EXHIBIT 10.6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated as of the 22nd day of
June, 1998, is made and entered into by and among WALB-TV, INC., a Georgia
corporation (the "Company"), WALB LICENSEE CORP., a Delaware corporation and a
wholly-owned subsidiary of the Company (the "Subsidiary" and together with the
Company, the "Sellers"), and COSMOS BROADCASTING CORPORATION, a South Carolina
corporation (the "Purchaser").
BACKGROUND:
The Company owns and operates the television station WALB-TV, serving
Albany, Georgia (the "Station"). The Sellers, respectively, hold the FCC
Licenses.
This Agreement sets forth the terms and conditions upon which Sellers shall
sell to Purchaser, and upon which Purchaser shall purchase, certain of Sellers'
Assets associated with the business of the Station.
Certain terms used in this Agreement are defined in Article X hereof.
AGREEMENT:
In consideration of the foregoing, the mutual agreements, covenants,
representations and warranties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms and conditions hereinafter set forth, the parties hereto
agree as follows:
ARTICLE I
SALE OF ASSETS
1.01 PURCHASE OF ASSETS BY PURCHASER. At the Closing, and subject to the
terms and conditions of this Agreement, Purchaser shall purchase and accept from
Sellers and Sellers shall sell, convey, transfer, assign and deliver to
Purchaser for the purchase price set forth in Section 1.02 below, all of the
Assets, free and clear of any and all Liens other than the Permitted Liens. None
of the Retained Assets are being purchased by Purchaser pursuant to this
Agreement.
1.02 PURCHASE PRICE FOR THE ASSETS.
(a) The total purchase price for the Assets shall be equal to Seventy-Eight
Million Dollars ($78,000,000), as adjusted as provided by Section 1.04.
(b) The Purchase Price has been allocated among the Assets in accordance with
a schedule mutually prepared by Sellers and Purchaser and attached hereto as
Exhibit 1.02(b). If Purchaser or Sellers undertake to change such schedule, such
party must obtain the approval of Sellers or Purchaser, as the case may be,
which will not be unreasonably withheld.
The allocation and undertaking pursuant to this Section 1.02(b), and the
following undertaking with respect to Tax reporting, have been specifically
negotiated by Purchaser, on the one hand, and Sellers on the other, at arms'
length and are a part of the basis of this Agreement. Each of Purchaser and
Sellers shall prepare its Tax Returns after the Closing employing the allocation
made pursuant to this Section 1.02(b) and shall not take a position in any Tax
proceeding, Tax audit or otherwise that is inconsistent with such allocation;
provided, however, that nothing contained herein shall require Purchaser or
Sellers to contest beyond or otherwise than by the exhaustion of administrative
remedies before any Taxing authority or agency or to litigate before any court,
including, without limitation, the United States Tax Court, any proposed
deficiency or adjustment by any Taxing authority or agency which challenges such
allocation. Each of Purchaser and Sellers shall give prompt notice to each other
of the commencement of any Tax audit or the assertion of any proposed deficiency
or adjustment by any Taxing authority or agency which challenges such
allocation.
(c) Capitalized terms used in this Section 1.02(c) and not defined in this
Agreement have the respective meanings set forth in the Exchange Agreement (the
"Exchange Agreement") of even date herewith among Sellers, Purchaser and certain
other parties. Pursuant to the Exchange Agreement and the WEAU Asset Purchase
Agreement, at Closing thereunder and hereunder, Purchaser will pay to Busse and
WEAU $66,000,000 as set forth in the Exchange Agreement and the WEAU Asset
Purchase Agreement (the "WEAU Purchase Price") for the WEAU Assets and WEAU
License, which Purchaser will direct Busse and WEAU to transfer and assign to
the Company and the Subsidiary, respectively. At Closing hereunder, Purchaser
shall receive a credit against the Purchase Price in an amount equal to the WEAU
Purchase Price paid by Purchaser pursuant to the WEAU Asset Purchase Agreement.
The pre-merger notification and report required by the Hart-Scott Act in
connection with Sellers' acquisition of the WEAU Assets and the WEAU License is
to be filed by Sellers and Busse, and Purchaser will not be a party to, and has
no obligation to pay the filing fee associated with, such notification and
report. The FCC assignment application for the WEAU License has been filed by
the Subsidiary and WEAU, and Purchaser is not a party to, and has no obligation
to pay the filing fee associated with, such application. Whether or not the
closing under the WEAU Asset Purchase Agreement is consummated, Sellers shall
have the obligation to sell, and purchaser shall have the obligation to
purchase, the Assets, pursuant to the terms, and subject to the conditions, set
forth in this Agreement. The foregoing shall not be deemed to limit Sellers'
right to extend the Closing Date as set forth in the definition of such term or
the other rights and obligations set forth in this Section and Section 5.16.
1.03 CLOSING; EFFECTIVENESS OF CLOSING; DELIVERIES. The Closing shall occur
at 10:00 a.m. local time on the Closing Date at the offices of Cadwalader,
Wickersham & Taft in New York, New York or at such other time and place as the
parties may agree. The Closing shall be effective as of such time as agreed to
by the parties hereto. All deliveries, payments and other transactions and
documents relating to the Closing (i) shall be interdependent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing), and (ii) shall be deemed to be
consummated in the order set
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forth in this Agreement and, to the extent the order is not specified, shall be
deemed to be consummated simultaneously.
1.04 PRORATIONS AND ADJUSTMENTS.
(a) Prorations and Adjustments. The Purchase Price shall be increased or
decreased as required to effectuate the proration of revenues and expenses as
provided for herein. All revenues and all expenses arising from the operation of
the Station, including tower rental, business and license fees (including FCC
regulatory fees), utility charges, real and personal property taxes and
assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, including program license payments, sales
and service charges, taxes (except for taxes arising from the transfer of the
Assets under this Agreement), employee compensation, including wages, salaries,
commissions, accrued vacation pay and personal days, music license fees and
similar prepaid and deferred items, shall be prorated between Purchaser and
Sellers in accordance with generally accepted accounting principles and to
effect the principle that Sellers shall receive all revenues and shall be
responsible for all expenses, costs and liabilities allocable to the operations
of the Station for the period prior to 12:01 a.m. on the Closing Date, and
Purchaser shall receive all revenues and shall be responsible for all expenses,
costs and obligations allocable to the operations of the Station for the period
after 12:01 a.m. on the Closing Date, subject to the following:
(1) There shall be no adjustment for, and Sellers shall remain solely
liable with respect to, any Contract that is included in the Retained Assets and
any other obligation or liability not being assumed by Purchaser in accordance
with Section 2.02.
(2) No adjustment or proration to the Purchase Price shall be made in
favor of Sellers or Purchaser for the amount, if any, by which the value of the
goods or services to be received by the Station under its trade or barter
agreements as of Closing for the Station exceeds, or is less than, the value of
any advertising time remaining to be run by the Station as of Closing.
(3) There shall be no adjustment or proration to the Purchase Price for
program barter. Sellers shall be responsible for payment of all film or
programming license fees for periods prior to Closing, and Purchaser shall be
responsible for payment of all such fees for periods after Closing.
(4) There shall be no adjustment or proration for sick days accrued on
or prior to Closing by any employee of Sellers, all of which shall be assumed by
Purchaser.
(b) Manner of Determining Prorations and Adjustments. The Purchase Price,
taking into account the adjustments and prorations pursuant to Section 1.04(a),
will be determined in accordance with the following procedures:
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(1) Sellers shall prepare and deliver to Purchaser not later than five
(5) days before Closing a preliminary settlement statement signed by Sellers
which shall set forth Sellers' good faith estimate of the adjustments or
prorations to the Purchase Price under Section 1.04(a). Such preliminary
settlement statement shall contain all information reasonably necessary to
determine the adjustments or prorations to the Purchase Price under Section
1.04(a), including appropriate supporting documentation. The adjustments and
prorations to the Purchase Price to be made at Closing shall be based upon such
preliminary settlement statement.
(2) Not later than ninety days after the Closing Date, Purchaser will
deliver to Sellers a statement signed by Purchasers setting forth Purchaser's
good faith determination of any changes to the adjustments and prorations made
at Closing. Such statement shall contain all information reasonably necessary to
determine the adjustments and prorations to the Purchase Price under Section
1.04(a), including appropriate supporting documentation. If Sellers dispute the
adjustments and prorations determined by Purchaser, they shall deliver to
Purchaser within sixty days after its receipt of Purchaser's statement a
statement setting forth its determination of the adjustments and prorations. If
Sellers notify Purchaser of their acceptance of Purchaser's statement, or if
Sellers fail to deliver their statement within the sixty-day period specified in
the preceding sentence, Purchaser's determination of the adjustments and
prorations shall be conclusive and binding on the parties as of the last day of
the sixty-day period.
(3) Purchaser and Sellers shall use good faith efforts to resolve any
dispute involving the determination of the adjustments and prorations. If the
parties are unable to resolve the dispute within fifteen days following the
delivery of Sellers' statement pursuant to Section 1.04(b)(2), Purchaser and
Sellers shall jointly designate an independent certified public accountant, who
shall be knowledgeable and experienced in the operation of television
broadcasting stations, to resolve the dispute. If the parties are unable to
agree on the designation of an independent certified public accountant, the
selection of the accountant to resolve the dispute shall be submitted to
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association. The accountant's resolution of the dispute shall be
final and binding on the parties, and a judgment may be entered thereon in any
court of competent jurisdiction. Any fees of this accountant, and, if necessary,
for arbitration to pick such accountant, shall be split equally between the
parties.
(4) Amounts payable to the Station from the United States Copyright
Office or such arbitration panels as may be appointed by the United States
Copyright Office that relate to the period prior to Closing may not be
determinable or paid within the period provided in this Section 1.04 for final
determination of adjustments. In that event, notwithstanding the provisions of
this Section 1.04, Purchaser and Sellers agree to cooperate fully in future
copyright filings and to allocate any future copyright proceeds in accordance
with Section 1.04 until such time as all such proceeds with respect to the
period prior to Closing are paid.
(c) If required by Section 1.07, the Purchase Price shall be adjusted as
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provided in Section 1.07.
1.05 PAYMENT OF PURCHASE PRICE AND PRORATIONS AND ADJUSTMENTS. The Purchase
Price shall be paid by Purchaser to Sellers as follows:
(a) Payment of Estimated Purchase Price At Closing. At Closing, Purchaser
shall pay or cause to be paid to Sellers the Purchase Price as adjusted as
provided by Section 1.04 by federal wire transfer of same-day funds pursuant to
wire instructions which shall be delivered to Purchaser by Sellers prior to
Closing. Any payment of the Deposit to Sellers as provided by Section 1.06 and
any payment of the WEAU Purchase Price provided by Section 1.02(c) shall be
credited as a partial payment of the Purchase Price.
(b) Payments to Reflect Prorations and Adjustments.
(1) If the Purchase Price as finally determined pursuant to Section
1.04(b) exceeds the estimated Purchase Price paid at Closing, Purchaser shall
pay to Sellers, in immediately available funds within five business days after
the date on which the Purchase Price is finally determined pursuant to Section
1.04(b), the difference between the final Purchase Price and the estimated
Purchase Price paid at Closing.
(2) If the Purchase Price as finally determined pursuant to Section
1.04(b) is less than the estimated Purchase Price paid at Closing, Sellers shall
pay to Purchaser, in immediately available funds within five business days after
the date on which the Purchase Price is finally determined pursuant to Section
1.04(b), the difference between the final Purchase Price and the estimated
Purchase Price paid at Closing.
(3) If any dispute arises over the amount to be refunded or paid, such
refund or payment shall nevertheless be made to the extent any amount is not in
dispute.
1.06 DEPOSIT. On the date of this Agreement, Purchaser shall deposit into
escrow with NationsBank (the "Escrow Agent") the sum of $3,900,000 pursuant to
the Escrow Agreement (the "Escrow Agreement") of even date herewith among
Sellers, Purchaser and the Escrow Agent. At Closing, such deposit, as increased
or decreased based upon investment as provided in the Escrow Agreement (the
"Deposit") shall be paid to (or at the direction of) Sellers as a partial
payment of the Purchase Price. If this Agreement is terminated without a
Closing, the Deposit shall be disbursed as set forth in Section 9.03. Purchaser
and Sellers shall instruct the Escrow Agent to disburse the Deposit to the party
entitled thereto and shall not, by any act or omission, delay or prevent any
such disbursement.
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1.07 CAPITAL IMPROVEMENTS. Purchaser acknowledges that Sellers are in the
process of making certain 1998 capital improvements to the Station's facilities
and equipment for a total cost of $930,000, as set forth on Attachment A hereto
(the "Capital Fund"). Sellers shall endeavor to complete such capital
improvements prior to Closing, to the extent feasible. If the Capital Fund has
not been exhausted in accordance with Attachment A prior to Closing, the
Purchase Price shall be adjusted in favor of Purchaser in an amount equal to the
Capital Fund minus the amount expended by Sellers in accordance with Attachment
A, and to the extent of such adjustment Purchaser shall assume Sellers'
obligations to complete such capital improvements in accordance with Attachment
A. If Purchaser makes any change to such specifications, Purchaser shall bear
any additional costs associated with such change.
ARTICLE II
ASSUMPTION OF LIABILITIES AND CONTRACTUAL OBLIGATIONS
2.01 GENERAL.
(a) Purchaser is not assuming and shall not be liable for or with respect to
any Retained Liability.
(b) Notwithstanding anything in this Agreement to the contrary, in no event
shall any Liability due to any Affiliate of the Sellers be assumed by Purchaser.
(c) Nothing contained in this Section 2.01 or in any instrument of assumption
executed by Purchaser at the Closing shall be deemed to release or relieve the
Sellers from their respective representations, warranties, covenants and
agreements contained in this Agreement or any of the Other Agreements. Further,
Sellers shall retain all of the Retained Liabilities and no disclosures made or
exceptions noted with respect to the representations, warranties, covenants and
agreements of the Sellers contained in this Agreement or any of the Other
Agreements shall require Purchaser to assume any of the Retained Liabilities.
2.02 ASSUMPTION OF THE LIABILITIES OF THE BUSINESS.
(a) Purchaser shall assume the Assumed Liabilities on the terms provided in
subsection 2.02(b).
(b) Purchaser expressly agrees, effective on the Closing Date, to assume the
Assumed Liabilities and thereafter to pay, perform and discharge in full, in
accordance with their terms where applicable, the Assumed Liabilities. Nothing
contained in this Agreement shall require Purchaser to pay, perform or discharge
any of the Assumed Liabilities so long as Purchaser shall in good faith contest
or cause to be contested the amount or validity thereof or shall in good faith
assert any defense or offset thereto, and the Sellers shall provide reasonable
assistance to Purchaser in so contesting and defending such claims.
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2.03 NO INTENTION TO BENEFIT THIRD PARTIES. This Agreement is not intended
to, and shall not, benefit any person or entity other than the Sellers and
Purchaser or create any Third Party beneficiary right in any person.
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY THE SELLERS
Each of the Sellers, jointly and severally, hereby represent and warrant to
Purchaser as follows:
3.01 CAPACITY AND VALIDITY. Each of the Sellers has the full corporate power,
capacity and authority necessary to enter into and perform its obligations under
this Agreement and the Other Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Other Agreements have been approved by all
necessary action of the Board of Directors and stockholders of the Sellers. This
Agreement has been, and the Other Agreements to which each of the Sellers is a
party will be when executed and delivered, duly executed and delivered by duly
authorized officers of each of the Sellers, and this Agreement and each of the
Other Agreements constitutes, or will constitute when executed and delivered,
the legal, valid and binding obligation of each of the Sellers, enforceable
against each of the Sellers, as the case may be, in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or general equitable principles
(regardless of whether considered in a proceeding in equity or at law).
3.02 ORGANIZATION. Each of the Sellers is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate power and authority to own, lease
and operate its Assets and to carry on its Business as presently conducted.
3.03 NO CONFLICT. Except as disclosed on Schedule 3.03 and assuming
compliance with the Hart-Scott Act and the receipt of all necessary FCC
approvals, neither the execution, delivery and performance of this Agreement or
the Other Agreements to which it is a party by each of the Sellers nor the
consummation by each of the Sellers of the transactions contemplated hereby or
thereby (i) conflicts with or results in a violation, contravention or breach of
any of the terms, conditions or provisions of the Certificate of Incorporation,
as amended, or the By-Laws, as amended, of each of the Sellers, (ii) results in
a Default under, or requires the consent or approval of any party to, any
Assumed Contract or License of the Sellers or requires the consent of any Third
Party or Governmental Authority, (iii) results in the violation of any Law or
Order applicable to either of the Sellers, or (iv) results in the creation or
imposition of any Lien on the Assets, except in each case (other than clause
(ii)) as would not have a Material Adverse Effect.
3.04 RESERVED.
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3.05 FINANCIAL STATEMENTS. The Financial Statements, correct and complete
copies of which are included in Schedule 3.05, (i) are in accordance with the
books and records of the Company, which are correct and complete in all Material
respects and which have been maintained in accordance with good business
practices; (ii) present fairly in all Material respects the financial position
of the Company as of the dates indicated and the results of each of its
operations for the periods then ended; and (iii) have been included in the
consolidated financial statements of Gray Communications Systems, Inc., which
are prepared in accordance with GAAP, as of the dates indicated and for the
periods then ended. The Financial Statements contain all adjustments, which are
solely of a normal recurring nature, necessary to present fairly in all Material
respects the financial condition and the results of operations, and changes in
financial position of the Company as of the dates and for the periods indicated.
3.06 RESERVED.
3.07 ABSENCE OF CHANGES. Except as disclosed on Schedule 3.07, since the
Balance Sheet Date, (i) the Business has been carried on only in the ordinary
course consistent with past practice, (ii) there has been no Material Adverse
Change, and there has been no event or circumstance that reasonably is
anticipated to result in a Material Adverse Change, with respect to the Assets
or the Business, (iii) Sellers have not made any material increase in
compensation payable or benefits provided to any of Sellers' Station employees
other than in the ordinary course of business and not exceeding 5% per year, and
(iv) Sellers have not given any promise, assurance or guaranty of the payment,
discharge or fulfillment of any obligation of any other person or entity with
respect to the Business.
3.08 TAX MATTERS. Except as set forth on Schedule 3.08, with respect to the
Business:
(a) Each of the Sellers has timely filed with the appropriate Governmental
Authorities all required Tax Returns in all jurisdictions in which Tax Returns
are required to be filed. Neither of the Sellers is presently the beneficiary of
any extension of time within which to file any Tax Return. All Taxes (whether or
not shown on any Tax Return) for all periods ending on or before the Balance
Sheet Date, have been fully paid or appropriate deposits or adequate accruals
have been made therefor on the Financial Statements.
(b) Since the Balance Sheet Date, neither of the Sellers has incurred any
Liability for Taxes other than in the ordinary course of business and no such
Tax Liability so incurred is Material. Neither of the Sellers is currently
delinquent in the payment of any Tax, assessment, deposit or other charge by any
Governmental Authority for which any Liability is pending or has been assessed,
asserted or threatened (in writing, or otherwise to the Knowledge of either of
the Sellers) against the Sellers or any of their respective Assets in connection
with any Tax and there is no basis for any such Liability. Neither of the
Sellers has received any notice of assessment or proposed assessment in
connection with any Tax Returns and there are no pending Tax examinations of or
Tax claims asserted (in writing, or otherwise to the Knowledge of either of the
Sellers) against either of the Sellers or any of their respective
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Assets, including without limitation, any claim by any Governmental Authority in
any jurisdiction where either of the Sellers did not file Tax Returns that
either of the Sellers, are or may be subject to or liable for Taxes imposed by
that Governmental Authority or jurisdiction. There are no Liens for any Taxes
(other than any Lien for current real property or ad valorem Taxes not yet due
and payable) on any of the Sellers' Assets.
(c) Each of the Sellers has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other Third Party.
3.09 TITLE TO ASSETS; ENCUMBRANCES; CONDITION.
(a) Except as set forth on Schedule 3.09, each of the Sellers has good, valid
and marketable (and, in the case of the Owned Real Property, insurable) title to
all of its respective Assets free and clear of any and all Liens, except
Permitted Liens.
(b) Except as set forth in Schedule 3.09, each of the Material Improvements
and each item of Material Personal Property is in good condition and repair,
reasonable wear and tear excepted, and is usable in the ordinary course of
business consistent with past practices. Each Material Improvement and each item
of Material Personal Property is adequate for its present and intended uses and
operation and neither of the Sellers has any intention to use or operate any
Material Improvement or any item of Material Personal Property other than as
presently used or operated. Each of the Sellers' respective Assets (including
the each of the Sellers' respective interest in all leased assets) include all
Material Assets required to operate the Business as presently conducted.
3.10 REAL PROPERTY.
(a) Schedule 3.10 contains a correct and complete list of all of the Real
Property, including, without limitation, a legal description for all of the
Owned Real Property. To the Knowledge of either of the Sellers, no facts or
circumstances exist which do, or potentially may, adversely affect any of the
access to and from the Real Property, from and to the existing public highways
and roads, and, to the Knowledge of either of the Sellers, there is no pending
or threatened denial, revocation, modification or restriction of such access.
(b) The Real Property is served by utilities as required for its current
operation.
(c) No zoning or similar land use restrictions are presently in effect or
proposed by any Governmental Authority that would impair in any Material respect
the operation of the Business as presently conducted by the Sellers or which
would prevent the use of any of the Real Property as currently operated. All of
the Real Property is in compliance in all Material aspects with all applicable
zoning laws and recorded covenants. Neither of the Sellers has received any
notice from any Governmental Authority or other Third Party with regard to, and
Sellers have no Knowledge of, encroachments on or off the Real Property,
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violations of building codes, zoning, subdivision or other similar Laws or other
material defects in the Improvements or in the good, valid, marketable and
insurable title of said Real Property.
(d) As of the Closing Date, there will be no Persons in possession of the
Real Property or any part thereof other than the Sellers or their lessees
pursuant to Contracts that are Permitted Liens.
(e) No condemnation proceedings are pending or to the Knowledge of either of
the Sellers, threatened with regard to the Owned Real Property.
(f) With respect to each parcel of Leased Real Property, (i) the lessor was
the owner of the premises leased to the lessee at the time of the execution and
delivery of the lease, (ii) the Company or the Subsidiary is the owner and
holder of the interest of the lessee in the lease, (iii) all buildings and
towers constructed by the lessee of each lease are located within the boundaries
of the leased premises, (iv) each lease contains an adequate description of the
leased premises, (v) each lease is enforceable by the lessee, (vi) all payments
of rent are current under each lease and no default exists under any lease and
(vii) except as set forth on Schedule 3.19, there are no disputes with or
adverse claims asserted by any lessor of a lease. Each of the Assumed Contracts
relating to such Leased Real Property is fully and accurately identified, and
the expiration date and current rent are described, in Schedule 3.10 and each
such Assumed Contract is in full force and effect. Except as disclosed on
Schedule 3.09, and except for Permitted Liens, neither the Leased Real Property
nor any of the Sellers' right, title or interest therein is affected by any
Lien, prior interests or superior interests of any nature whatsoever that will,
or could reasonably be expected to, terminate such leasehold or otherwise
Materially adversely affect such Leased Real Property or any of the Sellers'
right, title and interest therein.
3.11 PERSONAL PROPERTY.
(a) Schedule 3.11 contains a correct and complete list of each item of
Personal Property, other than Inventory (excluding office furniture, equipment,
supplies and miscellaneous items of personal property with an individual fair
market value of less than $2,500).
(b) Schedule 3.11 contains a correct and complete description of all Material
Leased Personal Property. Each of the Assumed Contracts relating to such Leased
Personal Property is identified on Schedule 3.11 and each such Assumed Contract
is in full force and effect.
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3.12 INTELLECTUAL PROPERTY.
(a) Schedule 3.12 contains a correct and complete list of all of the Sellers'
respective Material Intellectual Property, including all Material license
agreements relating thereto. Neither of the Sellers (or any goods or services
sold by either of them) has violated, infringed upon or unlawfully or wrongfully
used the Intellectual Property of others and none of the Sellers' Intellectual
Property or any related rights or any customer lists, supplier lists or mailing
lists, as used in the Business or in the other businesses now or heretofore
conducted by either of the Sellers, Materially infringes upon or otherwise
Materially violates the rights of others, nor has any Person asserted a claim of
such infringement or misuse, which infringement or violation is likely to result
in a cost to the Sellers in excess of $20,000. Each of the Sellers has taken all
reasonable measures to enforce, maintain and protect its interests and, to the
extent applicable, the rights of Third Parties, in and to the Sellers' Material
Intellectual Property. Each of the Sellers have all right, title and interest in
the Intellectual Property identified on Schedule 3.12. The consummation of the
transactions contemplated by this Agreement will not alter or impair any
Material Intellectual Property rights of either of the Sellers. Except as set
forth in Schedule 3.12, neither of the Sellers is obligated nor has either of
the Sellers incurred any Liability to make any Material payments for royalties,
fees or otherwise to any Person in connection with any of the Sellers'
Intellectual Property. All patents, trademarks, trade names, service marks,
assumed names, and copyrights and all registrations thereof included in or
related to the Sellers' Intellectual Property are valid, subsisting and in full
force and effect. Each of the Sellers is unaware of any Material infringement of
the Sellers' Material Intellectual Property, and there are no pending
infringement actions against another for infringement of the Sellers'
Intellectual Property or theft of the Sellers' trade secrets.
(b) No present or former officer, director, partner or employee of either of
the Sellers owns or has any proprietary, financial or other interest, direct or
indirect, in any of the Sellers' Material Intellectual Property, except as
described on Schedule 3.12. Except as set forth on Schedule 3.12, no officer,
director, partner or employee of either of the Sellers has entered into any
Contract (i) that requires such officer, director, partner or employee to (A)
assign any interest to inventions or other Material Intellectual Property, or
(B) keep confidential any Material trade secrets, proprietary data, customer
lists or other business information or (ii) that restricts or prohibits such
officer, director, partner or employee from engaging in competitive activities
with or soliciting customers to or from any competitor of the Sellers.
3.13 COMPUTER SOFTWARE AND DATABASES. Schedule 3.13 identifies all Material
Computer Software and Databases owned, licensed, leased, internally developed or
otherwise used in connection with the Business. Each of the Sellers has use of
or the ability to freely acquire, without substantial costs to the Sellers for
such acquisition, all Computer Software and Databases that are necessary to
conduct the Business as presently conducted by the Sellers and all documentation
relating to all such Material Computer Software and Databases. Such Computer
Software and Databases perform in all Material respects in accordance with the
documentation related thereto or used in connection therewith and are free
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of Material defects in programming and operation. Each of the Sellers has
previously made available to Purchaser complete and accurate copies of all
documents relating to the sale, license, lease or other transfer or grant of
Material Computer Software and Databases by the Sellers since January 1, 1996.
3.14 RESERVED.
3.15 INSURANCE. All of the Assets and the operations of each of the Sellers
and the Business of an insurable nature and of a character usually insured by
them are insured by the Sellers in such amounts and against such losses,
casualties or risks as is (i) consistent with Sellers' past practices, and (ii)
required by any Law applicable to the Sellers or the Business. Schedule 3.15
contains a complete and accurate list of all Material insurance policies now in
force and held or owned by the Sellers and such Schedule indicates the name of
the insurer, the type of policy, the policy number and the amounts of coverage
and deductible in each case.
3.16 RESERVED.
3.17 COMPLIANCE WITH LAW.
(a) Each of the Sellers has complied with and is in compliance with all Laws,
Licenses and Orders applicable to, required of or binding on the Business, or on
the Sellers or their respective Assets with respect to the Business, including
without limitation, the FCC Licenses, the Communications Act, and PUC Laws, and
neither of the Sellers has Knowledge of any basis for any claim of current or
past non-compliance with any such Law, License or Order, in each case where such
non-compliance would be Material to the Business or the Assets, taken as a
whole, including, without limitation, the value of the Station, taken as a
whole. No notices from any Governmental Authority with respect to any failure or
alleged failure of either of the Sellers, their respective Assets or the
Business to comply with any such Law, License or Order have been received by
either of the Sellers, nor, to the Knowledge of either of the Sellers, are any
such notices proposed or threatened. Schedule 3.17 contains a complete and
correct list of all Material Licenses and Orders applicable to, required of or
binding on the Sellers, their respective Assets or the Business, true and
complete copies of which (other than the FCC Licenses) previously have been made
available to the Purchaser.
(b) Sellers, respectively, hold the FCC Licenses and all other Material
Licenses necessary for or used in the operations of the Business, and the FCC
Licenses and all such other Material Licenses are in full force and effect.
Schedule 3.17 contains a true and complete list of the FCC Licenses currently in
effect and all such other Material Licenses (showing, in each case, the
expiration date). Except as set forth on Schedule 3.17, no application, action
or proceeding is pending for the renewal or modification of any of the FCC
Licenses or any of such other Material Licenses, and no application, action or
proceeding is pending or, to the either of the Sellers' Knowledge, threatened
that may result in the denial of the application for renewal, the revocation,
modification, nonrenewal or suspension of the FCC Licenses or any of such other
Material Licenses, the issuance of a cease-and-desist order,
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or the imposition of any administrative or judicial sanction with respect to the
Business that may Materially and adversely affect the rights of Purchaser or the
Sellers under any such FCC Licenses or other Material Licenses. All Material
returns, reports and statements required to be filed by the Sellers with the FCC
relating to the Business have been filed and complied with and are complete and
correct in all Material respects as filed. The FCC Licenses are not subject to
any FCC conditions that would limit the full operation of Station as now
operated, other than those set forth on the forms evidencing or orders granting
the FCC Licenses or any renewal thereof and those set forth in the
Communications Act imposed on licensees generally or television broadcasting
licenses specifically.
(c) Except as described in Section 1.07 or in Schedule 3.17, there are no
Material capital expenditures that the Sellers anticipate will be required to be
made in connection with the Sellers' respective Assets or the Business as now
conducted in order to comply with any Law applicable to either of the Sellers,
their respective Assets or the Business as now conducted.
3.18 ENVIRONMENTAL. Except as set forth in Schedule 3.18, with respect to the
Business:
(a) There is no Environmental Litigation (or any Litigation against any
Person whose Liability, or any portion thereof, for Environmental Matters or
under any Environmental Laws that either of the Sellers has or, to the Knowledge
of either of the Sellers, may have retained or assumed contractually or by
operation of Law) pending or, to the Knowledge of either of the Sellers,
threatened with respect to (i) the ownership, use, condition or operation of the
Business, the Real Property or any other Asset of either of the Sellers or any
Asset formerly held for use or sale by the Sellers or any of their respective
predecessors or any of their respective current or former subsidiaries, or (ii)
any violation or alleged violation of or Liability or alleged Liability under
any Environmental Law or any Order related to Environmental Matters. To the
Knowledge of either of the Sellers, there have not been any, and there are no,
existing violations of (i) any Environmental Law, or (ii) any Order related to
Environmental Matters, with respect to the ownership, use, condition or
operation of the Business, the Real Property or any other Asset of the Sellers
or any Asset formerly held for use or sale by the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries. To the Knowledge of either of the Sellers, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, any Environmental Matter, that could reasonably
be expected to form the basis of (i) any Environmental Litigation against the
Sellers, or (ii) any Litigation against any Person whose Liability (or any
portion thereof) for Environmental Matters or under any Environmental Laws the
Sellers have or may have retained or assumed contractually or by operation of
Law. To the Knowledge of either of the Sellers, neither of the Sellers or any of
their respective predecessors or any of their respective current or former
subsidiaries nor anyone Known to either of the Sellers has used any Assets of
the Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries or any part thereof for the handling, treatment,
storage, or disposal of any Hazardous Substances except in Material compliance
with applicable Environmental Laws. The disclosure of facts set forth in
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Schedule 3.18 shall not relieve either of the Sellers of any of their respective
obligations under this Agreement.
(b) To the Knowledge of either of the Sellers, no release, discharge,
spillage or disposal of any Hazardous Substances has occurred or is occurring at
any assets owned, leased, operated or managed by the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries or any part thereof while or before such Assets were owned, leased,
operated or managed by the Sellers.
(c) To the Knowledge of either of the Sellers, no soil or water in, under or
adjacent to any Assets owned, leased, operated or managed, directly or
indirectly, by the Sellers or Assets formerly held for use or sale by the
Sellers or, in either case, any of their respective predecessors or any of their
respective current or former subsidiaries has been contaminated by any Hazardous
Substance while or before such Assets were owned, leased, operated or managed by
the Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries.
(d) To the Knowledge of either of the Sellers, all waste containing any
Hazardous Substances generated, used, handled, stored, treated or disposed of
(directly or indirectly) by the Sellers or any of their respective predecessors
or any of their respective current or former subsidiaries has been released or
disposed of in compliance with all applicable reporting requirements under any
Environmental Laws and there is no Environmental Litigation with respect to any
such release or disposal.
(e) To the Knowledge of either of the Sellers, all underground tanks and
other underground storage facilities presently or previously located at any Real
Property owned, leased, operated or managed by the Sellers or any of their
respective predecessors or any of their respective current or former
subsidiaries or any such tanks or facilities located at any Real Property while
such Real Property was owned, leased, operated, or managed by the Sellers or any
of their respective predecessors or any of their respective current or former
subsidiaries are listed together with the capacity and contents (former and
current) of each such tank or facility in Schedule 3.18. To the Knowledge of
either of the Sellers, none of such underground tanks or facilities is leaking
or has ever leaked, and neither of the Sellers or any of their respective
current or former subsidiaries holds any responsibility or Liability for any
underground tanks or underground facilities at any other location.
(f) To the Knowledge of either of the Sellers, all hazardous waste has been
removed from all Real Property of the Sellers and each of their respective
predecessors and each of their respective current and former subsidiaries in
Material compliance with applicable Environmental Laws.
(g) To the Knowledge of either of the Sellers, the Sellers and each of their
respective predecessors or any of their respective current or former
subsidiaries have complied with all applicable reporting requirements under all
Environmental Laws concerning the disposal or release of Hazardous Substances
and neither of the Sellers or any of their respective
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predecessors or any of their respective current or former subsidiaries has made
any such reports concerning any Real Property of the Sellers or concerning the
operations or activities of the Sellers or any of their respective predecessors
or any of their respective current or former subsidiaries.
(h) To the Knowledge of either of the Sellers, no building or other
Improvement or any Real Property owned, leased, operated or managed by the
Sellers contains any asbestos-containing materials.
(i) To the Knowledge of either of the Sellers, without limiting the
generality of any of the foregoing, (i) all on-site and off-site locations where
the Sellers or any of their respective predecessors or any of their respective
current or former subsidiaries has disposed or arranged for the disposal of
Hazardous Substances are identified in Schedule 3.18, (ii) none of the on-site
or off-site locations identified in Schedule 3.18 is listed on any federal,
state or local government lists of abandoned disposal sites or sites where
Hazardous Substances have or may have occurred, and (iii) no polychlorinated
biphenyls ("PCB's") are used or stored on or in any real property owned, leased,
operated or managed by the Sellers or any of their respective predecessors or
any of their respective current or former subsidiaries, except in Material
compliance with applicable Environmental Laws.
(j) Sellers have made available to Purchaser copies of all environmental site
assessments and other studies relating to the investigation of the possibility
of the presence or existence of any Environmental Matter with respect to the
Assets that are in Sellers' possession.
3.19 LITIGATION AND CLAIMS. Except as disclosed on Schedule 3.19, there is no
Litigation against Sellers or the Station that prevents Sellers from performing
their obligations hereunder or Materially adversely effects the Assets and that
is pending or, to the Knowledge of either of the Sellers, threatened, and
neither of the Sellers has any Knowledge of any basis for any such Litigation or
any facts or the occurrence of any event which might give rise to any
Litigation.
3.20 BENEFIT PLANS.
(a) Schedule 3.20 lists every Employee Benefit Plan of the Sellers. On or
after September 26, 1980, neither of the Sellers or any entity aggregated with
the Sellers under Code Section 414 (for purposes of this Section and Article X,
an "ERISA Affiliate") has had an "obligation to contribute" (as defined in ERISA
Section 4212) to a "multiemployer plan" (as defined in ERISA Sections 4001(a)(3)
and (3)(37)(A)). No Employee Benefit Plan is or has been a multiemployer plan
within the meaning of Section 3(37) of ERISA.
(b) The Employee Benefit Plans listed on Schedule 3.20 have been or will be
made available to Purchaser for review, including correct and complete copies
of: (i) all trust agreements or other funding arrangements for such Employee
Benefit Plans (including insurance contracts), and all amendments thereto, (ii)
with respect to any such Employee
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Benefit Plans or amendments, all determination letters, rulings, opinion
letters, information letters, or advisory opinions issued by the United States
Internal Revenue Service, the United States Department of Labor, or the Pension
Benefit Guaranty Corporation after December 31, 1974, (iii) annual reports or
returns, audited or unaudited Financial Statements, actuarial valuations and
reports, and summary annual reports prepared for any Employee Benefit Plan with
respect to the most recent three plan years, and (iv) the most recent summary
plan descriptions and any material modifications thereto.
(c) Except as disclosed in Schedule 3.20, all the Employee Benefit Plans and
the related trusts subject to ERISA comply in all Material respects with and
have been administered in compliance in all Materials respects with, (i) the
applicable provisions of ERISA, (ii) all applicable provisions of the Code
relating to qualification and Tax exemption under Code Sections 401(a) and
501(a) or otherwise applicable to secure intended Tax consequences, (iii) all
applicable state or federal securities Laws, and (iv) all other applicable Laws
and collective bargaining agreements, and neither of the Sellers has received
any notice from any Governmental Authority questioning or challenging such
compliance. All available determination letters and required registrations under
federal and state securities Laws ("Permits") for the Employee Benefit Plans
have been obtained, including, but not limited to, timely determination letters
on the qualification of the ERISA Plans and Tax exemption of related trusts, as
applicable under the Code, and all such Permits continue in full force and
effect. No event has occurred which will or could reasonably be expected to give
rise to disqualification of any such plan or loss of intended Tax consequences
under the Code or to any Tax under Section 511 of the Code.
(d) Except as disclosed in Schedule 3.20, no oral or written representation
or communication with respect to any aspect of the Employee Benefit Plans has
been made to employees of the Sellers prior to the date hereof that is not in
accordance with the written or otherwise preexisting terms and provisions of
such plans. Neither of the Sellers or any administrator or fiduciary of any
Employee Benefit Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner that could subject the
Sellers or Purchaser to any direct or indirect Material Liability (by indemnity
or otherwise) for breach of any fiduciary, co-fiduciary or other duty under
ERISA. There are no unresolved claims or disputes under the terms of, or in
connection with, the Employee Benefit Plans other than claims for benefits which
are payable in the ordinary course and no Litigation has been commenced with
respect to any Employee Benefit Plan.
(e) Except as disclosed in Schedule 3.20, all Employee Benefit Plan documents
and annual reports or returns, audited or unaudited financial statements,
actuarial valuations, summary annual reports, and summary plan descriptions
issued with respect to the Employee Benefit Plans are correct and complete in
all Material respects, have been timely filed with the IRS and the United States
Department of Labor, have been timely distributed to participants in the
Employee Benefit Plans, and there have been no changes in the information set
forth therein.
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(f) No "party in interest" (as defined in Section 3(14) of ERISA) or
"disqualified person" (as defined in Code Section 4975) of any Employee Benefit
Plan has engaged in any Material nonexempt "prohibited transaction" (described
in Code Section 4975 or ERISA Section 406). Except as disclosed in Schedule
3.20, there has been no (i) "reportable event" (as defined in Section 4043 of
ERISA), or event described in Sections 4041, 4042, 4062 (including ERISA Section
4062(e)), 4064, 4069 or 4063 of ERISA, or (ii) termination or partial
termination, withdrawal or partial withdrawal with respect to any of the ERISA
Plans which the Sellers maintain or contribute to or have maintained or
contributed to. Except as disclosed in Schedule 3.20, neither of the Sellers has
incurred any liability under Title IV of ERISA, including any Liability that
could arise under Title IV of ERISA as a result of the Sellers' membership in a
"controlled group" as defined in ERISA ss.ss. 4001(a)(14) and 4001(b)(1).
(g) Except as disclosed in Schedule 3.20, for any ERISA Plan that is an
employee pension benefit plan as defined in ERISA ss. 3(2) ("ERISA Pension
Plan"), the fair market value of such Plan's assets equals or exceeds the
present value of all benefits (whether vested or not) accrued to date by all
present or former participants in such ERISA Pension Plan. For this purpose the
assumptions prescribed by the Pension Benefit Guaranty Corporation for valuing
plan assets or liabilities upon plan termination shall be applied and the term
"benefits" shall include the value of all benefits, rights and features
protected under Code ss. 411(d)(6) or its successors and any ancillary benefits
(including disability, shutdown, early retirement and welfare benefits) provided
under any such employee pension benefit plan and all "benefit liabilities" as
defined in ERISA Section 4001(a)(16). Since the date of the most recent
actuarial valuation, there has been (i) no Material change in the financial
position of an ERISA Pension Plan, (ii) no change in the actuarial assumptions
with respect to any ERISA Pension Plan, and (iii) no increase in benefits under
any ERISA Pension Plan as a result of ERISA Pension Plan amendments or changes
in any applicable regulation which is reasonably likely to have, individually or
in the aggregate, a Material effect on the funding status of such ERISA Pension
Plan. All contributions with respect to an Employee Benefit Plan of the Sellers
or of an ERISA Affiliate that is subject to Code Section 412 or ERISA Section
302 have been, or will be, timely made and there is no Lien or expected to be a
Lien under Code Section 412(n) or ERISA Section 302(f) or Tax under Code Section
4971. No ERISA Pension Plan of either of the Sellers or of an ERISA Affiliate
has a "liquidity shortfall" as defined in Code Section 412(m)(5). No event
described in Code Section 401(a)(29) has occurred or can reasonably be expected
to occur with respect to either of the Sellers ERISA Affiliates. All premiums
required to be paid under ERISA Section 4006 have been paid by the Sellers and
by any Person aggregated with the Sellers under ERISA Sections 4001(a)(14) and
4001(b)(1).
(h) Neither of the Sellers has, or maintains, an Employee Benefit Plan
providing welfare benefits (as defined in ERISA Section 3(1)) to employees after
retirement or other separation of service except to the extent required under
Part 6 of Title I of ERISA or Code Section 4980B or their successors. No
Material Tax under Code Sections 4980B or 5000 has been incurred with respect to
any Employee Benefit Plan and no circumstances exist which could reasonably be
expected to give rise to such Taxes.
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3.21 ASSUMED CONTRACTS. Schedules 3.10 and 3.21 include a complete list as
of the date of this Agreement of all Assumed Contracts except (i) contracts with
advertisers for production or the sale of advertising time on the Station for
cash with a term of not more than ninety days or that may be canceled by Sellers
on not more than ninety days' notice, (ii) oral employment contracts terminable
at will, (iii) miscellaneous service contracts terminable on not more than
thirty (30) days' notice, and (iv) other Contracts entered into in the ordinary
course of business, not involving liabilities exceeding $15,000 per Contract per
year and $80,000 in the aggregate for all such other Contracts per year and
$300,000 in the aggregate for all such other Contracts. Sellers have delivered
or made available to Purchaser true and complete copies of all written Assumed
Contracts and accurate descriptions of all oral Assumed Contracts listed on
Schedules 3.10 and 3.21. Sellers are not in Default under any Assumed Contract
in any Material respect and to the Knowledge of Sellers, no other party to any
such Assumed Contract is in Default thereunder in any Material respect. To the
Knowledge of Sellers, the Assumed Contracts are in full force and effect and are
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other Laws affecting creditors' rights generally, or general
equitable principles (regardless of whether considered in a proceeding in equity
or at law) or by an implied covenant of good faith and fair dealing. Subject to
obtaining any consents required by the terms of the Assumed Contracts, the
continuation, validity and effectiveness of the Assumed Contracts will not be
affected in any Material adverse respect by the consummation of the transactions
contemplated by this Agreement.
3.22 RESERVED.
3.23 LABOR MATTERS. Sellers have delivered to Purchaser a correct and
complete list of Sellers' Station employees and position and compensation as of
the date of this Agreement. Except for employees under Assumed Contracts and
except as disclosed on Schedule 3.23, the employment of all employees of the
Sellers is terminable at will by the Sellers, without any penalty or severance
obligation incurred by the Sellers. Except as set forth on Schedule 3.23 and
other than in the ordinary course of business consistent with past practices,
neither of the Sellers will owe any amounts to any of its employees as of the
Closing Date, including, without limitation, any amounts incurred for wages,
bonuses, vacation pay, sick leave or any severance obligations other than
amounts owed with respect to the then current pay period. Except as and to the
extent set forth in Schedule 3.23, (i) neither of the Sellers is a party to any
union agreement or collective bargaining agreement or work rules or practices
agreed to with any labor organization or employee association applicable to any
employees of the Sellers and, to the Knowledge of either of the Sellers, no
attempt to organize any of the employees of the Business has been made, proposed
or threatened in the past three years, (ii) neither of the Sellers is, or within
the past three years has been, subject to any Equal Employment Opportunity
Commission charges or other claims of employment discrimination made against it,
(iii) no Wage and Hour Department investigations have been made in the past 3
years of the Sellers, (iv) no labor strike, dispute, slowdown, stoppage or
lockout is pending or, to the Knowledge of either of the Sellers, threatened
against or affecting the Sellers, their respective Assets or the Business and
during the past five (5) years there has not been any such action, (v) no unfair
labor practice charge or complaint against either of the Sellers is pending
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or, to the Knowledge of either of the Sellers, threatened before the National
Labor Relations Board or any similar Governmental Authority, and (vi) neither of
the Sellers has received any formal notice (other than as set forth in Schedule
3.23) that any of the employees listed on Schedule 3.23 will terminate or
contemplates terminating his or her employment currently or at any time within
sixty (60) days after the Closing Date or will otherwise not be available to the
Sellers. Since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), neither of the Sellers has effectuated (a) a
"plant closing" (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of the Sellers; or (b) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Sellers; nor has either of
the Sellers been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar state or
local Law. Except as set forth in Schedule 3.23, neither of the Sellers'
employees has suffered an "employment loss" (as defined in the WARN Act) since
six (6) months prior to the date hereof.
3.24 BROKERS AND FINDERS. Except as set forth on Schedule 3.24, no finder or
any agent, broker or other Person acting pursuant to authority of either of the
Sellers is entitled to any commission or finder's fee in connection with the
transactions contemplated by this Agreement.
3.25 INTERESTED TRANSACTIONS. Except as set forth in Schedule 3.25, neither
of the Sellers is a party to any Assumed Contract with any Affiliate of the
Sellers, any Related Party of any Affiliate of the Sellers (other than as a
stockholder or employee of either of the Sellers), or any Person in which any of
the foregoing (individually or in the aggregate) beneficially or legally owns,
directly or indirectly, five percent (5%) or more of the equity or voting
interests. Each of such Assumed Contracts and other transactions described in
the preceding sentence was negotiated on an arm's length basis, contains pricing
terms that reflected fair market value at the time entered into and otherwise
contains terms and conditions comparable to those customarily contained in
similar transactions between unrelated parties. Except as described in Schedule
3.25, none of the Persons described in the first sentence of this Section 3.25
owns, or during the last three (3) years has owned, directly or indirectly,
beneficially or legally, (individually or in the aggregate) five percent (5%) or
more of the equity or voting interests of any Person that competes with either
of the Sellers or the Business.
3.26 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
either of the Sellers, nor any statement, certificate or instrument furnished or
to be furnished to Purchaser pursuant to this Agreement, the Other Agreements or
any other document, agreement or instrument referred to herein or therein,
including, without limitation, the Financial Statements, contains or will
contain any untrue statement of Material fact or omits or will omit to state a
Material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which they were made.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Sellers that:
4.01 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization, with the corporate power and authority to perform its obligations
under this Agreement and carry on the Business and to own, lease and operate the
Assets.
4.02 CAPACITY AND VALIDITY. Purchaser has the full corporate power and
authority necessary to enter into and perform its obligations under this
Agreement and the Other Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Other Agreements will have been approved
by all necessary action of the Board of Directors of Purchaser on or before
Closing. This Agreement has been, and the Other Agreements will be when executed
and delivered, duly executed and delivered by duly authorized officers of
Purchaser, and the Agreement and each of the Other Agreements constitutes, or
will constitute when executed and delivered, the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or general equitable principles
(regardless of whether considered in a proceeding in equity or at law).
4.03 NO CONFLICT. Assuming compliance with the Hart-Scott Act and receipt of
all necessary FCC approvals, neither the execution, delivery and performance of
this Agreement and the Other Agreements to which it is a party by Purchaser nor
the consummation of the transactions contemplated hereby or thereby (i)
conflicts with or results in a violation, contravention or breach of any of the
terms, conditions or provisions of the Articles of Incorporation, as amended, or
By-laws, as amended, of Purchaser, (ii) results in a Default under, or requires
the consent or approval of any party to, and contract or license of Purchaser,
or requires the consent of any Third Party or Governmental Authority, (iii)
results in the violation of any Law or Order applicable to Purchaser, or (iv)
results in the creation or imposition of any Lien, except in each case (other
than clause (ii)) as would not have a Material Adverse Effect.
4.04 BROKERS AND FINDERS. No finder or any agent, broker or other Person
acting pursuant to authority of Purchaser is entitled to any commission or
finder's fee in connection with the transactions contemplated by this Agreement.
4.05 QUALIFICATION OF PURCHASER. Purchaser is fully qualified under the
Communications Act to assume control and operation of the Station and, to the
best of Purchaser's knowledge and belief, there exists no reason for the FCC to
refuse to consent to the assignment of the FCC Licenses to Purchaser.
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4.06 FINANCING. Purchaser has all necessary financial resources or has
secured a binding commitment for all financing necessary for Purchaser to
consummate the transactions contemplated by this Agreement.
4.07 STATEMENTS TRUE AND CORRECT. No representation or warranty made by
Purchaser, nor any statement, certificate or instrument furnished or to be
furnished to the Sellers pursuant to this Agreement, the Other Agreements or any
other document, agreement or instrument referred to herein or therein, contains
or will contain any untrue statement of Material fact or omits or will omit to
state a Material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which they were made.
ARTICLE V
COVENANTS AND ADDITIONAL AGREEMENTS OF THE SELLERS AND PURCHASER
5.01 CONDUCT OF BUSINESS. Prior to the Closing Date, except with the prior
written consent of Purchaser and except as necessary to effect the transactions
contemplated in this Agreement, each of the Sellers shall, with respect to the
Business:
(a) conduct the Business in substantially the same manner as presently
being conducted, except as otherwise contemplated by this Agreement; and,
without Purchaser's prior written consent, which shall not be unreasonably
withheld, (i) not enter into any transaction with respect to the Station or
Contract other than in the ordinary course of business consistent with past
practice, and (ii) not enter into any Contracts (other than Contracts designated
by Sellers as Retained Assets) involving liabilities exceeding $10,000 per
Assumed Contract per year and $50,000 in the aggregate for all such Assumed
Contracts per year;
(b) confer on a regular and frequent basis with Purchaser to report
Material operational matters and to report the general status of ongoing
operations;
(c) notify Purchaser of any unexpected emergency or other change in the
normal course of the Business or the operation of the Assets, and of any
Litigation (or communications indicating that the same may be contemplated),
affecting the Business or any Material Assets, and keep Purchaser fully informed
of such events and permit its representatives prompt access to all materials
prepared in connection therewith in each case where such emergency, change,
Litigation or other event could cause a Material Adverse Effect;
(d) except as set forth in Section 1.07, and except in the ordinary course
of business consistent with past practice, not make any Material capital
expenditure;
(e) not take any action, or omit to take any action, that would cause the
representations and warranties contained in Article III hereof to be incorrect
or incomplete in any Material respect;
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(f) promptly notify Purchaser in writing of any Material Adverse Change
with respect to the Sellers or the Business, or any condition or event which
threatens to result in a Material Adverse Change with respect to the Sellers or
the Business;
(g) notwithstanding the dollar amount threshold contained in the
definition of Material Adverse Change in Article IX, use all reasonable efforts
to promptly remedy any adverse change, condition or event that causes or is
reasonably likely to cause the Station to be or go off the air; and
(h) not make any agreement or commitment which will result in or cause to
occur a Default of any of the items contained in paragraphs (a) through (g)
above.
Notwithstanding any of the foregoing provisions of this Section 5.01, prior to
the Closing, control of the operation of the Station shall remain exclusively
with the Sellers.
5.02 RIGHT OF INSPECTION; ACCESS. In order to allow Purchaser to conduct its
due diligence investigation, including, without limitation, environmental due
diligence, the Sellers shall give to Purchaser and its designees, during normal
working hours, full and free access to all of their respective Assets, Assumed
Contracts, reports and other records and shall furnish to Purchaser and its
designees all additional financial, legal and other information with respect to
the Assets and the Business that Purchaser may reasonably request. Each of the
Sellers shall also allow and arrange for Purchaser and its designees free and
full access and opportunity, during normal business hours, to consult and meet
with the officers, directors, employees, attorneys, accountants and other agents
of the Sellers. Each of the Sellers shall instruct such individuals to cooperate
fully with Purchaser and its designees. Purchaser and its designees shall have
the right to make copies of any of the records referred to above. Purchaser
agrees to indemnify against and hold the Sellers harmless from any claim for
Liability, damages or injuries arising out of or resulting from the inspection
of the Sellers by Purchaser or its agents, including without limitation any
costs and expenses (including reasonable attorneys' fees actually incurred) in
connection with such Liability, damages or injuries.
5.03 OTHER OFFERS AND EXCLUSIVE DEALING. Unless and until this Agreement is
terminated prior to Closing pursuant to Section 9.01, the Sellers shall deal
exclusively with Purchaser with respect to the sale of the Assets or properties
of the Sellers relating to the Station. In addition, unless and until this
Agreement is terminated prior to Closing pursuant to Section 9.01, neither of
the Sellers, acting in any capacity, shall, and the Sellers shall direct their
officers, directors, limited partners, general partners (as applicable),
financial advisors, accountants and counsel not to, either directly or
indirectly, through the Sellers, any officer, director, employee, agent or
otherwise, (a) solicit, initiate or encourage submission of proposals or offers
from any Person relating to any purchase of the Assets, or (b) approve or
undertake any such transaction. If, notwithstanding the foregoing, the Sellers
or any of their respective shareholders, directors, partners, officers,
employees or agents shall receive any written proposal or inquiry regarding any
such transaction, the Sellers shall promptly
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communicate to Purchaser the terms of any such proposal or offer upon Knowledge
or receipt of such written proposal or offer.
5.04 CONFIDENTIALITY. For a period of one (1) year from and after the date
hereof, each of Purchaser and Sellers agree that it will not, and will use
reasonable efforts to ensure that none of its representatives or Affiliates
will, use in the conduct of its business (except as contemplated by this
Agreement), or disclose to or file with any other Person (other than financing
sources, financial advisors, accountants and attorneys for the foregoing who
will be informed of the confidential nature of such information and who have a
need to know such information), (a) any confidential or non-public information
relating to the other parties to this Agreement or (b) the existence of this
Agreement or the fact of the transactions contemplated hereby, except (i) for a
disclosure that is required by Law or by a Governmental Authority or is
reasonably believed to be so required, including, without limitation,
disclosures to the FCC and the Department of Justice for purposes of obtaining
consents to the transactions contemplated hereby and disclosures to the
Securities and Exchange Commission and related public disclosures (in connection
with public offerings or otherwise); (ii) information that is ascertainable or
obtained from public or published information; (iii) information received from a
Third Party not known to the disclosing party to be under an obligation to keep
such information confidential; (iv) information independently developed by the
disclosing party; or (v) information disclosed to or filed with any Persons
necessary to obtaining the consents or the equity and debt financing relating to
the transactions contemplated by this Agreement. Notwithstanding the foregoing,
(i) neither Purchaser nor its assignees, in the course of any investigation it
shall deem necessary and desirable in connection with the transactions
contemplated by this Agreement, shall be prohibited from discussing the Sellers,
their respective Assets and the Business with others having business dealings
with the Sellers, and (ii) the foregoing provisions of this Section 5.04 shall
not apply to Purchaser or any of its representatives or Affiliates after
consummation of the transactions contemplated hereby at the Closing with respect
to information relating to the Sellers. If the transaction contemplated by this
Agreement is not consummated, each party will return or destroy as much of such
written information as the party furnishing such information may reasonably
request.
5.05 CONSENTS AND APPROVALS. Each of the Sellers and Purchaser shall use
commercially reasonable efforts to obtain the waiver, consent and approval of
all Persons whose waiver, consent or approval is required in order to consummate
the transactions contemplated by this Agreement under any Material Assumed
Contract and the parties shall cooperate in connection therewith. All written
waivers, consents and approvals obtained by any party shall be produced at
Closing in customary form and content.
5.06 SUPPLYING OF FINANCIAL STATEMENTS. The Sellers shall make available to
Purchaser within twenty (20) days following the end of each month true and
complete copies of all unaudited monthly financial statements of each of the
Sellers for each calendar month ending subsequent to the date hereof and prior
to the Closing Date in the format historically utilized internally by the
Sellers.
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5.07 QUALIFICATION AND CORPORATE EXISTENCE. Each of the Sellers shall deliver
to Purchaser certificates of the Secretary of State of the jurisdiction of its
organization, dated within ten (10) days prior to the Closing Date, stating that
each of the Sellers is a corporation in good standing.
5.08 EMPLOYEE MATTERS.
(a) On the Closing Date, Sellers shall terminate the employment of each of
their Station employees, other than Station employees covered by a Contract (as
disclosed in the Schedules to this Agreement).
(b) Sellers' maintain a "defined contribution plan" (as defined in Code
Section 414(i)) that is intended to satisfy the requirements of Code Section
401(k) ("Sellers' 401(k) Plan") and a "defined benefit plan" (as defined in Code
Section 414(j)) that is intended to satisfy the requirements of Code Section
401(a) ("Sellers' Defined Benefit Plan"). For purposes of this Section 5.08, the
term "Hired Employee" means any employee who is employed by either of the
Sellers on the Closing Date and is hired by Purchaser immediately following the
Closing Date.
(c) Hired Employees who are participants in Sellers' 401(k) Plan will be able
to make their normal salary deferral contributions pursuant to the terms of the
401(k) Plan and applicable salary reduction agreements out of compensation paid
to the Hired Employee prior to the Closing Date. Sellers shall contribute the
normal matching contribution (based on the terms of the 401(k) Plan) applicable
to these salary reduction contributions. Sellers agree to fully vest each Hired
Employee who is a participant in Sellers' 401(k) Plan and Sellers' Defined
Benefit Plan in their accrued benefit under such plans.
(d) Certain Hired Employees will have account balances in the Sellers' 401(k)
Plan. At the time of the 401(k) asset transfer contemplated herein, Sellers will
provide Purchaser with a current favorable determination letter from the
Internal Revenue Service issued with respect to Sellers' 401(k) Plan. Sellers
will enclose with the IRS determination letter a written acknowledgment stating
that no event has occurred and no condition exists that could reasonably be
expected to result in the revocation of any such determination letter. The
vested account balances under Sellers' 401(k) Plan for the Hired Employees will
be transferred to a "defined contribution plan" sponsored by Purchaser that is
intended to satisfy the requirements of Code Section 401(k) ("Purchaser's 401(k)
Plan") as soon as administratively practicable based on normal administrative
practices after the Closing Date. The amount transferred will be in cash,
participant loans, or other assets acceptable to Sellers and Purchaser equal to
the aggregate account balances of the Hired Employees determined as of the
valuation date preceding the actual transfer. At the time of the 401(k) asset
transfer contemplated herein, Purchaser will provide Sellers with a current
favorable determination letter from the Internal Revenue Service issued with
respect to Purchaser's 401(k) Plan. Purchaser will enclose with the IRS
determination letter a written acknowledgment stating that no event has occurred
and no condition exists that could reasonably be expected to result in the
revocation of any such determination letter. Purchaser represents Purchaser's
401(k) Plan will
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be amended to address the transfer of accounts from the Sellers' 401(k) Plan
including the preservation of all Section 411(d)(6) optional forms of benefits
available to the Hired Employees under Sellers' 401(k) Plan, distribution rules
under Code Section 401(k), and past service credit and participation in Sellers'
401(k) Plan required by Code Section 414(a). Following the transfer, Purchaser
shall assume all liabilities for the payment of account balances that are
transferred to Purchaser's 401(k) Plan.
(e) Purchaser shall employ the Hired Employees at their current location with
base remuneration not less than current levels (subject to normal salary
increases). Except as provided in the following sentence, as of the Closing
Date, the Hired Employees and their dependents, if any, previously covered under
Sellers' health and dental insurance plan shall be offered coverage under
Purchaser's group health and dental insurance plan without being subject to any
pre-existing condition limitations or exclusions and without any waiting period.
However the preceding sentence shall not apply to any pre-existing condition
limitation, exclusion or waiting period applicable to a Hired Employee or his or
her dependent at the Closing Date under Sellers' group health and dental
insurance plan (i) to the extent such pre-existing condition limitation,
exclusion or waiting period also applies under Purchaser's group health and
dental insurance plan and (ii) only until the earlier of the date such
pre-existing limitation, exclusion or waiting period would otherwise have
expired under Sellers' group health and dental insurance plan or under
Purchaser's group health and dental insurance plan or under applicable law.
Hired Employees shall receive full credit for their prior service with Sellers
for purposes of determining their eligibility and vesting rights under,
Purchaser's tax qualified "pension plans" (as defined in ERISA Section 3(2)) and
for the accrual of vacation benefits beginning on January 1, 1999. Benefit
accrual under Purchaser's tax qualified pension plans shall accrue from the
Employees' first day of service with Purchaser and shall be based solely on
service with Purchaser.
(f) Sellers make no representations or warranties about whether any of the
Hired Employees will remain employed at their current location after the Closing
Date.
5.09 CLOSING CONDITIONS. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to take, or cause to be taken, all
commercially reasonable actions to consummate the transactions contemplated by
this Agreement and to satisfy those conditions precedent to Closing set forth in
Article VII and Article VIII of this Agreement that are to be satisfied by it.
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5.10 WALB TOWER.
(a) Sellers', at their expense and at Purchaser's behest, have engaged
Anderson-Foreman Engineers, Inc. ("Anderson-Foreman") to perform an analysis of
the structure and electric circuitry of the Station's broadcast tower. Sellers
will provide Purchaser with a copy of the results of such analysis upon receipt.
Upon such receipt, Sellers, at their option and expense, may engage their
engineering consultant ("Sellers' Engineer") to perform an analysis of the
structure and electric circuitry of the Station's tower. If Sellers elect to
request such an analysis, Sellers will provide Purchaser with a copy of the
results thereof upon receipt. If the reports of Anderson-Foreman and Sellers'
Engineer disagree, then the matter shall be resolved by an independent,
qualified engineering consultant (the "Independent Engineer") selected jointly
by Sellers and Purchaser. The analysis of the structure and electric circuitry
of the Station's tower as established pursuant to this Section 5.10(a), is
referred to herein as the "Tower Report."
(b) If the Tower Report concludes that the tower is not in compliance in any
material respect with applicable law or engineering standards customary for the
television industry, Sellers will cause to be made any repairs necessary to
achieve such compliance. Receipt of the Tower Report and completion of any such
necessary repairs are not conditions to Closing. If any such necessary repairs
are not completed prior to Closing, then after Closing Sellers shall have no
further obligation to make any such repairs, but Sellers shall reimburse
Purchaser for the reasonable cost of completing such repairs, which cost shall
be determined in advance either by mutual agreement of Sellers and Purchaser or,
if they are unable to agree, by the Independent Engineer (who shall not be
eligible to perform any such repair work).
(c) Sellers shall use commercially reasonable efforts to assign to Purchaser
at Closing any manufacturer's warranty or agreements governing the
manufacturer's duties to repair and improve the Station's broadcast tower.
5.11 CERTAIN TAX MATTERS.
(a) Purchaser, on the one hand, and the Sellers, on the other hand, shall
provide the other parties to this Agreement, at the expense of the requesting
party, with such assistance as may reasonably be requested by any of them in
connection with the preparation of any Tax Return, any audit or other
examination by any Governmental Authority, or any judicial or administrative
proceedings relating to any Liability for Taxes, and for a period of five years
after Closing each will retain and provide the requesting party with any records
or information that may be relevant to any of the foregoing.
(b) The Sellers shall prepare and file on or before the due date therefor
(including any extensions thereof) all Tax Returns and amendments thereto
required to be filed by the Sellers on or before the Closing Date, and each of
the Sellers shall pay, or cause to be paid, all Taxes (including estimated
taxes) due on such Tax Return or which are otherwise required to be paid at any
time prior to or during such period. Such Tax Returns shall be
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prepared in accordance with the most recent Tax practices as to elections and
accounting method.
5.12 EXPENSES.
(a) Except as provided below, regardless of whether the transactions
contemplated by this Agreement are consummated, the Sellers shall be responsible
for all expenses and fees incurred by them in connection with the transactions
contemplated hereby and Purchaser shall be responsible for all expenses and
costs incurred by it in connection with the transactions contemplated hereby. In
no event shall any of the Assets be utilized for or reduced by the payment of
any such fees or expenses.
(b) At the Closing Purchaser and Sellers shall each pay one-half of all
Taxes, if any, relating to the transfer of the Assets to Purchaser. Purchaser
and Sellers shall file all necessary documentation and Tax Returns required to
be filed by them with respect to such Taxes.
(c) Purchaser and Sellers shall each pay one-half of the initial $45,000
filing fee associated with the pre-merger notifications and reports required by
the Hart-Scott Act in connection with Purchaser's acquisition of the Assets
hereunder.
(d) Purchaser shall bear the costs and expenses associated with delivery of
the title documents described in Section 7.11.
(e) The Sellers and Purchaser shall each pay one-half of the processing fees
incident to the filing of the assignment application with the FCC.
5.13 FURTHER ASSURANCES. At any time and from time to time after the Closing,
the Sellers shall, at the request of Purchaser, take any and all actions
necessary to fulfill their respective obligations hereunder, to put Purchaser in
actual possession and control of the Assets and execute and deliver such further
instruments of conveyance, sale, transfer and assignment, and take such other
actions necessary or desirable to effectuate, record or perfect the transfer of
the Assets to Purchaser free and clear of all Liens, to confirm the title of the
Assets to Purchaser, to assist Purchaser in exercising rights relating thereto,
or to otherwise effectuate or consummate any of the transactions contemplated
hereby.
5.14 DELIVERY OF BOOKS AND RECORDS. At Closing, Sellers shall deliver to
Purchaser at the Closing all original documents, books and records pertaining to
the Assets. The Sellers may retain copies of any of the foregoing for their own
use. Without limiting the generality of the foregoing, the Sellers shall deliver
to Purchaser at the Closing all documents and records relating to the
Intellectual Property, including without limitation, Certificates of
Registration for all letters patent, trademarks and service marks listed on
Schedule 3.12 and all such documents relating thereto.
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5.15 FCC MATTERS.
(a) The Sellers and Purchaser have filed with the FCC all necessary
applications for assignment of the FCC Licenses to Purchaser. In connection
therewith, each party shall provide the information requested by the FCC, take
actions reasonably necessary to enable the FCC to grant the applications, and
oppose requests for reconsideration or judicial review of the FCC's consent to
assignment of the FCC Licenses to Purchaser.
(b) The Sellers and Purchaser further covenant that from the date hereof
until the Closing Date, without the prior written consent of the Sellers or
Purchaser, as the case may be, neither the Sellers nor Purchaser shall take any
action that is reasonably likely to adversely affect, or delay or interfere
with, obtaining the FCC's consent to assignment of the FCC Licenses to
Purchaser, or complying with or satisfying the terms thereof, including without
limitation, acquiring any new or increased attributable interest, as defined in
the FCC rules, in any media property, which property could not be held (without
the need for a waiver) in common control by Purchaser following the Closing
Date.
5.16 COOPERATION TO EFFECT STATION EXCHANGE. Sellers intend that their sale
of the Station qualify as a like-kind exchange under Section 1031 of the Code.
In connection therewith, Sellers and Purchaser are concurrently entering into
the Exchange Agreement. Sellers and Purchaser shall comply with the terms of the
Exchange Agreement. If either the Exchange Agreement or the purchase agreement
for the replacement property described therein terminates, or if the
transactions contemplated by the Exchange Agreement or such other purchase
agreement are not consummated simultaneously with Closing, then notwithstanding
anything herein to the contrary, Sellers may transfer the Assets and assign this
Agreement to a third party qualified intermediary and cause title to the Assets
to be transferred by such third party to Purchaser, and Purchaser shall
cooperate with such transfer and assignment. Alternatively, in such event, at
Sellers election, Purchaser will enter into an exchange agreement substantially
the same as the Exchange Agreement with respect to other replacement property
identified by Sellers. The Closing Date may not be extended beyond the time
provided by the definition thereof to effectuate the exchange described in this
Section.
5.17 WFXL TOWER. Sellers, at their expense and at Purchaser's behest, have
engaged Anderson-Foreman to perform a structural analysis of the antenna tower
(the "WFXL Tower") used by television station WFXL-TV. Sellers will provide
Purchaser with a copy of the results of such analysis upon receipt. Sellers make
no representation, warranty or covenant regarding the WFXL Tower, and Purchaser
shall not be entitled to terminate this Agreement based upon the WFXL Tower or
such report.
5.18 HSR FILINGS. Purchaser and Sellers shall, as promptly as practicable
following the execution of this Agreement, and in cooperation with each other,
file with the Department of Justice and the Federal Trade Commission the
premerger notification forms and any other documents required under the HSR Act,
and each shall use its best efforts to obtain earliest termination of all
waiting periods under the HSR Act.
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5.19 FURTHER ACTIONS. Subject to the terms and conditions of this Agreement,
the Sellers and Purchaser each agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated in this Agreement and to satisfy the conditions hereto, in each
case in as prompt a manner as is reasonably possible.
5.20 ACCOUNTS RECEIVABLE.
(a) Upon Closing, Purchaser shall collect the Accounts Receivable on behalf
of the Sellers for a period of 120 days following the Closing Date (the
"Collection Period"). Purchaser shall collect the Accounts Receivable with the
same care and diligence as Purchaser uses with respect to its own accounts
receivable, except that Purchaser shall not be obligated to use any
extraordinary efforts for collection, including without limitation, institution
of litigation and shall not refer any of the Accounts Receivable to a collection
agency or to an attorney for collection, or compromise, settle or adjust the
amount of any Account Receivable, except with the prior written approval of
Sellers. Any payment received by Purchaser from any account debtor of Purchaser
that is also an account debtor of Sellers shall be applied to the oldest account
due from such account debtor, unless there is a good faith dispute with respect
to either account and the account debtor specifically identifies the invoice
being paid, in which case any payment by such account debtor shall be applied
first in accordance with the remittance advice or instructions from the account
debtor, with any excess payment applied to the oldest account due. Purchaser
shall have no right to offset any amounts collected in respect of the Accounts
Receivable against any amounts owed by Sellers to Purchaser. Any Accounts
Receivable remaining uncollected at the end of the Collection Period shall be
transferred to Sellers, a list thereof and all files concerning the collection
or attempt to collect such Accounts Receivable hereunder, and Purchaser shall
thereafter have no further responsibility with respect thereto except to remit
to Sellers any payments in respect of the Accounts Receivable that Purchaser
receives.
(b) Certain capitalized terms used in this Section are defined below.
Purchaser shall pay the A/R Commissions out of the A/R Proceeds when due on
behalf of Sellers. On the first and fifteenth day of each month, Purchaser shall
remit to Sellers all A/R Proceeds not previously remitted to Sellers less all
A/R Commissions paid by Purchaser. On the fifteenth day of each month, Purchaser
shall deliver to Sellers a list of all A/R Proceeds received by Purchaser and
all A/R Commissions paid by Purchaser (and, upon Sellers' request, evidence of
such payments) during the prior month.
(c) For purposes of this Section, (i) the proceeds of collection of the
Accounts Receivable are referred to as the "A/R Proceeds," (ii) those sales
employees of Sellers with respect the Station who are employed by Purchaser
during the Collection Period are referred to as "Transferred Sales Employees,"
and (iii) those commissions, if any, that are payable by Sellers to Transferred
Sales Employees as a result of receipt of the A/R Proceeds, pursuant to Sellers'
sales commission policy in effect at Closing (which Sellers will deliver to
Purchaser at Closing), and that have not been paid by Sellers, are referred to
as the "A/R Commissions."
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5.21 SATELLITE TRUCK. Notwithstanding anything in this Agreement to the
contrary, the Company's existing satellite truck (the "Existing Truck") and the
related FCC authorization described below are Retained Assets and the Frontline
DSNG satellite truck (the "New Truck") ordered by the Company (at the Company's
expense) is included in the Assets, and if the New Truck is not delivered to the
Company prior to Closing then:
(a) the New Truck will not be conveyed to Purchaser at Closing, and Sellers
and Purchaser shall use commercially reasonable efforts to arrange for Purchaser
to acquire the New Truck directly from the manufacturer and pay when due the
balance of the purchase price for the New Truck (being $150,000) and any unpaid
sales taxes applicable thereto, which payments shall be reimbursed by Sellers
immediately; and, if such arrangements cannot be made despite such efforts, then
the New Truck will be conveyed to Purchaser upon receipt by the Company (and any
applicable transfer taxes will be paid as set forth in Section 5.12); and,
(b) during the period after Closing and until delivery of the New Truck, the
Company will lease to Purchaser the Existing Truck pursuant to a customary net
lease agreement to be entered into by the Company and Purchaser at Closing
providing among other things that Purchaser will:
(i) pay all costs and expenses of operating and maintaining the Existing
Truck during the lease term, including without limitation the cost of insurance
(which Purchaser will maintain in effect during the lease term with the Company
included as an additional insured) and any applicable property and other taxes,
but Purchaser will not be obligated to pay rent to the Company for the use of
the Existing Truck;
(ii) use the Existing Truck only to operate the Station and only in
compliance with all applicable laws and the terms of the FCC authorization to
operate the temporary fixed satellite transmit earth station included in the
Existing Truck, it being understood such FCC authorization will not be assigned
to Purchaser and that the holder of such FCC authorization shall have ultimate
control over the operation of such earth station in accordance with FCC rules
and policies;
(iii) indemnify the Company against any and all loss, liability, cost and
expense arising from use of the Existing Truck during the lease term; and
(iv) return the Existing Truck to the Company at the end of the lease term
in the same condition as it existed at the beginning of such term, ordinary wear
and tear from reasonable use excepted.
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ARTICLE VI
SURVIVAL; INDEMNIFICATION; REMEDIES
6.01 SURVIVAL. The representations and warranties of Purchaser and Sellers
contained herein shall survive the Closing for a period of twelve months after
the Closing Date and shall terminate on such date, except to the extent that any
claims for indemnification in respect of a breach of any such representation or
warranty is made on or before such date, in which case such representation or
warranty (but not any others) shall survive until the resolution of such claim.
Purchaser's obligation to pay, perform or discharge the Assumed Liabilities
shall survive until such Assumed Liabilities have been paid, performed or
discharged in full. Any claim for indemnification in respect of a covenant or
agreement of Purchaser or Sellers hereunder to be performed before the Closing
shall be made before the expiration of the twelve month anniversary of the
Closing Date. The covenants and agreements of Sellers contained herein and to be
performed to any extent after the Closing Date shall survive the Closing for a
period of twelve months after the Closing Date (except for those set forth in
Section 5.11 (Certain Tax Matters), which shall survive for five years, and
those set forth in Sections 5.10 (WALB Tower) and 5.21 (Satellite Truck), which
shall survive until fully performed) and shall terminate on such date and any
claims for indemnification in respect of a breach of such covenants to be
performed in any respect after the Closing Date must be made on or before such
date. The covenants and agreements of Purchaser contained herein to be performed
in any respect after the Closing Date shall survive the Closing Date until fully
discharged and performed.
6.02 INDEMNIFICATION BY SELLERS.
(a) After the Closing, Sellers hereby agree to indemnify, defend and hold
Purchaser harmless against and with respect to, and shall reimburse Purchaser
for:
(1) any and all losses, liabilities or damages (whether such claim arises
from a third party action or is made by Purchaser against Sellers) resulting
from any breach of any representation or warranty made pursuant to this
Agreement, or any failure by Sellers to perform any covenant of Sellers set
forth herein or in any certificate, document or instrument prepared by Sellers
and delivered to Purchaser hereunder;
(2) any failure by Sellers to pay, perform or discharge any and all
liabilities of Sellers not assumed by Purchaser pursuant to the terms hereof;
(3) any litigation, proceeding or claim by any third party arising from
the business or operations of the Assets by Sellers prior to the Closing Date;
and
(4) any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
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Subject to the limitations set forth herein, such indemnity shall apply after
Closing regardless of whether Purchaser has knowledge of any breach or default
of Sellers under this Agreement at Closing. Notwithstanding the foregoing or any
other provision of this Agreement to the contrary, in the event of a failure of
the condition set forth in Section 7.05 (Material Adverse Change) to be
satisfied or a failure of the representation set forth in clause (ii) of Section
3.07 (Material Adverse Change) to be true at Closing for any reason other than a
failure by Sellers to comply with terms of this Agreement, Purchaser's sole
remedy shall be the right to terminate this Agreement prior to Closing pursuant
to Section 9.01 and obtain the Deposit pursuant to Section 9.03(b).
(b) Sellers' obligation to indemnify Purchaser pursuant to Section 6.02 shall
be subject to all of the following limitations:
(1) No indemnification shall be required to be made by Sellers as the
Indemnifying Party under Section 6.02 until the aggregate amount of damages of
Purchaser as Claimant exceeds Three Hundred Thousand Dollars ($300,000) and then
only with respect to the amount of such damages in excess of such amount;
provided, however, that such limitation shall not apply to claims made by
Purchaser with respect to adjustments to the Purchase Price under Section 1.04
or expenses to be paid by Sellers under Section 5.12.
(2) Purchaser shall be entitled to indemnification only for those damages
arising with respect to any claim as to which Purchaser has given the Sellers
written notice within the appropriate time period set forth in Section 6.01
hereof for such claim.
(3) Notwithstanding anything contained in this Agreement or applicable law
to the contrary, except as set forth in this Section 6.02(b) in no event shall
Sellers' obligation for indemnification under this Agreement and the Other
Agreements in the aggregate exceed Two Million Dollars ($2,000,000) and
Purchaser waives and releases, and shall have no recourse against, Sellers as a
result of the breach of any representation, warranty, covenant or agreement of
Sellers contained in this Agreement or the Other Agreements or otherwise arising
out of or in connection with the transactions contemplated hereby or the
operation of the Station.
(4) Following the Closing, the sole and exclusive remedy for Purchaser for
any claim (whether such claim is framed in tort, contract or otherwise) arising
out of a breach of any representation, warranty, covenant or other agreement in
this Agreement or the Other Agreements or otherwise arising out of or in
connection with the transactions contemplated by this Agreement or the operation
of the Station shall be a claim for indemnification pursuant to this Section
6.02.
(5) Anything in this Agreement or any applicable law to the contrary
notwithstanding, it is understood and agreed by Purchaser that no director,
officer, employee, agent or Affiliate of Sellers shall have (i) any personal
liability to Purchaser as a result of the breach of any representation,
warranty, covenant or agreement of Sellers contained in this
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Agreement or the Other Agreements or otherwise arising out of or in connection
with the transactions contemplated hereby or the operation of the Station or
(ii) any personal obligation to indemnify Purchaser for any of Purchaser's
claims pursuant to Section 6.02(a), and Purchaser waives and releases and shall
have no recourse against any of such parties as a result of the breach of any
representation, warranty, covenant or agreement of Sellers contained in this
Agreement or the Other Agreement or otherwise arising out of or in connection
with the transactions contemplated hereby or the operation of the Station.
The limitations set forth in Section 6.02(b)(1), (2), (3) and (4) shall not
apply to any Third Party claims for Retained Liabilities or Sellers' obligations
under Sections 5.10 and 5.21 or any indemnification obligations of Sellers with
respect to the foregoing, or to claims, if any, under the Exchange Agreement,
and no such claims shall be taken into account for purposes of the dollar amount
thresholds set forth in such Sections.
6.03 INDEMNIFICATION BY PURCHASER.
(a) After the Closing, Purchaser hereby agrees to indemnify, defend and hold
Sellers harmless against and with respect to, and shall reimburse Sellers for:
(1) any and all losses, liabilities or damages (whether such claim arises
from a third party action or is made by Sellers against Purchaser) resulting
from any breach of any representation or warranty made pursuant to this
Agreement, or any failure by Purchaser to perform any covenant of Purchaser set
forth herein or in any certificate, document or instrument delivered to Sellers
under this Agreement;
(2) any failure by Purchaser to pay, perform or discharge any and all
Assumed Liabilities or any other liabilities of, or assumed by, Purchaser
pursuant to this Agreement;
(3) any litigation, proceeding or claim arising from the business or
operations of the Assets on or after the Closing Date; and
(4) any and all out-of-pocket costs and expenses, including reasonable
legal fees and expenses, incident to any action, suit, proceeding, claim,
demand, assessment or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
Subject to the limitations set forth herein, such indemnity shall apply after
Closing regardless of whether Sellers have knowledge of any breach or default of
Purchaser under this Agreement at Closing.
(b) Purchaser's obligation to indemnify Sellers pursuant to Section 6.03
shall be subject to all of the following limitations:
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(1) No indemnification shall be required to be made by Purchaser as the
Indemnifying Party under Section 6.03 until the aggregate amount of damages of
Sellers as Claimant exceeds Three Hundred Thousand Dollars ($300,000) and then
only with respect to the amount of such damages in excess of such amount;
provided, however, that such limitation shall not apply to claims made by
Sellers with respect to adjustments to the Purchase Price under Section 1.04 or
expenses to be paid by Purchaser under Section 5.12.
(2) Sellers shall be entitled to indemnification only for those damages
arising with respect to any claim as to which Sellers have given Purchaser
written notice within the appropriate time period set forth in Section 6.01
hereof for such claim.
(3) Notwithstanding anything contained in this Agreement or applicable law to
the contrary, except as set forth in this Section 6.03(b), in no event shall
Purchaser's obligation for indemnification under this Agreement and the Other
Agreements in the aggregate exceed Two Million Dollars ($2,000,000), and Sellers
waive and release, and shall have no recourse against, Purchaser as a result of
the breach of any representation, warranty, covenant or agreement of Purchaser
contained in this Agreement or the Other Agreements or otherwise arising out of
or in connection with the transactions contemplated hereby or the operation of
the Station.
(4) Following the Closing, the sole and exclusive remedy for Sellers for any
claim (whether such claim is framed in tort, contract or otherwise) arising out
of a breach of any representation, warranty, covenant or other agreement in this
Agreement or the Other Agreements or otherwise arising out of or in connection
with the transactions contemplated by this Agreement or the operation of the
Station shall be a claim for indemnification pursuant to this Section 6.03.
(5) Anything in this Agreement or any applicable law to the contrary
notwithstanding, it is understood and agreed by Sellers that no director,
officer, employee, agent or Affiliate of Purchaser shall have (i) any personal
liability to Sellers as a result of the breach of any representation, warranty,
covenant or agreement of Purchaser contained in this Agreement or the Other
Agreements or otherwise arising out of or in connection with the transactions
contemplated hereby or the operation of the Station or (ii) personal obligation
to indemnify Sellers for any of Sellers' claims pursuant to Section 6.03(a), and
Sellers waives and releases and shall have no recourse against any of such
parties as the result of the breach of any representation, warranty, covenant or
agreement of Purchaser contained in this Agreement or the Other Agreements or
otherwise arising out of or in connection with the transactions contemplated
hereby or the operation of the Station.
The limitations set forth in Section 6.03(b)(1), (2), (3) and (4) shall not
apply to Purchaser's obligations under Sections 5.08, 5.10, 5.20 and 5.21,
Purchaser's obligation to pay, perform or discharge the Assumed Liabilities, or
any indemnification obligations of Purchaser with respect to the foregoing.
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6.04 PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification shall
be as follows:
(a) The party claiming indemnification (the "Claimant") shall promptly give
notice to the party from which indemnification is claimed (the "Indemnifying
Party") of any claim, whether between the parties or brought by a third party,
specifying in reasonable detail the factual basis for the claim, the amount
thereof, estimated in good faith, and the method of computation of such claim,
all with reasonable particularity and containing a reference to the provisions
of this Agreement in respect of which such indemnification claim shall have
occurred. If the claim relates to an action, suit, or proceeding filed by a
third party against Claimant, such notice shall be given by Claimant within ten
business days after written notice of such action, suit, or proceeding was given
to Claimant.
(b) With respect to claims solely between the parties, following receipt of
notice from the Claimant of a claim, the Indemnifying Party shall have thirty
days to make such investigation of the claim as the Indemnifying Party deems
necessary or desirable. For the purposes of such investigation, the Claimant
agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party shall
immediately pay to the Claimant the full amount of the claim, subject to the
terms hereof (including Sections 6.02(b) and 6.03(b)). If the Claimant and the
Indemnifying Party do not agree within the thirty-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate remedy at law
or equity, as applicable, subject to the limitations of Sections 6.02(b) and
6.03b).
(c) With respect to any claim by a third party as to which the Claimant is
entitled to indemnification under this Agreement, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnifying Party.
If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any
third-party claim, then the Claimant may defend through counsel of its own
choosing and (so long as it gives the Indemnifying Party at least fifteen (15)
days' notice of the terms of the proposed settlement thereof and permits the
Indemnifying Party to then undertake the defense thereof) settle such claim,
action or suit, and to recover from the Indemnifying Party the amount of such
settlement or of any judgment and the costs and expenses of such defense. The
Indemnifying Party shall not compromise or settle any third party claim, action
or suit without the prior written consent of the Claimant, which consent will
not be unreasonably withheld or delayed.
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(d) If a claim, whether between the parties or by a third party, requires
immediate action, the parties will make every effort to reach a decision with
respect thereto as expeditiously as possible.
(e) Subject to the limitations set forth herein and without expanding the
total liability of Purchaser or Sellers hereunder, the indemnification rights
provided in Section 6.02 and Section 6.03 shall extend to the officers,
directors, employees, agents and Affiliates of any Claimant although for the
purpose of the procedures set forth in this Section 6.04, any indemnification
claims by such parties shall be made by and through the Claimant.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions, all or any of which may
be waived, in whole or in part, by Purchaser for purposes of consummating such
transactions, but without prejudice to any other right or remedy which Purchaser
may have hereunder as a result of any misrepresentation by, or breach of any
agreement, covenant or warranty of the Sellers contained in this Agreement or
any Other Agreement:
7.01 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by the Sellers shall be correct and complete
in all Material respects on the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the Closing
Date. Sellers shall have each duly performed and complied in all Material
respects with all of the agreements, covenants, acts and undertakings to be
performed or complied with by it in all Material respects on or prior to the
Closing Date. Sellers shall have delivered to Purchaser a certificate signed by
Sellers dated as of the Closing Date certifying as to the fulfillment of the
conditions of this Section 7.01. Notwithstanding any other provision of this
Agreement to the contrary, for purposes of this Section 7.01, all Materiality
qualifications contained in the representations and warranties made by the
Sellers shall be disregarded and given no effect.
7.02 INCUMBENCY CERTIFICATE. Purchaser shall have received an appropriate
incumbency certificate or certificates, dated the Closing Date, certifying the
incumbency of all officers of the Sellers. The certificate or certificates shall
contain specimens of the signatures of the officers, whose incumbency is
certified and shall be executed by officers of the Sellers other than officers
whose incumbency is certified.
7.03 CERTIFIED COPIES. Purchaser shall have received copies, certified by the
duly qualified and acting Secretary or Assistant Secretary of the Sellers, of
Sellers' articles and bylaws and resolutions adopted by the Board of Directors
of the Sellers approving this Agreement and the consummation of the transactions
contemplated hereby.
7.04 REQUIRED CONSENTS. The Required Consents shall have been obtained.
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7.05 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any Material
Adverse Change, or any condition or event that is reasonably likely to cause a
Material Adverse Change, with respect to the Assets or the Business, or either
of Sellers with respect to the Business, taken as a whole, from the Balance
Sheet Date. Each of the Sellers shall have delivered to Purchaser a certificate
or certificates dated as of the Closing Date executed by the Sellers certifying
the foregoing statement.
7.06 NO INJUNCTION, ETC. No Litigation, Law, Order or legislation shall have
been instituted, threatened or proposed by a Third Party before any court or
Governmental Authority to enjoin, restrain, prohibit or obtain damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby, if such Litigation, Law, Order or legislation, in the reasonable
judgment of Purchaser, would make it inadvisable to consummate the transactions
contemplated hereby.
7.07 CONVEYANCING DOCUMENTS. Purchaser shall have received from Sellers duly
executed documents conveying the Assets to Purchaser free and clear of Liens
other than Permitted Liens and otherwise subject to the terms of this Agreement,
including an assignment of the FCC Licenses duly executed by the Sellers,
respectively, and a bill of sale, deeds in recordable form, and an assignment
and assumption agreement duly executed by the Company, all subject to the terms
of this Agreement.
7.08 FCC APPROVALS. The FCC shall have given all requisite approvals and
consents, without any condition or qualification Materially adverse to Purchaser
(whether or not any appeal or request for reconsideration or review is pending
or the time for filing any appeal or request for reconsideration or review, or
for any sua sponte action by the FCC with similar effect has expired).
7.09 HART-SCOTT APPROVAL. All waiting periods applicable to this Agreement
and the transactions contemplated hereby under the Hart-Scott Act shall have
expired or been terminated.
7.10 RESERVED.
7.11 TITLE DOCUMENTS. Purchaser shall have received an owner's title
insurance policy (or an endorsement to an existing owner's title insurance
policy) for each parcel of the Owned Real Property subject to no Liens other
than Permitted Liens. Purchaser confirms that it has ordered such policy.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions, all or any of which may
be waived, in whole or in part, by the Sellers for purposes of consummating such
transactions, but without prejudice to any other right or remedy which the
Sellers may have hereunder as a result of any
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misrepresentation by, or breach of any agreement, covenant or warranty of
Purchaser contained in this Agreement or any Other Agreement:
8.01 REPRESENTATIONS TRUE AND COVENANTS PERFORMED AT CLOSING. The
representations and warranties made by Purchaser shall be correct and complete
in all Material respects on the Closing Date with the same force and effect as
if such representations and warranties had been made on and as of the Closing
Date. Purchaser shall have duly performed and complied with all of the
agreements, covenants, acts and undertakings to be performed or complied with by
it on or prior to the Closing Date. Purchaser shall have delivered to the
Sellers a certificate signed by Purchaser dated as of the Closing Date
certifying as to the fulfillment of the conditions of this Section 8.01.
Notwithstanding any other provision of this Agreement to the contrary, for
purposes of this Section 8.01, all Materiality qualifications contained in the
representations and warranties made by Purchaser shall be disregarded and given
no effect.
8.02 INCUMBENCY CERTIFICATE. The Sellers shall have received an incumbency
certificate or certificates dated the Closing Date certifying the incumbency of
all officers of Purchaser who have executed this Agreement or documents in
connection with this Agreement. The certificate or certificates shall contain
specimens of the signatures of each of the officers whose incumbency is
certified and shall be executed by an officer of Purchaser other than an officer
whose incumbency is certified.
8.03 CERTIFIED COPIES. The Sellers shall have received copies, duly certified
by the duly qualified and acting Secretary or Assistant Secretary of Purchaser,
of Purchaser's articles and bylaws and resolutions adopted by the Board of
Directors of Purchaser approving this Agreement and the consummation of the
transactions contemplated herein.
8.04 NO INJUNCTION, ETC. No Litigation, Law, Order or legislation shall have
been instituted, threatened or proposed by a Third Party before any court or
Governmental Authority to enjoin, restrain, prohibit or obtain damages in
respect of this Agreement or the consummation of the transactions contemplated
hereby, if such Litigation, Law, Order or legislation, in the reasonable
judgment of Purchaser, would make it inadvisable to consummate the transactions
contemplated hereby.
8.05 HART-SCOTT ACT APPROVAL. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the Hart-Scott Act
shall have expired or been terminated.
8.06 ASSUMPTION AGREEMENT. Sellers shall have received from Purchaser a duly
executed assignment and assumption agreement pursuant to which Purchaser assumes
the Assumed Liabilities.
8.07 FCC APPROVALS. The FCC shall have given all requisite approvals and
consents, without any condition or qualification Materially adverse to the
Sellers (whether or not any appeal or request for reconsideration or review is
pending or the time for filing any
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appeal or request for reconsideration or review, or for any sua sponte action by
the FCC with similar effect has expired).
8.08 REQUIRED CONSENTS. The Required Consents shall have been obtained.
ARTICLE IX
TERMINATION
9.01 CAUSES FOR TERMINATION. This Agreement and the transactions contemplated
by this Agreement may be terminated at any time prior to the Closing Date: (i)
by the mutual consent of the Sellers and Purchaser; (ii) by Purchaser in the
event the conditions set forth in Article VII of this Agreement shall not have
been satisfied or waived by the date nine months after the date of this
Agreement for any reason other than Purchaser's breach or default hereunder or
failure to act in good faith; (iii) by the Sellers in the event that the
conditions set forth in Article VIII of this Agreement shall not have been
satisfied or waived by the date nine months after the date of this Agreement for
any reason other than Sellers' breach or default hereunder or failure to act in
good faith; or (iv) by Purchaser or the Sellers at any time if Purchaser
determines in good faith that any Material Adverse Change, or any condition or
event that is reasonably likely to cause a Material Adverse Change, with respect
to Business or the Assets, or the Sellers with respect to the Business shall
have occurred or been discovered since the Balance Sheet Date.
9.02 NOTICE OF TERMINATION. Notice of termination of this Agreement as
provided for in this Article IX shall be given by the party so terminating to
the other parties hereto in accordance with the provisions of Section 11.01.
9.03 EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement pursuant to Section 9.01
hereof, except for Sections 3.24, 404, 5.04, 5.12 and 9.03, which shall remain
in full force and effect, this Agreement shall become void and of no further
force and effect, and each party shall pay the costs and expenses incurred by it
in connection with this Agreement, and no party (or any of its agents, counsel,
representatives, Affiliates or assigns) shall be liable to any other party for
any Loss hereunder. Notwithstanding the foregoing sentence, if the
non-occurrence of Closing is the direct or indirect result of the Material
breach or default by the Sellers of any of their respective obligations
hereunder, including without limitation, any Material inaccuracy in any
representation or warranty made by such party, and Purchaser has not Materially
breached or defaulted on any of its obligations hereunder, Sellers shall be
liable to Purchaser for any such breach or default; and if the non-occurrence of
Closing is the direct or indirect result of the Material breach or default by
Purchaser of any of its obligations hereunder, and neither of the Sellers has
Materially breached or defaulted on any of its respective obligations hereunder,
the Deposit shall be paid to the Sellers as liquidated damages to compensate the
Sellers for the damages resulting to such parties from such breach or default.
The parties agree that actual damages pursuant to a breach of this Agreement
prior to the Closing would be impossible to measure. Receipt of the Deposit
shall be the sole and exclusive remedy that the
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Sellers shall have in the event of such breach or default and shall constitute a
waiver of any and all other legal or equitable rights or remedies that any of
the Sellers may otherwise have as a result of Purchaser's breach or default, and
that in consideration for the receipt of the Deposit as liquidated damages,
neither of the Sellers may obtain any further legal or equitable relief,
including specific performance, to which it may otherwise have been entitled and
Purchaser shall have no further Liability to the Sellers as a result of such
breach or default or the non-occurrence of Closing.
(b) If the Closing does not occur due to the nonfulfillment of any of the
conditions in Article VII or for any other reason except Purchaser's Material
breach or default in the performance of any of its obligations under this
Agreement, then promptly after termination of this Agreement the Deposit shall
be returned to Purchaser. The Sellers acknowledge that Purchaser, at its option
(to be exercised in its sole and absolute discretion), may elect to have the
Agreement specifically performed by the Sellers. The Sellers further acknowledge
that any breach of this Agreement by either of the Sellers will cause
irreparable damage and injury to Purchaser and that Purchaser will be entitled
to injunctive relief in any court of competent jurisdiction without the
necessity of posting any bond.
(c) It is agreed that time is of the essence in the performance and
satisfaction of this Agreement and each of the conditions specified in Articles
VII and VIII of this Agreement are Material for purposes of this Agreement.
9.04 RISK OF LOSS. The Sellers assume all risk of condemnation, destruction
or Loss due to fire or other casualty from the date of this Agreement until the
Closing.
ARTICLE X
DEFINITIONS
The following terms (in their singular and plural forms as appropriate) as
used in this Agreement shall have the meanings set forth below unless the
context requires otherwise:
"Accounts Receivable" means all accounts receivable, notes receivable, and
other monies due to the Sellers for sales and deliveries of goods, performance
of services and other business transactions (whether or not on the books of the
Sellers) that exist as of 12:01 a.m. on the Closing Date.
"Affiliate" of a Person means: (i) any Person directly, or indirectly through
one or more intermediaries, controlling, controlled by or under common control
with such Person; (ii) any officer, director, partner, employee, agent, or
representative or direct or indirect beneficial or legal owner of any 10% or
greater equity or voting interest of such Person; or (iii) any entity for which
a Person described in (ii) above acts in any such capacity.
"Agreement" means this Asset Purchase Agreement, including the Exhibits and
Schedules delivered pursuant hereto or referred to herein, each of which is
incorporated herein by reference.
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"Assets" means all of the Seller's right, title and interest in and to the
assets and properties, of every kind, nature, character and description, whether
real, personal or mixed, whether tangible or intangible, whether accrued,
contingent or otherwise (other than the Retained Assets) used or held for use in
the Business, together with any additions thereto between the date hereof and
the Closing Date, but excluding those disposed of between the date of this
Agreement and the Closing Date in accordance with the terms of this Agreement,
including but not limited to the following:
(i) the FCC Licenses;
(ii) the Real Property;
(iii) the Personal Property;
(iv) the Inventory;
(v) the Intellectual Property;
(vi) the Assumed Contracts;
(vii) the Licenses;
(viii) the Computer Software;
(ix) the Databases;
(x) Sellers' other intangible assets of the Business, including, but not
limited to, the trademarks, service marks, and tradenames and assumed names of
the Business;
(xi) all intangible personal property and assets other than the foregoing
that are used or held for use in the Business, including all books and records
of Sellers relating solely to the Business (including copies of the Assumed
Contracts and the records required by the FCC to be kept at the Station) and any
assignable warranties with respect to the Personal Property;
(xii) the customer lists, mailing lists, customer files, supplier files,
sales agent and manufacturers' representative files, credit files, and credit
data relating to the Assets and the Assumed Liabilities, all other files,
records, drawings, catalogues, stationery, advertising materials and other
documents (or copies thereof) related to the Assets or the Business, and the use
of any telephone numbers that are used in the operation of the Business;
(xiii) to the extent used or held for use in the operation of the Business
and adjusted in favor of Sellers under Section 1.04, the deposits, prepaid sums,
fees and expenses (including, without limitation, Taxes, insurance premiums,
rental fees, utility charges and
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service charges), trust funds, retainages, escrows, monies and assets held by
Third Parties, and deferred charges, as the same shall exist as of the Closing
Date; and
(xiv) any other assets used in the Business and owned by either of the
Sellers (other than the Retained Assets).
"Assumed Contracts" means (i) all Contracts listed on Schedules 3.10 and 3.21
and all Contracts of the type described in Sections 3.10 and 3.21 that are not
required to be listed thereon pursuant to the exceptions set forth in such
Sections, (ii) Contracts with advertisers for the sale of advertising time for
cash or production services in the ordinary course of business, (iii) Contracts
entered into between the date of this Agreement and the Closing Date that
Purchaser agrees in writing to assume, and (iv) Contracts entered into between
the date of this Agreement and the Closing Date in compliance with Section 5.01;
provided that Assumed Contracts shall in no event include Contracts that are
included in the Retained Assets. The Assumed Contracts shall include without
limitation the contracts listed on Schedules 3.10 and 3.21, whether entered into
solely by the Company, solely by the Company's parent or jointly by the Company
and its parent. With respect to those Assumed Contracts to which the Company's
parent is a party, at Closing Sellers shall cause such Assumed Contracts to be
assigned to Purchaser, and Purchaser shall assume such Assumed Contracts, and
such Assumed Contracts shall otherwise be considered Assumed Contracts for all
purposes of this Agreement, including without limitation for purposes of the
representations and warranties hereunder, except that Sellers shall not be
deemed to be in breach or default hereunder by reason of the fact that the
Company's parent is the only party thereto or a joint party thereto.
"Assumed Liabilities" means the following specific Liabilities of the
Sellers:
(i) Liabilities first to be paid or performed after 12:01 a.m. on the Closing
Date under or pursuant to the Assumed Contracts (including, without limitation,
outstanding purchase orders and sales commitments of Sellers); provided,
however, such Liabilities shall not include any Liabilities resulting from or
arising out of any Default by Sellers prior to the Closing Date under or with
respect to any of such Assumed Contracts;
(ii) To the extent arising after 12:01 a.m. on the Closing Date or for which
there is an adjustment to the Purchase Price, all trade accounts payable and
accrued operating expenses of Sellers which (A) were incurred in the ordinary
course of business consistent with past practices, (B) arose only from
expenditures related directly to the Business or the Assets, (C) are not payable
to or with respect to or for the benefit of an Affiliate of Seller; and
(iii) All sick, personal and vacation time accrued prior to Closing by
Sellers' Station employees.
"Balance Sheet Date" means the date of the most recent balance sheet included
in the Financial Statements, being March 31, 1998.
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"Board of Directors" means the Board of Directors of a Person that is a
corporation.
"Business" means the Sellers' business of owning and operating the Station.
"Business Day" means a day other than a Saturday, a Sunday, a day on which
banking institutions in the State of Georgia are authorized or obligated by law
or required by executive order to be closed, or a day on which the New York
Stock Exchange is closed.
"Certificate of Incorporation" means the certificate of incorporation of a
Person that is a corporation.
"Closing" means the consummation of the transactions contemplated by this
Agreement.
"Closing Date" means the date on which the Closing occurs, which shall be the
fifth business day after issuance of the FCC approval as set forth in Section
5.15 and the satisfaction (or waiver) of all of the conditions set forth in
Articles VII and VIII, or such other date as the parties may agree in writing;
provided that the Closing Date may be extended by Sellers to a date no later
than nine (9) months after the date of this Agreement as necessary to effectuate
the tax-free like-kind exchange described in Section 5.16.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
"Communications Act" means the Communications Act of 1934, as amended, and
the rules, regulations and written policies of the FCC.
"Computer Software" means all Sellers' computer programs, materials, tapes,
source and object codes, and all prior and proposed versions, releases,
modifications, updates, upgrades and enhancements thereto that are used or held
for use in the Business, as well as all documentation and listings related
thereto used in the Business.
"Contract" means any written or oral contract, agreement, understanding,
lease, usufruct, license, plan, instrument, commitment, restriction,
arrangement, obligation, undertaking, practice or authorization of any kind or
character or other document to which either of Sellers is a party or that is
binding on either of Sellers and that is used or held for use in the Business.
"Databases" means Sellers' databases in all forms, versions and media,
together with prior and proposed updates, modifications and enhancements
thereto, as well as all documentation and listings therefor used in the
Business, other than Licenses, that are used or held for use in the Business.
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"Default" means (1) a breach of, default under, or misrepresentation in or
with respect to any contract or license, (2) the occurrence of an event that
with the passage of time or the giving of notice or both would constitute a
breach of, default under, or misrepresentation in any contract or license, or
(3) the occurrence of an event that with or without the passage of time or the
giving of notice or both would give rise to a right to terminate, change the
terms of or renegotiate any contract or license or to accelerate, increase, or
impose any Liability under any contract or license.
"Employee Benefit Plan" means, collectively, each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, any medical, vision,
dental or other health plan, any life insurance plan, or any other employee
benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA
currently or previously adopted, maintained by, sponsored in whole or in part
by, or contributed to by either of the Sellers or any other ERISA Affiliate
thereof or under which either of the Sellers or any other ERISA Affiliate
thereof has any Liability for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate. "Employee
Benefit Plans" also means any plans, programs, agreements, arrangements or
understandings previously maintained by, sponsored in whole or in part by, or
contributed to by either of the Sellers or any other ERISA Affiliate thereof
that could result in a Material Liability to the Sellers, including but not
limited to, any plan covered by or subject to Title IV of ERISA. Employee
Benefit Plans include (but are not limited to) "employee benefit plans" as
defined in Section 3(3) of ERISA and any other plan, fund, policy, program,
practice, custom, understanding or arrangement providing compensation or other
benefits to any current or former officer or employee or director or independent
contractor of either of the Sellers or any dependent or beneficiary thereof,
maintained by the Sellers or under which the Sellers have any obligation or
Liability, whether or not they are or are intended to be (i) covered or
qualified under the Code, ERISA or any other applicable Law, (ii) written or
oral, (iii) funding or unfunded, (iv) actual or contingent, or (v) generally
available to any or all employees (or former employees) of the Sellers (or their
beneficiaries or dependents), including, without limitation, all incentive,
bonus, deferred compensation, flexible spending accounts, cafeteria plans,
vacation, holiday, medical, disability, share purchase or other similar plans,
policies, programs, practices or arrangements.
"Environmental Laws" means all Laws relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of any
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Hazardous Substance, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Substance.
"Environmental Litigation" means any Litigation against the Sellers with
respect to the Business or the Assets of either of the Sellers (including,
without limitation, written notice or other written communication by any Person
alleging potential Liability for investigatory costs, cleanup costs, private or
governmental response or remedial costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based upon, or
resulting from (i) any Environmental Matter or (ii) any circumstances or state
of facts forming the basis of any Liability or alleged Liability under, or
violation or alleged violation of, any Environmental Law.
"Environmental Matter" means any matter or circumstances related in any
manner whatsoever to (i) the emission, discharge, disposal, release or
threatened release of any Hazardous Substance into the environment, or (ii) the
transportation, treatment, storage, recycling or other handling of any Hazardous
Substance or (iii) the placement of structures or materials into waters of the
United States, by, in each case, either of the Sellers or any of their
respective predecessors or (iv) the presence of any Hazardous Substance,
including, but not limited to, asbestos, in any building, structure or workplace
or on any of the Real Property.
"ERISA" means Employee Retirement Income Security Act of 1974, as amended.
"ERISA Plan" means any Employee Benefit Plan which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, or an "employee
welfare benefit plan" as that term is defined in Section 3(1) of ERISA.
"FCC" means the Federal Communications Commission.
"FCC Licenses" means the licenses and authorizations issued by the FCC to
either of the Sellers with respect to the Business.
"Financial Statements" means the unaudited balance sheets of the Sellers as
of December 31, 1997 and March 31, 1998 and the related statements of income for
the periods then ended.
"GAAP" means generally accepted accounting principles as in effect in the
United States consistently applied.
"Governmental Authority" means any federal, state, county, local, foreign or
other governmental or public agency, instrumentality, commission, authority,
board or body.
"Hart-Scott Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, 15 U.S.C.A. ss. 18(a), as amended, and all Laws promulgated thereunder.
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"Hazardous Substance" means (i) any hazardous substance, hazardous material,
hazardous waste pollutants, contaminants, or toxic substance (as those terms are
defined by any applicable Environmental Laws) and (ii) any petroleum, petroleum
products, or oil.
"Improvements" means all buildings, structures, fixtures and other
improvements included in the Real Property.
"Intellectual Property" means the following of Sellers to the extent used or
held for use in the Business (i) patents and pending patent applications
together with any and all continuations, divisions, reissues, extensions and
renewals thereof, (ii) trade secrets, know-how, inventions, formulae and
processes, whether trade secrets or not, (iii) trade names, trademarks, service
marks, logos, assumed names, brand names and all registrations and applications
therefor, (iv) copyrights and any registrations and applications therefor, (v)
technology rights and licenses, and (vi) Computer Software and all other
intellectual property owned by, registered in the name of, or used in the
business of a Person or in which a Person or its business has any interest.
"Inventory" means all Sellers' inventories of raw materials, supplies,
products, advertising materials, and other inventories used or held for use in
the Business.
"IRS" means the Internal Revenue Service of the United States of America.
"Knowledge" or "Known" with respect to the Sellers, means collectively those
facts that either of the Sellers or any of their officers and employees listed
on Exhibit X hereto, after due inquiry, knew or reasonably should have known.
"Law" means any code, law, order, ordinance, regulation, rule, or statute of
any Governmental Authority.
"Leased Personal Property" means all Personal Property that is not owned by
the Sellers that the Sellers either use or have the right to use.
"Leased Real Property" means all Real Property that is not owned in fee
simple by the Sellers that the Sellers either occupy or use or has the right to
occupy or use.
"Liability" means any direct or indirect, primary or secondary, liability,
indebtedness, obligation, penalty, expense (including, without limitation, costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills and
checks presented to banks for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute, contingent, liquidated,
unliquidated, matured, unmatured or otherwise.
"License" means any license, franchise, notice, permit, easement, right,
certificate, authorization, approval or filing with any Governmental Authority
or court to
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which either Seller is a party or that is or may be binding on either Seller and
that is used or held for use in the Business.
"Lien" means any mortgage, lien, security interest, pledge, hypothecation,
encumbrance, restriction, reservation, encroachment, infringement, easement,
conditional sale agreement, title retention, lease, right of occupancy or other
security arrangement, defect of title, adverse right or interest, charge or
claim of any nature whatsoever of, on, or with respect to any property or
property interest.
"Litigation" means any action, administrative or other proceeding,
arbitration, cause of action, claim, complaint, criminal prosecution, inquiry,
hearing, investigation (governmental or otherwise), litigation, notice (written
or oral) before any Governmental Authority or arbitration, mediation or similar
tribunal by any Person alleging potential Liability against the Sellers or any
Affiliate of Sellers with respect to the Business or the Assets, the Business or
the transactions contemplated by this Agreement.
"LOI" means the letter of intent dated April 10, 1998 between Sellers and
Purchaser with respect to the Station.
"Loss" means any and all direct or indirect demands, claims, payments,
obligations, recoveries, deficiencies, fines, penalties, interest, assessments,
actions, causes of action, suits, losses, diminution in the value of assets,
damages, punitive, exemplary or consequential damages (including, but not
limited to, lost income and profits and interruptions of business), liabilities,
costs, expenses (including without limitation, (i) interest, penalties and
reasonable attorneys' fees and expenses, (ii) attorneys' fees and expenses
necessary to enforce rights to indemnification hereunder, and (iii) consultants'
fees and other costs of defense or investigation), and interest on any amount
payable to a Third Party as a result of the foregoing, whether accrued,
absolute, contingent, known, unknown, or otherwise as of the Closing Date or
thereafter.
"Material" or "Materially" shall be determined in light of the facts and
circumstances of the matter in question; provided, however, that any specific
monetary amount cited in this Agreement shall be deemed to determine materiality
in that instance.
"Material Adverse Change" or "Material Adverse Effect" means any Material
adverse change in or effect on (i) the business, operations, assets,
Liabilities, financial condition or results of operations of such Person,
including, without limitation, any Material adverse change in the value of the
Station, the Assets or the Business, taken as a whole, (ii) the ability of such
party to consummate the transactions contemplated by this Agreement or any of
the Other Agreements to which it is or will be a party, or (iii) the ability of
such party to perform any of its obligations under this Agreement or any of the
Other Agreements to which it is or will be a party, if such change or effect
Materially impairs the ability of such party to perform its obligations
hereunder or thereunder, taken as a whole. If any change, condition or event
shall have an adverse effect or a reasonably likely adverse effect of less than
$700,000, no Material Adverse Change or Material Adverse Effect will be deemed
to have occurred. If
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any change, condition or event shall have an adverse effect or a reasonably
likely adverse effect of $700,000 or more but less than $5,200,000, no Material
Adverse Change or Material Adverse Effect will be deemed to have occurred and
the Sellers shall have the option to either (i) cure such change, condition or
event by the Closing Date or (ii) reduce the Purchase Price by the amount of the
adverse effect caused by such change, condition or event. If any change,
condition or event shall have an adverse effect or a reasonably likely adverse
effect of $5,200,000 or more, either Purchaser or the Sellers may terminate this
Agreement at their discretion. Neither a Material Adverse Change nor a Material
Adverse Effect shall be deemed to result from an adverse change in general
economic conditions, industry conditions or general conditions in the markets in
which the Sellers operate. Further, notwithstanding the $700,000 threshold
contained in the third sentence of this definition, the Sellers shall use all
reasonable efforts to promptly remedy any adverse change, condition or event
that causes or is reasonably likely to cause the Station to be or go off the
air.
"Order" means any decree, injunction, judgment, order, ruling, writ, quasi-
judicial decision or award or administrative decision or award of any federal,
state, local, foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Governmental Authority to which any Person is a party
or that is or may be binding on any Person or its securities, assets or business
(including, in the case of the FCC, a public notice or other written
authorization).
"Other Agreements" means the agreements, documents, assignments and
instruments to be executed and delivered by the Sellers pursuant to this
Agreement.
"Owned Real Property" means all Real Property other than Leased Real
Property.
"Permitted Liens" means (i) Liens for current real property Taxes not yet due
and payable, (ii) non-monetary Liens on Real Property that do not affect the
value or use or future use of any parcel of Real Property, and (iii) those
exceptions to title contained in the existing lender title policies with respect
to the Owned Real Property that are listed on Schedule X-1 attached hereto.
"Person" means a natural person or any legal, commercial or governmental
entity, such as, but not limited to, a business association, corporation,
general partnership, joint venture, limited partnership, limited liability
company, trust, or any person acting in a representative capacity.
"Personal Property" means collectively all Sellers' of the personal property
or interests therein owned, leased, used or controlled by the Sellers and used
or held for use in the Business, including, without limitation, machinery,
tools, equipment (including office equipment and supplies), furniture,
furnishings, fixtures (including trade fixtures), vehicles, leasehold
improvements, all other tangible personal property other than Inventory (which
is specifically excluded from the Personal Property).
"PUC Laws" means public utility commission laws, rules and regulations.
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"Purchase Price" means the total consideration to be paid to the Sellers by
Purchaser for the purchase of the Assets pursuant to this Agreement and which
shall be paid in accordance with Section 1.05 of this Agreement.
"Real Property" means collectively all Sellers' real property or interests
therein owned, leased, occupied, or used by the Sellers as of the date of this
Agreement and used or held for use in the Business, together with (i) all
rights, easements, tenements, hereditaments, appurtenances, privileges,
immunities, mineral rights and other benefits belonging or appertaining thereto
which run with said real property and (ii) all right, title and interest, if
any, of the Sellers in and to (A) any land lying in the bed of any street, road,
avenue, open or proposed, adjoining said real property, (B) any award made or to
be made in lieu of the land described in the preceding clause (A), (C) any
unpaid award for damage to said real property, and (D) all strips and
rights-of-way abutting or adjoining said real property, if any. The Real
Property includes, without limitation, all buildings, structures, fixtures and
other improvements located on the land described in the preceding sentence.
"Required Consents" means the consents to assign to Purchaser those Contracts
designated on Schedule 3.03 as Required Consent Contracts, to the extent
required under such Assumed Contracts.
"Retained Assets" means the following:
(a) cash, cash equivalents and cash items of any kind whatsoever,
certificates of deposit, money market instruments, bank balances, and rights in
and to bank accounts, Treasury bills and marketable securities and other
securities of Sellers, and the Accounts Receivable;
(b) contracts of insurance and insurance plans and the assets thereof,
promissory notes, amounts due from employees, bonds, letters of credit,
certificates of deposit, or other similar items, and any cash surrender value in
regard thereto;
(c) any pension, profit-sharing, retirement, bonus, stock purchase,
savings plans and trusts, 401(k) plans, health insurance plans (including any
insurance contracts or policies related thereto), and the assets thereof and any
rights thereto, and all other plans, agreements or understandings to provide
employee benefits of any kind for employees of Sellers, including any contracts
listed on Schedule X to this Agreement;
(d) tangible personal property disposed of or consumed in the ordinary
course of the business of Sellers and in compliance with this Agreement between
the date of this Agreement and the Closing Date;
(e) claims of Sellers with respect to transactions arising prior to the
Closing Date, including, without limitation, rights and interests of Sellers in
and to any claims for tax refunds (including, but not limited to, federal, state
or local franchise, income or other
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taxes) and causes of action and claims of Sellers under contracts and with
respect to other transactions with respect to events occurring prior to the
Closing Date and all claims for other refunds of monies paid to any governmental
agency and all claims for copyright royalties for broadcast prior to the Closing
Date;
(f) Contracts that are not Assumed Contracts;
(g) Sellers' corporate records and other books and records that pertain to
internal corporate matters of Sellers and Sellers' account books of original
entry with respect to the Business and the Assets, and all original accounts,
checks, payment records, tax records (including payroll, unemployment, real
estate and other tax records) and other similar books, records and information
of Sellers relating to Sellers' operation of the Business and the Assets prior
to Closing;
(h) the deposits and prepaid expenses of Sellers with respect to the items
that are not adjusted in favor of Sellers under Section 1.04; and
(i) all interests in the assets described on Schedule X to this Agreement.
Notwithstanding anything to the contrary set forth in this Agreement, no
representations, warranties or covenants are made with respect to the Retained
Assets.
"Retained Liabilities" means any Liability of Sellers that is not an Assumed
Liability, including, without limitation, the following:
(i) any Liabilities for any Taxes of Sellers that arise prior to the
Closing Date;
(ii) any Liabilities relating to current or former assets of Sellers not
being acquired by Purchaser pursuant to this Agreement;
(iii) any Contracts that are not Assumed Contracts;
(iv) any Liability incurred by Sellers as a result of any Default by Sellers
under any provision of this Agreement or the Other Agreements;
(v) any Liability of Sellers for severance payments or other severance
obligations relating to any Person employed by Sellers on or before the Closing
Date;
(vi) any Liability of Sellers for continuation of coverage under any group
health plan maintained by Sellers required under the provisions of Code ss.4980B
or Sections 601-608 of ERISA with respect to any Person employed by Sellers who
experiences a "qualifying event" (as defined in the Code and ERISA) on or before
the Closing Date;
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(vii) any Liability of Sellers to pay bonuses or other compensation to
Affiliates of Sellers on account of the transactions contemplated by this
Agreement;
(viii) any Liability of Sellers, of any nature whatsoever, to any current or
former shareholder or Affiliate of Sellers;
(ix) any Liability (including without limitation, any Liability relating to
any Litigation described on Schedule 3.19 and any other Litigation) relating to,
based upon, or arising out of (A) the conduct of the Business or the ownership
of the Assets prior to the Closing Date or (B) any act, omission, transaction,
circumstance, sale of goods or services, state of facts or other condition which
occurred or existed prior to the Closing Date, whether or not then known, due or
payable and whether or not disclosed in this Agreement or the Other Agreements;
(x) any Liability that Purchaser may incur in connection with any Litigation
brought against Purchaser under the Worker Adjustment and Retraining
Notification Act or any similar Law that relates to actions taken by Sellers
with regard to any employees or any site employment;
(xi) any Environmental Litigation;
(xii) any Liability of Sellers under or relating to any Employee Benefit
Plan;
(xiii) any Liability to or Lien of any Third Party pursuant to the bulk sales
of any jurisdiction that may be asserted against the sale of any of the Assets
pursuant to this Agreement (whether asserted against Sellers, the Assets or
Purchaser);
(xiv) any claim by any broker, finder or other Person employed or allegedly
employed by Sellers in connection with the transactions contemplated by this
Agreement; or
(xv) any credit agreements, note purchase agreements, indentures, or other
financing arrangements, other than the Assumed Contracts, of either of Sellers.
"Subsidiary" means WALB Licensee Corp.
"Tax" or "Taxes" means any federal, state, county, local, foreign and other
taxes, assessments, charges, fees, and impositions, including interest and
penalties thereon or with respect thereto, whether disputed or not, and
including Liabilities relating to unclaimed property.
"Tax Returns" means all returns, reports, filings, declarations and
statements relating to Taxes that are required to be filed, recorded, or
deposited with any Governmental Authority, including any attachment thereto or
amendment thereof.
"Third Party" or "Third Parties" means any Person that is not Purchaser, the
Sellers or an Affiliate of any of the foregoing.
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ARTICLE XI
MISCELLANEOUS
11.01 NOTICES.
(a) All notices, requests, demands and other communications hereunder shall
be (i) delivered by hand, (ii) mailed by registered or certified mail, return
receipt requested, first class postage prepaid and properly addressed, (iii)
sent by national overnight courier service, or (iv) sent by facsimile, graphic
scanning or other telegraphic communications equipment to the parties or their
assignees, addressed as follows:
To the Sellers: c/o The Ward L. Quaal Company
401 N. Michigan Avenue, Suite 3140
Chicago, Illinois 60611
Attention: Ward L. Quaal
Telephone: (312) 644-6066
Facsimile: (312) 644-3733
with copies to: Gray Communications Systems, Inc.
1201 New York Avenue, N.W., Suite 1000
Washington, D.C. 20005
Attention: Robert A. Beizer
Telephone: (202) 962-4820
Facsimile: (202) 962-8300
To Purchaser: Cosmos Broadcasting Corporation
2000 Wade Hampton
Greenville, South Carolina 29615
Attention: Martha G. Williams
Telephone: (864) 609-4264
Facsimile: (864) 609-3176
with copies to: Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W., Suite 800
Washington, D.C. 20036
Attention: Patricia A. Francis
Telephone: (202) 776-2509
Facsimile: (202) 776-2222
(b) All notices, requests, instructions or documents given to any party in
accordance with this Section 11.01 shall be deemed to have been given (i) on the
date of receipt if delivered by hand, overnight courier service or if sent by
facsimile, graphic scanning or other telegraphic communications equipment or
(ii) on the date three (3) business days after depositing with the United States
Postal Service if mailed by United States registered or certified mail, return
receipt requested, first class postage prepaid and properly addressed.
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(c) Any party hereto may change its address specified for notices herein by
designating a new address by notice in accordance with this Section 11.01.
11.02 ENTIRE AGREEMENT. This Agreement, the Schedules, the Exhibits, the
Exchange Agreement, and the Other Agreements constitute the entire agreement
between the parties relating to the subject matter hereof and thereof and
supersede all prior oral and written, and all contemporaneous oral negotiations,
discussions, writings and agreements relating to the subject matter of this
Agreement, including without limitation the LOI.
11.03 MODIFICATIONS, AMENDMENTS AND WAIVERS. The failure or delay of any
party at any time or times to require performance of any provision of this
Agreement shall in no manner affect its right to enforce that provision. No
single or partial waiver by any party of any condition of this Agreement, or the
breach of any term, agreement or covenant or the inaccuracy of any
representation or warranty of this Agreement, whether by conduct or otherwise,
in any one or more instances shall be construed or deemed to be a further or
continuing waiver of any such condition, breach or inaccuracy or a waiver of any
other condition, breach or inaccuracy.
11.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties hereto, and their
respective estates, successors, legal or personal representatives, heirs,
distributees, designees and assigns, but no assignment shall relieve any party
of the obligations hereunder. This Agreement or any portion thereof cannot be
assigned by any party without the prior written consent of the other parties
hereto; provided, however, that Purchaser may assign this Agreement with the
prior written consent of the Sellers, to an Affiliate of Purchaser, which
consent shall not be unreasonably withheld if it does not delay the FCC consent
and if it does not have an adverse tax impact on Sellers or their Affiliates and
if Purchaser obtains all necessary Third Party consents in connection therewith
without delaying Closing; provided, further, such assignment shall not relieve
Purchaser of its obligations hereunder. With respect to such assignments, all
representations, warranties, covenants and indemnification rights shall be
binding upon, and inure to the benefit of, the assignee or assignees as if such
representations, warranties, covenants and indemnification rights were made
directly between the original parties to this Agreement.
11.05 TABLE OF CONTENTS; CAPTIONS; REFERENCES. The table of contents and the
captions and other headings contained in this Agreement as to the contents of
particular articles, sections, paragraphs or other subdivisions contained herein
are inserted for convenience of reference only and are in no way to be construed
as part of this Agreement or as limitations on the scope of the particular
articles, sections, paragraphs or other subdivisions to which they refer and
shall not affect the interpretation or meaning of this Agreement. All references
in this Agreement to "Section" or "Article" shall be deemed to be references to
a Section or Article of this Agreement.
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11.06 GOVERNING LAW. This Agreement shall be controlled, construed and
enforced in accordance with the substantive Laws of the State of New York,
without respect to the Laws related to choice or conflicts of Laws.
11.07 PRONOUNS. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
11.08 SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good faith to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as practicable to
that of the invalid, illegal or unenforceable provisions.
11.09 REMEDIES NOT EXCLUSIVE. Except for the liquidated damages provided for
in Section 9.03, prior to Closing no remedy conferred by any of the specific
provisions of this Agreement is intended to be, nor shall be, exclusive of any
other remedy available at law, in equity or otherwise.
11.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original; but all of such counterparts
shall together constitute one and the same instrument.
11.11 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Purchaser or Sellers
whether under any rule of construction or otherwise. No party to this Agreement
shall be considered the draftsman. On the contrary, this Agreement has been
reviewed, negotiated and accepted by all parties and their attorneys and shall
be construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all parties hereto.
11.12 EXCLUSIVE REMEDY. The parties acknowledge and agree that after Closing
this Agreement shall provide the exclusive remedies of Purchaser and Sellers
with respect to the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, on and after the Closing, Purchaser
and Sellers hereby waive any statutory, equitable or common law rights or
remedies relating to any environmental health and safety matters, including
without limitation, any such matters arising under any Environmental, Health and
Safety Requirements, the Comprehensive Environmental Response, Compensation and
Liability Act or any analogous state law.
11.13 GUARANTEE. Subject to the limitations set forth herein, including
without limitation those set forth in Sections 6.01 and 6.02(b), Gray
Communications Systems, Inc. hereby unconditionally guarantees to Purchaser the
due and punctual payment and performance in full, when due, of all obligations
and liabilities of Sellers' under this Agreement and the Other Agreements and
waives any circumstances that might constitute a defense available to, or a
discharge of, a guarantor or surety (but not any circumstances that might
constitute a defense available to,
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or discharge of, either of the Sellers).
[SIGNATURES ON FOLLOWING PAGES]
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SIGNATURE PAGE TO WALB-TV ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, the Sellers and Purchaser have duly executed this
Agreement as of the date first above written.
THE COMPANY
WALB-TV, INC.
By: /s/ Ward L. Quaal
_________________________
Ward L. Quaal, President
THE SUBSIDIARY
WALB LICENSEE CORP.
By: /s/ Ward L. Quaal
_________________________
Ward L. Quaal, President
PURCHASER
COSMOS BROADCASTING CORPORATION
By: /s/ James M. Keelor
____________________________
James M. Keelor, President
FOR PURPOSES OF SECTION 11.13:
GRAY COMMUNICATIONS SYSTEMS, INC.
By: /s/ Robert A. Beizer
__________________________________
Robert A. Beizer, Vice President
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