normal
operations, business or activities of the Station); and
(b) From time to time, furnish to Buyer such additional
information (financial or otherwise) concerning the Station as Buyer may
reasonably request (which right to request information shall not be exercised in
any way which would unreasonably interfere with the normal operations, business
or activities of the Station).
6.2.9. INSURANCE.
Maintain in full force and effect all of Seller's existing
casualty, liability, and other insurance with respect to the Station through the
day following the Closing Date in amounts not less than those in effect on the
date hereof.
6.2.10. FINANCIAL STATEMENTS.
Provide Buyer with (a) unaudited monthly statements of assets
and liabilities of Seller relating to the business and operations of the
Station, and statements of revenues and expenses reflecting the results of
business and operations of the Station, for September, 2002 and for each month
thereafter, within thirty (30) days after the end of each such month; and (b)
weekly pacing reports for each week after the date hereof as they become
available in the ordinary course of business.
6.3. CONFIDENTIALITY.
Seller shall, at all times, maintain the confidentiality with
respect to all documents and information furnished to Seller by or on behalf of
Buyer, and documents and information related to the business and operations of
the Station during the period prior to the Closing Date to the extent included
in the Assets. Nothing shall be deemed to be confidential information that: (a)
is known to Seller at the time of its disclosure to Seller; (b) becomes publicly
known or available other than through disclosure by Seller; (c) is received by
Seller from a third party not actually known by Seller to be bound by a
confidentiality agreement with or obligation to Buyer; or (d) is independently
developed by Seller. Notwithstanding the foregoing provisions of this Section
6.3, Seller may disclose such confidential information (i) to the extent
required or deemed advisable to comply with applicable Laws; and (ii) to its
officers, directors, employees, representatives, financing sources, financial
advisors, attorneys, accountants, and agents with respect to the transactions
contemplated hereby; provided, however, Seller shall be liable for any
disclosure by any such Person that such Person would not have been permitted to
make if such Person were a Seller hereunder. In the event this Agreement is
terminated, Seller will return to Buyer all documents and other material
prepared or furnished by Buyer relating to the transactions contemplated
hereunder, whether obtained before or after the execution of this
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Agreement. In the event that Seller is required by Law (including without
limitation by oral question, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar legal process) to
disclose any confidential information, Seller will promptly notify Buyer of such
requirement so that Buyer may, as it may elect, either seek an appropriate
protective order or waive Seller's compliance with the provisions of this
Section 6.3. In the event that such protection or other remedy is not obtained
or that Buyer waives compliance, Seller agrees to furnish only that portion of
the confidential information which Seller is advised by counsel is legally
required and to exercise Seller's reasonable efforts to obtain assurance that
confidential treatment will be accorded such confidential information.
6.4. NO SHOPPING.
From and after the date hereof until the earlier to occur of the
Closing Date or the termination of this Agreement, Seller shall not, and shall
cause its officers, directors and Affiliates not to, (a) initiate contact with,
solicit, encourage or respond to any inquiries or proposals by, or (b) enter
into any discussions or negotiations with, or disclose, directly or indirectly,
any information concerning the Assets or the Station to, or (c) afford any
access to Seller's properties, books and records to any Person other than Buyer
or any permitted assignee in connection with any possible proposal for the
acquisition (directly or indirectly, whether by purchase, merger, consolidation
or otherwise) of all or any material portion of the Assets or the Station.
6.5. NO SOLICITATION OF EMPLOYEES.
From and after the date hereof to the first anniversary of the
Closing Date, neither Seller nor any Affiliate of Seller shall solicit or offer
employment to or hire or employ or otherwise compensate any employee or former
employee (who is an employee of the Station as of the date hereof or as of the
Closing Date) of the Station at any other location; provided, however, that the
foregoing shall not apply to any employee of the Station who is terminated by
Buyer after the Closing Date.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.1. CONFIDENTIALITY.
Buyer shall, at all times prior to the Closing, maintain the
confidentiality with respect to all documents and information furnished to Buyer
by or on behalf of Seller. Nothing shall be deemed to be confidential
information that: (a) is known to Buyer at the time of its disclosure to Buyer;
(b) becomes publicly known or available other than through disclosure by Buyer;
(c) is received by Buyer from a third party not actually known by Buyer to be
bound by a
-27-
confidentiality agreement with or obligation to Seller; or (d) is independently
developed by Buyer. Notwithstanding the foregoing provisions of this Section
7.1, Buyer may disclose such confidential information (i) to the extent required
or deemed advisable to comply with applicable Laws; and (ii) to its officers,
directors, partners, employees, representatives, financing sources, financial
advisors, attorneys, accountants, agents, underwriters, lenders, investors and
any other potential sources of financing with respect to the transactions
contemplated hereby; provided, however, Buyer shall be liable for any disclosure
by any such Person that such Person would not have been permitted to make if
such Person were Buyer hereunder. In the event this Agreement is terminated,
Buyer will return to Seller all documents and other material prepared or
furnished by Seller relating to the transactions contemplated by this Agreement,
whether obtained before or after the execution of this Agreement. In the event
that Buyer is required by Law (including without limitation by oral question,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar legal process) to disclose any confidential
information, Buyer will promptly notify Seller of such requirement so that
Seller may, as it may elect, either seek an appropriate protective order or
waive Buyer's compliance with the provisions of this Section 7.1. In the event
that such protection or other remedy is not obtained or that the Seller waives
compliance, Buyer agrees to furnish only that portion of the confidential
information which Buyer is advised by counsel is legally required and to
exercise Buyer's reasonable efforts to obtain assurance that confidential
treatment will be accorded such confidential information.
7.2. CORPORATE ACTION.
Prior to the Closing, Buyer shall take all corporate action under
the Laws of any state having jurisdiction over Buyer necessary to effectuate the
transactions contemplated by this Agreement and the other Buyer Documents.
7.3. ACCESS.
For a period of seven (7) years from and after the Closing Date,
Buyer shall cause to be afforded to representatives of Seller reasonable access
during normal business hours to the offices, books and records, contracts and
reports of the Station which relate to the operations of the Station during the
period during which the Station was owned by Seller and that are included in the
Assets (the "PRE-CLOSING DATE RECORDS"), as Seller shall from time to time
reasonably request for Seller's reasonable business purposes, and shall provide
to Seller copies of any Pre-Closing Date Records reasonably requested by Seller;
provided, however, that such investigation shall only be upon reasonable notice
and shall not disrupt the personnel or operations of Buyer or the Station. Any
costs incurred by Buyer in connection with any such copying during the first
nine (9) months after the Closing Date shall be paid by Buyer, and any such
costs incurred by Buyer after such nine (9) month period shall be paid by
Seller. All requests for access to the Pre-Closing Date Records shall be made to
such representatives as Buyer shall designate in writing, who shall be solely
responsible for coordinating all such requests and all access permitted
hereunder. For a period of seven (7) years from and after the Closing Date,
Buyer shall not dispose of any Pre-Closing Date Records; provided, however, that
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Buyer may destroy any Pre-Closing Date Records upon providing thirty (30) days'
written notice to Seller of an intent to destroy such Pre-Closing Date Records;
provided, further, that Buyer, at Buyer's expense, shall transfer to Seller such
Pre-Closing Date Records, rather than destroy them, if before the expiration of
such thirty (30) day notice period, Seller directs Buyer to transfer such
Pre-Closing Date Records to Seller.
ARTICLE 8.
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLER AND BUYER
8.1. POSSESSION AND CONTROL.
Between the date hereof and the Closing Date, Buyer shall not
directly or indirectly control, supervise or direct, or attempt to control,
supervise or direct, the business and operations of the Station, and such
operation, including complete control and supervision of all programming, shall
be the sole responsibility of the owners of the Station. On and after the
Closing Date, Seller shall have no control over, or right to intervene,
supervise, direct or participate in, the business and operations of the Station.
8.2. RISK OF LOSS.
The risk of loss or damage by fire or other casualty or cause to the
Assets until the Closing Date shall be upon Seller. In the event of any such
loss or damage prior to the Closing Date, Seller shall restore, replace or
repair the damaged Assets to their previous condition. In the event that as of
the Closing Date, any such loss or damage shall not have been restored,
replaced, or repaired, Seller shall have the right to defer the Closing Date by
written notice to Buyer, for a period of up to sixty (60) days after the date on
which such loss or damage occurred. In the event that any such loss or damage
shall not be restored, replaced, or repaired by the end of such sixty (60) day
period, Buyer shall, at its option, either:
(a) proceed with the Closing and receive at the Closing the
insurance proceeds or an assignment of the right to receive such insurance
proceeds to which Seller otherwise would be entitled, whereupon Seller shall
have no further liability to Buyer for such loss or damage (pursuant to the
indemnification provisions of this Agreement or otherwise); or
(b) terminate this Agreement by written notice to Seller.
Buyer and Seller acknowledge and agree that nothing in this Section
8.2 shall be deemed to waive any requirement that the conditions to closing set
forth in Section 9.1 be satisfied as of the Closing Date.
8.3. PUBLIC ANNOUNCEMENTS.
Between the date hereof and the Closing Date, Seller and Buyer shall
consult
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and cooperate with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the transactions
contemplated herein and shall not issue any such press release or make any such
public statement without the prior written consent of the other party, which
shall not be unreasonably withheld; provided, however, that a party may, without
the prior written consent of the other party, issue such press release or make
such public statement if it has used all reasonable efforts to consult with the
other party and to obtain such party's consent but has been unable to do so in a
timely manner.
8.4. EMPLOYEE MATTERS.
8.4.1. TRANSFERRED EMPLOYEES.
(a) Not less than ten (10) days prior to the Closing Date,
Seller shall provide a list to Buyer of all employees of the Station. Prior to
the Closing Date, Buyer shall offer employment to all such employees of the
Station, as of the Closing Date, at the same salary or wage rate (as
applicable), and place of employment as held by each such employee immediately
prior to the Closing Date, and with benefits no less favorable in the aggregate
than those provided by Buyer and Buyer's Affiliates to their similarly situated
employees (subject, in all cases, to the provisions of any employment agreements
that are Station Contracts).
(b) To the extent such employees accept employment with Buyer
(collectively, "TRANSFERRED EMPLOYEES"), such Transferred Employees will be
included in Buyer's employee benefit plans and will be subject to Buyer's
employment policies, as generally applicable to Buyer's employees who are
similarly situated. Subject to any applicable waiting periods and other
qualification standards, Buyer agrees that Transferred Employees shall be
credited under all of Buyer's applicable employee benefit plans covering such
employees for their service at the Station. After the Closing Date, subject to
applicable laws, Buyer shall have the right, at any time thereafter, to dismiss
any or all Transferred Employees at any time thereafter, with or without cause,
and to change the terms and conditions of their employment (including
compensation and employee benefit plans, policies or arrangements, provided to
them).
8.4.2. COBRA OBLIGATIONS.
Seller shall satisfy and discharge any obligations to provide
health care continuation coverage as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985 and as described in Section 4980B of the Code and
Sections 601 through 608 of ERISA and as required by any applicable state
continuation of health coverage provisions (collectively, "COBRA OBLIGATIONS")
to any employee of the Station whose employment is terminated prior to the
Closing Date to whom Seller has on-going COBRA Obligations (and such employee's
covered dependents). Buyer shall satisfy and discharge all other COBRA
Obligations with respect to Transferred Employees (and such employees' covered
dependents). Seller and Buyer shall reasonably cooperate in good faith to comply
with their respective COBRA Obligations hereunder.
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8.4.3. SELLER BENEFITS PLANS.
As between Buyer and Seller, Seller agrees to be responsible
and liable for any medical, disability or other benefits owed under Seller's
benefit plans.
8.4.4. 401(K) PLANS.
Buyer agrees to permit those Transferred Employees, at each such
Transferred Employee's option, to transfer as a rollover to Buyer's 401(k) Plan
their respective pre-tax account balances under Seller's 401(k) Plan, provided
that such plan is a tax qualified plan under Section 401(a) and 401(k) of the
Code and that the transfer as a rollover of any such pre-tax account balance
will not affect the tax qualified status of Buyer's 401(k) Plan. Seller agrees
that if any such Transferred Employee elects to transfer as a rollover its
pre-tax account balance to Buyer's 401(k) Plan, Seller will cause the trustees
of Seller's 401(k) Plan to transfer each such electing Transferred Employee's
account to the trustee of Buyer's 401(k) Plan. Effective as of the Closing Date,
Seller shall fully vest Transferred Employees in their account balances under
Seller's 401(k) Plan.
8.5. BULK SALES LAWS.
Buyer hereby waives compliance by Seller, in connection with the
transactions contemplated hereby, with the provisions of any applicable bulk
transfer laws; provided, however, that Seller shall indemnify and hold harmless
Buyer from and against any Losses attributable to Seller's non-compliance with
any applicable bulk transfer laws, without regard to the provisions of Article
12.
8.6. CONSENTS.
Prior to the Closing, Seller and Buyer shall take all reasonable t
12 12 0 action required to obtain all consents, approvals and agreements of any
third parties (the initial requests for which shall be provided by Seller)
necessary to authorize, approve or permit the consummation of the transactions
contemplated by this Agreement, provided that neither Seller nor Buyer shall be
required to make any financial accommodations to any third party in order to
obtain such consents and approvals (other than payment of any amount otherwise
due such third party); provided, further, that although Seller may request
release from any contract as part of a request for any such consent, approval or
agreement, Seller shall not require that Seller be released from such contract
as a condition to obtaining any such consent, approval or agreement. The parties
agree that, notwithstanding Section 9.2 hereof and in the sole discretion of
Buyer, Seller may retain, until such time as all required consents, approvals
and agreements shall have been obtained by Seller, all rights to and liabilities
under any Station Contract to which any required consent or approval pertains if
such consent or approval has not been obtained prior to the Closing Date (a
"DEFERRED CONTRACT"). Until the assignment of a Deferred Contract, (a) Seller
and Buyer shall take all reasonable action to obtain all necessary consents or
approvals to remove any other impediments to such assignment, and (b) Seller and
Buyer shall cooperate in any
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arrangement to provide (to the extent permitted without breach of such Deferred
Contract) that Buyer shall receive the benefits of such Deferred Contract after
the Closing Date to the same extent as if such Deferred Contract had been
assigned to Buyer (such arrangement, an "ALTERNATIVE ARRANGEMENT"). To the
extent Buyer receives such benefits, Buyer shall assume Seller's Liabilities
thereunder arising on or after the Closing Date with respect to such Alternative
Arrangement, and to such extent such obligations and liabilities shall be deemed
to constitute Assumed Liabilities, Buyer shall perform any such obligations of
Seller arising under such Alternative Arrangement (to the extent permitted
without breach of the relevant Deferred Contract). If, subsequent to the Closing
Date, Seller shall obtain all necessary consents or approvals required to assign
any Deferred Contract, the Deferred Contract for which consent or approval to
assign has been obtained shall at that time be deemed to be assigned to Buyer
and assumed by Buyer, without need of further action by Seller or of further
documentation except for notice from Seller to Buyer that such consent or
approval has been obtained; and from and after the effective date such Deferred
Contract is assigned to Buyer, (x) no party shall have any further liability
under the Alternative Arrangement related thereto, and (y) the Deferred Contract
shall be deemed to be an Asset and Assumed Liability.
8.7. TRANSITION SERVICES AGREEMENT.
Prior to Closing, Buyer and Seller shall enter into a transition
services agreement with respect to Buyer's use of certain of Seller's computer
equipment and accounting systems used in connection with the Station for a
period not to exceed ninety (90) days on such commercially reasonable terms as
the parties shall mutually agree.
ARTICLE 9.
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to proceed with
the Closing are subject to the satisfaction (or waiver in writing by Buyer) at
or prior to the Closing of each of the following conditions:
9.1. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Seller made in this Agreement
shall be true and correct when made and on and as of the Closing Date (except
for representations and warranties that speak as of a specific date or time,
which need only be true and correct in all respects as of such date or time),
with only such exceptions as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. The agreements and
covenants of Seller required to be performed on or before the Closing Date shall
have been performed, with only such exceptions as would not, individually or, in
the aggregate, be reasonably expected to have a Material Adverse Effect.
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9.2. REQUIRED CONSENTS.
Seller shall have obtained prior to the Closing Date all consents,
authorizations and approvals from third parties necessary for the valid
assignment and transfer to Buyer of (a) all of the real estate leases or
subleases listed on Schedule 9.2; (b) the Network Affiliation Agreement; and (c)
all of the Station Contracts listed on Schedule 9.2; provided, that all such
consents, authorizations and approvals shall be obtained without any material
modifications to the terms of such leases, subleases, Station Contracts or
Network Affiliation Agreement; and provided further, that the parties
acknowledge and agree that any such consent, authorization or approval shall not
be required as a condition to Closing under this Section 9.2 with respect to any
such contract if an Alternative Arrangement as contemplated by Section 8.6 has
been entered into in lieu of receiving such required consent, authorization or
approval with respect to such contract.
9.3. DELIVERY OF DOCUMENTS.
Seller shall have delivered to Buyer all contracts, agreements,
instruments and documents required to be delivered by Seller to Buyer pursuant
to Section 11.3.
9.4. FCC MATTERS.
(a) The FCC Order shall have been granted.
(b) All of the material FCC Licenses shall be in full force and
effect.
9.5. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any
court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement; and
no action or proceeding by or before any Governmental Authority (other than an
action or proceeding instituted or threatened by Buyer) shall have been
instituted or threatened (and not subsequently dismissed, settled or otherwise
terminated) which, if determined adversely, would be reasonably likely to (a)
restrain, prohibit or invalidate the transactions contemplated by this Agreement
or any other Seller Document or Buyer Document, or (b) have a Material Adverse
Effect.
9.6. NO MATERIAL ADVERSE EFFECT.
Since the date hereof, there shall not have been any event, change
or development which individually or in the aggregate has had or would
reasonably be expected to have a Material Adverse Effect.
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9.7. PROGRAM CONTRACTS.
Evidence reasonably satisfactory to Buyer shall have been provided
by Seller that all Liabilities or obligations due or payable through the Closing
Date by the Station pursuant to or under any Program Contract shall have been
paid such that the Station is current on such Liabilities or obligations (which,
for purposes of clarification, shall mean that such Liabilities or obligations
are not more than 30 days past due).
ARTICLE 10.
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey and deliver the
Assets and to proceed with the Closing, are subject to the satisfaction (or t 12
12 0 waiver in writing by Seller) at or prior to the Closing, of each of the
following conditions:
10.1. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Buyer made in this Agreement
shall be true and correct in all material respects (but without regard to any
materiality qualifications or references contained in any specific
representation or warranty) when made and on and as of the Closing Date (except
for representations and warranties that speak as of a specific date or time,
which need only be true and correct in all material respects as of such date and
time). The agreements and covenants of Buyer required to be performed on or
before the Closing Date shall have been performed in all material respects.
10.2. DELIVERY BY BUYER.
Buyer shall have delivered to Seller the Purchase Price in
accordance with Section 2.5, and all contracts, agreements, instruments and
documents required to be delivered by Buyer to Seller pursuant to Section 11.4.
10.3. FCC ORDER.
The FCC Order shall have been granted.
10.4. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any
court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement; and
no action or proceeding by or before any Governmental Authority (other than an
action or proceeding instituted or threatened by Seller)
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shall have been instituted or threatened (and not subsequently dismissed,
settled or otherwise terminated) which would be reasonably likely to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or any
other Seller Document or Buyer Document.
ARTICLE 11.
CLOSING
11.1. CLOSING.
11.1.1. Provided that the conditions set forth in Article 9 and
Article 10 shall have been satisfied, the closing for all of the Assets
hereunder (the "CLOSING") shall be held on the date that is the fifth (5th)
business day after the date on which the FCC Order is granted (the date on which
the Closing shall occur pursuant to this Section 11.1.1 is referred to herein as
the "CLOSING DATE"). Notwithstanding the foregoing sentence, Buyer may, on one
occasion by written notice to Seller, delay the Closing Date for up to ninety
(90) days in the event that there shall have occurred (i) any general suspension
of trading in equity securities in the United States securities or financial
markets in excess of two (2) consecutive trading days; (ii) a declaration of a
banking moratorium or any general suspension of payments in respect of banks by
federal or state authorities in the United States; (iii) a commencement of a
war, armed hostilities or other national or international calamity directly
involving the United States; (iv) any material limitation by any governmental
authority outside the ordinary course of business on the extension of credit by
banks or other lending institutions in the United States which materially
adversely effects Buyer's ability to pay the Purchase Price; or (v) in the case
of any of the foregoing existing on the date hereof, a material acceleration or
worsening thereof.
11.1.2. At the Closing, Seller shall sell, assign, transfer, convey
and deliver to Buyer free and clear of any Encumbrances other than Permitted
Encumbrances, and Buyer shall purchase, acquire, pay for and accept from Seller,
all right, title and interest of Seller in, to and under the Assets and shall
assume the Assumed Liabilities.
11.2. TIME AND PLACE OF CLOSING.
The Closing shall be held at 10:00 A.M. local time on the Closing
Date at the offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive, Suite
1100, McLean, Virginia, or at such other time and place as the parties may agree
in writing.
11.3. DELIVERY BY SELLER.
At the Closing, Seller shall deliver to Buyer the following:
11.3.1. AGREEMENTS AND INSTRUMENTS
The following bills of sale, assignments and other instruments
of
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transfer duly executed by Seller:
(a) the Bill of Sale;
(b) the Assignment of FCC Licenses;
(c) the Assignment of Contracts and Leases;
(d) the Assumption Agreement;
(e) certificates of title with respect to the motor
vehicles listed on Schedule 2.1.9 or if any such
motor vehicles are leased by Seller, an assignment of
such lease;
(f) special or limited warranty deeds for all Real
Property owned by Seller in a form reasonably
acceptable to Seller and Buyer;
(g) real and personal property transfer tax forms; and
(h) all other documents, instruments and certificates
required to be delivered by Seller pursuant to this
Agreement or otherwise required or reasonably
requested by Buyer, including of conveyance and
transfer, as Buyer may reasonably request in order to
more effectively convey and transfer the Assets of
the Station to Buyer and to put Buyer in operational
control of the Station, or for aiding, assisting,
collecting and reducing to possession any of the
Assets of the Station and exercising rights with
respect thereto and to otherwise consummate the
transaction contemplated herein and as otherwise
contemplated by this Agreement.
11.3.2. CONSENTS.
Copies of all consents Seller has been able to obtain to
effect the assignment to Buyer of the Station Contracts listed on Schedule
3.4.1.
11.3.3. CERTIFIED RESOLUTIONS.
A copy of the approval of the boards of directors of Seller,
certified as being correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement, and of
the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby.
11.3.4. OFFICERS' CERTIFICATES.
(a) A certificate of Seller certifying the matters set forth
in
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Section 9.1; and
(b) A certificate of Seller as to the incumbency of the
representatives of Seller executing this Agreement or any of the other Seller
Documents on behalf of Seller.
11.3.5. ORGANIZATIONAL DOCUMENTS.
Copies of the organizational documents of Seller certified by
an executive officer of Seller as being correct and complete.
11.3.6. RELEASES.
Duly executed releases, termination statements and mortgage
satisfactions to the extent necessary to release any Encumbrances on the Assets
required to be removed by Seller pursuant to the terms of this Agreement.
11.3.7. FIRPTA CERTIFICATE.
A certificate of nonforeign status under Section 1445 of the
Code.
11.3.8. TITLE INSURANCE DOCUMENTS.
An owner's affidavit, gap indemnity and estoppel certificates
executed by Seller and such other customary documents and certificates executed
by Seller reasonably acceptable to Seller and as may be reasonably required by
Buyer's title insurance company with respect to Buyer's title insurance of the
Real Property and Leased Property.
11.3.10.DOMAIN NAME TRANSFER.
Domain name transfer agreements in form and substance
reasonably satisfactory to Buyer to perfect the transfer to Buyer of all the
domain names of the Station.
11.3.11.GOOD STANDING.
A certificate of the Secretary of State of Nevada certifying
the good standing of Seller in the State of Nevada.
11.4. DELIVERY BY BUYER.
At the Closing, Buyer shall deliver to Seller the following:
11.4.1. PURCHASE PRICE PAYMENT.
The Purchase Price in the amount and manner set forth in
Section 2.5.
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11.4.2. AGREEMENTS AND INSTRUMENTS.
The following agreements, documents and instruments duly
executed by Buyer:
(a) the Assumption Agreement;
(b) all other documents, instruments and certificates required
to be delivered by Buyer pursuant to this Agreement or otherwise required, or
reasonably requested by Seller in order to effectively make Buyer responsible
for all Assumed Liabilities and to otherwise consummate the transaction
contemplated herein and as otherwise contemplated by this Agreement.
11.4.3. CERTIFIED RESOLUTIONS.
Copies of the resolutions of the directors of Buyer, certified
as being correct and complete and then in full force and effect, authorizing the
execution, delivery and performance of this Agreement and of the other Buyer
Documents, and the consummation of the transactions contemplated hereby and
thereby.
11.4.4. OFFICERS' CERTIFICATE.
(a) A certificate of Buyer signed by an officer of Buyer
certifying the matters set forth in Section 10.1; and
(b) a certificate signed by the Secretary of Buyer as to the
incumbency of the officers of Buyer executing this Agreement or any of the other
Buyer Documents on behalf of Seller.
ARTICLE 12.
SURVIVAL; INDEMNIFICATION
12.1. SURVIVAL OF REPRESENTATIONS.
Unless otherwise set forth herein, all representations and t 12 12 0
warranties, covenants and agreements of Seller and Buyer contained in or made
pursuant to this Agreement or in any certificate furnished pursuant hereto shall
survive the Closing Date and shall remain in full force and effect to the
following extent: (a) representations, warranties, covenants and agreements of
Seller or Buyer shall remain in full force and effect for a period of one (1)
year after the Closing Date (except for the representations and warranties set
forth in Section 3.18, Section 3.23 and Section 4.7); (b) representations and
warranties of Seller with respect to environmental matters as set forth in
Section 3.18 shall remain in full force and effect until thirty (30) days after
the expiration of any applicable statute of limitations with respect to claims
relating to the matters set forth in Section 3.18; (c) the following covenants
and agreements shall remain in full force and
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effect until fully discharged: Sections 6.3 and 7.1 (which relate to
confidentiality), Sections 6.2.8 and 7.3 (which relate to access), Section 8.4
(which relates to employee matters), Article 12 (which relates to
indemnification) and Article 15 (which relates to miscellaneous matters); and
(d) representations and warranties of Buyer and Seller set forth in Section 3.23
and Section 4.7 shall not survive the Closing Date; provided, however, that, in
all cases, any representation, warranty, covenant or agreement that is the
subject of a claim which is asserted by the party seeking indemnification
hereunder in a reasonably detailed writing delivered to the other party or
parties, as the case may be, prior to the expiration of the applicable survival
period shall survive with respect to such claim or dispute until the final
resolution thereof. No claim for indemnification may be made pursuant to this
Article 12 after the expiration of the applicable survival period set forth in
this Section 12.1.
12.2 INDEMNIFICATION BY SELLER.
Subject to the conditions and provisions of Section 12.4 and Section
12.5, from and after the Closing Date, Seller agrees to indemnify, defend and
hold harmless Buyer and Buyer's officers, directors, employees, agents and
shareholders ("BUYER INDEMNIFIED PARTIES") from and against and in any respect
of any and all Losses, asserted against, resulting to, imposed upon or incurred
by any Buyer Indemnified Parties, directly or indirectly, by reason of or
resulting from: (a) any failure by Seller to pay, perform or discharge any
Excluded Liabilities; (b) the business or operations of the Station during the
period on or prior to the Closing Date (including any matters or Liabilities
with respect to the employees of the Station and any termination of any such
employee on or prior to the Closing) except for items specifically included in
Assumed Liabilities; (c) any misrepresentation or breach of the representations,
warranties and certifications of Seller contained in or made pursuant to this
Agreement or any other Seller Document, except that the Buyer Indemnified
Parties shall not have any right to indemnification with respect to any
misrepresentations or breaches of any of the representations and warranties set
forth in Section 3.23 of this Agreement; or (d) any breach by Seller of any
covenants of Seller contained in or made pursuant to this Agreement or any other
Seller Document.
12.3. INDEMNIFICATION BY BUYER.
Subject to the conditions and provisions of Section 12.4 and Section
12.5, from and after the Closing Date, Buyer hereby agrees to indemnify, defend
and hold harmless Seller, and their respective officers, directors, employees,
agents and partners ("SELLER INDEMNIFIED PARTIES") from, against and with
respect of any and all Losses, asserted against, resulting to, imposed upon or
incurred by any Seller Indemnified Parties, directly or indirectly, by reason of
or resulting from: (a) any failure by Buyer to pay, perform or discharge any
Assumed Liabilities; (b) the business or operations of the Station during the
period after the Closing Date (including any matters or Liabilities with respect
to the employees of the Station and any termination of any such employee after
the Closing); (c) any misrepresentation or breach of the representations,
warranties and certifications of Buyer contained in or made pursuant to this
Agreement or any other Buyer Document, except that the Seller Indemnified
Parties shall not have any right to
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indemnification with respect to the any misrepresentation or breach of the
representations and warranties set forth
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in Section 4.7 of this Agreement; or (d) any breach by Buyer of any covenants of
Buyer contained in or made pursuant to this Agreement or any other Buyer
Document.
12.4. LIMITATIONS ON INDEMNIFICATION
12.4.1. Seller shall not be liable to the Buyer Indemnified Parties
in respect of any indemnification under Section 12.2(c) or Section 12.2(d) (with
respect to breaches of covenants set forth in Sections 6.1 and 6.2) except to
the extent that the aggregate Losses of the Buyer Indemnified Parties under such
Sections exceed Four Hundred Fifty Thousand Dollars ($450,000) (the "BASKET
AMOUNT"), and then Buyer Indemnified Parties shall only be entitled to assert
claims for Losses in excess of the Basket Amount. Buyer shall not be liable to
the Seller Indemnified Parties in respect of any indemnification under Section
12.3(c) or Section 12.3(d) (with respect to breaches of covenants set forth in
Section 7.2) except to the extent that the aggregate Losses of the Seller
Indemnified Parties under such Sections exceed the Basket Amount, and then
Seller Indemnified Parties shall only be entitled to assert claims for Losses in
excess of the Basket Amount.
12.4.2. Buyer acknowledges and agrees that the maximum aggregate
liability of Seller pursuant to Section 12.2(c) and Section 12.2(d) (with
respect to breaches of covenants set forth in Sections 6.1 and 6.2) of this
Agreement to the Buyer Indemnified Parties and any third parties for any and all
Losses shall not exceed Three Million Five Hundred Thousand Dollars
($3,500,000); provided, however, nothing in this Section 12.4.2 shall be
construed to constitute a waiver or limitation of any claims by Buyer based on
fraud. Seller acknowledges and agrees that the maximum aggregate liability of
Buyer pursuant to Section 12.3(c) and Section 12.3(d) (with respect to breaches
of covenants set forth in Section 7.2) of this Agreement to the Seller
Indemnified Parties and any third parties for any and all Losses shall not
exceed Three Million Five Hundred Thousand Dollars ($3,500,000); provided,
however, nothing in this Section 12.4.3 shall be construed to constitute a
waiver or limitation of any claims by Seller based on fraud
12.5. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of Seller and of Buyer hereunder
with respect to their respective indemnities pursuant to this Article 12,
resulting from any Losses, shall be subject to the following terms and
conditions:
12.5.1. The party seeking indemnification (the "INDEMNIFIED PARTY")
must give the other party or parties, as the case may be (the "INDEMNIFYING
PARTY"), notice of any such Losses promptly after the Indemnified Party receives
notice thereof; provided that the failure to give such notice shall not affect
the rights of the Indemnified Party hereunder except to the extent that the
Indemnifying Party shall have suffered actual damage by reason of such failure.
12.5.2. The Indemnifying Party shall have the right to undertake,
by counsel
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or other representatives of its own choosing (reasonably acceptable to the
Indemnified Party), the defense of such Losses at the Indemnifying Party's risk
and expense; provided, however, that as a condition to the exercise of such
right to undertake defense of such Losses, the Indemnifying Party shall, as
between the Indemnifying Party and the Indemnified Party, assume the liability
for such Losses, without regard to the limitations set forth in Section 12.4.2.
12.5.3. In the event that the Indemnifying Party shall elect not to
undertake such defense, or, within a reasonable time after notice from the
Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof (with counsel reasonably
acceptable to the Indemnified Party)). In such event, the Indemnifying Party
shall pay to the Indemnified Party, in addition to the other sums required to be
paid hereunder, the costs and expenses incurred by the Indemnified Party in
connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.
12.5.4. Anything in this Section 12.5 to the contrary
notwithstanding, (a) if any third party alleges the right to or seeks any remedy
other than money damages or other money payments, the Indemnified Party shall
have the right, at the cost and expense of the Indemnifying Party, to
participate in and direct the defense, compromise or settlement of the Losses,
(b) the Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise any Losses or consent to entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from all
liability in respect of such Losses in form and substance reasonably
satisfactory to the Indemnified Party, and (c) in the event that the
Indemnifying Party undertakes defense of any Losses, the Indemnified Party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the Indemnifying Party and its
counsel or other representatives concerning such Losses and the Indemnifying
Party and the Indemnified Party and their respective counsel or other
representatives shall cooperate with respect to such Losses, (d) in the event
that the Indemnifying Party undertakes defense of any Losses, the Indemnifying
Party shall have an obligation to keep the Indemnified Party informed of the
status of the defense of such Losses and furnish the Indemnified Party with all
documents, instruments and information that the Indemnified party shall
reasonably request in connection therewith, and (e) in the event that both the
Indemnified Party and the Indemnifying Party are parties (directly or through
interpleader) to any Losses giving rise to indemnification hereunder and the
Indemnified Party is advised by counsel that there is or may be a conflict of
interest in the representation of both the Indemnified Party and the
Indemnifying Party by one firm of counsel, the Indemnified Party shall be
entitled to assume, at the sole cost and expense of the Indemnifying Party, the
defense, compromise and settlement (subject to clause (b) above) of such Loss
with counsel (in addition to local counsel) reasonably satisfactory to the
Indemnifying Party.
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12.5.5. In the event that an Indemnified Party has a good faith
basis for a claim for indemnification which does not involve a claim against it
by a third party (a "DIRECT CLAIM"), the Indemnified Party shall notify the
Indemnifying Party in writing of such Direct Claim with reasonable promptness,
specifying, to the extent known, the nature, circumstances and amount of such
Direct Claim (a "DIRECT CLAIM NOTICE"), including with particularity the
specific representation and warranty or covenant and agreement alleged to have
been breached; provided, that the failure to give such notice shall not affect
the rights of the Indemnified Party hereunder except to the extent that the
Indemnifying Party shall have suffered actual damage by reason of such failure.
If the Indemnifying Party notifies the Indemnified Party that it disputes an
Indemnified Party's right of indemnification with respect to a particular Direct
Claim, the parties shall use their reasonable efforts to negotiate a resolution
of such dispute promptly. Except to the extent of the limitations on
indemnification set forth in this Article 12, nothing in this Section 12.5.5
shall be deemed to prevent any Indemnified Party from initiating litigation
under this Agreement with respect to any Direct Claim disputed by the
Indemnifying Party for the purpose of establishing the Indemnified Party's right
to indemnification hereunder.
12.6. EXCLUSIVE REMEDY.
Except with respect to fraud, from and after the Closing Date, the
indemnification rights provided in Article 12 of this Agreement shall be the
sole and exclusive remedy available under contract, tort or any other legal
theory to Buyer or any other person with respect to any Losses, including any
debts, liabilities, damages, obligations, claims, demands, judgments, and
settlements, whether asserted by third parties or incurred or sustained in the
absence of third-party claims, including all costs and expenses, including
interest, penalties, attorneys' fees and any amounts paid in investigation,
defense or settlement of any of the foregoing incurred or sustained pursuant to
or in connection with this Agreement or the transactions contemplated hereby.
ARTICLE 13.
TERMINATION
13.1. TERMINATION
This Agreement may be terminated at any time prior to the Closing
by:
13.1.1. the mutual consent of Seller and Buyer;
13.1.2. either Buyer or Seller, by written notice of termination
delivered to the other, if (a) the Closing Date has not occurred within twelve
(12) months after the date of this Agreement; provided, however, that the
failure of the Closing to have occurred within twelve (12) months of the date of
this Agreement shall not be attributable to the breach of this Agreement by the
party seeking termination pursuant to this Section 13.1.2(a); and provided,
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further, that Buyer's right to terminate this Agreement pursuant to this Section
13.1.2(a) shall be subject to Seller's rights to extend the Closing Date
pursuant to Section 8.2 and that Seller's right to terminate this Agreement
pursuant to this Section 13.1.2(a) shall be subject to Buyer's rights to extend
the Closing Date pursuant to Section 11.1.1; or (b) the FCC designates the
applications contemplated by Article 5 for an evidentiary hearing;
13.1.3. either Buyer or Seller in the event that any court or
Governmental Authority of competent jurisdiction shall issue a final,
non-appealable injunction prohibiting the transactions contemplated by this
Agreement; provided, however, that the issuance of such final, non-appealable
injunction shall not be attributable to the breach of this Agreement by the
party seeking termination pursuant to this Section 13.1.3;
13.1.4. either Buyer or Seller in accordance with the terms and
conditions of Article 14; or
13.1.5. Buyer in accordance with the terms and conditions of Section
8.2.
13.2. EFFECT OF TERMINATION
13.2.1. In the event this Agreement is terminated as provided in
Sections 13.1.1, 13.1.2, 13.1.3 or 13.1.5, this Agreement shall be deemed null,
void and of no further force or effect, and the parties hereto shall be released
from all future obligations hereunder; provided, however, that the obligations
of Buyer and Seller set forth in Sections 6.3 and 7.1 (which relate to
confidentiality), this Section 13.2 and Section 15.3 (which relates to payment
of certain expenses), shall survive such termination and the parties hereto
shall have any and all remedies to enforce such obligations provided at law or
in equity or otherwise (including specific performance); and provided, further,
that Seller shall return the full amount of the Deposit to Buyer within ten (10)
business days of such termination in accordance with the terms hereof.
13.2.2. In the event this Agreement is terminated as provided in
Section 13.1.4, this Agreement shall be deemed null, void and of no further
force or effect, and the parties hereto shall be released from all future
obligations hereunder; provided, however, that the obligations of Buyer and
Seller set forth in Sections 6.3 and 7.1 (which relate to confidentiality), this
Section 13.2, Article 14 (which relates to remedies) and Section 15.3 (which
relates to payment of certain expenses), shall survive such termination and the
parties hereto shall have any and all remedies to enforce such obligations
provided at law or in equity or otherwise (including specific performance).
ARTICLE 14.
REMEDIES
14.1. DEFAULT BY BUYER.
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If each condition set forth in Section 9 and Section 10 (other than
any condition that has not been satisfied solely as a result of an uncured
misrepresentation or breach of representation or warranty of Buyer set forth in
this Agreement or a default by Buyer in the performance of its obligations under
this Agreement) has been satisfied or waived, and Buyer has breached its
obligation to effect the transactions to be consummated on the Closing Date by
the date required pursuant to Section 11.1, then Seller shall be entitled, by
written notice to Buyer, to terminate this Agreement, to retain the entire
amount of the Deposit and to pursue any other remedies Seller has at law or in
equity or otherwise; provided, however, Buyer shall have a period of ten (10)
business days after receipt of Seller's written termination notice to cure any
such misrepresentation, breach or default, and if Buyer cures such
misrepresentation, breach or default within such ten (10) business day period,
Seller shall have no right to terminate this Agreement based on such
misrepresentation, breach or default; provided, further, however, that Buyer
shall have no right to such ten (10) business day cure period with respect to
any breach of Buyer's obligation to pay the amount set forth in Section 2.4 on
the Closing Date.
14.2. DEFAULT BY SELLER.
If there exists a material misrepresentation or breach of
representation or warranty of Seller set forth in this Agreement, or if Seller
shall default in any material respect in the performance of Seller's obligations
under this Agreement, or if, as a result of Seller's action or failure to act,
the conditions precedent to Buyer's or Seller's obligation to close specified in
Section 9 or Section 10 are not satisfied, and for such reason or reasons this
Agreement is not consummated, and provided that Buyer shall not then be in
default in the performance of Buyer's obligations hereunder, Buyer shall be
entitled, by written notice to Seller, to terminate this Agreement and to pursue
any other remedies Buyer has at law or in equity or otherwise and, in the event
of such termination in accordance with the terms hereof, if such default is not
otherwise cured by Seller, Seller shall return the full amount of the Deposit to
Buyer within ten (10) business days of the later of receipt of the written
termination notice or the expiration of any applicable cure period; provided,
however, Seller shall have a period of ten (10) business days after receipt of
Buyer's written termination notice to cure any such misrepresentation, breach or
default, and if Seller cures such misrepresentation, breach or default within
such ten (10) business day period, Buyer shall have no right to terminate this
Agreement based on such misrepresentation, breach or default; provided, further,
however, that Seller shall have no right to such ten (10) business day cure
period with respect to any breach of Seller's obligation to execute and deliver
on the Closing Date, the agreements, certificates and documents set forth in
Section 11.3.1 and Section 11.3.10.
14.3. SPECIFIC PERFORMANCE.
Seller hereby acknowledges that the Assets are unique, and that the
harm to Buyer resulting from Seller's failure to perform their obligations
hereunder cannot be adequately compensated by damages. Accordingly, Seller
agrees that Buyer shall have the right to have all obligations, undertakings,
agreements, covenants and other provisions of this Agreement specifically
performed by Seller. In any such specific performance action, Seller agrees to
waive
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the defense that there is an adequate remedy at law for damages and agree
that Buyer shall be entitled to obtain specific performance of Seller's
obligations hereunder without having to post any bond or other security in any
such proceeding.
ARTICLE 15.
GENERAL PROVISIONS
15.1. ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION.
Buyer agrees that it will, at any time, prior to, at or after the
Closing Date, take or cause to be taken such further actions, and execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments and obtain such consents, as may be reasonably
requested by Seller in connection with the consummation of the transactions
contemplated by this Agreement. Seller agrees that it will, at any time, prior
to, at or after the Closing Date, take or cause to be taken such further
actions, and execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments and obtain such consents, as may be
reasonably requested by Buyer in connection with the consummation of the
transactions contemplated by this Agreement, including in the event that any
Assets are owned by any Affiliate of Seller, causing such Affiliate to transfer
the Assets to Buyer.
15.2. BROKERS.
Seller represents to Buyer that Seller has not engaged, or incurred
any unpaid liability (for any brokerage fees, finders' fees, commissions or
otherwise) to, any broker, finder or agent in connection with the transactions
contemplated by this Agreement, except for CobbCorp, LLC; Buyer represents to
Seller that Buyer has not engaged, or incurred any unpaid liability (for any
brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder
or agent in connection with the transactions contemplated by this Agreement; and
Seller agrees to indemnify Buyer, and Buyer agrees to indemnify Seller, against
any claims asserted against the other parties for any such fees or commissions
by any person purporting to act or to have acted for or on behalf of the
indemnifying party. Notwithstanding any other provision of this Agreement, this
representation and warranty shall survive the Closing Date without limitation
and shall not be subject to the Basket Amount contained in Section 12.4.1 or the
limitations of Section 12.4.2.
15.3. EXPENSES AND TAXES.
Each party hereto shall pay its own expenses incurred in connection
with this Agreement and in the preparation for and consummation of the
transactions provided for herein. Notwithstanding the foregoing, (a) Buyer and
Seller shall each pay one-half (1/2) of all sales (including bulk sales), use,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("TRANSFER TAXES")
applicable to, imposed upon or arising out of the transactions contemplated
hereby whether now in effect or
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hereinafter adopted and regardless of which party such Transfer Tax is imposed
upon and (b) Seller and Buyer shall each pay one-half (1/2) of any FCC filing
fees incurred in connection with the assignment of the FCC Licenses. Each party
agrees to cooperate with such other party in the timely completion, execution
and filing of any documentation required by any local or state governmental
agency in connection with the Transfer Taxes.
15.4. NOTICES.
All notices, demands, requests, or other communications which may be
or are required to be given or made by any party to any other party pursuant to
this Agreement shall be in writing and shall be hand delivered, mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, delivered by overnight air courier, or transmitted by telegram, telex,
or facsimile transmission addressed as follows:
If to Buyer:
Gray Television, Inc.
4370 Peachtree Road, NE
Atlanta, GA 30319
Attention: Robert S. Prather, Jr.
Telecopy No.: (404) 261-9607
with a copy (which shall not constitute notice) to:
Troutman Sanders LLP
600 Peachtree Street, NE
Suite 5200
Atlanta, GA 30308
Attention: Neal H. Ray
Telecopy No.: (404) 962-6857
If to Seller:
Smith Television Group, Inc.
Smith Television License Holdings, Inc.
720 2nd Avenue
St. Petersburg, Florida 33701
Attention: Margaret Williams
Telecopy No.: (727) 821-7092
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
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8300 Greensboro Drive
Suite 1100
McLean, Virginia 22102
Attention: Richard T. Horan, Jr., Esq.
Telecopy No.: (703) 610-6200
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall be given
or made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex) the answerback being deemed conclusive but not exclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
15.5. WAIVER.
No delay or failure on the part of any party hereto in exercising
any right, power or privilege under this Agreement or under any other instrument
or document given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any party hereto unless made in writing and signed by the
party against whom enforcement of such waiver is sought and then only to the
extent expressly specified therein.
15.6. BENEFIT AND ASSIGNMENT.
(a) No party hereto shall assign this Agreement, in whole or in
part, whether by operation of law or otherwise, without the prior written
consent of the other party hereto; provided, however, that Buyer may assign this
Agreement without the consent of Seller to any of its subsidiaries or
affiliates, but no such assignment shall relieve Buyer of its obligations
hereunder.
(b) Any purported assignment contrary to the terms hereof shall be
null, void and of no force and effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns as permitted hereunder. No Person, other than the parties hereto, is
or shall be entitled to bring any action to enforce any provision of this
Agreement against any of the parties hereto, and the covenants and agreements
set forth in this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto or their respective successors and
assigns as permitted hereunder. Without limiting the foregoing, no employee of
the Station and no other Person shall be a third-party beneficiary under this
Agreement (including the provisions of Section 8.4), or any Seller Document or
Buyer Document.
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15.7. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the Preamble, Schedules and Exhibits
hereto and the other instruments and documents referred to herein or delivered
pursuant hereto contains the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior oral or written agreements,
commitments or understandings with respect to such matters. No amendment,
modification or discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by the party or parties against whom
enforcement of the amendment, modification or discharge is sought.
15.8. SEVERABILITY.
If any part of any provision of this Agreement or any other
contract, agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
15.9. HEADINGS.
The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
15.10. GOVERNING LAW; JURISDICTION.
This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by and construed
under and in accordance with the laws of the State of Georgia, without giving
effect to the conflicts of law principles thereof. The parties hereto hereby
waive personal service of any process in connection with any such action, suit
or proceeding and agree that the service thereof may be made by certified or
registered mail addressed to or by personal delivery to the other party, at such
other party's address set forth pursuant to Section 15.4 hereof. In the
alternative, in its discretion, any of the parties hereto may effect service
upon any other party in any other form or manner permitted by law.
15.11. SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts, none of
which need contain the signatures of all parties, each of which shall be deemed
to be an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Asset Purchase Agreement, or has caused this Asset Purchase Agreement to be duly
executed and delivered in its name on its behalf, all as of the day and year
first above written.
SELLER
SMITH TELEVISION GROUP, INC.
By: /s/ Robert N. Smith
-------------------------------
Name: Robert N. Smith
-----------------------------
Title: Chief Executive Officer
----------------------------
SMITH TELEVISION LICENSE HOLDINGS, INC.
By: /s/ Robert N. Smith
-------------------------------
Name: Robert N. Smith
-----------------------------
Title: Chief Executive Officer
----------------------------
BUYER
GRAY TELEVISION, INC.
By: /s/ Robert S. Prather
-------------------------------
Name: Robert S. Prather
-----------------------------
Title: President
----------------------------
Solely for purposes of guaranteeing Seller's obligation to return
the Deposit pursuant to Section 13.2.1 and Section 14.2 hereof.
SMITH TELEVISION OF NEW YORK, INC.
By: /s/ Robert N. Smith
-------------------------------
Name: Robert N. Smith
-----------------------------
Title: Chief Executive Officer
----------------------------
ANNEX I
DEFINITIONS
"ACCOUNTS RECEIVABLE" means all accounts receivable with respect to
the Station as of the end of the broadcast day immediately preceding the Closing
Date.
"ADDITIONAL AGREEMENTS" shall have the meaning set forth in Section
6.1.6.
"AFFILIATE" shall mean, with respect to any Person, any other Person
that, (a) directly or indirectly is in control of, is controlled by, or is under
common control with, the first Person, (b) is an officer, director, trustee,
partner (general or limited), employee or holder of five percent (5%) or more of
any class of any voting or non-voting securities or other equity in the first
Person, and (c) is an officer, director, trustee, partner (general or limited),
employee or holder of five percent (5%) or more of any class of the voting or
non-voting securities or other equity in any Person which directly or indirectly
is in control of, is controlled by, or is under common control with, the first
Person. For purposes of this definition, "control" (including with correlative
meanings "controlled by" and "under common control with") shall mean possession,
directly or indirectly, of either (X) five percent (5%) or more of the voting
power of the securities having ordinary voting power for the election of
directors of the first Person, or (Y) the power to direct or cause the direction
of the management or policies of the first Person (whether through ownership of
securities, partnership interests or any other ownership or debt interests, by
contract or otherwise).
"ALTERNATIVE ARRANGEMENT" shall have the meaning set forth in
Section 8.6.
"APPRAISAL FIRM" shall have the meaning set forth in Section 2.6.
"APPRAISAL REPORT" shall have the meaning set forth in Section 2.6.
"ASSETS" shall have the meaning set forth in Section 2.1.
"ASSIGNMENT APPLICATIONS" shall have the meaning set forth in
Article 5.
"ASSIGNMENT OF CONTRACTS AND LEASES" means that certain Assignment
of Contracts and Leases executed by Seller, in a form reasonably acceptable to
Seller and Buyer.
"ASSIGNMENT OF FCC LICENSES" means that certain Assignment of FCC
Licenses executed by Seller, in a form reasonably acceptable to Seller and
Buyer.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.7.1.
"ASSUMPTION AGREEMENT" means that certain Assumption Agreement
executed by Buyer and Seller, in a form reasonably acceptable to Seller and
Buyer.
"BASKET AMOUNT" shall have the meaning set forth in Section 12.4.1.
"BENEFIT ARRANGEMENT" means a welfare or benefit program, practice
or policy providing for bonuses, incentive compensation, vacation pay, severance
pay, insurance, restricted stock, stock options, employee discounts, company
cars, tuition reimbursement or any other perquisite or benefit (including any
fringe benefit under Section 132 of the Code) to employees, officers or
independent contractors that is not a Plan.
"BENEFIT PLANS" shall have the meaning specified in Section 3.16.1.
"BILL OF SALE" means that certain Bill of Sale and Assignment of
Assets, dated as of the Closing Date and executed by Seller, in a form
reasonably acceptable to Seller and Buyer.
"BUYER DOCUMENTS" means, collectively, this Agreement, the
Assumption Agreement and the closing certificates and other deliveries
contemplated by Section 11.4.
"BUYER INDEMNIFIED PARTIES" shall have the meaning specified in
Section 12.2.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.ss.9601 et seq., as amended, and any
similar or implementing state or local law..
"CHILDREN'S TELEVISION ACT" shall mean the Children's Television Act
of 1990.
"CLOSING" shall have the meaning set forth in Section 11.1.1.
"CLOSING DATE" shall have the meaning specified in Section 11.1.1.
"COBRA OBLIGATIONS" shall have the meaning specified in Section
8.4.2.
"CODE" means the Internal Revenue Code of 1986, as amended, and all
Laws promulgated pursuant thereto or in connection therewith.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended.
"CURRENT BALANCE SHEET" shall have the meaning set forth in Section
3.5.1.
"DEPOSIT" shall have the meaning set forth in Section 2.3.
"DEFERRED CONTRACT" shall have the meaning set forth in Section 8.6.
"DIRECT CLAIM" shall have the meaning set forth in Section 12.5.5.
"DIRECT CLAIM NOTICE" shall have the meaning set forth in Section
12.5.5.
"DTV" shall have the meaning set forth in Section 3.22.
"ENCUMBRANCES" means any mortgages, pledges, liens, security
interests, defects in title, easements, encumbrances, encroachments and any
other matters affecting the title, value, marketability or current use of the
Assets.
"ENVIRONMENTAL AFFILIATES" of any Person means, with respect to any
particular matter, all other Persons whose liabilities or obligations with
respect to that particular matter have been assumed by, or are otherwise deemed
by law to be those of, such first Person.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all Environmental Laws
and all federal, state, local and foreign statutes, regulations, ordinances and
similar provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law relating to public health and safety, worker health and safety and
pollution or protection of human health or the environment, including without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata, and natural resources and including all such standards of conduct and
bases of obligations relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, emission, Release, threatened Release, control,
or cleanup of any Hazardous Materials.
"ENVIRONMENTAL CLAIM" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (i) the presence, or Release into the environment, of any Hazardous
Materials at any location, whether or not owned or operated by Seller or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental and Safety Requirements.
"ENVIRONMENTAL LAWS" means any federal, state, local, or foreign law
(including common law), statute, code, ordinance, rule, regulation, or other
requirement relating to the environment, natural resources, public, or employee
health and safety, and Hazardous Materials generation, production, use, storage,
treatment, transportation or disposal, and includes, but is not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
("CERCLA") as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. Section 5101 et seq.; the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq.; the Clean Water Act ("CWA"), 33 U.S.C.
Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 2701 et seq.; and
the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., as such
laws have been amended or supplemented, and the regulations promulgated pursuant
thereto, and all analogous state or local statues.
"ENVIRONMENTAL LIEN" means any Encumbrance, whether recorded or
unrecorded, in favor of any governmental entity or any department, agency or
political subdivision thereof relating to any liability of Seller, any
Subsidiary of the Seller or any Environmental Affiliate of any such Person
arising under any Environmental and Safety Requirement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
"EXCLUDED ASSETS" shall have the meaning specified in Section 2.2.
"EXCLUDED CONTRACTS" shall have the meaning specified in Section
2.1.8.
"EXCLUDED LIABILITIES" shall have the meaning specified in Section
2.7.2.
"FCC" means the Federal Communications Commission.
"FCC LICENSES" shall have the meaning specified in Section 2.1.1.
"FCC ORDER" means an unconditional order or orders (except for
standard conditions imposed by the FCC on all assignments of licenses) of the
FCC, or of the Chief, Mass Media Bureau of the FCC, acting under delegated
authority, consenting to the assignment to Buyer of the FCC Licenses for the
Station.
"GAAP" means generally accepted accounting principles consistently
applied for the periods involved.
"GOVERNMENTAL AUTHORITY" means any agency, board, bureau, court,
commission, department, instrumentality or administration of the United States
government, any state government or any local or other governmental body in a
state, territory or possession of the United States or the District of Columbia.
"HAZARDOUS MATERIALS" means any wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic, pollutants,
or contaminants, including without limitation, substances defined as "hazardous
wastes", "hazardous substances", "hazardous materials", "extremely hazardous
waste", "toxic substances", "radioactive materials", or other similar
designations in, or otherwise subject to, regulation under, any Environmental
Laws; the term shall also include any other chemical substances or mixtures,
pesticides, toxic chemicals, petroleum products or by-products,
asbestos-containing materials, polychlorinated biphenyls (PCBs), noise, lead or
lead-based paints or materials, radon, and radioactive materials.
"INCOME TAXES" means all federal, state and local income taxes and
installments of estimated income taxes, income tax deficiencies and income tax
withholdings imposed by any Governmental Authorities.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the
respective meanings set forth in Section 12.5.1.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
2.1.4.
"LAWS" means any federal, state or local law, statute, code,
ordinance, regulation, order, writ, injunction, judgment or decree applicable to
the specified Person and to the businesses and assets thereof.
"LEASES" shall have the meaning set forth in Section 3.10.2.
"LEASED PROPERTY" shall have the meaning set forth in Section 2.1.2.
"LIABILITIES" means, as to any Person, all debts, adverse claims,
liabilities and obligations, direct, indirect, absolute or contingent of such
Person, whether accrued, vested or otherwise, whether in contract, tort, strict
liability or otherwise and whether or not actually reflected, or required by
GAAP to be reflected, in such Person's balance sheets or other books and
records.
"LOSSES" means any liabilities, demands, claims, actions, causes of
action, costs, damages, deficiencies, Taxes, penalties, fines, judgments,
settlements, arbitrations, assessments, obligations (including those arising out
of any action, such as any settlement or compromise thereof of judgment or award
therein or other loss or expense, whether or not arising out of a third party
claim, including all interest, penalties, reasonably attorneys' fees and
expenses, reasonable accountants' fees and expenses and all amounts paid or
incurred in connection with any such action, demand, proceeding, investigation,
preservation or enforcement of rights to indemnification), or claim (including
any governmental entity or any department, agency or political subdivision
thereof) and the investigation, defense or settlement of any of the foregoing.
"MARKET CABLE SYSTEMS" shall mean all U.S. cable systems located
within any particular station's market, as defined in Section 76.55 of the FCC
regulations.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations, assets or financial condition of the Station, except for
any material adverse affect resulting from (a) general economic conditions
applicable to the television broadcast industry, or (b) general economic
conditions in the Reno, Nevada market in which the Station operates.
"NETWORK AFFILIATION AGREEMENT" means that certain Network
Affiliation Agreement dated May 11, 1995, as amended, between Seller for the
Station and the American Broadcasting Companies, Inc.
"OPERATING CONTRACTS" shall have the meaning set forth in Section
2.1.8.
"PENSION PLAN" means an "employee pension benefit plan" as such term
is defined in Section 3(2) of ERISA.
"PERMITTED ENCUMBRANCES" means (a) Encumbrances on Real Property
that do not interfere with the value, marketability or use of the Real Property
in the operations or business of the Station, (b) Encumbrances for Taxes not yet
due and payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on Seller's
books in accordance with GAAP and (c) Encumbrances which do not secure monetary
liabilities of any Person and that, individually or in the aggregate, do not and
would not materially detract from the value or marketability of any of the
Assets or materially interfere with the use thereof as currently used.
"PERSON" or "PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
other form of business or legal entity or Governmental Authority.
"PLAN" means any plan, program or arrangement, whether or not
written, that is or was an "employee benefit plan" as such term is defined in
Section 3(3) of ERISA and (a) which was or is established or maintained by
Seller; (b) to which Seller contributed or was obligated to contribute or to
fund or provide benefits; or (c) which provides or promises benefits to any
person who performs or who has performed services for Seller and because of
those services is or has been (i) a participant therein or (ii) entitled to
benefits thereunder.
"PRE-CLOSING DATE RECORDS" shall have the meaning set forth in
Section 7.3.
"PROCEEDING" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
judicial or investigative, whether formal or informal, whether public or
private) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Authority or arbitrator.
"PROGRAM CONTRACTS" shall have the meaning set forth in Section
2.1.5.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.4.
"QUALIFIED PLAN" means a Pension Plan that satisfies, or is intended
by Seller to satisfy, the requirements for tax qualification described in
Section 401 of the Code.
"REAL PROPERTY" shall have the meaning set forth in Section 2.1.2.
"RELEASE" has the meaning set forth in CERCLA.
"SCHEDULES" means the disclosure schedules delivered by Seller to
Buyer in connection herewith.
"SELLER DOCUMENTS" means, collectively, this Agreement, the
Assignment of Contracts and Leases, the Bill of Sale, the Assignment of FCC
Licenses, the Assumption Agreement and the closing certificates and other
deliveries contemplated by Section 11.3.
"SELLER INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 12.3.
"SELLER TAX RETURNS" means all federal, state, local, foreign and
other applicable Tax returns, declarations of estimated Tax reports required to
be filed by Seller (without regard to extensions of time permitted by law or
otherwise).
"STATION" means KOLO-TV, Channel 8, Reno, Nevada.
"STATION CONTRACTS" shall have the meaning set forth in Section
2.1.8.
"SUBJECT AGREEMENTS" means the following types of Station Contracts:
(a) employment agreements that will not be terminable by Buyer after the Closing
Date at-will without cost or obligation (other than an obligation to pay accrued
salary or wages at the normally applicable rate through the time of
termination); (b) agreements related to Real Property and Leased Property; (c)
program licenses and contracts under which Seller is authorized to broadcast
programs on the Station; (d) all contracts and agreements pursuant to which
commercial air time on the Station is sold, traded or bartered in consideration
for any property or services in lieu of or in addition to cash; (e) network
affiliation agreements; (f) rating service agreements; (g) advertising sales
representation agreements; and (h) agreements pursuant to which an Encumbrance
is placed on an Asset.
"TAXES" means all federal, state and local taxes (including income,
profit, franchise, sales, use, real property, personal property, ad valorem,
excise, employment, social security and wage withholding taxes) and installments
of estimated taxes, assessments, deficiencies, levies, imports, duties, license
fees, registration fees, withholdings, or other similar charges of every kind,
character or description imposed by any Governmental Authorities.
"TIME SALES AGREEMENTS" shall have the meaning set forth in Section
2.1.7.
"TRADE-OUT AGREEMENTS" shall have the meaning set forth in Section
2.1.6.
"TRANSFER TAXES" shall have the meaning set forth in Section 15.3.
"TRANSFERRED EMPLOYEE(S)" shall have the meaning set forth in
Section 8.4.1.
"WELFARE PLAN" means an "employee welfare benefit plan" as such term
is defined in Section 3(1) of ERISA.
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SMITH TELEVISION GROUP, INC.
SMITH TELEVISION LICENSE HOLDINGS, INC.
AS SELLER
AND
GRAY TELEVISION, INC.
AS BUYER
DATED AS OF SEPTEMBER 3, 2002
TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS AND REFERENCES................................ 1
ARTICLE 2. SALE AND PURCHASE OF ASSETS; PURCHASE PRICE; ASSUMPTION OF
LIABILITIES...................................................... 1
2.1. Asset Sale and Purchase of Assets.......................... 1
2.1.1. FCC Licenses....................................... 2
2.1.2. Real and Leased Property Interests................. 2
2.1.3. Tangible Personal Property......................... 2
2.1.4. Intellectual Property.............................. 2
2.1.5. Program Contracts.................................. 3
2.1.6. Trade-out Agreements............................... 3
2.1.7. Broadcast Time Sales Agreement..................... 3
2.1.8. Operating Contracts................................ 3
2.1.9. Vehicles........................................... 4
2.1.10. Files and Records.................................. 4
2.1.11. Auxiliary Facilities............................... 4
2.1.12. Permits and Licenses............................... 4
2.1.13. Goodwill........................................... 4
2.1.14 Accounts Receivable................................ 4
2.1.15 Deposits and Prepaid Expenses...................... 4
2.2. Excluded Assets............................................ 5
2.2.1. Cash............................................... 5
2.2.2. Personal Property Disposed Of...................... 5
2.2.3. Insurance.......................................... 5
2.2.4. Employee Plans and Assets.......................... 5
2.2.5. Right to Tax Refunds............................... 5
2.2.6. Certain Books and Records.......................... 5
2.2.7. Rights Under this Agreement........................ 5
2.2.8. Name............................................... 6
2.2.9. Securities......................................... 6
2.2.10. Excluded Contracts and Unrelated Assets............ 6
2.3 Deposit.................................................... 6
2.4. Purchase Price............................................. 6
2.5. Payment of Purchase Price.................................. 6
2.6. Allocation of Purchase Price............................... 6
2.7. Assumption of Liabilities.................................. 7
2.7.1. Assumed Liabilities................................ 7
2.7.2. Excluded Liabilities............................... 7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY SELLER.................. 9
3.1. Organization and Standing.................................. 9
3.2. Authorization.............................................. 9
TABLE OF CONTENTS (continued)
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3.3. Compliance with Laws....................................... 9
3.4. Consents and Approvals; No Conflicts....................... 10
3.5. Financial Statements; Undisclosed Liabilities.............. 10
3.6. Absence of Certain Changes or Events....................... 11
3.7. Absence of Litigation...................................... 11
3.8. Assets..................................................... 11
3.9. FCC Matters................................................ 12
3.10. Real Property.............................................. 12
3.11. Condition of Tangible Assets............................... 13
3.12. Intellectual Property...................................... 13
3.13. Reports and Records........................................ 13
3.14. Station Contracts.......................................... 14
3.15. Taxes. ................................................... 14
3.16. Employee Benefit Plans..................................... 15
3.17. Labor Relations............................................ 16
3.18. Environmental Matters...................................... 16
3.19. Transactions With Affiliates............................... 17
3.20. Insurance.................................................. 18
3.21. Cable Systems.............................................. 18
3.22. Digital Television......................................... 19
3.23. Statements True and Correct................................ 19
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY BUYER................... 19
4.1. Organization and Standing.................................. 19
4.2. Authorization.............................................. 19
4.3. Compliance with Laws....................................... 21
4.4. Consents and Approvals; No Conflicts....................... 21
4.5. Qualification of Buyer..................................... 21
4.7. Statements True and Correct................................ 22
ARTICLE 5. FCC CONSENT............................................... 22
ARTICLE 6. COVENANTS AND AGREEMENTS OF SELLER........................ 22
6.1. Negative Covenants......................................... 22
6.1.1. Dispositions....................................... 22
6.1.2. Accounting Principles and Practices................ 23
6.1.3. Trade-out Agreements............................... 23
6.1.4. Broadcast Time Sales Agreements.................... 23
6.1.5. Network Affiliation Agreements and Local Marketing
Arrangements....................................... 23
6.1.6. Additional Agreements.............................. 23
6.1.7. Breaches........................................... 23
6.1.8. Employee Matters................................... 23
6.1.9. Actions Affecting FCC Licenses..................... 24
6.1.10. Programming........................................ 24
TABLE OF CONTENTS (continued)
Page
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6.1.11. Affiliated Transactions............................ 24
6.1.12. Collection of Accounts Receivable.................. 24
6.2. Affirmative Covenants...................................... 24
6.2.1. Preserve Existence................................. 24
6.2.2. Normal Operations.................................. 24
6.2.3. Maintain FCC Licenses.............................. 25
6.2.4. Network Affiliation................................ 25
6.2.5. Station Contracts.................................. 25
6.2.6. Taxes.............................................. 25
6.2.7. Corporate Action................................... 25
6.2.8. Access............................................. 25
6.2.9. Insurance.......................................... 26
6.2.10. Financial Statements............................... 26
6.3. Confidentiality............................................ 26
6.4. No Shopping................................................ 27
6.5. No Solicitation of Employees............................... 27
ARTICLE 7. COVENANTS AND AGREEMENTS OF BUYER......................... 27
7.1. Confidentiality............................................ 27
7.2. Corporate Action........................................... 28
7.3. Access..................................................... 28
ARTICLE 8. MUTUAL COVENANTS AND UNDERSTANDINGS OF SELLER AND BUYER... 29
8.1. Possession and Control..................................... 29
8.2. Risk of Loss............................................... 29
8.3. Public Announcements....................................... 29
8.4. Employee Matters........................................... 30
8.4.1. Transferred Employees.............................. 30
8.4.2. COBRA Obligations.................................. 30
8.4.3. Seller Benefits Plans.............................. 31
8.4.4. 401(k) Plans....................................... 31
8.5. Bulk Sales Laws............................................ 31
8.6. Consents................................................... 31
8.7. Transition Services Agreement.............................. 32
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE...... 32
9.1. Representations and Covenants.............................. 32
9.2. Required Consents.......................................... 33
9.3. Delivery of Documents...................................... 33
9.4. FCC Matters................................................ 33
9.5. Legal Proceedings.......................................... 33
9.6. No Material Adverse Effect................................. 33
9.7. Program Contracts.......................................... 34
TABLE OF CONTENTS (continued)
Page
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ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.... 34
10.1. Representations and Covenants.............................. 34
10.2. Delivery by Buyer.......................................... 34
10.3. FCC Order.................................................. 34
10.4. Legal Proceedings.......................................... 34
ARTICLE 11. CLOSING.................................................. 35
11.1. Closing.................................................... 35
11.2. Time and Place of Closing.................................. 35
11.3. Delivery by Seller......................................... 35
11.3.1. Agreements and Instruments......................... 35
11.3.2. Consents........................................... 36
11.3.3. Certified Resolutions.............................. 36
11.3.4. Officers' Certificates............................. 36
11.3.5. Organizational Documents........................... 37
11.3.6. Releases........................................... 37
11.3.7. FIRPTA Certificate................................. 37
11.3.8. Title Insurance Documents.......................... 37
11.3.10.Domain Name Transfer............................... 37
11.3.11.Good Standing...................................... 37
11.4. Delivery by Buyer.......................................... 37
11.4.1. Purchase Price Payment............................. 37
11.4.2. Agreements and Instruments......................... 38
11.4.3. Certified Resolutions.............................. 38
11.4.4. Officers' Certificate.............................. 38
ARTICLE 12. SURVIVAL; INDEMNIFICATION................................ 38
12.1. Survival of Representations................................ 38
12.2 Indemnification by Seller.................................. 39
12.3. Indemnification by Buyer................................... 39
12.4. Limitations on Indemnification............................. 41
12.5. Conditions of Indemnification.............................. 41
12.6. Exclusive Remedy........................................... 43
ARTICLE 13. TERMINATION.............................................. 43
13.1. Termination................................................ 43
13.2. Effect of Termination...................................... 44
ARTICLE 14. REMEDIES................................................. 44
14.1. Default by Buyer........................................... 44
14.2. Default by Seller.......................................... 45
14.3. Specific Performance....................................... 45
ARTICLE 15. GENERAL PROVISIONS....................................... 46
15.1. Additional Actions, Documents and Information.............. 46
15.2. Brokers.................................................... 46
15.3. Expenses and Taxes......................................... 46
TABLE OF CONTENTS (continued)
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15.4. Notices................................................... 47
15.5. Waiver. .................................................. 48
15.6. Benefit and Assignment.................................... 48
15.7. Entire Agreement; Amendment............................... 49
15.8. Severability.............................................. 49
15.9. Headings.................................................. 49
15.10. Governing Law; Jurisdiction............................... 49
15.11. Signature in Counterparts................................. 49