TABLE OF CONTENTS
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PAGE
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SECTION 1. CERTAIN DEFINITIONS...........................................1
1.1 Terms Defined in this Section.................................1
1.2 Terms Defined Elsewhere in this Agreement.....................7
1.3 Rules of Construction.........................................8
SECTION 2. PURCHASE AND SALE OF ASSETS; ASSET VALUE......................8
2.1 Purchase and Sale.............................................8
2.2 Excluded Assets...............................................9
2.3 Purchase Price Deposit and Escrow Agreement..................10
2.4 Purchase Price; Allocation...................................11
2.5 Prorations and Adjustments...................................11
2.6 Payment of Purchase Price and Prorations and
Adjustments........................................14
2.7 Assumption of Liabilities and Obligations....................15
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.....................16
3.1 Organization and Authority of Seller.........................16
3.2 Authorization and Binding Obligation.........................17
3.3 Absence of Conflicting Agreements; Consents..................17
3.4 Governmental Licenses........................................18
3.5 Real Property................................................18
3.6 Tangible Personal Property...................................21
3.7 Assumed Contracts............................................21
3.8 Intangibles..................................................22
3.9 Financial Information........................................23
3.10 Taxes and Tax Returns........................................23
3.11 Insurance....................................................23
3.12 Reports......................................................23
3.13 Personnel....................................................24
3.14 Claims and Legal Actions.....................................24
3.15 Compliance with Laws.........................................25
3.16 Conduct of Business in Ordinary Course.......................25
3.17 Environmental................................................25
3.18 Brokers......................................................26
3.19 Transactions With Affiliates.................................26
3.20 Assets.......................................................27
3.21 Employee Benefits............................................27
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3.22 Disclosure...................................................27
3.23 Knowledge....................................................28
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER......................28
4.1 Organization, Standing and Authority.........................28
4.2 Authorization and Binding Obligation.........................28
4.3 Absence of Conflicting Agreements and Required
Consents...........................................28
4.4 Buyer Qualifications.........................................29
4.5 Brokers......................................................29
4.6 Disclosure...................................................29
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING...................29
5.1 Contracts....................................................29
5.2 Dispositions.................................................30
5.3 Encumbrances.................................................30
5.4 Access to Information........................................31
5.5 Insurance....................................................31
5.6 Compensation.................................................31
5.7 Financial Information........................................31
5.8 Transactions with Affiliates.................................32
5.9 Collective Bargaining........................................32
5.10 Maintenance of Assets........................................32
5.11 Operating Budget.............................................32
5.12 Incurrence of Additional Indebtedness........................32
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS.............................32
6.1 FCC Consent..................................................32
6.2 HSR Act Filing...............................................33
6.3 Confidentiality..............................................34
6.4 Cooperation..................................................35
6.5 Control of the Station.......................................35
6.6 Accounts Receivable..........................................36
6.7 Access to Books and Records..................................38
6.8 Employee Matters.............................................38
6.9 Cure.........................................................40
6.10 Other Acquisitions...........................................40
6.11 Interruption of Broadcast Transmission.......................41
6.12 Ownership Interests in Seller................................42
6.13 Estoppel Certificate.........................................42
6.14 FCC Applications.............................................42
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6.15 Executed Copies of the Assumed Contracts.....................42
6.16 Representation Agreement.....................................42
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
.............................................................44
7.1 Conditions to Obligations of Buyer...........................44
7.2 Conditions to Obligations of Seller..........................45
SECTION 8. CLOSING AND CLOSING DELIVERIES...............................46
8.1 Closing......................................................46
8.2 Deliveries by Seller.........................................47
8.3 Deliveries by Buyer..........................................49
SECTION 9. TERMINATION..................................................50
9.1 Termination of Agreement.....................................50
9.2 Procedure and Effect of Termination..........................50
9.3 Attorneys' Fees..............................................53
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES............................53
10.1 Survival.....................................................53
10.2 Indemnification by Seller....................................54
10.3 Indemnification by Buyer.....................................57
10.4 Procedure for Indemnification................................58
10.5 Investigation................................................60
SECTION 11. MISCELLANEOUS................................................60
11.1 Fees and Expenses............................................60
11.2 Notices......................................................60
11.3 Benefit and Binding Effect...................................61
11.4 Further Assurances...........................................62
11.5 GOVERNING LAW................................................62
11.6 Entire Agreement.............................................62
11.7 Waiver of Compliance; Consents...............................63
11.8 Counterparts.................................................63
11.9 Severability.................................................63
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Exhibits
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Exhibit 1.1 Indemnification Fund Agreement
Exhibit 2.3(b) Escrow Agreement
Exhibit 8.2(f) Opinion of Counsel to Seller
Exhibit 8.2(i) Assignment and Assumption Agreement
Exhibit 8.2(k) Non-Competition Agreement
Exhibit 8.3(e) Opinion of Counsel to Buyer
Schedules
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Schedule 1.1 Definition of Broadcast Cash Flow
Schedule 2.2(g) Excluded Contracts
Schedule 2.2(j) Additional Excluded Assets
Schedule 3.3 Absence of Conflicting Agreements; Consents
Schedule 3.4 Governmental Licenses
Schedule 3.5 Real Property
Schedule 3.6 Tangible Personal Property
Schedule 3.7 Contracts
Schedule 3.7A Certain Agreements
Schedule 3.8 Intangibles
Schedule 3.9 Financial Statements
Schedule 3.10 Taxes and Tax Returns
Schedule 3.11 Insurance
Schedule 3.13 Personnel
Schedule 3.14 Claims and Legal Actions
Schedule 3.16 Conduct of Business in Ordinary Course
Schedule 3.17 Environmental
Schedule 3.19 Transactions with Affiliates
Schedule 3.21 Employee Benefits
Schedule 4.3 Absence of Conflicting Agreements; Consents
Schedule 5.6 Employee Raises
Schedule 8.2(k) Persons executing Non-Competition Agreements
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated as of January 31, 1997, by and
between Channel 21, L.P., a Nevada limited partnership ("Seller"), and KUPN,
Inc., a Maryland corporation("Buyer").
R E C I T A L S:
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A. Seller owns and operates Television Station KUPN-TV, Las Vegas,
Nevada (the "Station").
B. Seller desires to sell, and Buyer desires to purchase, substantially
all of the assets of the Station, on the terms and conditions hereinafter set
forth.
A G R E E M E N T S:
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In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
SECTION 1. CERTAIN DEFINITIONS
1.1 Terms Defined in this Section. The following terms, as used in
this Agreement, have the meanings set forth in this Section:
"Accounts Receivable" means the rights of Seller as of the Closing Date
to payment for the sale of advertising time and other goods and services by the
Station prior to the Closing Date.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.
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"Assets" means the assets to be transferred or otherwise conveyed by
Seller to Buyer under this Agreement, as specified in Section .
"Assumed Contracts" means (a) all Contracts listed in Schedules 3.5,
3.7 and 3.7A and all Contracts of the type described in Sections 3.5 and 3.7
that are not required to be listed thereon pursuant to the exceptions set forth
in such Sections; (b) contracts entered into with advertisers for the sale of
advertising time or production services for cash in the ordinary course of
business; (c) any Contracts entered into by Seller between the date of this
Agreement and the Closing Date that Buyer agrees in writing to assume; and (d)
other contracts entered into by Seller between the date of this Agreement and
the Closing Date in compliance with Section 5.2; provided that Assumed Contracts
shall in no event include Excluded Contracts.
"Broadcast Cash Flow" has the meaning set forth in Schedule 1.1.
"Business Day" means any day other than a Saturday, Sunday, federal
holiday or day on which banking institutions in New York City are authorized or
obligated by law or executive order to be closed.
"Closing" means the consummation of the sale and acquisition of the
Assets, and assumption of the Assumed Liabilities, pursuant to this Agreement in
accordance with the provisions of Section .
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section .
"Closing Date Estimated Accounts Receivable" means an amount equal to
the Seller's good faith estimate of Accounts Receivable as of the Closing Date,
which have been outstanding for no more than 120 days, as set forth in the
certificate of Seller delivered to Buyer five (5) days before the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Communications Act" means the Communications Act of 1934, as amended.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to lawfully and validly transfer
the Assets to Buyer, to maintain the validity and effectiveness (and prevent any
default or violation of the terms thereof) of the Contracts and Licenses
(including, without limitation, the FCC Licenses) to be transferred to Buyer, or
otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) of Seller or to which Seller is a party or that are binding upon Seller
and that relate to or affect the Assets or the business or operations of the
Station, and (a) that are in effect on the date of this Agreement or (b) that
are entered into by Seller between the date of this Agreement and the Closing
Date, but excluding any Contracts that terminate between the date of this
Agreement and the Closing Date.
"Effective Time" means 12:01 a.m. Las Vegas, Nevada time, on the
Closing Date.
"Employee Plan" means any retirement, severance, medical, disability,
life insurance or any other employee benefit plan as defined in Section 3(3) of
ERISA to which either of the Seller or any entity related to Seller (under the
terms of Sections 414 (b) or (c) of the Code) contributes (or previously
contributed and with respect to which Seller could still have direct or
contingent liability) or which either of the Seller or any entity related to
Seller (under the terms of Sections 414 (b) or (c)of the Code) sponsors or
maintains (or previously sponsored or maintained and with respect to which
Seller could still have direct or contingent liability).
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person that, together with Seller, is,
would be, or was at any time treated as a single employer under Section 414 of
the Code or Section 4001 of ERISA.
"Escrow Agent" means First Union National Bank of North Carolina.
"Escrow Amount" means the sum of the Subsequent Escrow Deposits, and
all interest and earnings accrued thereon.
"FCC" means the Federal Communications Commission.
"FCC Consent" means actions by the FCC granting its consent to the
assignment of the FCC Licenses by the Seller to Buyer or, if the Buyer assigns
its rights as assignee of the FCC Licenses to the License Assignee pursuant to
Section 11.3 of this Agreement, the License Assignee as contemplated by this
Agreement.
"FCC Licenses" means those licenses, permits and authorizations issued
by the FCC to the Seller in connection with the business and operations of the
Station (together with any renewals, extensions, modifications or additions
thereto between the date of this Agreement and the Closing Date).
"Final Order" means an action or order by the FCC (a) that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay and the FCC has not initiated a review
of such action or order on its own motion and the periods provided by statute or
FCC regulations for filing any such requests and for the FCC to set aside the
action on its own motion have expired, or (ii) in the event of review,
reconsideration or appeal, the period provided by statute or FCC regulations for
further review, reconsideration or appeal has expired.
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnification Amount" means the sum of the current Indemnification
Deposit and all interest or earnings accrued thereon.
"Indemnification Deposit" means the Initial Deposit and the Additional
Indemnification Amount Deposit.
"Indemnification Fund Agreement" means the Indemnification Fund
Agreement among Buyer, Seller and First Union National Bank of North Carolina
("Indemnification Escrow Agent"), substantially in the form attached hereto as
Exhibit 1.1, in accordance with which the Indemnification Deposit will be
deposited with the Indemnification Escrow Agent in order to provide a fund for
the (a) payment of any claims for which Buyer may be entitled to indemnification
as provided in Section 10 hereof or (b) payment of any amounts pursuant to
Section 2.6(b)(2) hereof, if any.
"Initial Deposit" means Three Million Dollars ($3,000,000) less an
amount equal to the lesser of (a) One Million Five Hundred Thousand Dollars
($1,500,000) or (b) the Closing Date Estimated Accounts Receivable.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, and other similar intangible or
intellectual property rights and interests (and any goodwill associated with the
Station or any of the foregoing) applied for, issued to, or owned by Seller or
under which Seller is licensed or franchised or in which Seller has any interest
and that are used or useful in the business and operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Lease" means the lease dated 1993 between Private Trust 204 and Frank
E. Scott, Trustee, and Lambert Television, Inc. and any amendments thereto.
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"License Assignee" means KUPN Licensee, Inc., a Maryland corporation,
which will be a wholly owned subsidiary of Buyer.
"Licenses" means all licenses, permits, construction permits and other
authorizations issued by the FCC (including, without limitation, the FCC
Licenses), the Federal Aviation Administration, or any other federal, state or
local governmental authorities to Seller, currently in effect or pending and
used or useful in connection with the conduct of the business or operations of
the Station, together with any additions thereto between the date of this
Agreement and the Closing Date.
"Management Arrangement" means any time brokerage agreement, local
marketing agreement or other arrangement providing for the provision of
management services, television programming or assets related to the provision
of television broadcasting in exchange for payments and/or the right to charge
others for the provision of advertising or other services or products with
respect to any broadcast television station, the Designated Market Area (as
defined by Nielsen Media Research("DMA")) of which is the same as the DMA of the
Station.
"Operating Budget" means the operating budget of the Station for fiscal
year 1997 previously furnished by Seller to Buyer.
"Option" means option to purchase the assets of or ownership interests
in any Person owning a broadcast television station, the DMA of which is the
same as the DMA of the Station.
"Permitted Liens" means (a) liens for taxes not yet due and payable;
(b) landlord's liens; (c) liens for property taxes not delinquent; (d) statutory
liens that were created in the ordinary course of business; (e) restrictions or
rights required to be granted to governmental authorities or otherwise imposed
by governmental authorities under applicable law; (f) zoning, building, or
similar restrictions relating to or affecting property; (g) all matters of
record as of the date hereof, and, including, without limitation, those matters
disclosed in Schedule 3.5 as "continuing" and including leasehold interests in
real property owned by others and operating leases for personal
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property and leased interests in property leased to others; (h)(1) liens or
encumbrances on the Real Property, currently of record as of the date hereof and
(2) other liens or encumbrances on the Real Property, in either case that do not
materially affect the current use and enjoyment thereof in the operation of the
Assets; and (i) the Assumed Liabilities (as hereinafter defined).
Notwithstanding the foregoing, "Permitted Liens" shall not include Liens on
Assets that secure amounts owed by Seller or its partners to its creditors for
indebtedness for borrowed money which shall be discharged at or before Closing.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, or other entity or organization.
"Purchase Price Deposit" means the amount paid by Buyer to Seller
pursuant to Section 2.3(a) of this Agreement, plus interest thereon, accrued on
such amount at a rate of interest equal to 7% per annum from the date of each
deposit of such amounts pursuant to Section 2.3 hereof until the Closing Date or
until the date of return of such amounts to Buyer, as the case may be; provided
that from and after the date of termination of this Agreement as a result of
which Buyer becomes entitled to a return of the Purchase Price Deposit, the
interest accruing thereon shall equal nine percent (9%) per annum; provided
further however, that Seller shall have the right by delivering the Purchase
Price Deposit (plus interest accrued thereon to the date of delivery) into an
escrow to be established pursuant to an escrow agreement substantially similar
to the Escrow Agreement attached hereto as Exhibit 2.3(b), in which event
interest on the Purchase Price Deposit at the rates specified above shall cease
to accrue and the amount in escrow (principal and interest) shall accrue
interest in accordance with the terms and provisions of such escrow agreement
and will be paid in accordance with the terms of this Agreement and such escrow
agreement; and provided, further, that Seller and Buyer shall negotiate in good
faith to establish any subsequent escrow agreement and, failing agreement,
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Seller shall have the right to deposit such amount with a court of competent
jurisdiction and interest on the Purchase Price Deposit shall cease upon such
deposit.
"Real Property" means (a) all fee estates in real property, and all
buildings and other improvements thereon, owned, leased or held by Seller or its
General Partner that are used or useful in the business or operations of the
Station; and (b) leases of any real property under which Seller or its General
Partner is the lessor, together with any additions thereto between the date of
this Agreement and the Closing Date.
"Required Consents" means such Consents as listed in Schedule 3.3 that
are designated with a double asterisk.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, office equipment, plant, inventory, spare parts and other
tangible personal property owned or held by Seller that is used or useful in the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Tax" means any federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding or other
tax or governmental assessment, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties.
"Tax Return" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing required to be
submitted by Seller relating to the Station to any governmental authority with
respect to any Tax.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of
this Agreement, the following terms have the meanings set forth in the sections
indicated:
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Term Section
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Additional Indemnification
Amount Deposit Section 6.6 (b)
Ancillary Documents Section 8.3
Assumed Employees Section 6.8 (a)
Assumed Liabilities Section 2.7
Buyer Preamble
Claimant Section 10.4 (a)
Collection Period Section 6.6 (a)
DOJ Section 6.2
Employees Section 3.13 (a)
Escrow Agreement Section 2.3 (b)
Estimated Purchase Price Section 2.4
Environmental Laws Section 3.17
Excluded Assets Section 2.2
Excluded Contracts Section 2.2 (g)
Financial Statements Section 3.9
FTC Section 6.2
General Partner Section 3.1(b)
Hazardous Substance Section 3.17
Indemnification Escrow Agent Section 1.1
Indemnifying Party Section 10.4 (a)
Liens Section 2.1
Purchase Price Section 2.4
Seller Preamble
Settled Claim Section 10.4 (b)
Station Recitals
Subsequent Escrow Deposits Section 2.3 (b) (1)
1.3 Rules of Construction. Except as specifically otherwise provided
in this Agreement in a particular instance, a reference to a Section, Schedule
or Exhibit is a reference to a Section of this Agreement or a Schedule or
Exhibit hereto, and the terms "hereof," "herein," and other like terms refer to
this Agreement as a whole, including the Schedules and Exhibits to this
Agreement, and not solely to any particular part of this Agreement. The
descriptive headings in this Agreement are inserted for convenience of reference
only and are not intended
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to be part of or to affect the meaning or interpretation of this Agreement.
SECTION 2. PURCHASE AND SALE OF ASSETS; ASSET VALUE
2.1 Purchase and Sale. Subject to the terms and conditions set forth
in this Agreement, Seller hereby agrees to transfer, convey, assign and deliver
to Buyer on the Closing Date, and Buyer agrees to acquire, all of Seller's
right, title and interest in the tangible and intangible assets used or useful
in connection with the conduct of the business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date, but excluding assets disposed of between the date of this
Agreement and the Closing Date in the ordinary course of business in accordance
with the provisions of this Agreement and the assets described in Section 2.2,
free and clear of any claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges, or encumbrances of any nature whatsoever
(collectively, "Liens") (except for Permitted Liens), including, without
limitation, the following:
(a) the Tangible Personal Property;
(b) the Real Property;
(c) the Licenses (subject to Buyer's right to have the FCC Licenses
assigned directly to the License Assignee);
(d) the Assumed Contracts;
(e) the Intangibles;
(f) all of Seller's proprietary information, technical information
and data, maps, computer discs and tapes, plans, diagrams, blueprints and
schematics, including filings with the FCC, relating to the business and
operations of the Station;
(g) all books and records of Seller relating solely to the business
or operations of the Station, including executed
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copies of the Assumed Contracts, and all records required by the FCC to be kept
by the Station, other than account books of original entry and such files and
records that are maintained at the corporate offices of Seller's general partner
for tax and accounting purposes;
(h) all deposits and prepaid expenses of Seller with respect to items
that are prorated in favor of Seller pursuant to Section 2.5 below; and
(i) all other assets of Seller not constituting Excluded Assets.
2.2 Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the Assets shall not include the following (collectively, the
"Excluded Assets"):
(a) all 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 Seller;
(b) any contracts of insurance and insurance plans and the assets
thereof, promissory notes, amounts currently due from employees, bonds, letters
of credit, certificates of deposit, or other similar items, and any cash
surrender value in regard thereto;
(c) except as otherwise provided in Section 6.8, 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 Seller;
(d) Accounts Receivable and any other receivables of any nature
whatsoever due to Seller;
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(e) tangible personal property disposed of or consumed in the
ordinary course of operation of the Station by Seller between the date of this
Agreement and the Closing Date;
(f) claims of Seller with respect to transactions attributable to the
operations of the Station prior to the Closing Date, including, without
limitation, rights and interests of Seller in and to any claims for tax refunds
(including, but not limited to, federal, state or local franchise, income or
other taxes) and causes of action and claims of Seller under contracts and with
respect to other transactions with respect to events occurring prior to the
Closing Date and all claims for other refunds or return of monies relating to
the operations of the Station prior to the Closing Date;
(g) Contracts that are not Assumed Contracts, including those listed
in Schedule 2.2(g) (the "Excluded Contracts");
(h) Seller's partnership records and other books and records that
pertain to internal partnership matters of Seller and Seller's account books of
original entry with respect to the Station, and any other 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 Seller relating to Seller's operation of the business
of the Station and any other Assets prior to Closing;
(i) the deposits and prepaid expenses of Seller with respect to the
items that are not subject to adjustment under Section 2.5 hereof and with
respect to which Seller remains solely liable pursuant to Section 2.5 hereof;
and
(j) Seller's interests in the assets described in
Schedule 2.2(j).
Notwithstanding anything to the contrary set forth in this Agreement,
no representations, warranties or covenants are made with respect to the
Excluded Assets.
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2.3 Purchase Price Deposit and Escrow Agreement.
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(a) Concurrently with the execution and delivery of this Agreement,
Buyer shall pay to Seller Five Million Dollars ($5,000,000) (the "Purchase Price
Deposit") by federal wire transfer of same-day funds pursuant to wire transfer
instructions which instructions have been delivered by Seller to Buyer prior to
the date hereof. The Purchase Price Deposit shall be credited against the amount
to be paid by Buyer to Seller at Closing as set forth in Section 2.6 hereof.
(b) Pursuant to the terms and conditions of the Escrow Agreement,
substantially in the form of Exhibit 2.3(b) attached hereto (the "Escrow
Agreement"), executed by and among Buyer, Seller and the Escrow Agent
concurrently with the execution and delivery of this Agreement:
(1) On the expiration of each full 45 day period after the date
of this Agreement, subject to Section 2.3(c) below, Buyer shall deposit with the
Escrow Agent by federal wire transfer of same-day funds Two Million Dollars
($2,000,000) (collectively, the "Subsequent Escrow Deposits"); and
(2) At the Closing, Buyer and Seller shall cause the Escrow Agent
to pay the Escrow Amount over to Seller as a credit against the amount to be
paid by Buyer to Seller at the Closing as set forth in Section 2.6 hereof.
(c) Notwithstanding anything in this Agreement to the contrary, the
aggregate of all amounts required to be paid or deposited pursuant to this
Section 2.3 shall not exceed Fifteen Million Dollars ($15,000,000). In the event
of a termination of this Agreement, the Purchase Price Deposit and the Escrow
Amount shall be paid in accordance with Section 9.2 hereof.
2.4 Purchase Price; Allocation. The purchase price for the Assets
shall be Eighty-seven Million Dollars ($87,000,000) (the "Estimated Purchase
Price"), which sum shall be subject to upward or downward adjustment, as the
case may be, on and after the
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Closing Date pursuant to Section 2.5(a) below (the Estimated Purchase Price as
so adjusted, the "Purchase Price").
2.5 Prorations and Adjustments.
--------------------------
(a) Prorations and Adjustments. The Estimated 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,
utility charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, taxes (except for taxes arising from the transfer of
the Assets under this Agreement), employee compensation, including wages,
salaries, accrued vacation pay, commissions, music license fees and similar
prepaid and deferred items, shall be prorated between Buyer and Seller in
accordance with the principle that Seller shall receive all revenues and shall
be responsible for all expenses, costs and liabilities allocable to the
operations of the Station in accordance with generally accepted accounting
principles consistently applied for the period prior to the Effective Time, and
Buyer 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 the Effective Time in accordance with generally accepted accounting
principles consistently applied, subject to the following:
(1) There shall be no adjustment for, and Seller shall remain
solely liable with respect to, any Excluded Contracts and any other obligation
or liability not being assumed by Buyer in accordance with Section 2.7.
(2) No adjustment or proration shall be made in favor of Seller
or Buyer 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 the
Effective Time exceeds, or is less than, the value of any advertising time
remaining to be run by the Station as of the Effective Time; provided, however,
that there shall be a decrease in the
-15-
Estimated Purchase Price if and to the extent that the aggregate value of such
advertising time exceeds the value of such goods or services by more than
$25,000.
(3) There shall also be no adjustment or proration for program
barter. There shall be no adjustment or proration of the payments due under the
film or programming license agreements except as expressly specified in this
Section 2.5(a)(3). Except as set forth herein for the month in which the Closing
occurs, Seller shall be responsible for filing and paying all film or
programming license fees due and payable as of the Effective Time; provided that
for the month in which the Closing occurs, such obligations for such month shall
be allocated on a pro-rata basis based on the day of the month in which the
Closing occurs. Deposits for film and programming agreements shall be fully
credited to the Seller; provided, however, that on the Closing Date, such credit
will be reduced on a pro-rated basis based on the length of the term that the
film or program was available to be aired on the Station prior to Closing and
the total length of the term that the film or program is available to air on the
Station.
(4) There shall be no adjustment or proration for sick days with
respect to which no cash payment is or may be due to any employee or severance
pay relating to any employee of Seller.
(b) Manner of Determining Prorations and Adjustments. The Purchase
Price, taking into account the adjustments and prorations pursuant to Section ,
will be determined in accordance with the following procedures:
(1) Seller shall prepare and deliver to Buyer not later than five
(5) Business Days before the Closing Date a preliminary settlement statement
which shall set forth Seller's good faith estimate of the Purchase Price and
adjustments or prorations to the Estimated Purchase Price under Section 2.5 (a).
The preliminary settlement statement shall contain all information reasonably
necessary to determine the adjustments or prorations to the Estimated Purchase
Price under Section 2.5 (a),
-16-
including appropriate supporting documentation, to the extent such adjustments
or prorations can be determined or estimated as of the date of the preliminary
settlement statement. The adjustments and prorations to the Estimated 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, Buyer will
deliver to Seller a statement setting forth Buyer's determination of the
Purchase Price and any changes to the adjustments and prorations to the
Estimated Purchase Price made at Closing pursuant to Section 2.5(a). Buyer's
statement (A) shall contain all information reasonably necessary to determine
the adjustments and prorations to the Estimated Purchase Price under Section ,
including appropriate supporting documentation, and such other information as
may be reasonably requested by Seller, and (B) shall be certified by an officer
of Buyer (after due inquiry by, but without personal liability to, such officer)
to be true and complete to Buyer's knowledge. Seller shall have the right to
visit the Station to verify and review such documentation upon providing
reasonable notice to Buyer. If Seller disputes the adjustments and prorations
determined by Buyer, it shall deliver to Buyer within sixty days after its
receipt of Buyer's statement a statement setting forth its determination of the
Purchase Price and the adjustments and prorations. If Seller notifies Buyer of
its acceptance of Buyer's statement, or if Seller fails to deliver its statement
within the sixty-day period specified in the preceding sentence, Buyer's
determination of the Purchase Price and the adjustments and prorations shall be
conclusive and binding on the parties as of the last day of the sixty-day
period.
(3) Buyer and Seller shall use good faith efforts to resolve any
dispute involving the determination of the Purchase Price and the adjustments
and prorations to the Estimated Purchase Price made in connection with the
Closing. If the parties are unable to resolve any dispute related to financial
or accounting matters within fifteen days following the delivery of Seller's
preliminary settlement statement pursuant to
-17-
Section 2.5 (b) (2) , Buyer and Seller shall jointly designate an independent
certified public accountant, who shall not have performed services for either
Buyer or Seller within the prior two (2) year period and who shall be
knowledgeable and experienced in the operation of television broadcasting
stations, to resolve such dispute. If the parties are unable to agree on the
designation of an independent certified public accountant, the selection of the
accountant to resolve such dispute shall be submitted to arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association. The accountant's resolution of such 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.
To the extent that any dispute involving the Purchase Price and the adjustments
and prorations made to the Estimated Purchase Price in connection with the
Closing relates to matters of construction or interpretation of this Agreement
or is otherwise not related to financial or accounting matters within the
competence of the accountant, such dispute shall not be resolved by the
accountant, but shall be resolved by mutual agreement of the parties or pursuant
to the order of a court of competent jurisdiction.
2.6 Payment of Purchase Price and Prorations and Adjustments. The
Purchase Price shall be paid by Buyer to Seller as follows:
(a) Payments At Closing. At the Closing, the Estimated Purchase
Price, as adjusted pursuant to Section 2.5(b)(1) (the "Preliminary Purchase
Price"), shall be paid as follows:
(1) Buyer shall pay or cause to be paid to Seller an amount equal
to the Preliminary Purchase Price less the sum of (A) the Purchase Price
Deposit, (B) the Escrow Amount and (C) the Initial Deposit;
-18-
(2) Buyer shall pay or cause to be paid to the Indemnification
Escrow Agent the Initial Deposit to be held pursuant to the Indemnification Fund
Agreement; and
(3) At the Closing, Buyer and Seller shall cause the Escrow Agent
to pay the Escrow Amount over to Seller as a credit against the Preliminary
Purchase Price.
Each of the foregoing amounts shall be paid by federal wire transfer of same-day
funds pursuant to wire transfer instructions which instructions shall be
delivered by Buyer, Seller and the Indemnification Escrow Agent, as appropriate,
to the other parties hereto at least two Business Days prior to the Closing
Date.
(b) Payments to Reflect Prorations and Adjustments.
----------------------------------------------
(1) If the Purchase Price as finally determined pursuant to
Section 2.5(b)(2) (the "Final Purchase Price") exceeds the Preliminary Purchase
Price, Buyer shall pay to Seller, by federal wire transfer of same-day funds
within five Business Days after the date on which the Final Purchase Price is
determined pursuant to Section 2.5(b)(2), the difference between the Final
Purchase Price and the Preliminary Purchase Price.
(2) If the Final Purchase Price is less than the Preliminary
Purchase Price, Seller shall pay to Buyer, by federal wire transfer of same-day
funds, within five (5) Business Days after the date on which the Final Purchase
Price is determined pursuant to Section 2.5(b)(2), the difference between the
Preliminary Purchase Price and the Purchase Price.
2.7 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge and perform only the
following obligations, duties and liabilities: (a) any obligation or liability
of Seller arising out of or related to the ownership and operation of the
Station and the Assets(including the Licenses and the Assumed Contracts) to the
extent that either (1) the obligations and liabilities relate to the period from
and after the Effective Time or (2) the
-19-
Purchase Price was reduced pursuant to Section 2.5 (a) as a result of the
proration or adjustment of such obligations and liabilities; (b) any liability
or obligation to any former employee of Seller who has been hired by Buyer,
attributable to any period of time on or after the Closing Date or as provided
in Section 6.8; (c) any liability or obligation arising out of any litigation,
proceeding or claim by any person or entity relating to the business or
operations of the Station or any of the Assets with respect to any events or
circumstances that are attributable to the period on or after the Closing Date;
(d) any severance or other liability arising out of the termination of any
employee's employment with or by Buyer on or after the Closing Date; (e) any
duty, obligation or liability relating to any pension, 401(k) or other similar
plan, agreement or arrangement provided by Buyer to any employee or former
employee of Seller on or after the Closing Date; and (f) all state and local
sales or use taxes (or their equivalent) and transfer taxes or recording fees
payable as a consequence of the sale of the Assets hereunder, but subject to
Seller's obligations under Section 11.1 hereof (all of the foregoing, together
with other liabilities or obligations expressly assumed by Buyer hereunder,
including, without limitation, the Assumed Contracts, are referred to herein
collectively as the "Assumed Liabilities"). Buyer shall not be required to
assume any of the following: (i) any obligations or liabilities under any
Excluded Contract, (ii) any obligations or liabilities under the Assumed
Contracts relating to the period prior to the Effective Time, except insofar as
a proration or adjustment therefor is made in favor of Buyer under Section ,
(iii) liabilities relating to indebtedness of Seller for borrowed money, (iv)
liabilities for claims or litigation involving the Station relating to events
occurring prior to the Effective Time or (v) except as otherwise provided in
this Agreement, obligations or liabilities relating to employees not
specifically assumed hereunder.
-20-
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization and Authority of Seller.
------------------------------------
(a) Seller is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Nevada. Seller is qualified to
conduct business and is in good standing in each jurisdiction where the nature
of its business or ownership of its properties requires such qualification,
except where the failure to be so qualified or in good standing would not have a
material adverse effect on the business or operations of the Station. Seller has
the requisite partnership power and authority to own and operate the Assets
owned and operated by it, to carry on the business of the Station now being
conducted by it, and to execute, deliver and perform this Agreement and the
Ancillary Documents according to their respective terms.
(b) The general partner of Seller (the "General Partner") is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the State of Nevada. The General Partner is qualified to conduct
business and in good standing in each jurisdiction where the nature of its
business or ownership of its properties requires such qualification, except
where the failure to be so qualified or in good standing would not have a
material adverse effect on the business or operations of the Station. The
General Partner has the requisite corporate power to serve as general partner of
Seller and to execute and deliver this Agreement and the Ancillary Documents on
behalf of Seller.
3.2 Authorization and Binding Obligation.
-------------------------------------
(a) The execution, delivery and performance of this Agreement and the
Ancillary Documents, and the consummation of the transactions contemplated
hereby and thereby, by Seller have been duly and validly authorized by all
necessary partnership action on the part of Seller. This Agreement and the
Ancillary
- 21 -
Documents executed by Seller have been duly executed and delivered by Seller and
constitute its legal, valid and binding obligations, enforceable against it in
accordance with their respective terms, except as the enforceability of this
Agreement and the Ancillary Documents may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally and by judicial discretion
in the enforcement of equitable remedies.
(b) The execution and delivery of this Agreement and the Ancillary
Documents by the General Partner have been duly and validly authorized by all
necessary corporate action on the part of the General Partner.
3.3 Absence of Conflicting Agreements; Consents. The execution and
delivery of this Agreement by the General Partner on behalf of Seller, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or governmental authority, except as follows: (a)
filings, waivers and approvals required under the HSR Act, (b) the FCC Consent,
(c) filings with respect to real estate, sales and other transfer taxes, and (d)
certain of the Assumed Contracts may be assigned only with the consent of third
parties, as specified in Schedule 3.3. Subject to obtaining the Consents, the
execution and delivery of this Agreement and the Ancillary Documents by the
General Partner on behalf of Seller and performance by Seller of this Agreement
and the Ancillary Documents (with or without the giving of notice, the lapse of
time, or both): (a) do not require the consent of any third party; (b) do not
conflict with, violate or result in a breach of any provision of the Articles of
Incorporation and Bylaws of the General Partner or the Agreement of Limited
Partnership of Seller, as the case may be; (c) do not conflict in any material
respect with, result in a material breach of, or constitute a material default
under, any applicable law, ordinance, rule or regulation applicable to the
General Partner or Seller or any Assumed Contract; or (d) do not conflict with,
result in a breach of or constitute a default under any judgment, order,
injunction
- 22 -
or decree of any court or governmental authority applicable specifically to the
General Partner, Seller or the Station.
3.4 Governmental Licenses. Schedule 3.4 is a complete list as of the
date of this Agreement of all FCC Licenses and all material other Licenses,
which constitute all FCC authorizations and all material other governmental
authorizations which are required or necessary for the lawful conduct of the
business and operations of the Station as currently conducted. Schedule 3.4 also
includes a complete list of all applications for FCC Licenses with respect to
the business and operations of the Station pending at the FCC as of the date
hereof (the "FCC Applications"). Each License is in effect, and the Seller is
the legal holder thereof. Except as set forth in Schedule 3.4, the conduct of
the business and operations of the Station is in accordance with the Licenses in
all material respects. Except as set forth in Schedule 3.4, and except for those
conditions or restrictions appearing on the face of the FCC Licenses or other
Licenses, none of the FCC Licenses or other Licenses is subject to any
restriction or condition which would limit the operation of the Station as
currently operated. Except as set forth on Schedule 3.7, Seller is not a party
to any agreement with any community group, governmental authority or other third
party restricting programming, employment practices or other aspects of the
business or operations of the Station. Seller has delivered to Buyer true,
correct and complete copies of the Licenses and FCC Applications listed in
Schedule 3.4 (including any and all amendments and other modifications thereto).
The FCC Licenses listed in Schedule 3.4 are currently in effect and are not
subject to any Liens, other than Permitted Liens. No license renewal
applications are pending with respect to any of the FCC Licenses. As of the date
hereof, Seller has no reason to believe that the FCC would not renew the FCC
Licenses in the ordinary course for a full license term without any adverse
conditions, upon the timely filing of appropriate applications and payment of
the required filing fees. As of the date hereof, Seller has no reason to believe
that the FCC would not grant the FCC Applications in the ordinary course without
any adverse conditions, except for conditions pertaining to the FCC's
implementation of digital television.
-23-
3.5 Real Property.
-------------
(a) Schedule 3.5 contains an accurate description as of the date of
this Agreement of all Real Property.
(b) Except as described in Schedule 3.5, Seller has good and
marketable fee simple title (to the knowledge of Seller, insurable at standard
rates by a reputable national title insurer) to all fee estates included in the
Real Property and good title to all other Real Property, in each case free and
clear of all Liens, except for Permitted Liens. The Real Property constitutes
all real property interests of any nature whatsoever used in the conduct of the
business and operations of the Station as now conducted. Seller has delivered to
Buyer true, correct and complete copies (to the extent possessed by Seller) of
all deeds, by which Seller or its General Partner has received a fee interest in
any of the Real Property; leases, by which Seller is the lessee or lessor of any
of the Real Property; title insurance policies, which Seller has received with
respect to any of the Real Property; surveys, which Seller has received with
respect to any of the Real Property; and inspection reports or other instruments
or reports, including, without limitation, any phase I or phase II environmental
reports or other similar environmental reports, surveys or assessments, which
Seller has contracted for or received with respect to any of the Real Property
(including any and all amendments and other modifications of such instruments).
All of the Real Property owned in fee has full practical and insurable legal
access to public roads or streets and has all zoning, utilities and services
necessary for the proper and lawful conduct and operation of the Station as now
conducted, except where the absence thereof would not have a material adverse
effect on the business or operations of the Station or impose a material
monetary liability on Buyer to correct. To the knowledge of Seller, all towers,
earth receiving dishes and facilities, and other installations, equipment and
facilities utilized in connection with the Station (including any related
buildings and guy anchors) are maintained, placed and located in accordance with
the provisions of all applicable laws, rules, regulations,
- 24 -
deeds, easements, restrictions, leases, licenses and permits or other
arrangements and are located entirely on the Real Property owned or leased by
Seller or its General Partner, except to the extent that any failure to so
maintain, place or locate such equipment would not have a material adverse
effect on the business or operations of the Station or impose a material
monetary liability on Buyer to correct.
(c) Seller or its General Partner, as the case may be, has a valid
leasehold interest in all leasehold Real Property listed as leased by Seller in
Schedule 3.5. Schedule 3.5 lists all leases and subleases pursuant to which any
of the leasehold Real Property included in the Assets is leased by Seller or its
General Partner, as the case may be. To the knowledge of Seller, so long as
Seller or its General Partner, as the case may be, fulfills its obligations
under the lease therefor, Seller or its General Partner, as the case may be, has
enforceable rights to nondisturbance and peaceful and quiet enjoyment. Except as
set forth in Schedule 3.5, Seller or its General Partner, as the case may be, is
in compliance in all material respects with all of the provisions of such leases
and subleases and is not in default thereunder in any material respect, and to
the knowledge of Seller, no other party to any such lease or sublease is in
default thereunder in any material respect. Each such leasehold interests (i) is
valid, subsisting and in full force and effect; and (ii) is not subject to any
Liens, except for Permitted Liens. The rental set forth in each of the leases
and subleases listed in Schedule 3.5 is the actual rental currently being paid
by Seller, there are no separate agreements or understandings with respect to
same and Seller is current on such rental obligations. Seller currently has the
full right to exercise any renewal options contained in any of the leases listed
in Schedule 3.5 that are being conveyed pursuant to this Agreement, on the terms
and conditions contained therein and, upon due exercise, currently would be
entitled to enjoy the use of each leased Real Property premises for the full
term of such renewal options. To the knowledge of Seller, the leased Real
Property premises are occupied under a valid and current occupancy permit or the
like to the extent required by law and assuming all requisite consents are
received; there are no facts known to Seller which would
- 25 -
prevent any leased Real Property premises from being occupied after the Closing
in substantially the same manner as before.
(d) Except as set forth in Schedule 3.5, all Real Property (i) is in
good condition and repair in accordance with normal and customary industry
practices (ordinary wear and tear excepted), (ii) is available for immediate use
in the conduct of the business or operations of the Station, and (iii) complies
with all applicable building or zoning codes and the regulations of any
governmental authority having jurisdiction, except where such non-compliance
would not have a material adverse effect upon the operations of the Station. As
of the date hereof, there are no condemnation proceedings or eminent domain
proceedings, lawsuits or legal proceedings of any kind pending or, to the
knowledge of Seller, threatened, in connection with any Real Property. The Real
Property and the present use and condition thereof do not violate any applicable
deed restrictions or other covenants, restrictions, agreements, existing site
plan approvals, or any zoning or subdivision regulations or urban redevelopment
plans applicable to the Real Property as modified by any duly issued variances
where such violation would have a material adverse affect on the business or
operations of the Station, and no permits, licenses or certificates pertaining
to the ownership or operation of the Real Property, other than those which are
transferable with the Real Property, are required by any governmental agency
having jurisdiction over the Real Property or their operation, other than such
permits, licenses or certificates, the failure of which to obtain would not have
a material adverse affect on the business or operations of the Station. All
improvements made by or constructed for Seller and, to Seller's knowledge with
respect to improvements used by Seller but not made by it or constructed for it,
on the Real Property, were constructed in compliance with all applicable
Federal, state or other statutes, laws, ordinances, regulations, rules, codes,
orders or requirements (including, but not limited to, any building, zoning or
environmental laws or codes) affecting such premises, except for any
noncompliance which would not have a material adverse affect on the business or
operations of the Station. Seller has paid, or shall have paid prior to Closing,
all amounts owning by Seller to any architect, contractor,
- 26 -
subcontractor or materialman for labor or materials performed, rendered or
supplied to or in connection with any Real Property if such amounts would
otherwise constitute a materialman's, mechanics or other similar lien upon the
property. Schedule 3.5 sets forth a true and complete list of all construction,
architect, engineering and other agreements, if any, relating to uncompleted
construction projects entered into by Seller in connection with any Real
Property. Seller has heretofore delivered to Buyer true, correct and complete
copies of such construction agreements.
3.6 Tangible Personal Property. Schedule 3.6 lists as of the date
hereof all items of Tangible Personal Property included in the Assets owned by
Seller and having a fair market value in excess of $5,000. Except as described
in Schedule 3.6, Seller owns and has good title to the Tangible Personal
Property listed thereon and none of the Tangible Personal Property included in
the Assets is subject to any Liens, except for Permitted Liens. Except as set
forth in Schedule 3.6, the material items of Tangible Personal Property are in
good operating condition and repair (given the age of such property and the use
to which such property is put and ordinary wear and tear excepted).
3.7 Assumed Contracts. Schedules 3.5, and 3.7 include a complete
list as of the date of this Agreement of all Assumed Contracts except (a)
contracts with advertisers for production or the sale of advertising time on the
Station for cash that may be canceled by Seller on not more than ninety days'
notice, (b) trade or barter advertising agreements entered into in the ordinary
course of business, (c) employment contracts terminable at will, (d)
miscellaneous service contracts terminable on not more than thirty (30) days'
notice, and (e) other Contracts entered into in the ordinary course of business
with not more than 12 months remaining on their terms, not involving liabilities
exceeding Ten Thousand Dollars ($10,000) per year per Contract and One Hundred
Thousand Dollars ($100,000) per year in the aggregate for all such Contracts.
Seller has delivered or made available to Buyer true and correct copies of all
written Assumed Contracts and accurate descriptions of all oral Assumed
Contracts listed in Schedules 3.5, and 3.7 (including any and all
- 27 -
amendments and other modifications thereto). As of the date hereof, without
material exception, each of the Assumed Contracts listed in Schedules 3.5, and
3.7, is in full force and effect and constitutes the legal, valid, binding and
legally enforceable obligation of the Seller (and, to the knowledge of Seller,
of the other parties thereto). Except as set forth in Schedule 3.7, there is
not, under any of the Assumed Contracts, any existing default, event of default
or other event which, with or without due notice or lapse of time or both, would
constitute a default or event of default by Seller or, to the knowledge of
Seller, any other party thereto. Schedule 3.7 describes all outstanding
commitments or proposals by Seller to make capital expenditures related to the
Station (whether or not yet begun or in progress), which have been approved by
Seller or the management of the Station and which will or are expected to
require payments to third parties. Schedule 3.7A describes all types of
Contracts which, if in existence on the Closing Date, Buyer shall have the
right, by written notice delivered prior to Closing (or, if this Agreement is
terminated as a result of the willful and intentional breach by Seller of its
obligations hereunder, promptly following such termination), to have assigned to
it (or its assigns) either on the Closing Date (or, in the event of termination
in the circumstances referred to in the preceding parenthetical, promptly
following such termination), subject to Buyer complying with the provisions of
Section 6.17 hereof.
3.8 Intangibles. Schedule 3.8 is a complete list as of the date of
this Agreement of all material Intangibles (exclusive of Licenses listed in
Schedule 3.4). Seller has provided or made available to Buyer copies of all
documents establishing or evidencing the Intangibles listed in Schedule 3.8.
Except as disclosed in Schedule 3.8, Seller owns and has good title to all the
Intangibles listed therein and none of the Intangibles is subject to any Liens,
except for Permitted Liens. Except as disclosed in Schedule 3.8, Seller is not
obligated pursuant to any Contract to make any payments by way of royalties,
fees or otherwise with respect to any of the Intangibles. Other than with
respect to matters generally affecting the television broadcasting industry and
not particular to Seller, except as set forth in Schedule 3.8, Seller has not
received any notice or
- 28 -
demand alleging that Seller is infringing any trademarks, trade names, service
marks, service names, copyrights or similar intellectual property rights owned
by any other Person.
3.9 Financial Information
---------------------
(a) Seller has furnished Buyer with true and complete copies of the
financial statements described in Schedule 3.9 (collectively, together with the
1996 Audited Financials, as defined in Section 5.4, the "Financial Statements").
Except as set forth in Schedule 3.9, the Financial Statements have been prepared
in accordance with generally accepted accounting principles consistently
applied, and present fairly in all material respects the financial condition of
Seller as at their respective dates and the results of operations for the
periods then ended, except that the unaudited financial statements do not
include footnotes or customary year-end adjustments.
(b) Broadcast Cash Flow for the twelve month period ended December
31, 1996 was in excess of Four Million Dollars ($4,000,000).
3.10 Taxes and Tax Returns. Except as set forth in Schedule 3.10 and
except where the failure to file, pay or accrue any Taxes does not result in a
lien on the Assets or in the imposition of transferee or other liability on
Buyer for the payment of Taxes, (a) all Tax Returns have been filed with the
appropriate governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed, and (b) all Taxes shown on such Tax Returns have been
properly accrued or paid to the extent such Taxes have become due. Seller is not
a party to any Tax allocation or sharing agreement. Seller has not received
written notice of any dispute or claim concerning any Tax liability of Seller
from any governmental authority. Seller has not waived any statute of
limitations in respect of income Taxes or agreed to any extension of time with
respect to an income Tax assessment or deficiency.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller. All policies of insurance
- 29 -
listed in Schedule 3.11 are in full force and effect as of the date of this
Agreement and Seller is not in default in any material respect thereunder.
3.12 Reports. All material returns, reports and statements that the
Station is currently required to file with the FCC or any governmental agency
have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction thereof have been complied with by
Seller in all material respects. All of such reports, returns and statements are
complete and correct in all material respects as filed. All material documents
required by the FCC to be deposited by Seller in Seller's public file (as
defined in the rules and regulations of the FCC) during the period of operation
of the Station by Seller have been deposited therein.
3.13 Personnel.
---------
(a) Schedule 3.13 contains a true and complete list as of the date of
this Agreement of all employees of Seller engaged in the business and operations
of the Station (collectively, the "Employees"), and Seller has provided Buyer
with a description of all compensation arrangements affecting them. Except (a)
for oral employment contracts terminable at will, or (b) as described in
Schedule 3.13, Seller has no written or oral contracts of employment with any
employee of the Station. Except as set forth in Schedule 3.13, Seller is not a
party to or subject to any collective bargaining agreements with respect to the
Station, and no labor union or other collective bargaining unit represents or,
to Seller's knowledge of Seller, claims to represent any of the employees of the
Station. Seller has made available to Buyer copies of all employee handbooks and
employee rules and regulations, if any.
(b) Except as set forth in Schedule 3.13, as of the date hereof,
Seller is not a party to any collective bargaining agreement. Seller is in
compliance with respect to the operations of the Station with all applicable
laws, rules and regulations relating to the employment of labor including,
without limitation, those related to wages, hours, collective
- 30 -
bargaining, occupational safety, discrimination and the payment of social
security and other payroll-related taxes, except for any noncompliance by Seller
that would not have a material adverse effect on the business or operations of
the Station. Except as set forth in Schedule 3.13, as of the date hereof, to
Sellers knowledge, there are no organizing campaigns, strikes, unfair labor
practice charges, arbitrations, lawsuits or other labor disputes, disturbances
or other controversies or proceedings pending or threatened, involving Seller or
the employees of the Station or any labor union or other collective bargaining
unit claiming to represent any of the employees of the Station or seeking to
organize the employees of the Station.
3.14 Claims and Legal Actions. Except as disclosed in Schedule 3.14
and for any FCC rulemaking proceedings generally affecting the television
broadcasting industry and not particular to Seller, as of the date hereof, there
is no claim, legal action, counterclaim, suit, arbitration, or other legal,
administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or, to the knowledge of Seller, threatened, against Seller,
the Assets, or the business or operations of the Station which seeks to enjoin,
prohibit or otherwise question the validity of any action taken or to be taken
by Seller pursuant to or in connection with this Agreement or which would be
reasonably expected, in any material respect, to adversely affect the business
or operations of the Station. Except as set forth in Schedule 3.14, as of the
date hereof, neither Seller nor the Station nor any of the Assets is subject to
any judgment, writ, order, injunction, award or decree by any court, arbitrator
or governmental authority, including any administrative agency.
3.15 Compliance with Laws. Seller is in compliance with the Licenses
and all federal, state and local laws, rules, regulations and ordinances
applicable or relating to the ownership and operation of the Station, except for
any noncompliance by Seller that would not have a material adverse effect on the
business or operations of the Station.
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3.16 Conduct of Business in Ordinary Course. Except as set forth in
Schedule 3.16, from the date of the most recent financial statements described
in Schedule 3.9 through the date of this Agreement, Seller has conducted the
business and operations of the Station in the ordinary course consistent with
past practice in all material respects and has not (a) made any material
increase in compensation payable or to become payable to any of the Employees of
Seller other than in the ordinary course of business, or any material change in
personnel policies, insurance benefits or other compensation arrangements
affecting the Employees of Seller, (b) made any sale, assignment, lease or other
transfer of any of Seller's properties, other than obsolete assets no longer
usable in the operation of the Station, or other assets sold or disposed of in
the normal course of business with suitable replacements being obtained
therefor, (c) incurred material loss of, or material injury to, any of the
Assets as the result of any fire, explosion, flood, windstorm, earthquake, labor
trouble, riot, accident, act of God or public enemy or armed forces, or other
casualty, (d) mortgaged, pledged or subjected to any lien any of its Assets,
other than Permitted Liens, (e) made any material change in any method of
accounting or accounting practice, (f) incurred any material obligations or
liabilities, except in the ordinary course of business, (g) waived or released
any right of value or modified in any material respect any material Contract or
(h) entered into any agreement to do any of the foregoing.
3.17 Environmental. Except as stated in Schedule 3.17 or where such
matters would not have a material adverse effect on the business or operations
of the Station, Seller is not subject to any (a) "Superfund" evaluation; or (b)
any investigation or proceeding of any governmental authority evaluating whether
any remedial action is necessary to respond to release of any chemicals,
materials, substances or wastes that are now or hereafter become defined as, or
included in the definition of, "hazardous wastes," "hazardous substances,"
"extremely hazardous substances," "toxic substances," "toxic" or "hazardous
pollutants," "hazardous" or "toxic materials," "contaminants," "pollutants," or
words of similar import under the Resource Conservation and Recovery Act of
1980, as amended, the
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Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, the Hazardous Materials Transportation Act, as amended, the Clean
Air Act, as amended, the Clean Water Act, as amended, the Toxic Substances
Control Act, as amended, the Safe Drinking Water Act, as amended, the Oil
Pollution Act, as amended, and their state or local counterparts or equivalents;
or (c) requirement to remove asbestos material or polychlorinated biphenyls
based on Seller's present use of the applicable property. To the knowledge of
Seller, none of the Real Property used by Seller in the operations of the
Station contains any underground or aboveground tanks. Except as stated in
Schedule 3.17, Seller is in compliance with all applicable federal, state and
local environmental laws and regulations, except for any noncompliance by Seller
which would not have a material adverse effect on the business or operations of
the Station. Except as stated in Schedule 3.17 or where such matters would not
have a material adverse effect on the business or operations of the Station, the
Real Property owned by Seller in fee simple contains no condition or substance
which under the aforesaid environmental laws and regulations thereunder, as
interpreted as of this date by judicial and regulatory authorities, could
reasonably be expected to result in recovery by any person of material remedial
or removal costs, expenses or damages, or expenditures by Buyer for abatement or
remedial actions.
3.18 Brokers. Except for the fees payable to Merrill Lynch, which fees
shall be paid by Seller, neither Seller nor any person or entity acting on its
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
3.19 Transactions With Affiliates. Except as set forth in Schedule
3.19, Seller is not now, and since January 1, 1996, has not been a party,
directly or indirectly, to any contract, lease, arrangement or transaction which
is material to the business or operations of the Station, whether for the
purchase, lease or sale of property, for the rendition of services or otherwise,
with any affiliate of Seller, or any officer, director, employee, proprietor,
partner or shareholder of Seller and no such person has any interest in or right
to any of the Assets. The terms and
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conditions of the transactions involving Seller and any affiliate of Seller
which are identified in Schedule 3.19 are described briefly therein.
3.20 Assets. Except for the Excluded Assets, the Assets include all of
the assets or property necessary for the lawful conduct of the business of the
Station as currently operated.
3.21 Employee Benefits. Schedule 3.21 lists all Employee Plans, and
copies of such Employee Plans, together with any trusts related thereto, have
previously been provided to Buyer. All Employee Plans are in material compliance
with their terms and with all applicable provisions of ERISA and the Code.
Neither Seller nor any ERISA Affiliate maintains, contributes to, or is
obligated to contribute to, nor has Seller nor any ERISA Affiliate ever
maintained, contributed to, been obligated to contribute to or had any direct,
indirect or contingent liability with respect to, any employee benefit plan
subject to Title IV of ERISA (including any multiemployer plan as defined in
Section 4001(a)(3) of the Code) or Section 412 of the Code. Seller has not
engaged in any non-exempt prohibited transaction (as defined in Code Section
4975 or ERISA Section 406) involving any Employee Plan which would subject
Seller to any material penalty or tax imposed under Code Section 4975 or ERISA
Section 502(i). Seller has not made a complete or partial withdrawal, within the
meaning of ERISA Section 4201, from any multiemployer plan which has resulted
in, or is reasonably expected to result in, any material withdrawal liability.
Seller has not engaged in any transaction described in ERISA Section 4069 within
the past five years. Seller is not aware of the existence of any governmental
audit or examination of any Employee Plan or of any facts which would lead
Seller to believe that any such audit or examination is pending or threatened.
There exists no action, suit or claim (other than routine claims for benefits)
with respect to any Employee Plan pending or, to the knowledge of Seller,
threatened, against any Employee Plan. Except as required by ERISA Sections 601
et seq. and Code Section 4980B, Seller does not sponsor, maintain or contribute
to any Employee Plan which provides medical coverage to retirees or other former
employees of Seller. Neither Seller nor any ERISA Affiliate nor any fiduciary of
any Employee Plan
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has engaged in any transaction or conduct that could, directly or indirectly,
result in any material liability of Seller pursuant to Sections 408, 502(c) or
502(i) of ERISA or Sections 4975, 4976 or 4980B of the Code.
3.22 Disclosure. No representation or warranty of Seller contained
herein contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make such representations and warranties, in
light of the circumstances under which they were made, not misleading.
3.23 Knowledge. Where the term "to Sellers knowledge" (or similar
term) is used herein, it shall mean Seller's knowledge based upon inquiry of
appropriate Station personnel.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is (and License
Assignee will be upon assignment hereunder a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and, on
the Closing Date, will be duly qualified to conduct business in each
jurisdiction in which such qualification is necessary for Buyer to own the
Assets and operate the Station. Buyer has (and License Assignee will have upon
assignment hereunder) the requisite corporate power and authority to (a)
execute, deliver and perform this Agreement and the documents contemplated
hereby according to their respective terms, and (b) own the Assets.
4.2 Authorization and Binding Obligation. The execution, delivery
and performance of this Agreement and the Ancillary Documents, and the
consummation of the transactions contemplated hereby and thereby, by Buyer have
been (and will be by License Assignee upon assignment hereunder) duly and
validly authorized by all necessary corporate action on the part of Buyer and
License Assignee. This Agreement and the Ancillary Documents executed by Buyer
have been (and will be by License Assignee upon assignment hereunder) duly
executed and delivered by Buyer and
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constitute its legal, valid and binding obligations, enforceable against Buyer
in accordance with their respective terms, except as the enforceability of this
Agreement and the Ancillary Documents may be affected by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and by judicial discretion
in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements and Required Consents. Except
as set forth in Schedule 4.3, for applicable requirements of the HSR Act and
subject to the receipt of the FCC Consent, the execution, delivery and
performance by Buyer (and/or License Assignee) of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (a) do not require the consent of any third party; (b) will
not conflict with the Articles of Incorporation or Bylaws of Buyer (and/or
License Assignee); and (c) will not conflict in any material respect with,
result in a material breach of, or constitute a material default under, any
applicable law, judgment, order, ordinance, injunction, decree, rule,
regulation, or ruling of any court or governmental authority applicable to Buyer
(and/or License Assignee) or any material contract or agreement to which Buyer
(and/or License Assignee) is a party or by which Buyer may be bound.
4.4 Buyer Qualifications. Buyer is (and License Assignee will be)
legally, financially and otherwise qualified to be the licensee of, acquire, own
and operate the Station under the Communications Act, and the rules, regulations
and policies of the FCC. Buyer knows of no fact that would, under existing law
and the existing rules, regulations, policies and procedures of the FCC (a)
disqualify Buyer or the License Assignee as an assignee of the FCC Licenses or
as the owner and operator of the Station or (b) cause the FCC to fail to approve
in a timely fashion the application for the FCC Consent. No waiver of any FCC
rule or policy is necessary to be obtained for the grant of the applications for
the assignment of the FCC Licenses to Buyer or the License Assignee, nor will
processing pursuant to any exception or rule of general applicability be
requested or required in connection with the consummation of the transactions
contemplated by this Agreement.
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4.5 Brokers. Neither Buyer, License Assignee nor any person or
entity acting on its behalf has incurred any liability for any finders' or
brokers' fees or commissions in connection with the transactions contemplated by
this Agreement.
4.6 Disclosure. No representation or warranty of Buyer (or License
Assignee) contained in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make such
representations and warranties, in light of the circumstances under which they
were made, not misleading.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
Between the date of this Agreement and the Closing Date, Seller shall
operate the Station in the ordinary course of business and, to the extent not
inconsistent therewith, consistent with past practice (in either case, except
where such conduct would conflict with the following covenants or with Seller's
other obligations under this Agreement). Notwithstanding the foregoing, without
the prior written consent of Buyer:
5.1 Contracts. Seller shall not enter into or renew any contract or
commitment relating to the Station or the Assets, or incur any obligation that
will be binding on Buyer after Closing, except in the ordinary course of
business; provided that (i) except for time sales contracts for cash at
prevailing rates for a term not exceeding six months, Seller shall not enter
into time sales agreements that will be binding on Buyer after Closing; (ii)
subject to the provisions of Section 6.17 hereof, Seller may enter into
Contracts of the type referred to therein; and (iii) Seller shall not enter
into, modify, amend, renew or change any Contract with respect to programming
for the Station for any period after the Closing Date without the prior approval
of Buyer, which approval shall be deemed given if Buyer does not specifically
advise Seller of its disapproval thereof within two Business Days of Sellers
request for any such approval;
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provided, however, that, without Buyer's consent, Seller shall have the right to
enter into, modify, amend, renew or change Contracts relating to programming
that do not involve expenditures in the aggregate of more than $150,000 and
shall have the right to renew agreements for sports programming on substantially
the same terms of such agreements as presently in existence and, provided,
further, if Buyer does not provide the approval described above, Seller shall
have the right to enter into, modify, amend, renew or change any Contract with
respect to programming for the Station as long as Seller shall pay the Buyer at
Closing (by set-off against Buyer's payment of the amount due Seller pursuant to
Section 2.6(a)(1)), the difference, if any, between (a) the present value, using
a discount rate of eight percent (8%) per annum (the "Present Value"), of the
payments required to be made on behalf of the Station pursuant to any such
Contract after the Closing Date, minus (b) the Present Value of the payments
which would have been made on behalf of the Station pursuant to any such
Contract after the Closing Date if Buyer had been the owner of the Station at
the time such Contract was entered into, modified, amended, renewed or changed,
as estimated in good faith by Buyer and evidenced in a certificate to such
effect executed by two (2) officers of Buyer and delivered to Seller at Closing.
5.2 Dispositions. Seller shall not sell, assign, lease or otherwise
transfer or dispose of any of the Assets, except at fair market value, in
connection with the acquisition of replacement property of equivalent kind and
use. Notwithstanding the foregoing or anything else contained in this Agreement,
the expiration by their terms of contracts prior to the Closing shall not be
deemed to be a violation of this Agreement.
5.3 Encumbrances. Seller shall not create, assume or permit to exist
any Liens upon the Assets, except for Permitted Liens and liens that will be
discharged prior to or on the Closing Date.
5.4 Access to Information. Seller shall give Buyer and its employees
and other authorized representatives during normal business hours and with
reasonable prior notice, access to the
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Assets and to all other books, records and documents of Seller relating to the
Station for the purpose of audit and inspection, including, without limitation,
conducting of any surveys and environmental assessments of Real Property
included in the Assets, and will furnish or cause to be furnished to Buyer or
its authorized representatives, upon reasonable notice, all information with
respect to the business and operation of the Station that Buyer may reasonably
request; provided, that the foregoing do not unreasonably disrupt the business
of the Seller. Not later than March 15, 1997, Seller shall deliver to Buyer its
final, audited financial statements for calendar year 1996 (the "1996 Audited
Financials") and will provide Buyer with a copy within one Business Day after
Seller's receipt of the final 1996 Audited Financials. Seller will use its
commercially reasonable efforts to obtain the consent of its auditors to permit
inclusion of the 1996 Audited Financials in applicable securities filings of
Sinclair Broadcast Group, Inc. ("SBGI"), provided that any expenses of obtaining
such consent shall be borne by Buyer. If Buyer requests, and at Buyer's expense,
it shall have the immediate right, without causing unreasonable disruption to
the business of the Station, to have the access provided for in the first
sentence hereof to conduct an audit of the Station's financial information, and,
subject to the foregoing, Seller shall cooperate with Buyer's reasonable
requests in connection with such audit, including, without limitation, giving
all reasonable consents thereto as long as any expenses thereof are borne by
Buyer.
5.5 Insurance. Seller shall maintain the existing insurance policies
on the Assets or other policies providing substantially similar coverages.
5.6 Compensation. Except as set forth in Schedule 5.6, Seller will
not permit any increases in the compensation of any of the employees of the
Station, except in the ordinary course of business (involving increases of not
more than five percent (5%) per annum) or as required by law or existing
contract or agreement, in which case any such contracts and agreements shall be
assumed by Buyer and treated as Assumed Liabilities hereunder; provided,
however, that Seller may pay bonuses to any of its
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employees, consistent with past practice or, if not consistent with past
practice, only so long as such bonuses do not create a binding obligation upon
Buyer after the Closing Date.
5.7 Financial Information. Seller shall furnish Buyer within thirty
days after the end of each month ending between the date of this Agreement and
the Closing Date an unaudited statement of income and expense for such month and
such other financial information prepared by Seller, as Buyer may reasonably
request, prepared in accordance with generally accepted accounting principles
(except for the absence of footnotes) consistently applied.
5.8 Transactions with Affiliates. Seller shall not enter into any
transaction with any Affiliate of Seller that will be binding upon Buyer, the
Assets or the Station following the Closing Date.
5.9 Collective Bargaining. Except as required by applicable law,
Seller shall not enter into any collective bargaining agreement covering any
employees, through negotiations or otherwise, or make any commitment or incur
any liability to any labor organization with respect to any employees.
5.10 Maintenance of Assets. Seller shall use all commercially
reasonable efforts to maintain the Assets or replacements thereof in good
operating condition and adequate repair (given the age of such Assets and the
use to which such Assets are put and ordinary wear and tear excepted).
5.11 Operating Budget. Seller shall, in connection with the
operation of the Station, make expenditures materially consistent with the
estimates of expenses set forth in the Operating Budget to the extent reasonably
within the control of Seller and, including, without limitation, that Seller
shall make expenditures in respect of promotional, programming and engineering
activities for the Station (and employee expenditures related to such
activities) for any period covered by the Operating Budget equal to at least 95%
of the amounts therefor set forth therein.
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5.12 Incurrence of Additional Indebtedness. Seller shall not increase
its principal amount of indebtedness for borrowed money (which shall not include
any amounts owed to the former owners of the Station under non-competition or
consulting agreements) above $7,000,000.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
-----------
(a) The purchase and sale of the Assets as contemplated by this
Agreement is subject to the FCC Consent.
(b) Seller and Buyer shall prepare and, within ten (10) days after
the date of this Agreement, file with the FCC appropriate applications for the
FCC Consent. The parties shall thereafter prosecute each application with
commercially reasonable diligence and otherwise use their commercially
reasonable efforts to obtain the grants of the applications as expeditiously as
practicable. Each party will promptly provide to the other party a copy of any
pleading, order or other document served on it relating to such applications
(but no party shall have any obligation to take any steps to satisfy
complainants, if any, which steps would substantially impair or diminish rights
under the FCC Licenses or otherwise impose an unreasonable burden on a party).
Buyer is and will be (and License Assignee upon assignment hereunder will be)
legally, financially and otherwise qualified to be the licensee of, acquire, own
and operate the Station under the Communications Act, and the rules, regulations
and policies of the FCC, and Buyer shall take or cause to be taken all actions
necessary or appropriate to be taken by Buyer (or its Affiliates, including
License Assignee) to permit the FCC to approve in a timely fashion the
assignment to Buyer of the FCC Licenses for the Station. Each party agrees to
comply with any condition imposed on it by the FCC Consent, except that no party
shall be required to comply with a condition if compliance with the condition
would have a material adverse effect upon it. Buyer and Seller shall oppose any
petitions to deny or other objections filed with
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respect to the applications for any FCC Consent and any requests for
reconsideration or review of any FCC Consent.
(c) If the Closing shall not have occurred for any reason within the
original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 9, the parties shall jointly request an
extension of the effective period of such FCC Consent. No extension of the
effective period of the FCC Consent shall limit the exercise by either party of
its right to terminate the Agreement under Section 9.
6.2 HSR Act Filing. Seller and Buyer agree to (a) file or cause
to be filed with the U.S. Department of Justice ("DOJ") and Federal Trade
Commission ("FTC") within ten (10) Business Days of the date of this Agreement
all filings, if any, that are required in connection with the transactions
contemplated hereby under the HSR Act; (b) submit to the other party, prior to
filing, their respective HSR Act filings to be made hereunder and to discuss
with the other any comments the reviewing party may have; (c) cooperate with
each other in connection with such HSR Act filings, which cooperation shall
include furnishing the other with any information or documents that may be
reasonably required in connection with such filings; (d) promptly file, after
any request by the FTC or DOJ and after appropriate negotiation with the FTC or
DOJ of the scope of such request, any information or documents requested by the
FTC or DOJ; and (e) furnish each other with any correspondence from or to, and
notify each other of any other communications with, the FTC or DOJ that relates
to the transactions contemplated hereunder and, to the extent practicable, to
permit each other to participate in any conferences with the FTC or DOJ.
6.3 Confidentiality.
---------------
(a) Each party will not use or disclose to third parties (except as
may be necessary for the consummation of the transactions contemplated hereby,
or as required by law, including, without limitation, in connection with legal
proceedings relating to this Agreement and the transactions
- 41 -
contemplated hereby, or otherwise pursuant to subpoena or the request of a
governmental authority, and then only with prior notice to the other parties
hereto, including delivery of a copy of the subpoena or request, if applicable)
this Agreement or any information (including, without limitation, financial
information and information regarding program contracts and revenue) received
from the other parties hereto or their agents in the course of investigating,
negotiating and performing the transactions contemplated by this Agreement;
provided, however, that each party may disclose such information to such party's
officers, directors, employees, lenders, advisors, attorneys and accountants who
need to know such information in connection with the consummation of the
transactions contemplated by this Agreement and who are informed by such party
of the confidential nature of such information. Nothing shall be deemed to be
confidential information to a party that: (1) is already in such party's
possession, provided that such information is not known by such party to be
subject to another confidentiality agreement with or other obligation of secrecy
to, the other party hereto or another party, or (2) becomes generally available
to the public other than as a result of a disclosure by such party or its
officers, directors, employees, lenders, advisors, attorneys or accountants, or
(3) becomes available to such party on a non- confidential basis from a source
other than the other party hereto or its advisors, provided that such source is
not known by such party to be bound by a confidentiality agreement with or other
obligation of secrecy to the other party hereto or another party. In the event
this Agreement is terminated and the purchase and sale contemplated hereby
abandoned, Buyer will return to Seller all copies of documents, work papers and
other written confidential material obtained by Buyer in connection with the
transactions contemplated hereby. If this Agreement is terminated, each party
will return to the other party all information (including all documents, work
papers and other written confidential material) obtained by such party from any
other party in connection with the transactions contemplated by this Agreement.
(b) No party shall publish any press release or make any other public
announcement concerning this Agreement and the
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Ancillary Documents or the transactions contemplated hereby or thereby without
the prior written consent of each other party, which shall not be withheld
unreasonably; provided, however, that nothing contained in this Agreement shall
prevent any party, after notification to each other party, from taking any
action required by law or from making any filings with governmental authorities
that, in its judgment, may be required or advisable in connection with the
execution and delivery of this Agreement or the Ancillary Documents or the
consummation of the transactions contemplated hereby or thereby.
6.4 Cooperation. Buyer and Seller shall cooperate fully with
each other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary or desirable to the implementation and consummation of this Agreement
necessary or desirable to obtain the Consents, and otherwise use their
commercially reasonable efforts to consummate the transactions contemplated
hereby and to fulfill their obligations under this Agreement. Buyer and Seller
shall each diligently make and cooperate with the other in making all
commercially reasonable efforts to obtain or cause to be obtained prior to the
Closing Date all Consents. Buyer agrees to use all commercially reasonable
efforts to assist Seller in obtaining such Consents, and to take all
commercially reasonable actions necessary or desirable to obtain such Consents,
including, without limitation, executing such assumption instruments and other
documents as may reasonably be required in connection with obtaining the
Consents; provided, however, that Buyer shall not be required to accept or honor
changes, modifications or additions to Contracts required by the party from whom
consent is sought if such changes, modifications or additions would make such
contract materially more onerous upon or materially more burdensome to Buyer
than the existing terms of such Contract; and provided further, without imposing
any obligations on Seller, if Seller provides Buyer with a payment that, as
reasonably agreed to in good faith by Buyer and Seller, would cover such
changes, modifications or additions, Buyer shall accept such changes,
modifications or additions.
- 44 -
6.5 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise or direct, or attempt to control,
supervise or direct, the operations of the Station; those operations, including
complete control and supervision of all of the Station's programs, employees and
policies, shall be the sole responsibility of Seller.
6.6 Accounts Receivable.
-------------------
(a) At the Closing, Seller will designate Buyer as its agent solely
for the purposes of collecting the Accounts Receivable. Buyer will collect the
Accounts Receivable during the period beginning on the Closing Date and ending
on the 180th day after the Closing Date (the "Collection Period") with the same
care and diligence Buyer uses with respect to its own accounts receivable and
hold all such Accounts Receivable in trust for Seller until remitted by Buyer to
the Indemnification Escrow Agent or the Collections Account pursuant hereto.
Buyer shall not make any referral or compromise of any of the Accounts
Receivable to a collection agency or attorney for collection and shall not
settle or adjust the amount of any of the Accounts Receivable without the
written approval of Seller. If, during the Collection Period, Buyer receives
monies from an account debtor of Buyer that is also an account debtor of Seller
with respect to any Accounts Receivable, Buyer shall credit the sums received to
the oldest account due, except where an account is disputed by the account
debtor as properly due, and the account debtor has so notified Buyer in writing,
in which case, payments received shall be applied in accordance with the account
debtor's instructions; provided that upon resolution of such dispute if any
amounts in dispute are received by Buyer, Buyer shall remit such amounts to the
Indemnification Escrow Agent in accordance with the Indemnification Fund
Agreement up to the amount of the Additional Indemnification Amount Deposit and,
thereafter, to the Collections Account.
(b) On the ninetieth (90th) day after the Closing Date and on or
before the fifth Business Day after the end of each full fifteen (15) day period
thereafter during the Collection
- 45 -
Period, Buyer shall deliver to Seller a list of the amounts collected by Buyer
before the end of such period with respect to the Accounts Receivable. On or
before the fifth Business Day after the end of the Collection Period, Buyer
shall deliver to Seller a list of all of the Accounts Receivable that remain
uncollected.
(c) Seller shall establish and maintain during the Collection Period
(and for as long after the Collection Period as Seller deems appropriate) a bank
account (the "Collections Account") at a commercial bank in Las Vegas, Nevada,
as notified in writing by Seller to Buyer for the deposit of collections of the
Accounts Receivable in accordance with this Section 6.6. Seller shall have sole
disbursement authority over the Collections Account. On the ninetieth (90th) day
after the Closing Date (or if such day is not a Business Day, on the next
succeeding Business Day), Buyer shall (i) deposit with the Indemnification
Escrow Agent pursuant to the Indemnification Fund Agreement all amounts
collected with respect to any Accounts Receivable, not to exceed the lesser of
(A) One Million Five Hundred Thousand Dollars ($1,500,000) or (B) the amount of
the Closing Date Estimated Accounts Receivable (the Additional Indemnification
Amount Deposit) and (ii) deposit in the Collections Account any other Accounts
Receivable collected by Seller as of such date. On and after the ninetieth
(90th) day after the Closing Date until the expiration of the Collections
Period, within five (5) Business Days of the end of each full fifteen (15) day
period, Buyer shall deposit all amounts collected with respect to the Accounts
Receivable with the Indemnification Escrow Agent pursuant to the Indemnification
Fund Agreement until the total of all amounts deposited pursuant to the previous
sentence and this sentence equals the Additional Indemnification Amount Deposit
and, thereafter, in the Collections Account. Seller shall be entitled to dispose
of all amounts deposited in the Collections Account from time to time as it
chooses, in its sole discretion, and Buyer and the Indemnification Escrow Agent
shall have no rights therein.
(d) After the expiration of the Collection Period, Buyer shall have
no further obligation hereunder other than (1)
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so long as Seller continues to maintain the Collections Account, to deposit in
such account any payments with respect to any of the Accounts Receivable that
Buyer subsequently receives, and (2) thereafter, to remit directly to Seller any
payments with respect to any of the Accounts Receivable that Buyer subsequently
receives.
(e) Any Accounts Receivable remaining uncollected 180 days after the
Closing Date shall be transferred to Seller, together with all files concerning
the collection or attempt to collect such Accounts Receivable hereunder, and
Buyer shall thereafter have no further responsibility with respect thereto.
(f) Buyer shall have no right to set-off any amounts collected for
Accounts Receivable against any amounts owed to Buyer by Seller; provided that
this Section 6.6(f) shall not be deemed to limit the right of Buyer to make
claims against the Indemnification Amount in accordance with, and subject to,
the terms and conditions of this Agreement.
6.7 Access to Books and Records. Seller shall provide Buyer
access and the right to copy for a period of seven years from the Closing Date
any books and records relating to the Assets but not included in the Assets.
Buyer shall provide Seller access and the right to copy for a period of seven
years after the Closing Date any books and records relating to the Assets that
are included in the Assets.
6.8 Employee Matters. The following provisions shall apply
exclusively for the sole benefit of the parties to this Agreement and not for
the benefit of any other Person, including any employee of Seller:
(a) Effective as of the Closing Date, Buyer shall offer employment to
each employee of Seller who is employed at the Station immediately prior to the
Closing Date (collectively, the "Assumed Employees"). Except as otherwise
provided in this Section 6.8, the Buyer shall offer employment to the Assumed
Employees on terms and conditions that are substantially similar in the
aggregate to the terms and conditions of employment of
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employees of SBGI and its affiliates as of the Closing Date. Seller acknowledges
that Buyer is not assuming any employment agreements to which Seller or any of
its Affiliates is a party. To the fullest extent permitted by applicable law,
each Assumed Employee shall receive credit for past service with Seller, to the
extent credited by the Seller as of the Closing Date, for all purposes under
Buyer's benefits plans; provided, however, that Buyer shall not be required to
provide any Assumed Employee with credit for service with the Seller for
purposes of benefit accrual under any defined benefit pension plan sponsored or
maintained by Buyer. Notwithstanding the foregoing, subject to Buyer's
liabilities and obligations pursuant to any of the Assumed Contracts, nothing in
this Section 6.8 is intended to guarantee employment for any Assumed Employees
for any minimum period of time after the Closing Date.
(b) Buyer shall offer and provide and shall assume full
responsibility and liability for offering and providing "Continuation Coverage"
to any "Qualified Beneficiary" who is covered by a "Group Health Plan" sponsored
or contributed to by Seller or any entity required to be combined with Seller
(within the meaning of Sections 414(b) or (c) of the Code) and who has
experienced a "Qualifying Event" or is receiving "Continuation Coverage" on or
prior to the Closing Date. Buyer shall offer and provide such coverage without
regard to any limitation on Seller's obligation to provide such coverage by
reason of Seller's termination of any Group Health Plan on or after the Closing
Date. "Continuation Coverage," "Qualified Beneficiary," "Qualifying Event" and
"Group Health Plan" all shall have the meanings given such terms under Section
4980B of the Code and Section 601 et seq. of ERISA.
(c) Buyer shall offer health plan coverage to all Assumed Employees
under the terms and conditions generally applicable to Buyer's or its
Affiliates' employees as of the Closing Date. For purposes of providing such
coverage, Buyer shall waive all preexisting condition limitations for all
Assumed Employees covered by Seller's group health plan as of the Closing Date
(to the extent permitted under Buyer's group health plan) and shall provide such
health care coverage effective as of the
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Closing Date without the application of any eligibility period for coverage. In
addition, Buyer shall credit all employee payments toward deductible and
co-payment obligations limits under Seller's health care plans for the plan year
which includes the Closing Date as if such payments had been made for similar
purposes under Buyer's health care plans during the plan year which includes the
Closing Date, with respect to the Assumed Employees.
(d) Buyer shall grant Assumed Employees credit for and shall assume
and be responsible for any liabilities with respect to accrued sick and personal
leave and earned vacation time (which vacation time shall be subject to
proration and adjustment as provided for in Section 2.5(a) above) by any Assumed
Employees as of the Closing Date.
(e) Buyer agrees that Seller may inform its employees that Buyer has
agreed that the Assumed Employees will be offered employment and the terms and
conditions relating to such employment as provided in this Section 6.8;
provided, however, that Buyer shall have the right to approve any written
statement to be made by Seller in connection therewith prior to the rendering or
transmittal of any such statement.
(f) Seller shall be responsible for and shall pay all amounts owed to
(i) any employees who have not become Assumed Employees and (ii) any Assumed
Employees for services performed prior to the Closing, except in respect of
Assumed Employees for accrued sick leave and for accrued vacation pay (with
respect to which no cash payment is or may be due to any employee).
Notwithstanding the foregoing, however, after the Closing, Buyer shall be solely
responsible for wages, benefits and any employment related claims brought by any
Assumed Employee against Buyer or Seller by reason of Buyer's acts or omissions
in connection with such employment or the termination thereof, to the extent any
such liability or claims is attributable to a period commencing after the
Closing Date.
(g) At Buyer's request, Seller shall use all commercially reasonable
efforts to obtain the assignment to Buyer
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of the Employment Agreement dated December 21, 1993, by and between Las Vegas
Channel 21, Inc. and Martin S. Sokoler (the "Employment Agreement") and all of
the assigning party's rights and obligations thereunder to the extent permitted
by the terms thereof, and Buyer shall accept such assignment and assume such
obligations. Notwithstanding the foregoing, Seller shall, and shall cause its
general partner to, at Buyer's request and in consultation with Buyer, use all
commercially reasonable efforts to obtain from Mr. Sokoler, pursuant to the
Employment Agreement, an executed non-competition agreement, to be substantially
on the same terms as the form of non-competition agreement attached hereto as
Exhibit 8.2(k), provided that the term of such non- competition agreement shall
not be longer than six months from the date of Mr. Sokoler's termination of
employment, if any. Seller shall, and shall cause its general partner to,
cooperate with Buyer, if requested by Buyer, in attempting to enforce the
applicable provisions of the Employment Agreement relating to such
non-competition agreement; provided that such enforcement shall be at the
expense of Buyer.
6.9 Cure. For all purposes under this Agreement, the existence
or occurrence of any events or circumstances that constitutes or causes a breach
of a representation or warranty of Buyer or Seller (including, without
limitation, under the information disclosed in the Schedules hereto) on the date
such representation or warranty is made shall be deemed not to constitute a
breach of such representation or warranty if such event or circumstance is cured
in all material respects on or prior to the Closing Date. Without limiting the
foregoing, Buyer or Seller shall promptly notify the other party hereto of the
existence or occurrence of any events or circumstances that would cause any of
the conditions to the notifying party's obligations at Closing hereunder set
forth in Section 7.1 or 7.2, as the case may be (collectively, the "Conditions
Precedent"), to not be fulfilled and such other party shall have the right to
cure such event or circumstance on or prior to the Closing Date.
6.10 Other Acquisitions. Without limiting any other provisions
of this Agreement, prior to the Closing, without the prior written consent of
Seller, neither SBGI, Buyer nor any of
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their respective Affiliates or any party acting, directly or indirectly, by or
on behalf of any of them (the "Buyer Parties") shall acquire or enter into an
agreement to acquire a television station in the Las Vegas DMA or enter into a
Management Arrangement or Option. Buyer shall promptly notify Seller in writing
of any violation of this Section 6.10.
6.11 Interruption of Broadcast Transmission.
--------------------------------------
(a) In the event of any loss, damage or impairment, confiscation or
condemnation of any of the Assets prior to the completion of the Closing that
interferes with the normal operation of the Station, Seller shall notify Buyer
of same in writing immediately, specifying with particularity the loss, damage
or impairment, confiscation or condemnation incurred, the cause thereof, if
known or reasonably ascertainable, and the insurance coverage. Seller shall
apply the proceeds of any insurance policy, judgment or award with respect
thereto and take such other commercially reasonable actions, as determined in
its sole discretion, as are necessary to repair, replace or restore such Assets
to their prior condition as soon as possible after such loss, damages or
impairment, confiscation or condemnation.
(b) If before the Closing Date, due to damage or destruction of the
Assets the regular broadcast transmission of the Station in the normal and usual
manner is interrupted for a period of 12 continuous hours or more, Seller shall
give prompt written notice thereof to Buyer. If on the Closing Date, due to
damages or destruction of the Assets the regular broadcast transmission of the
Station in the normal and usual manner is interrupted such that the regular
broadcast signal of such Station (including its effective radiated power) is
diminished in any material respect, then (i) Seller shall immediately give
written notice thereof to Buyer; and (ii) either, and both of, Seller or Buyer
shall have the right, by giving prompt written notice to the other, to postpone
the Closing Date for a period of up to 90 days.
(c) In the event the Station's normal and usual transmission has not
been resumed by the Closing Date as
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postponed pursuant to section (b) above, either Buyer or Seller may pursuant to
Section 9.1(e), terminate this Agreement by written notice to the other party.
Notwithstanding the foregoing, however, Buyer may, at its option, proceed to
close this Agreement and complete the restoration and replacement of any damaged
Assets after the Closing Date, in which event Seller shall deliver or assign to
Buyer all insurance or other proceeds received in connection therewith to the
extent such proceeds are received by or payable to Seller and have not therefore
been used in or committed to the restoration or replacement of the Assets, but
Seller shall have no other liability or obligation to Buyer in connection
therewith.
(d) If before the Closing Date, due to damage or destruction of the
Assets the regular broadcast transmission of the Station in the normal and usual
manner is interrupted for a period of seven (7) continuous days or more, Seller
shall give prompt written notice thereof (the "Interruption Notice") to Buyer.
Upon receipt of the Interruption Notice, Buyer shall have the right, in its sole
and absolute discretion, by giving prompt written notice thereof to Seller
within two (2) Business Days of the date of the Interruption Notice, to
terminate this Agreement with the effect specified in Section 9.2(b)(1) hereof.
(e) Until the Closing Date, Seller will maintain the existing
insurance policies listed in Schedule 3.11 on the Station and the Assets.
6.12 Ownership Interests in Seller. Buyer acknowledges and agrees
that the limited partners (collectively, the "Limited Partners") and General
Partner of Seller shall have the right to transfer their respective limited and
general partnership interests in Seller, and that the equity owners of the
Limited Partners and the General Partner shall have the right to transfer their
respective equity ownership interests therein, to charitable remainder trusts;
provided, however, that as a result of any such transfers, the consummation of
the transactions
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contemplated by this Agreement is not adversely affected, the parties hereto
specifically acknowledging and agreeing that an immaterial delay to the
consummation of the transactions contemplated by this Agreement resulting from
amendments to the parties' applications for the FCC Consent as a result of any
such transfers shall not be deemed a violation or breach of this Section 6.12.
6.13 Estoppel Certificate. Seller shall use reasonable efforts
to deliver to Buyer at the Closing an estoppel certificate from the landlord
under the Lease, certifying a copy of the Lease and stating that all rental
payments due thereunder are current and, to the knowledge of such landlord,
there are no defaults under such Lease.
6.14 FCC Applications. Between the date of this Agreement and the
Closing Date, Seller shall use commercially reasonable diligence to prosecute
each of the FCC Applications.
6.15 Executed Copies of the Assumed Contracts. Seller shall use
its reasonable efforts to obtain fully executed counterparts of each of the
Assumed Contracts of which it does not have a fully executed counterpart, as
requested by Buyer, and, upon the request of Buyer, promptly deliver copies
thereof to Buyer.
6.16 Representation Agreement. Within three (3) days of the date
on which Seller receives a written request (the "Termination Request") from
Buyer to give a Termination Notice, as defined in that certain Representation
Agreement dated June 27, 1994 by and between Seltel, Inc. and Channel 21, L.P.
(the "Seltel Agreement"), Seller shall give such Termination Notice. Such
Termination Request shall not be given by Buyer earlier than the eleventh (11th)
day after the date of this Agreement. Notwithstanding anything in this Agreement
to the contrary, if the termination pursuant to such Termination Notice is
effective on or before the Closing Date or if the Closing hereunder does not
occur for any reason, Seller shall use commercially reasonable efforts to enter
into a representation agreement with respect to the Station(the "Successor
Representation Agreement") with a representation firm (the "Successor
Representation Firm"), such Agreement to be subject to the consent of Buyer,
such consent not to be unreasonably withheld, and Buyer shall pay to
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Seller, promptly upon request therefor, an amount equal to the difference
between (A) the payments due by Seller pursuant to Section 5.2(a)(ii) and (iii)
of the Seltel Agreement, minus (B) the amounts, if any, which the Successor
Representation Firm undertakes to pay in connection with the Successor
Representation Agreement. Notwithstanding the foregoing and anything in this
Agreement to the contrary, if the termination pursuant to such Termination
Notice is effective after the Closing Date, any payments due under Section
5.2(a)(ii) or (iii) of the Seltel Agreement shall be paid by Buyer and Buyer
shall have no claim against Seller for such payments. Notwithstanding anything
to the contrary contained in this Agreement, payments due under Section
5.1(a)(i) of the Seltel Agreement shall be prorated between Seller and Buyer
based upon their respective period of ownership before the Termination Date and
Calculation Date (as defined in the Seltel Agreement) such that Seller is
responsible for National Spot Advertising (as defined in the Seltel Agreement)
broadcast on the Station before the Closing Date and Buyer shall be responsible
for National Spot Advertising broadcast on the Station on and after the Closing
Date.
6.17 Certain Contracts. Neither Seller nor any of its Affiliates
nor any party acting, directly or indirectly, by or on behalf of any of them
(the "Seller Parties") will enter into any Contract of the type specified on
Schedule 3.7A unless such Contract provides for the assignment, transfer or
conveyance thereof to Buyer (or its assigns) upon the Closing or the termination
of this Agreement as a result of a willful and intentional breach by Seller of
its obligations hereunder. Promptly upon any of the Seller Parties entering into
any Contract of the type specified on Schedule 3.7A, Seller will provide Buyer
with written notice thereof. Following any written request of Buyer delivered in
accordance with Section 3.7A, either at Closing or promptly following
termination of this Agreement as a result of a willful and intentional breach by
Seller of its obligations hereunder, Seller will assign, or cause to be
assigned, to Buyer (or its assigns) all rights and obligations of the Seller
Parties arising in connection with any Contract of the type specified in
Schedule 3.7A; provided that pursuant to documentation reasonably satisfactory
to the Seller
- 54 -
Parties: (i) SBGI will (or will cause its assigns to) reimburse the assigning
party for its out-of-pocket disbursements in connection with such Contract,
including all amounts paid by any Seller Party to any party with whom it entered
into such Contract in consideration for entering into such Contract; and (ii)
SBGI will (or will cause its assigns to) indemnify and hold harmless each Seller
Party and any party with whom any Seller Party entered into such Contract, in
respect of the failure or alleged failure of Buyer (or its assigns) to comply
with its obligations under any such Contract following assignment to Buyer (or
its assigns).
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
---------------------------------------------
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing hereunder are subject, at Buyer's option, to the fulfillment
prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Seller contained in this Agreement shall be true and correct at
and as of the Closing Date as though made at and as of that time, except (1) to
the extent any such representation or warranty is expressly stated only as of a
specified earlier date or dates, in which case such representation and warranty
shall be true, as of such earlier specified date or dates (subject to clause 3
below), (2) for changes which are permitted or contemplated pursuant to this
Agreement or (3) to the extent that the failure of the representations and
warranties of Seller contained in this Agreement to be true and correct at and
as of the Closing Date as though made at and as of that time, or, with respect
to representations and warranties stated only as of a specified earlier date or
dates, to be true and correct as of such earlier specified date or dates, would
in either case not result in losses, liabilities or damages to Buyer in excess
of $1,500,000.
(b) Covenants and Conditions. Seller shall have performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement
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to be performed or complied with by it prior to or on the Closing Date.
(c) Required Consents. All Required Consents shall have been obtained
and delivered to Buyer.
(d) FCC Consent. The FCC Consent shall have been granted and shall
have become a Final Order.
(e) HSR Act. The waiting period under the HSR Act shall have expired
or terminated without adverse action by DOJ or the FTC to prevent the Closing
and there shall not be pending any action or request for information instituted
by the FTC or the DOJ under the HSR Act.
(f) Legal Proceedings. No injunction, restraining order or decree of
any nature of any court or governmental authority of competent jurisdiction
shall be in effect which restrains or prohibits Buyer from consummating the
transactions contemplated by this Agreement.
(g) Deliveries. Seller shall have made or stand willing to make all
the deliveries to Buyer described in Section 8.2.
7.2 Conditions to Obligations of Seller. All obligations of Seller at
the Closing hereunder are subject, at Seller's option, to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement, considered in the aggregate,
shall be true and correct in all material respects at and as of the Closing Date
as though made at and as of that time, except (1) to the extent any such
representation or warranty is expressly stated only as of a specified earlier
date or dates, in which case such representation and warranty shall be true and
accurate in all material respects as of such earlier specified date or dates or
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(2) for changes are permitted or contemplated pursuant to this Agreement.
(b) Covenants and Conditions. Buyer shall have performed and complied
in all material respects with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
(c) Required Consents. All Required Consents shall have been
obtained.
(d) FCC Consent. The FCC Consent shall have been granted.
(e) HSR Act. The waiting period under the HSR Act shall have expired
or terminated without adverse action by DOJ or the FTC to prevent the Closing
and there shall not be pending any action or request for information instituted
by the FTC or the DOJ under the HSR Act.
(f) Legal Proceedings. No injunction, restraining order or decree of
any nature of any court or governmental authority of competent jurisdiction
shall be in effect which restrains or prohibits Seller from consummating the
transactions contemplated by this Agreement.
(g) Deliveries. Buyer shall have made or stand willing to make all
the deliveries described in Section 8.3.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
-------
(a) Closing Date.
(1) Subject to (i) the satisfaction or, to the extent permissible
by law, waiver (by the party for whose benefit the closing condition is imposed)
on the date scheduled for Closing of the closing conditions described in Article
7 hereof
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and (ii) the provisions of Article 9 hereof, the parties hereto shall be
obligated to consummate the transactions contemplated hereby at the Closing of
this Agreement, which shall take place at 10:00 a.m., Washington, D.C. time on
the date specified by Seller to Buyer, which is not less than ten (10) nor more
than fifteen (15) days following the date the FCC Consent becomes a Final Order;
provided, however, if the date the FCC Consent becomes a Final Order is prior to
June 30, 1997, Buyer may elect that the Closing be postponed until July 1, 1997
by written notice given to Seller within 10 days of the date the FCC Consent
becomes a Final Order. If any date specified for the Closing is not a Business
Day, the Closing shall take place on the next Business Day.
(2) Notwithstanding the foregoing, if on the date otherwise
scheduled for the Closing pursuant to the preceding paragraph, the conditions
precedent set forth in Sections 7.1(c), 7.1(e), 7.1(f), 7.2(c), 7.2(e) or 7.2(f)
hereof have not been satisfied, the party for whose benefit such conditions have
been imposed may elect to postpone the Closing, and the Closing shall thereafter
take place on a date specified by prior written notice from such party, which
date shall be not less than ten (10) days nor more than fifteen (15) days after
the satisfaction or waiver of such conditions precedent. The parties shall seek
extensions of any FCC Consent that may be required for any such postponement of
the Closing.
(3) Notwithstanding the foregoing, if, on the date otherwise
scheduled for Closing pursuant to Section 8.1(a)(1) or (2), the circumstances
set forth in Section 6.11 are applicable, the Closing Date shall be postponed to
the date specified in such Section. The parties shall seek extensions of any FCC
Consent that may be required for any such postponement of Closing.
(4) In no event shall the Closing hereunder occur later than
February 2, 1998, except as provided above in Section 8.1(a)(3) and in Section
9.1.
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(b) Closing Place. The Closing shall be held at the offices of Dow,
Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following documents (collectively, the "Seller's
Ancillary Documents"), in form and substance reasonably satisfactory to Buyer
and its counsel:
(a) Conveyancing Documents. Duly executed general warranty deeds
(subject, however, to any limitations on representations of Seller and
indemnification obligations of Seller set forth in this Agreement), bills of
sale and assignments conveying the Assets to the Buyer;
(b) Officer's Certificate. A certificate, dated as of the Closing
Date, executed by an officer of the General Partner of Seller, certifying, after
due inquiry, but without personal liability, to the fulfillment of the
conditions set forth in Sections 7.1(a) and 7.1(b);
(c) Secretary's Certificate. A certificate, dated as of the Closing
Date, executed by the Secretary of the General Partner of Seller, certifying
that the resolutions, as attached to such certificate, were duly adopted by the
Board of Directors and shareholders (if required) of the General Partner of
Seller, authorizing and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby and that such resolutions
remain in full force and effect;
(d) Consents. A copy of any instrument evidencing any Consent
received;
(e) Releases. Any mortgage discharges or releases of liens that are
necessary in order for the Assets to be free and clear of all liens, mortgages
or security interests, other than the Permitted Liens or a pay-off letter from
Seller's senior lenders providing for, and obligating such Lenders to provide,
such discharges and releases upon payment by Seller of the
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obligations owed to such lenders with the proceeds of the Estimated Purchase
Price on the Closing Date;
(f) Opinion of Counsel. An opinion of Dow, Lohnes & Albertson, PLLC,
dated the Closing Date, substantially in the form of Exhibit 8.2(f) hereto;
(g) Good Standing Certificates. Certificates as to the formation and
good standing of Seller and the General Partner issued by the Secretary of State
of the State of Nevada and certificates issued by the appropriate governmental
authorities in each jurisdiction in which Seller and the General Partner are
qualified to do business, dated not more than ten (10) days before the Closing
Date;
(h) Indemnification Fund Agreement and Escrow Agreement. The
Indemnification Fund Agreement and Escrow Agreement, each duly executed by
Seller;
(i) Assignment and Assumption Agreement. The Assignment and
Assumption Agreement, substantially in the form of Exhibit 8.2(i) hereto (the
Assignment and Assumption Agreement), duly executed by Seller;
(j) Officer's Certificate. A certificate, dated as of the Closing
Date, executed by an officer of the General Partner of Seller, certifying, after
due inquiry, but without personal liability, that neither Seller nor the Station
nor any of the Assets is subject to any judgment, writ, order, injunction, award
or decree by any court, arbitrator or governmental authority, including any
administrative agency, specifically applicable thereto, that would have a
material adverse effect on the business or operations of the Station; and
(k) Non-Competition Agreements. Non-Competition Agreements,
substantially in the form of Exhibit 8.2(k) hereto, duly executed by each of the
Persons listed in Schedule 8.2(k) hereto.
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8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following documents (collectively, the "Buyer's
Ancillary Documents" and, together with the Seller's Ancillary Documents, the
"Ancillary Documents"), in form and substance reasonably satisfactory to Seller
and its counsel:
(a) Closing Payment. The payments described in Section 2.6(a);
(b) Officer's Certificate. A certificate, dated as of the Closing
Date, executed on behalf of Buyer by an officer of Buyer, certifying, after due
inquiry, but without personal liability, to the fulfillment of the conditions
set forth in Sections 7.2(a) and 7.2(b);
(c) Secretary's Certificate. A certificate, dated as of the Closing
Date, executed by Secretary of Buyer, certifying that the resolutions, as
attached to such certificate, were duly adopted by Board of Directors and
shareholders (if required) of the Buyer, authorizing and approving the execution
of this Agreement and the consummation of the transactions contemplated hereby
and that such resolutions remain in full force and effect;
(d) Assignment and Assumption Agreement. The Assignment and
Assumption Agreement, duly executed by Buyer;
(e) Opinion of Counsel. An opinion of Buyer's counsel, dated the
Closing Date, substantially in the form of Exhibit 8.3(e) hereto;
(f) Good Standing Certificate. A certificate as to the existence and
good standing of Buyer issued by the Secretary of State of the State of
organization of Buyer, dated not more than ten (10) days before the Closing
Date, and certificates issued by the appropriate governmental authority as to
the qualification of Buyer to do business in each jurisdiction in which such
qualification is necessary for Buyer to own the Assets and operate the Station;
and
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(g) Indemnification Fund Agreement and Escrow Agreement. The
Indemnification Fund Agreement and Escrow Agreement, each duly executed by
Buyer.
SECTION 9. TERMINATION
9.1 Termination of Agreement. This Agreement may be terminated:
(a) at any time by mutual written consent of Buyer and Seller;
(b) by either Buyer or Seller, if the terminating party is not in
default or breach in any material respect of its obligations under this
Agreement, if the Closing hereunder has not taken place on or before February 2,
1998, except where Closing has been postponed pursuant to the provisions of
Sections 6.11(b) or 8.1(a)(3), in which case the applicable date shall be upon
the expiration of the 90 day period referred to in Sections 6.11(b) or
8.1(a)(3);
(c) by Seller, if Seller is not in default or breach in any material
respect of its obligations under this Agreement, if all the conditions in
Section 7.2 have not been satisfied or waived by the date scheduled for the
Closing pursuant to Section 8.1 (as such date may be postponed pursuant to
Sections 6.11 or 8.1);
(d) by Buyer, if Buyer is not in default or breach in any material
respect of its obligations under this Agreement, if all the conditions set forth
in Section 7.1 have not been satisfied or waived by the date scheduled for the
Closing pursuant to Section 8.1 (as such date may be postponed pursuant to
Sections 6.11 or 8.1);
(e) by Buyer or Seller, pursuant to Section 6.11; or
(f) by Seller, if Buyer should fail for any reason to make any
payment required pursuant to Section 2.3 hereof at the
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times and in the amounts specified therein or violate or breach the provisions
of Section 6.10 hereof.
Notwithstanding anything in this Section 9.1 to the contrary, if
on February 2, 1998 (or any extended date as provided in Section 8.1(a)(3)), the
Closing has not occurred solely because any required notice period for Closing
has not lapsed, such date shall be extended until the lapse of such period.
9.2 Procedure and Effect of Termination.
-----------------------------------
(a) In the event of termination of this Agreement by either or both
of Buyer and/or Seller pursuant to Sections 6.11(d) or 9.1 hereof, prompt
written notice thereof shall forthwith be given to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned without further action by any of the parties hereto, but subject to
and without limiting any of the rights of the parties specified herein in the
event a party is in default or breach in any material respect of its obligations
under this Agreement. If this Agreement is terminated as provided herein:
(1) None of the parties hereto nor any of their respective
partners, directors, officers, shareholders, employees, agents, or Affiliates
including any shareholder, director, officer, employee, agent or Affiliate of
the General Partner of the Seller) shall have any liability or further
obligation to the other party or any of their partners, directors, officers,
shareholders, employees, agents or Affiliates pursuant to this Agreement with
respect to which termination has occurred, except for Seller and/or Buyer, as
the case may be (but not including Seller's or Buyer's partners, directors,
officers, shareholders, employees, agents, or Affiliates (or any shareholder,
director, officer, employee, agent or Affiliate of the General Partner of the
Seller)), as stated in Sections 3.18, 4.5, 6.4, 6.16, 9.2(b) and 11.1 hereof;
and
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(2) All filings, applications and other submissions relating to
the transactions contemplated hereby as to which termination has occurred shall,
to the extent practicable, be withdrawn from the agency or other Person to which
made.
(b) (1) If this Agreement is terminated pursuant to Sections 9.1 and
Seller shall be in breach in a material respect of any of its representations,
warranties, covenants, agreements or obligations set forth in this Agreement,
then and in that event, the Purchase Price Deposit and the Escrow Amount shall
be returned to Buyer and Buyer shall have the right to pursue all remedies
available hereunder or at law or equity, including, without limitation, the
right to seek specific performance and/or monetary damages. In recognition of
the unique character of the property to be sold hereunder and the damages which
Buyer will suffer in the event of a breach by Seller, Seller hereby waives any
defense that Buyer has an adequate remedy at law for the breach of this
Agreement by Seller;
(2) If this Agreement is terminated pursuant to Section 9.1 and
Buyer shall be in breach in a material respect of its representations,
warranties, covenants, agreements or obligations set forth in this Agreement,
then and in that event, Seller shall have the right to retain the Purchase Price
Deposit and receive payment of the Escrow Amount from the Escrow Agent as
liquidated damages and as the exclusive remedy of Seller as a consequence of
Buyer's default (which aggregate amount the parties agree is a reasonable
estimate of the damages that will be suffered by Seller as a result of the
default by Buyer and does not constitute a penalty, the parties hereby
acknowledging the inconvenience and nonfeasibility of otherwise obtaining an
adequate remedy);
(3) Notwithstanding anything in this Agreement to the contrary,
if this Agreement is terminated pursuant to Section 9.1(f) by Seller, then and
in that event, Seller shall have the right to retain the Purchase Price Deposit
and receive payment of the Escrow Amount from the Escrow Agent as liquidated
damages and as the exclusive remedy of Seller as a consequence
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of Buyer's failure to make the payments required under Section 2.3 hereof at the
times and in the amounts specified therein or violation or breach of the
provisions of Section 6.10 hereof (which aggregate amount the parties agree is a
reasonable estimate of the damages that will be suffered by Seller as a result
of Buyer's failure and does not constitute a penalty, the parties hereby
acknowledging the inconvenience and nonfeasibility of otherwise obtaining an
adequate remedy);
(4) Notwithstanding anything in this Agreement to the contrary,
if this Agreement is terminated pursuant to Section 9.1(a) or (e), then and in
that event, the Purchase Price Deposit and the Escrow Amount shall be returned
to Buyer and except in the case of termination under Section 9.1(e), where
Seller shall be in breach in a material respect of its representations,
warranties, covenants or agreements or obligations set forth in this Agreement,
Buyer shall have no further rights, whether at law or equity, as a result of
such a termination of this Agreement.
(5) Without limiting the generality of the foregoing, or any
applicable law, neither Buyer nor Seller may rely on the failure of any
condition precedent set forth in Article 7 to be satisfied as a ground for
termination of this Agreement by such party if such failure was caused by such
party's failure to act in good faith, or a breach of or failure to perform its
representations, warranties, covenants or other obligations in accordance with
the terms hereof; and
(6) Notwithstanding the provisions of Sections 9.2(b) (2), (3)
and (4) above, or anything else contained herein to the contrary, Seller shall
have all rights, available at law or equity, including, without limitation, the
right to seek specific performance and/or monetary damages for a breach of the
provisions of Section 6.10 hereof by any Buyer Party in addition to its right to
retain the Purchase Price Deposit and receive payment of the Escrow Amount. In
addition, without limiting the foregoing, in the event of a breach of the
provisions of Section 6.10, upon the written request of Seller following the
termination of this Agreement (other than as a result of a
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willful and intentional breach by Seller of its obligations hereunder), SBGI and
Buyer will assign (or cause to be assigned) to Seller (or its assigns) all
rights and obligations of the Buyer Parties arising in connection with such
agreement to acquire, Management Arrangement or Option referred to in Section
6.10 (collectively, "Acquisition Agreements"), provided that pursuant to
documentation reasonably satisfactory to the Buyer Parties: (i) Seller will (or
will cause its assigns to) reimburse the assigning party for its out-of-pocket
disbursements in connection with any such Acquisition Agreement, including all
amounts paid by any Buyer Party to any person with which it entered into such
Acquisition Agreement in consideration for entering in such Acquisition
Agreement; and (ii) Seller will (or will cause its assigns to) indemnify and
hold harmless each Buyer Party, and any party with which any Buyer Party has
entered into such Acquisition Agreement, in respect of the failure or alleged
failure of Seller (or its assigns) to comply with its obligations under any such
Acquisition Agreement following assignment to Seller (or its assigns). In
recognition of the unique character of the agreements set forth in Section 6.10
and the damages Seller may suffer in the event of such a breach, Buyer and SBGI
hereby waive the defense that there is an adequate remedy at law.
9.3 Attorneys' Fees. In the event of a default by either party
that results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses (whether incurred in
arbitration, at trial, or on appeal).
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Survival. The representations and warranties of Buyer and
Seller contained herein shall survive the Closing for a period of one year 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
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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. Buyer'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 Buyer or Seller hereunder to be performed before the
Closing shall be made before the expiration of one year after the Closing Date.
The covenants and agreements of Seller contained herein and to be performed to
any extent after the Closing Date shall survive the Closing for a period of one
year after the Closing Date 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 Buyer contained herein to be performed in any
respect after the Closing Date shall survive the Closing Date until fully
discharged and performed.
10.2 Indemnification by Seller.
-------------------------
(a) After the Closing, Seller hereby agrees to indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for:
(1) Any and all losses, liabilities or damages resulting from any
breach of any representation or warranty made pursuant to, or any failure by
Seller to perform any covenant of Seller set forth, in this Agreement, in the
Ancillary Documents or in any certificate, document or instrument delivered to
Buyer hereunder or thereunder;
(2) Any failure by Seller to pay, perform or discharge any and
all liabilities of Seller not assumed by Buyer pursuant to the terms hereof;
(3) Any litigation, proceeding or claim by any third party
arising from the business or operations of the Assets or the Station by Seller
prior to the Closing Date, except to the extent arising from obligations or
liabilities
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that have been expressly assumed by Buyer pursuant to this Agreement or the
Ancillary Documents;
(4) Any failure by Seller to comply with any applicable bulk
sales law; and
(5) Any and all reasonable 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
reasonably incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
(b) Seller's obligation to indemnify Buyer pursuant to
Section 10.2(a) shall be subject to all of the following limitations:
(1) No indemnification shall be required to be made by Seller as
the Indemnifying Party under Section 10.2(a) until the aggregate amount of all
Settled Claims of Buyer as Claimant exceeds Fifty Thousand Dollars ($50,000), at
which time indemnification shall be made by Seller as the Indemnifying Party
under Section 10.2(a) for all Settled Claims of Buyer as Claimant; provided,
however, that such limitation shall not apply to claims made by Buyer (i) with
respect to adjustments to the Purchase Price or (ii) based on Seller's fraud.
(2) Buyer shall be entitled to indemnification only for those
damages arising with respect to any claim as to which Buyer has given the Seller
written notice within the appropriate time period set forth in Section 10.1
hereof for such claim; provided, however, that the obligation to provide
indemnification pursuant to Section 10.2 shall survive with respect to any such
claim until resolution thereof.
(3) All of Buyer's damages sought to be recovered under
Section 10.2(a) hereof shall be net of (i) any insurance proceeds received by
Buyer as Claimant, with respect to the events giving rise to such damages, and
(ii) any tax
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benefits finally received by or accruing to Buyer in connection with such
events.
(4) Notwithstanding anything contained in this Agreement or
applicable law to the contrary, Buyer agrees that the payment of any claim made
by Buyer for indemnification hereunder, for whatever reason (other than claims
pursuant to Section 2.6(b)(2) hereof), shall be limited to, and shall only be
made from, the Indemnification Amount in accordance with the Indemnification
Fund Agreement and, except for claims against the Indemnification Amount, Buyer
waives and releases, and shall have no recourse against, Seller as a result of
the breach of any representation, warranty, covenant or agreement of Seller
contained herein, or otherwise arising out of or in connection with the
transactions contemplated hereby or the operation of the Station; provided,
however, that nothing herein shall be deemed to limit any rights or remedies
that Buyer may have for Seller's fraud. On the twelve month anniversary of the
Closing, if no claim for indemnification is pending, the balance then remaining
of the Indemnification Amount shall be paid by the Indemnification Escrow Agent
to Seller by way of certified or bank check. If on the twelve month anniversary
of the Closing Buyer has any indemnification claims pending, an amount
sufficient to satisfy such claims shall be retained by the Indemnification
Escrow Agent and the remaining balance shall be remitted by the Indemnification
Escrow Agent to Seller.
(5) Following the Closing, the sole and exclusive remedy for
Buyer 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 contained herein or in the Ancillary Documents 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 10; provided, however, that nothing herein shall be
deemed to limit any rights or remedies that Buyer may have for Seller's fraud.
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(6) Anything in this Agreement or any applicable law to the
contrary notwithstanding, it is understood and agreed by Buyer that, other than
with respect to Seller (but not including any partner, director, officer,
employee, agent or Affiliate of Seller (including any shareholder, director,
officer, employee, agent or Affiliate of the General Partner of the Seller)) as
expressly provided for in Section 10.2(b)), no partner, director, officer,
employee, agent or Affiliate of Seller (including any shareholder, director,
officer, employee, agent or Affiliate of the General Partner of the Seller)
shall have (i) any personal liability to Buyer as a result of the breach of any
representation, warranty, covenant or agreement of Seller contained herein, in
the Ancillary Documents or otherwise arising out of or in connection with the
transactions contemplated hereby or thereby or the operations of the Station or
(ii) any personal obligation to indemnify Buyer for any of Buyer's claims
pursuant to Section 10.2(a) and Buyer waives and releases and shall have no
recourse against any of such parties described in this Section 10.2(b)(6) as a
result of the breach of any representation, warranty, covenant or agreement of
Seller contained herein or otherwise arising out of or in connection with the
transactions contemplated hereby or thereby or the operations of the Station;
provided, however, that nothing herein shall be deemed to limit any rights or
remedies that Buyer may have for Seller's fraud.
10.3 Indemnification by Buyer.
------------------------
(a) After the Closing, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(1) Any and all losses, liabilities or damages resulting from any
breach of any representation or warranty made pursuant to, or any failure by
Buyer or License Assignee to perform any covenant of Buyer or License Assignee
set forth, in this Agreement, in the Ancillary Documents or in any certificate,
document or instrument delivered to Seller hereunder or thereunder;
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(2) Any failure by Buyer or License Assignee to pay, perform or
discharge any and all Assumed Liabilities or any other liabilities of, or
assumed by, Buyer or License Assignee pursuant to this Agreement or the
Ancillary Documents;
(3) Any litigation, proceeding or claim arising from the business
or operations of the Assets and the Station on or after the Closing Date; and
(4) Any and all reasonable 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
reasonably incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
(b) Buyer's obligation to indemnify Seller pursuant to Section 10.3(a)
shall be subject to all of the following limitations:
(1) Seller shall be entitled to indemnification only for those
damages arising with respect to any claim as to which Seller has given Buyer
written notice within the appropriate time period set forth in Section 10.1
hereof for such claim; provided, however, that the obligation to provide
indemnification under this Section 10.3 shall survive with respect to any such
claim until resolution thereof.
(2) All of Seller's damages sought to be recovered under
Section 10.3(a) hereof shall be net of (i) any insurance proceeds received by
Seller as Claimant, with respect to the events giving rise to such damages, and
(ii) any tax benefits finally received by or accruing to Seller in connection
with such events.
(3) Anything in this Agreement or any applicable law to the
contrary notwithstanding, it is understood and agreed by Seller that, other than
with respect to Buyer (but not including any shareholder, director, officer,
employee, agent or Affiliate of Buyer) as expressly provided for in
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Section 10.3(b), no shareholder, director, officer, employee, agent or Affiliate
of Buyer shall have (i) any personal liability to Seller as a result of the
breach of any representation, warranty, covenant or agreement of Buyer contained
herein, in the Ancillary Documents or otherwise or (ii) personal obligation to
indemnify Seller for any of Seller's claims pursuant to Section 10.3(a) and
Seller waives and releases and shall have no recourse against any of such
parties described in this Section 10.3(b)(3) as a result of the breach of any
representation, warranty, covenant or agreement of Buyer contained herein or
otherwise arising out of or in connection with the transactions contemplated
hereby or thereby or the operations of the Station; provided, however, that
nothing herein shall be deemed to limit any rights or remedies that Seller may
have for Buyer's fraud.
10.4 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 five 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
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by the Claimant to substantiate the claim. If the Claimant and the Indemnifying
Party agree at or prior to the expiration of such 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 10.2(b) and
10.3(b)) and the terms of, and procedures set forth in, the Indemnification Fund
Agreement. If the Claimant and the Indemnifying Party do not agree within such
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedies at law or equity, as applicable, subject to the
limitations of Sections 10.2(b) and 10.3(b). Any claim for indemnity pursuant to
this Article 10 with respect to which (i) the Claimant and the Indemnifying
Party agree as to its validity and amount, (2) a final judgment, order or award
of a court of competent jurisdiction deciding such claim has been rendered, as
evidenced by a certified copy of such judgment, provided that such judgment is
not appealable or the time for taking an appeal has expired or (3) the
Indemnifying Party has not given written notice to the Claimant disputing such
claim in whole or in part within thirty days of receiving notice thereof, is
referred to as a "Settled Claim."
(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' prior written notice of the terms of any proposed settlement thereof
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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.
(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 practicable.
(e) Subject to the limitations set forth herein and without
expanding the total liability of Buyer or Seller hereunder, the indemnification
rights provided in Section 10.2 and Section10.3 shall extend to the members,
partners, shareholders, officers, directors, employees, agents and Affiliates of
any Claimant, although for the purpose of the procedures set forth in this
Section 10.4, any indemnification claims by such parties shall be made by and
through the Claimant.
10.5 Investigation. Any knowledge of Buyer and any investigation made
at any time or on behalf of Buyer shall not diminish in any respect whatsoever
Buyer's right to rely on any representations, warranties, covenants and
agreements made by or on behalf of Seller pursuant to this Agreement or in any
certificate delivered hereto.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement and the
Ancillary Documents, including all fees and expenses of counsel, accountants,
agents, and representatives, and each party shall be responsible for all fees or
commissions payable to any finder, broker, advisor, or
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similar Person retained by or on behalf of such party; provided, however, that
all transfer taxes, recordation taxes, sales taxes and document stamps in
connection with the transactions contemplated by this Agreement shall be paid
one-half by Buyer and one-half by Seller and all other filing fees (including
all FCC and HSR Act filing fees), and other charges levied by any governmental
entity in connection with the transactions contemplated by this Agreement shall
be paid one-half by Buyer and one-half by Seller. Buyer hereby waives compliance
with the provisions of any applicable bulk transfer laws.
11.2 Notices. All notices, demands and requests required or permitted
to be given under the provisions of this Agreement shall be (i) in writing,
(ii) sent by facsimile (with receipt personally confirmed by telephone),
delivered by personal delivery, or sent by commercial delivery service or
certified mail, return receipt requested, (iii) deemed to have been given on the
date telecopied with receipt confirmed, the date of personal delivery, or the
date set forth in the records of the delivery service or on the return receipt,
and (iv) addressed as follows:
To Buyer: KUPN, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attention: David D. Smith
Telecopy: (410) 467-5043
Telephone: (410) 662-1008
with copies Sinclair Communications, Inc.
(which shall 2000 W. 41st Street
not constitute Baltimore, Maryland 21211
notice) to: Attention: General Counsel
Telecopy: (410) 662-4707
Telephone: (410) 662-1422
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Thomas & Libowitz, P.A.
USF& G Tower, Suite 1100
100 Light Street
Baltimore, Maryland 21202
Attention: Steven A. Thomas
Telecopy: (410) 752-2046
Telephone: (410) 752-2468
To Seller: 1999 Avenue of the Stars
Suite 500
Los Angeles, California 90067
Attention: Mr. David Goldhill and
Robert Finkelstein, Esq.
Telecopy: (310) 553-3928
Telephone: (310) 551-4098 or 4093
with a copy Dow, Lohnes & Albertson, PLLC
(which shall 1200 New Hampshire Avenue, N.W.
not constitute Suite 800
notice) to: Washington, DC 20036-6802
Attention: John T. Byrnes, Esq.
Telecopy: (202) 776-2222
Telephone: (202) 776-2518
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
11.3 Benefit and Binding Effect. No party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Buyer shall be entitled, without Seller's consent, so long as the
representations, warranties and covenants of Buyer and License Assignee set
forth in this Agreement will be true and correct in all material respects upon
and following such assignment, to assign its rights to receive the FCC Licenses
hereunder (and to perform all obligations in connection thereunder) to the
License Assignee prior to the date of filing the applications for FCC Consent
specified in Section 6.1 hereof, and its rights to indemnification pursuant to
Section 10.2 of this Agreement to
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its Lenders; provided that no assignment shall relieve Buyer of any of its
obligations hereunder and, if requested by Seller, will execute such
documentation as reasonably requested by Seller in connection with such
assignment and assumption. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
11.4 Further Assurances. Subject to the terms and conditions of this
Agreement, from time to time prior to, at and after the Closing Date, each party
hereto will use commercially reasonable efforts to take, or cause to be taken,
all such actions and to do or cause to be done, all things, necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the purchase and sale contemplated by this Agreement and the consummation of the
other transactions contemplated hereby, including executing and delivering such
documents as the other party being advised by counsel shall reasonably request
in connection with the consummation of this Agreement and the consummation of
the other transactions contemplated hereby, including, without limitation, the
execution and delivery of any and all confirmatory and other instruments, in
addition to those to be delivered on the Closing Date.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF MARYLAND (WITHOUT REGARD TO THE CHOICE
OF LAW PROVISIONS THEREOF).
11.6 Entire Agreement. This Agreement, the Schedules hereto, and all
documents, certificates and other documents to be delivered by the parties
pursuant hereto (including, without limitation, the Ancillary Documents),
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter of this Agreement. This Agreement
supersedes all prior negotiations between the parties and cannot be amended,
supplemented or changed, except by an agreement in writing that makes specific
reference to this Agreement and that is signed by Buyer and Seller. Buyer
acknowledges and agrees that Seller shall not be liable for, or bound in any
manner by,
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and Buyer has not relied upon, any express or implied, oral or written
information, warranty, guaranty, promise, statement, inducement, presentation or
opinion (whether of, by or on behalf of Seller, any broker or finder, or any
officer, employee, agent or representative of any of the foregoing, or any other
person) pertaining to the transactions contemplated hereby, the Seller, the
Station, the Assets, or any part of any of the foregoing (including, without
limitation, the physical condition of the Station or any of the Assets, or the
uses which can be made of the same or the value thereof), except as is expressly
set forth herein and the representations and warranties in the certificate
delivered by Seller pursuant to Section 8.2(b). Seller acknowledges and agrees
that Buyer shall not be liable for, or bound in any manner by and Buyer has not
relied upon, any express or implied, oral or written information, warranty,
guaranty, promise, statement, inducement, presentation or opinion (whether of,
by or on behalf of Buyer, any broker or finder, or any officer, employee, agent
or representative of any of the foregoing, or any other person) pertaining to
the transactions contemplated hereby or the Buyer, except as is expressly set
forth in this Agreement and the representations and warranties in the
certificate delivered by Buyer pursuant to Section 8.3(b).
11.7 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.7.
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11.8 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid or unenforceable, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the greatest
extent possible.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of Buyer and Seller as of the date first written above.
Buyer:
KUPN, INC.
By: _____________________________
Name:
Title:
Seller:
CHANNEL 21, L.P., a Nevada Limited
Partnership
By: Las Vegas Channel 21, Inc., a
Nevada corporation,
General Partner
By: _____________________________
Name:
Title:
The undersigned hereby executes
this Agreement only for purposes
of Sections 6.10 , 6.17 and
9.2(b)(6), and agrees that it
shall be bound by the provisions
of such Sections.
SINCLAIR BROADCAST GROUP, INC.
By: _____________________________
Name:
Title:
Schedule 1.1
------------
"Broadcast Cashflow" means, for any period, the difference between (a) the
sum of operating revenue and revenue from production, network compensation and
other income, but not including barter revenue, minus (b) the sum of payments
made or accrued in respect of national agency commissions, local agency
commissions, rep fees, operating expenses and film payments, but not including
barter expenses.
Schedule 3.7A
-------------
Any agreement relating to the acquisition of any television station, the
DMA of which is the same as the DMA of the Station, any Management Arrangement
or any Option entered into on or after the date of this Agreement by any of the
Seller Parties.
Schedule 3.7A
-------------
Any agreement relating to the acquisition of any television station, the
DMA of which is the same as the DMA of the Station, any Management Arrangement
or any Option entered into on or after the date of this Agreement by any of the
Seller Parties.
Exhibit 1.1
-----------
[Subject to comments of the Indemnification Escrow Agent]
INDEMNIFICATION FUND AGREEMENT
------------------------------
This INDEMNIFICATION FUND AGREEMENT (this "Agreement") is dated ______,
1997, by and among KUPN, INC., a Maryland corporation ("Buyer"), CHANNEL 21,
L.P., a Nevada limited partnership ("Seller"), and FIRST UNION NATIONAL BANK OF
NORTH CAROLINA ("Indemnification Escrow Agent").
R E C I T A L S:
----------------
A. Seller and Buyer entered into an Asset Purchase Agreement dated as of
January ___, 1997 (the "Purchase Agreement"), pursuant to which Seller has
agreed to sell, transfer and deliver to Buyer certain assets used in the
operation of Television Station KUPN-TV, Las Vegas, Nevada.
B. Pursuant to Section 2.6 of the Purchase Agreement, Buyer and Seller have
agreed that up to Three Million Dollars ($3,000,000) (the "Indemnification
Deposit") shall be deposited in escrow with the Indemnification Escrow Agent as
set forth in Section 1.1 below in order to provide a fund for the payment of any
claims giving rise to indemnification under Section 10.2 of the Purchase
Agreement. Capitalized terms used, but not defined herein, have the meanings
ascribed to such terms in the Purchase Agreement.
A G R E E M E N T S:
--------------------
In consideration of the above recitals and of the covenants and agreements
contained herein, Buyer, Seller and Escrow Agent agree as follows:
-2-
SECTION 12 : INDEMNIFICATION FUND
12.1 Delivery. The Indemnification Deposit will be made with the
Indemnification Escrow Agent as follows: (a) simultaneously with the Closing (as
defined in the Purchase Agreement) provided for in Section 8.1 of the Purchase
Agreement (the "Closing"), Buyer is delivering to the Indemnification Escrow
Agent, by wire transfer of immediately available funds or by other means
mutually acceptable to the parties, the Initial Deposit; (b) on the ninetieth
(90th) day after the Closing Date (or if such day is not a Business Day, on the
next succeeding Business Day), Buyer shall deposit with the Indemnification
Escrow Agent, by wire transfer of immediately available funds or by other means
mutually acceptable to the parties, all amounts collected with respect to any
Accounts Receivable, not to exceed the lesser of (i) One Million Five Hundred
Thousand Dollars ($1,500,000) or (ii) the amount of the Closing Date Estimated
Accounts Receivable (the "Additional Indemnification Amount Deposit"); and (c)
on and after the ninetieth (90th) day after the Closing Date until the
expiration of the Collections Period, within five (5) Business Days of the end
of each full fifteen (15) day period, Buyer shall deposit all amounts collected
with respect to the Accounts Receivable with the Indemnification Escrow Agent
until the total of all amounts deposited pursuant to Sections 1.1(b) and (c)
equals the Additional Indemnification Amount Deposit. The Indemnification
Deposit shall be held by the Indemnification Escrow Agent pursuant to the terms
of this Agreement. The "Initial Deposit" is an amount equal to Three Million
Dollars ($3,000,000) minus an amount equal to the lesser of (a) One Million Five
Hundred Thousand Dollars ($1,500,000) or (b) the Closing Date Estimated Accounts
Receivable. The "Closing Date Estimated Accounts Receivable" is an amount equal
to the Seller's good faith estimate of Accounts Receivable as of the Closing
Date, which have been outstanding for no more than 120 days, as set forth in the
certificate of Seller delivered to Buyer five (5) days before the Closing Date.
The "Indemnification Deposit" is the aggregate of the Initial Deposit and the
Additional Indemnification Amount Deposit. The Indemnification Deposit, and all
interest and earnings thereon,
-3-
shall be referred to collectively herein as the "Indemnification Fund" or the
"Indemnification Amount."
12.2 Receipt. At Closing, the Indemnification Escrow Agent shall
acknowledge receipt of the Initial Deposit. The Indemnification Escrow Agent
shall also send to Buyer and Seller acknowledgment of receipt of the Additional
Indemnification Amount Deposit. The Indemnification Escrow Agent agrees to hold
and disburse the Indemnification Fund in accordance with the terms and
conditions of this Agreement and for the uses and purposes stated herein.
12.3 Investment and Income. Upon receipt of the Indemnification Deposit,
the Indemnification Escrow Agent shall, pending the disbursement thereof
pursuant to this Agreement, invest the Indemnification Fund in accordance with
Seller's instructions in (a) direct obligations of, or obligations fully
guaranteed by, the United States of America or any agency thereof, (b)
certificates of deposit issued by commercial banks having a combined capital,
surplus and undivided profits of not less than One Hundred Million Dollars
($100,000,000), (c) repurchase agreements collateralized by securities issued by
the United States of America or any agency thereof, or by any private
corporation the obligations of which are guaranteed by the full faith and credit
of the United States of America, (d) prime banker's acceptances, (e) money
market funds investing in any of the above, or (f) other investments of equal or
greater security and liquidity.
SECTION 13. : DISBURSEMENT OF INDEMNIFICATION FUND
The Indemnification Escrow Agent shall dispose of or distribute the
Indemnification Fund only in accordance with this Section 2.
13.1 Claims Procedure. The following procedure shall govern the application
of the Indemnification Fund to satisfy any claims by Buyer which may be brought
pursuant to Sections 2.6(b)(2) or 10.2 of the Purchase Agreement.
-4-
(a) Buyer shall promptly give written notice to Seller and the
Indemnification Escrow Agent of all claims against the Indemnification Fund. The
written notice shall specify (i) in reasonable detail, the factual basis for
such claim, (ii) in good faith, the estimated amount of the Indemnification Fund
to be reserved against the claim, and (iii) that Buyer has given a copy of such
notice to the Seller.
(b) Following receipt of notice from Buyer of a claim, Seller shall
have thirty (30) days to make such investigation of the claim as Seller deems
necessary or desirable. For the purposes of such investigation, Buyer agrees to
make available to Seller and/or its authorized representative(s) the information
relied upon by Buyer to substantiate the claim. If Buyer and Seller agree at or
prior to the expiration of said thirty (30) day period (or any mutually agreed
upon extension thereof) to the validity and amount of such claim, they shall
promptly give the Indemnification Escrow Agent joint instructions in writing to
apply such portion of the Indemnification Fund agreed upon by Buyer as shall be
necessary to reimburse Buyer for such claim. If Buyer and Seller do not agree
within said period (or any mutually agreed upon extension thereof), the matter
shall be resolved as provided for in Paragraph 2.3 hereof, and the
Indemnification Escrow Agent shall continue to hold the Indemnification Fund
until it receives a Court Order (as hereinafter defined) or joint written
instructions in accordance therewith.
13.2 Release of Indemnification Fund. (a) On the twelve month anniversary
of the Closing Date, if no claim for indemnification is pending, the Escrow
Agent shall pay to Seller by way of certified or bank check the balance then
remaining of the Indemnification Fund. If, on the twelve month anniversary of
the Closing, Buyer has any indemnification claims pending, the Escrow Agent
shall retain an amount sufficient to satisfy such claims and remit the remaining
balance to Seller by certified or bank check.
-5-
13.3 Dispute. In the event of any dispute among any of the parties to this
Agreement, the Indemnification Escrow Agent shall not comply with any such
claims or demands as long as such disagreements may continue, and in so
refusing, the Indemnification Escrow Agent shall make no delivery or other
disposition of any property then held by it under this Agreement until it has
received a final court order from a court of competent jurisdiction directing
disposition of such property (a "Court Order").
13.4 Disbursement of the Indemnification Fund In Accordance with Joint
Instructions. Notwithstanding the provisions of Sections 2.1 through 2.3 above,
the Indemnification Escrow Agent, upon receipt of written instructions signed by
both Buyer and Seller, shall disburse the Indemnification Fund, or a portion
thereof, in accordance with such instructions.
SECTION 14.: INDEMNIFICATION ESCROW AGENT
14.1 Appointment and Duties. Buyer and Seller hereby appoint
Indemnification Escrow Agent to serve hereunder and the Indemnification Escrow
Agent hereby accepts such appointment and agrees to perform all duties which are
expressly set forth in this Agreement.
14.2 Compensation. Compensation will be paid to the Indemnification Escrow
Agent one-half by Buyer and one-half by Seller as specified in Schedule A
annexed hereto.
14.3 Indemnification. Buyer and Seller will, at their expense, indemnify
the Indemnification Escrow Agent, hold it harmless from any and all claims,
regardless of nature, arising out of or because of this Agreement, and exonerate
the Indemnification Escrow Agent from any liability in connection with this
Agreement, except as such may arise because of the Indemnification Escrow
Agent's gross negligence or willful misconduct in performing its specified
duties as Indemnification Escrow Agent.
-6-
14.4 Resignation. Indemnification Escrow Agent may resign at any time upon
giving the parties hereto thirty (30) days' prior written notice to that effect.
In such event, the successor shall be such person, firm or corporation as shall
be mutually selected by Buyer and Seller. It is understood and agreed that such
resignation shall not be effective until a successor agrees to act hereunder;
provided, however, if no successor is appointed and acting hereunder within
thirty (30) days after such notice is given, Indemnification Escrow Agent may
pay and deliver the Indemnification Fund into a court of competent jurisdiction.
SECTION 15.: LIABILITIES OF INDEMNIFICATION ESCROW AGENT
15.1 Limitations. The Indemnification Escrow Agent shall be liable only to
accept, hold and deliver the Indemnification Fund in accordance with the
provisions of this Agreement and amendments thereto; provided, however, that the
Indemnification Escrow Agent shall not incur any liability with respect to (a)
any action taken or omitted in good faith upon the advice of its counsel given
with respect to any questions relating to its duties and responsibilities as
Indemnification Escrow Agent under this Agreement, or (b) any action taken or
omitted in reliance upon any instrument which the Indemnification Escrow Agent
shall in good faith believe to be genuine (including the execution, the identity
or authority of any person executing such instrument, its validity and
effectiveness, and the truth and accuracy of any information contained therein),
to have been signed by a proper person or persons and to conform to the
provisions of this Agreement.
15.2 Collateral Agreements. The Indemnification Escrow Agent shall not be
bound in any way by any contract or agreement between other parties hereto,
whether or not it has knowledge of any such contract or agreement or of its
terms or conditions.
SECTION 16: TERMINATION
This Agreement shall be terminated (i) upon disbursement or
release of the entire or remaining Indemnification Fund by the
-7-
Indemnification Escrow Agent, (ii) by written mutual consent signed by all
parties, or (iii) payment of the Indemnification Fund into a court of competent
jurisdiction in accordance with Section 3.4 hereof. This Agreement shall not be
otherwise terminated.
SECTION 17.: OTHER PROVISIONS
17.1 Notices. All notices, demands and requests required or permitted to
be given under the provisions of this Agreement shall be (a) in writing,
(b) sent by telecopy (with receipt personally confirmed by telephone), delivered
by personal delivery, or sent by commercial delivery service or certified mail,
return receipt requested, (c) deemed to have been given on the date telecopied
with receipt confirmed, the date of personal delivery, or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
To Buyer: KUPN, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attention: David D. Smith
Telecopy: (410) 467-5043
Telephone: (410) 662-1008
-8-
with a copies Sinclair Communications, Inc.
(which shall 2000 W. 41st Street
not constitute Baltimore, Maryland 21211
notice) to: Attention: General Counsel
Telecopy: (410) 662-4707
Telephone: (410) 662-1422
and
Thomas & Libowitz, P.A.
USF&G Tower, Suite 1100
100 Light Street
Baltimore, Maryland 21202
Attention: Steven A. Thomas
Telecopy: (410) 752-2046
Telephone: (410) 752-2468
To Seller: Channel 21, L.P.
1999 Avenue of the Stars
Suite 500
Los Angeles, CA 90067
Attention: Mr. David Goldhill and
Robert Finkelstein, Esq.
Telecopy: (310) 553-3928
Telephone: (310) 551-4098 or 4093
with a copy Dow, Lohnes & Albertson PLLC
(which shall 1200 New Hampshire Avenue, N.W.
not constitute Suite 800
notice) to: Washington, DC 20036-6802
Attention: John T. Byrnes, Esq.
Telecopy: (202) 776-2222
Telephone: (202) 776-2518
To Indemnification Escrow Agent:
--------------------------------
______________________________
______________________________
______________________________
Attention: ___________________
-9-
Telephone: ___________________
Telecopy: ___________________
17.2 Benefit and Assignment. The rights and obligations of each party
under this Agreement may not be assigned without the prior written consent of
all other parties, except to the same extent assignment of the rights and
obligations of the parties under the Purchase Agreement is permitted without
consent of the other parties. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
17.3 Entire Agreement; Amendment. This Agreement contains all the terms
agreed upon by the parties with respect to the subject matter hereof. This
Agreement may be amended or modified only by written agreement executed by Buyer
and Seller and if the amendment in any way affects the compensation, duties
and/or responsibilities of the Indemnification Escrow Agent, by a duly
authorized representative of the Indemnification Escrow Agent. No waiver of any
provision hereof or rights hereunder shall be binding upon a party unless
evidenced by a writing signed by such party.
17.4 Headings. The headings of the sections and subsections of this
Agreement are for ease of reference only and do not evidence the intentions of
the parties.
17.5 Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF MARYLAND
(WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
17.6 Counterparts. This Agreement may be signed upon any number of
counterparts with the same effect as if the signatures on all counterparts are
upon the same instrument.
17.7 Earnings. All income and earnings upon any of the Indemnification
Deposit or the Indemnification Amount shall be paid to the party or parties
receiving the principal portion of such funds pro rata based on the amount of
such funds received
-10-
by such party or parties. All income and earnings upon the Indemnification
Deposit or the Indemnification Amount not distributed as of the end of any
taxable period shall be deemed for tax reporting purposes to have accrued for
the account of Seller.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
Buyer:
KUPN, INC.
By: _____________________________
Name:
Title:
Seller:
CHANNEL 21, L.P.
By: Las Vegas Channel 21, Inc., a Nevada
corporation, General Partner
By: _________________________________
Name:
Title:
Indemnification Escrow Agent:
-----------------------------
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By: __________________________
Name:
Title:
Schedule A
----------
Compensation
Exhibit 2.3(b)
--------------
[Subject to comments of the Escrow Agent]
ESCROW AGREEMENT
----------------
This ESCROW AGREEMENT (this "Agreement") is dated January ___, 1997, by
and among KUPN, Inc., a Maryland corporation ("Buyer"), CHANNEL 21, L.P., a
Nevada limited partnership ("Seller"), and ___________________________
_________________________ ("Escrow Agent").
R E C I T A L S:
----------------
A. Seller and Buyer have entered into an Asset Purchase Agreement on the
date hereof (the "Purchase Agreement"), pursuant to which Seller has agreed to
sell, transfer and deliver to Buyer certain assets used in the operation of
Television Station KUPN-TV, Las Vegas, Nevada.
B. The Purchase Agreement provides that, concurrent with the execution of
the Purchase Agreement and to secure the obligations of Buyer to consummate the
transactions contemplated by the Purchase Agreement, Buyer is to execute and
deliver this Agreement and on the expiration of each full 45 day period after
the date of this Agreement, in accordance with the terms of this Agreement,
deposit with the Escrow Agent the Escrow Deposits (as hereinafter defined).
C. Capitalized terms used, but not defined herein, shall have the meanings
ascribed to such terms in the Purchase Agreement.
A G R E E M E N T S:
--------------------
In consideration of the above recitals and of the covenants and agreements
contained herein, Buyer, Seller and Escrow Agent agree as follows:
SECTION 18.: ESCROW DEPOSIT
18.1 Delivery.
(a) On the expiration of each full 45 day period after the date hereof,
subject to Section 1.1(b) below, Buyer shall deposit with Escrow Agent by wire
transfer of immediately available funds or by other means mutually acceptable to
the parties, Two Million Dollars ($2,000,000) (each such amount being
hereinafter referred to as an "Escrow Deposit" and, collectively, as the "Escrow
Deposits"). The Escrow Deposits and all interest and earnings thereon
(collectively, the "Escrow Amount") shall be held by the Escrow Agent pursuant
to the terms of this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, the
aggregate of all amounts required to be deposited by Buyer pursuant to Section
1.1(a) of this Agreement and paid by Buyer pursuant to Section 2.3(a) of the
Purchase Agreement shall not exceed Fifteen Million Dollars ($15,000,000).
18.2 Receipt. The Escrow Agent shall acknowledge receipt of each Escrow
Deposit in writing and agrees to hold and disburse the Escrow Amount in
accordance with the terms and conditions of this Agreement and for the uses and
purposes stated herein.
18.3 Investment and Income. Upon receipt of each Escrow Deposit, the Escrow
Agent shall, pending the disbursement thereof pursuant to this Agreement, invest
the Escrow Amount in accordance with Buyer's instructions in (a) direct
obligations of, or obligations fully guaranteed by, the United States of America
or any agency thereof, (b) certificates of deposit issued by commercial banks
having a combined capital, surplus and undivided profits of not less than One
Hundred Million Dollars ($100,000,000), (c) repurchase agreements collateralized
by securities issued by the United States of America or any agency thereof, or
by any private corporation the obligations of which are guaranteed by the full
faith and credit of the United States of America, (d) prime banker's
acceptances, (e) money market funds investing in any of the above, or (f) other
investments of equal or greater security and liquidity.
SECTION 19: DISBURSEMENT OF ESCROW AMOUNT
The Escrow Agent shall release the Escrow Amount only in accordance with
this Section 2.
19.1 Payment of Escrow Amount to Seller at Closing. At the Closing, and
simultaneously with the performance by Buyer and Seller of their respective
obligations under the Purchase Agreement, Buyer and Seller shall send to the
Escrow Agent telecopied written instructions executed by Buyer and Seller
("Joint Instructions") authorizing the Escrow Agent to deliver the Escrow Amount
to Seller as a credit against the Estimated Purchase Price payable under the
Purchase Agreement by Buyer in accordance with Section 2.6(a) thereof. The
Escrow Agent shall promptly comply with such Joint Instructions.
19.2 Entitlement of Seller to Liquidated Damages. In the event that Seller
shall give the Escrow Agent written notice stating that Seller is entitled to
the Escrow Amount in accordance with Section 9.2 of the Purchase Agreement and
that Seller has sent a copy of such written notice of such claim to Buyer, then
the Escrow Agent shall also promptly give Buyer a copy of such written notice.
At any time on or before the fifteenth (15th) day after the receipt by Buyer of
such notice from the Escrow Agent, Buyer may contest Seller's claim to the
Escrow Amount by written notice delivered to Seller and Escrow Agent setting
forth the grounds for such dispute. Promptly after the expiration of fifteen
(15) days from the date of Buyer's receipt of such notice from the Escrow Agent,
if the Escrow Agent shall not have, during such fifteen-day period, received
from Buyer written notice disputing Seller's claim to the Escrow Amount, the
Escrow Agent shall pay the Escrow Amount to Seller as partial liquidated damages
as a consequence of Buyer's default under the Purchase Agreement (which amount,
together with the Purchase Price Deposit which Seller may retain pursuant to
Section 9.2 of the Purchase Agreement) the parties agree is a reasonable
estimate of the damages that will be suffered by Seller as a result of such
default by Buyer and does not constitute a penalty, the parties hereby
acknowledging the inconvenience and nonfeasibility of otherwise obtaining an
adequate remedy). If Buyer shall give notice disputing Seller's claim to the
Escrow Amount, the Escrow Agent shall retain the Escrow Amount until the dispute
is resolved in accordance with
Section 2.4 hereof. All notices to be given or permitted to be given under this
Section shall be given as provided in Section 6.1 of this Agreement.
19.3 Buyer's Rights to Return of the Escrow Amount. In the event that Buyer
shall give Escrow Agent written notice stating that Buyer is entitled to the
Escrow Amount in accordance with Section 9.2 of the Purchase Agreement and that
Buyer has sent a copy of such written notice to Seller, then the Escrow Agent
shall also promptly give Seller a copy of such written notice. At any time on or
before the fifteenth (15th) day after the receipt by Seller of such notice from
the Escrow Agent, Seller may contest Buyer's claim to the Escrow Amount by
written notice delivered to Buyer and the Escrow Agent setting forth the grounds
for such dispute. Promptly after the expiration of fifteen (15) days from the
date of Seller's receipt of such notice from the Escrow Agent, if the Escrow
Agent shall not have, during such fifteen-day period, received from Seller
written notice disputing Buyer's claim to the Escrow Amount, the Escrow Agent
shall return the Escrow Amount to Buyer and, in accordance with the Purchase
Agreement, Buyer shall have the right to pursue all remedies available under the
Asset Purchase Agreement or at law or equity, including, without limitation, the
right to seek specific performance and/or monetary damages. If Seller shall give
notice disputing Buyer's claim to the Escrow Amount, the Escrow Agent shall
retain the Escrow Amount until the dispute is resolved in accordance with
Section 2.4 hereof. All notices to be given or permitted to be given under this
Section shall be given as provided in Section 6.1 of this Agreement.
2.4 Dispute. In the event of any dispute among any of the parties to this
Agreement, including with respect to Seller's claim to the Escrow Amount or
Buyer's claim to the Escrow Amount, or the interpretation or administration of
this Agreement, the Escrow Agent shall not comply with any such claims or
demands from either Buyer or Seller as long as any such dispute may continue,
and in so refusing, the Escrow Agent shall make no delivery or other disposition
of the Escrow Amount and any other property then held by it under this Agreement
until it has received a final court order from a court of competent jurisdiction
directing disposition of such property.
2.5 Disbursement Proceeds In Accordance with Joint Instructions.
Notwithstanding the provisions of Sections 2.1 through 2.4 above, the Escrow
Agent, upon receipt of Joint Instructions with respect to the delivery of the
Escrow Amount, shall deliver the Escrow Amount in accordance with such
instructions.
SECTION 20: ESCROW AGENT
20.1 Appointment and Duties. Buyer and Seller hereby appoint Escrow Agent
to serve hereunder and the Escrow Agent hereby accepts such appointment and
agrees to perform all duties which are expressly set forth in this Agreement.
20.2 Compensation. Compensation will be paid to the Escrow Agent one-half
by Buyer and one-half by Seller as specified on Schedule A annexed hereto.
20.3 Indemnification. Both Seller and Buyer will, at their expense,
indemnify the Escrow Agent, hold it harmless from any and all claims, regardless
of nature, arising out of or because of this Agreement, and exonerate the Escrow
Agent from any liability in connection with this Agreement, except as such may
arise because of the Escrow Agent's gross negligence or willful misconduct in
performing its specified duties as Escrow Agent.
20.4 Resignation. Escrow Agent may resign at any time upon giving the other
parties hereto thirty (30) days' prior written notice to that effect. In such
event, the successor shall be such person, firm or corporation as shall be
mutually selected by Buyer and Seller. It is understood and agreed that such
resignation shall not be effective until a successor agrees to act hereunder;
provided, however, if no successor is appointed and acting hereunder within
thirty (30) days after such notice is given, Escrow Agent may pay and deliver
the Escrow Amount into a court of competent jurisdiction.
SECTION 21: LIABILITIES OF ESCROW AGENT
21.1 Limitations. The Escrow Agent shall be liable only to accept, hold and
deliver the Escrow Amount in accordance with the provisions of this Agreement
and amendments thereto; provided, however, that the Escrow Agent shall not incur
any liability with respect to (a) any action taken or omitted in good faith upon
the advice of its counsel given with respect to any questions relating to its
duties and responsibilities as Escrow Agent under this Agreement, or (b) any
action taken or omitted in reliance upon any instrument which the Escrow Agent
shall in good faith believe to be genuine (including the execution, the identity
or authority of any person executing such instrument, its validity and
effectiveness, and the truth and accuracy of any information contained therein),
to have been signed by a proper person or persons, and to conform to the
provisions of this Agreement.
21.2 Collateral Agreements. The Escrow Agent shall not be bound in any way
by any contract or agreement between other parties hereto, whether or not it has
knowledge of any such contract or agreement or of its terms or conditions.
SECTION 22: TERMINATION
This Agreement shall be terminated (a) upon disbursement or release of the
Escrow Amount by the Escrow Agent in accordance with the provisions hereof, (b)
by written mutual consent signed by all parties, or (c) upon delivery of the
Escrow Amount into a court of competent jurisdiction in accordance with Section
3.4 hereof. This Agreement shall not be otherwise terminated.
SECTION 23: OTHER PROVISIONS
23.1 Notices. All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be (i) in writing, (ii) sent
by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or certified mail,
return receipt requested, (iii) deemed to have been given on the date telecopied
with receipt confirmed, the date of personal delivery, or the date set forth in
the records of the
delivery service or on the return receipt, and (iv) addressed as follows:
To Buyer: KUPN, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Attention: David D. Smith
Telecopy: 410/467-5043
Telephone: 410/662-1008
with copies Sinclair Communications, Inc.
(which shall 2000 W. 41st Street
not constitute Baltimore, Maryland 21211
notice) to: Attention: General Counsel
Telecopy: 410/662-4707
Telephone: 410/662-1422
Thomas & Libowitz, P.A.
USF&G Tower, Suite 1100
100 Light Street
Baltimore, Maryland 21202
Attention: Steven A. Thomas
Telecopy: 410/752-2046
Telephone: 410/752-2468
To Seller: 1999 Avenue of the Stars
Suite 500
Los Angeles, CA 90067
Attention: M. David Goldhill and
Robert Finkelstein, Esq.
Telecopy: 310/553-3928
Telephone: 310/551-4098 or 4093
with a copy Dow, Lohnes & Albertson
(which shall 1200 New Hampshire Avenue, N.W.
not constitute Suite 800
notice) to: Washington, DC 20036-6802
Attention: John T. Byrnes, Jr., Esq.
Telecopy: (202) 776-2222
Telephone: (202) 776-2518
To Escrow Agent: __________________________________
__________________________________
__________________________________
__________________________________
Attention: _______________________
Telecopy: _______________________
Telephone: _______________________
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 6.1.
23.2 Benefit and Assignment. The rights and obligations of each party under
this Agreement may not be assigned without the prior written consent of all
other parties, except to the same extent assignment of the rights and
obligations of the parties under the Purchase Agreement is permitted without
consent of the other parties. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
23.3 Entire Agreement; Amendment. This Agreement contains all the terms
agreed upon by the parties with respect to the subject matter hereof. This
Agreement may be amended or modified only by written agreement executed by the
Seller and the Buyer and if the amendment in any way affects the compensation,
duties and/or responsibilities of the Escrow Agent, by a duly authorized
representative of the Escrow Agent. No waiver of any provision hereof or rights
hereunder shall be binding upon a party unless evidenced by a writing signed by
such party.
23.4 Headings. The headings of the sections and subsections of this
Agreement are for ease of reference only and do not evidence the intentions of
the parties.
23.5 Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF MARYLAND
(WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
23.6 Counterparts. This Agreement may be signed upon any number of
counterparts with the same effect as if the signatures on all counterparts are
upon the same instrument.
23.7 Earnings. All income and earnings upon the Escrow Deposit or the
Escrow Amount shall be paid to the party receiving the principal portion of such
funds pro rata based on the amount of such funds received by such party or
parties. All income and earnings upon the Escrow Deposit or the Escrow Amount
not distributed as of the end of any taxable period shall be deemed for tax
reporting purposes to have accrued for the account of Buyer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
Buyer:
------
KUPN, INC.
By: _____________________________
Name:
Title:
Seller:
-------
CHANNEL 21, L.P.
By: Las Vegas Channel 21, Inc., a Nevada
corporation, General Partner
By: __________________________________
Name:
Title:
Escrow Agent:
-------------
_________________________________
By: ____________________________
Name:
Title:
Schedule A
----------
Compensation
Exhibit 8.2(f)
--------------
[Closing Date]
KUPN, Inc.
2000 W. 41st Street
Baltimore, Maryland 21211
Re: Asset Purchase Agreement, dated as of January ___,
1997, by and between Channel 21, L.P. and KUPN, Inc.
----------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Channel 21, L.P., a Nevada limited partnership
(the "Seller"), in connection with the transactions contemplated by that certain
Asset Purchase Agreement, dated as of January ___, 1997 (the "Asset Purchase
Agreement"), by and between Seller and KUPN, Inc., a Maryland corporation
("Buyer"). This opinion is being delivered to you pursuant to Section 8.2(f) of
the Asset Purchase Agreement. All capitalized terms used herein but not
otherwise defined in this opinion shall have the meanings ascribed thereto in
the Asset Purchase Agreement.
In rendering this opinion, we have reviewed:
24. the publicly available files in the Washington, D.C. public reference
office of the FCC pertaining to the Station on [date to be completed upon
delivery of opinion based upon date of search],
25. the Asset Purchase Agreement,
26. the Assignment and Assumption Agreement and the Indemnification Fund
Agreement (collectively, the "Related Agreements"),
KUPN, Inc.
[Closing Date]
Page 25
27. the Agreement of Limited Partnership and Certificate of Limited
Partnership of Seller (collectively, the "Seller Partnership Agreement"),
28. the records of certain proceedings and actions of Seller and its
partners, in the forms certified to us by an officer of the general partner of
Seller as being true, correct and complete and to be in effect (without
rescission, modification or amendment) on the date of this opinion, and
29. the agreements to which Seller is a party that are listed on Schedule
__________ to the Asset Purchase Agreement and those additional agreements to
which Seller is a party that Seller has certified to us are material to the
operation of Seller's business or the transactions contemplated by the Asset
Purchase Agreement, each in the form certified to us by Seller to be true and
complete on the date of this opinion (the "Seller Agreements").
We have not reviewed the records of any court.
In our examination of documents and records, we have assumed, without
investigation, (i) that the FCC's publicly available files were complete and
accurately maintained and indexed at the time of their examination by us and
that there have been no changes in such files since the date of our examination,
(ii) the genuineness of all signatures, (iii) the legal capacity of natural
persons, (iv) the authenticity of all documents submitted to us as originals,
and (v) the conformity with originals of all documents submitted to us as
telecopied, certified, photostatic or reproduced copies and the authenticity of
all such documents. We have also assumed, but not independently verified, that
the Asset Purchase Agreement, the Related Agreements and all other documents
executed by a party other than Seller were duly and validly authorized, executed
and delivered by such party, that such party has the requisite power and
authority to execute, deliver and perform such agreements
KUPN, Inc.
[Closing Date]
Page 26
and other documents, and that such agreements and other documents are legal,
valid and binding obligations of such party and are enforceable against such
party in accordance with their respective terms.
With respect to questions of fact, we have relied, without independent
inquiry or verification by us, solely upon (a) the representations and
warranties set forth in the Asset Purchase Agreement, (b) written and oral
representations of officers of the general partner of Seller and (c)
certificates of public officials, and we do not opine in any respect as to the
accuracy of any such facts. We have conducted no independent investigation
whatsoever of any factual matter. Certain of the opinions given herein are
qualified by the phrases "to our knowledge," "known to us" or similar phrases.
In each case, such knowledge refers only to the actual existing knowledge of
attorneys in our firm involved in representing Seller in the preparation of this
opinion with only such investigation as is specifically referred to in this
opinion, without any further investigation or inquiry. Such terms do not include
any knowledge of other attorneys within our firm or any constructive or imputed
notice of any matters or items of information. When a statement in this opinion
is made "to our knowledge," it means that none of the attorneys in our firm
involved in representing Seller in the preparation of this opinion has actual
existing knowledge that the statement is false; it does not mean that any of
such attorneys necessarily has actual existing knowledge of facts that would
suggest the statement is true.
This opinion is limited to the law of the District of Columbia and the
federal law of the United States of America, including, without limitation, the
Communications Act of 1934, as amended, and the rules, regulations and published
policies of the FCC, insofar as such laws apply (collectively, "Applicable
Law"), except that Applicable Law includes only laws and regulations that a
lawyer exercising customary professional diligence would reasonably recognize as
being directly
KUPN, Inc.
[Closing Date]
Page 27
applicable to the transactions contemplated by the Transaction Documents and
excludes those set forth in Section 19 of the Legal Opinion Accord of the
American Bar Association Section of Business Law (1991). We advise you that we
are not admitted to practice law in the States of Maryland or Nevada, and we do
not purport to be experts in the laws of the States of Maryland or Nevada. Our
opinions are given as if the Asset Purchase Agreement and each of the Related
Agreements were governed by the laws of the District of Columbia. You recognize
that the express terms of such agreements provide that they are to be governed
by the law of the State of Maryland, which may be different from the law of the
District of Columbia in certain relevant respects. We express no opinion as to
choice of law or conflicts of law rules, or the laws of any states or
jurisdictions other than as specified above.
Statements in this opinion as to the legality, validity, binding effect and
enforceability of the Asset Purchase Agreement and the Related Agreements are
subject to limitations imposed by bankruptcy, insolvency, reorganization,
moratorium or similar laws and related court decisions of general applicability
relating to or affecting creditors' rights generally, and to the application of
general equitable principles.
In addition, without limitation of any of the foregoing, we express no
opinion herein as to (i) any provision of the Asset Purchase Agreement that
provides for indemnification to the extent such provision may be limited by
applicable law, (ii) any consents of third parties that may be required in
connection with the transfer and assignment of any of the Assets, or the effects
of the failure to have obtained any such consents that may be required, or (iii)
the right, title or interest of Seller in or to any of the Assets.
KUPN, Inc.
[Closing Date]
Page 28
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, we are of the opinion that:
1. Seller is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Nevada. Seller has the requisite
partnership power and authority to execute, deliver and perform the Asset
Purchase Agreement.
2. The execution, delivery and performance by Seller of the Asset Purchase
Agreement and the Related Agreements to which it is a party, and the
consummation by Seller, to the extent applicable, of the transactions
contemplated thereby, have been duly and validly authorized by all necessary
partnership action on the part of Seller.
3. The Asset Purchase Agreement and the Related Agreements to which Seller
is a party have been duly and validly executed and delivered by Seller, and the
Asset Purchase Agreement and each Related Agreement constitutes a legal, valid
and binding agreement of Seller (to the extent it is a party thereto),
enforceable against Seller (to the extent it is a party thereto) in accordance
with its terms.
The execution, delivery and performance by Seller of the Asset Purchase
Agreement and the Related Agreements and the
- ----------------------
The opinions expressed in paragraphs 1 and 2 may be given by Dow, Lohnes &
Albertson, relying on the opinions of Nevada counsel or counsel which organized
Seller (which may not be admitted to practice in Nevada), or directly by such
Nevada counsel or counsel which organized Seller. If Dow, Lohnes & Albertson
gives the opinions expressed in paragraphs 1 and 2 in reliance on other counsel,
the opinions of such other counsel shall specifically state that KUPN, Inc. may
rely on such opinions.
KUPN, Inc.
[Closing Date]
Page 29
consummation by Seller of the transactions contemplated thereby, assuming all
necessary consents of third parties have been received in connection with such
execution, delivery and performance and consummation of the transaction
contemplated thereby, will not (a) conflict with or violate any provision of the
Seller Partnership Agreement; (b) conflict with or constitute a breach of or
default (or give rise to any right of termination, cancellation or acceleration)
under any of the Seller Agreements or (c) violate or conflict with any provision
of Applicable Law, or any judgment, order or ruling of governmental authority
known to us to be applicable to Seller or any of the Assets.
5. Seller holds the FCC licenses and authorizations issued by the FCC
listed on Exhibit A hereto (the "FCC Licenses"). The FCC Licenses listed on
Exhibit A are valid for the full term set forth in Exhibit A hereto, are
currently in effect and are not subject to any conditions, other than those set
forth on the FCC Licenses or that pertain to the FCC Licenses under generally
applicable rules or policies of the FCC.
6. The FCC has granted its consent (the "FCC Consent") to the assignment of
the FCC Licenses from Seller to Buyer. The FCC Consent is in effect and the time
periods specified by statute or FCC regulations for filing a request for
administrative or judicial review, reconsideration, appeal or stay of the FCC
Consent and for the FCC to set aside the FCC Consent on its own motion have
expired. To our knowledge, after our review only of the FCC publicly available
files as described above, the FCC Consent has not been reversed, stayed,
enjoined, set aside, annulled or suspended, no request for administrative or
judicial review, reconsideration, appeal or stay of the FCC Consent has been
filed, and the FCC has not initiated a review of or set aside the FCC Consent on
its own motion.
KUPN, Inc.
[Closing Date]
Page 30
7. To our knowledge, after our review only of the FCC publicly available
files as described above, except as described on Exhibit B hereto, there is no
order, judgment, decree, notice of apparent liability or order of forfeiture
outstanding, and no petition, complaint, action, suit, notice of apparent
liability, order of forfeiture, investigation or other proceeding pending before
the FCC or threatened in writing by or before the FCC against Seller with
respect to the Station or any of the FCC Licenses (other than rule making
proceedings of general applicability to the television industry).
We express no opinion as to the effect of the violation of any law or
regulation that may be applicable to Seller as a result of the involvement of
parties other than Seller in the transactions contemplated by the Asset Purchase
Agreement because of the legal or regulatory status of such other parties or
because of any other facts specifically pertaining to any of them.
The information set forth herein is as of the date hereof. We assume no
obligation to advise you of changes that may thereafter be brought to our
attention. Our opinions are based on statutory provisions and judicial decisions
in effect at the date hereof, and we do not opine with respect to any law,
regulation, rule or governmental policy that may be enacted or adopted after the
date hereof nor assume any responsibility to advise you of future changes in our
opinions.
This letter is solely for your information in connection with the
consummation of the transactions contemplated by the Asset Purchase Agreement
and is not to be reproduced, quoted in whole or in part or otherwise referred to
in any of your financial statements or public releases, nor is it to be filed
with any governmental agency or relied upon by any other person or for any
purposes whatsoever without the prior written consent of a member of this firm;
provided, however, that Chase
KUPN, Inc.
[Closing Date]
Page 31
Manhattan Bank (National Association) (individually and as agent) and such other
financial institutions that are providing financing to the Buyer in connection
with the acquisition of the Assets may rely on the foregoing opinions solely in
connection with such financing.
Very truly yours,
DOW, LOHNES & ALBERTSON, PLLC
By:_____________________________
_________________, Member
EXHIBIT A
---------
FCC LICENSES
------------
[To be completed on the Closing Date]
EXHIBIT B
---------
COMPLAINTS
----------
[To be completed on the Closing Date]
Exhibit 8.2(i)
--------------
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made this
___ day of ____________, 1997, by and between Channel 21, L.P., a Nevada limited
partnership ("Seller"), and KUPN, Inc., a Maryland corporation ("Buyer").
R E C I T A L S:
----------------
A. Seller and Buyer have entered into an Asset Purchase Agreement, dated as
of January ___, 1997 (the "Purchase Agreement"), pursuant to which the Seller
has agreed, among other things, to transfer, convey, assign and deliver to Buyer
all of Seller's right, title and interest in and to the tangible and intangible
assets used or useful in connection with the conduct of the business or
operations of Television Station KUPN-TV, Las Vegas, Nevada (the "Station"),
other than the assets specifically excluded as provided in Section 2.2 of the
Purchase Agreement.
B. Section 2.7 of the Purchase Agreement provides that, as of the Closing
Date, Buyer shall assume and undertake to pay, discharge and perform certain
obligations and liabilities of Seller.
C. Sections 8.2(i) and 8.3(d) of the Purchase Agreement contemplate that
this Agreement is to be entered into and delivered at Closing.
D. All capitalized terms not otherwise defined herein and defined in the
Purchase Agreement shall have the meanings attributed thereto in the Purchase
Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements and covenants contained herein and in the Purchase Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby
-35-
acknowledged, the parties hereto, intending legally to be bound, hereby agree as
follows:
1. Assignment of Assets. Seller does hereby sell, assign, transfer and
deliver to Buyer all of its right, title and interest in and to the tangible and
intangible assets used or useful in the conduct of the business or operations of
the Station, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever (except for Permitted Liens), including, without limitation, the
following:
a. the Tangible Personal Property;
b. the Real Property;
c. the Licenses (subject to Buyer's right to have the FCC
Licenses assigned directly to the License Assignee);
d. the Assumed Contracts;
e. the Intangibles;
f. all of Seller's proprietary information, technical information
and data, maps, computer discs and tapes, plans, diagrams, blueprints and
schematics, including filings with the FCC, relating to the business and
operations of the Station;
g. all books and records of Seller relating solely to the
business or operations of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept by the Station, other
than account books of original entry and such files and records that are
maintained at the corporate offices of Seller's general partner for tax and
accounting purposes;
-36-
h. all deposits and prepaid expenses of Seller with respect to
items that are prorated in favor of Seller pursuant to Section 2.5 of the
Purchase Agreement; and
i. all other assets of Seller not constituting Excluded Assets;
but excluding the Excluded Assets as defined in Section 2.2 of the Purchase
Agreement, and Buyer does hereby accept such assignment.
2. Assumption of Obligations. As of the Closing Date, Buyer shall assume,
pay, discharge and perform the following obligations, duties and liabilities:
(a) any obligation or liability of Seller arising out of or related to the
ownership and operation of the Station and the Assets (including the Licenses
and the Assumed Contracts) to the extent that either (1) the obligations and
liabilities relate to the period from and after the Effective Time or (2) the
Purchase Price was reduced pursuant to Section 2.5(a) of the Purchase Agreement
as a result of the proration or adjustment of such obligations and liabilities;
(b) any liability or obligation to any former employee of Seller who has been
hired by Buyer, attributable to any period of time on or after the Closing Date
or as provided in Section 6.8 of the Purchase Agreement; (c) any liability or
obligation arising out of any litigation, proceeding or claim by any person or
entity relating to the business or operations of the Station or any of the
Assets with respect to any events or circumstances that are attributable to the
period on or after the Closing Date; (d) any severance or other liability
arising out of the termination of any employee's employment with or by Buyer on
or after the Closing Date; (e) any duty, obligation or liability relating to any
pension, 401(k) or other similar plan, agreement or arrangement provided by
Buyer to any employee or former employee of Seller on or after the Closing Date;
and (f) all state and local sales or use taxes (or their equivalent) and
transfer taxes or recording fees payable as a consequence of the sale of the
Assets hereunder, but subject to Seller's obligations under Section 11.1 of the
Purchase Agreement.
-37-
Buyer shall not assume any obligations or liabilities of Seller, including,
without limitation, any of the following that exist now or at the Closing or
that may arise in the future: (i) any obligations or liabilities under any
Excluded Contract, (ii) any obligations or liabilities under the Assumed
Contracts relating to the period prior to the Effective Time, except insofar as
a proration or adjustment therefor is made in favor of Buyer under
Section 2.5(a) of the Purchase Agreement, (iii) liabilities relating to
indebtedness of Seller for borrowed money, (iv) liabilities for claims or
litigation involving the Station relating to events occurring prior to the
Effective Time or (v) except as otherwise provided in the Purchase Agreement,
obligations or liabilities relating to employees not specifically assumed
thereunder.
3. Purchase Agreement. This Agreement is subject to and controlled by the
terms of the Purchase Agreement, including, without limitation, that it is
subject to all limitations on indemnification set forth in the Purchase
Agreement.
4. Further Assurances. Buyer and Seller shall execute and deliver from time
to time hereafter, upon reasonable request of such other party, all such further
documents and instruments, and shall do and perform all such acts as may be
necessary, to give full effect to the intent and meaning of this Agreement.
5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF MARYLAND (BUT NOT THE LAWS PERTAINING TO CHOICE OF LAW) AS TO ALL MATTERS,
INCLUDING, BUT NOT LIMITED TO, MATTERS OF VALIDITY, CONSTRUCTION, EFFECT,
PERFORMANCE AND REMEDIES.
-38-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the day and year first
written above.
SELLER:
CHANNEL 21, L.P., a Nevada limited
partnership
By: Las Vegas Channel 21, Inc., a
Nevada corporation, General
Partner
By: __________________________
Name:
Title:
BUYER:
KUPN, INC.
By: __________________________
Name:
Title:
-39-
Exhibit 8.2(k)
--------------
NONCOMPETITION AGREEMENT
------------------------
THIS NONCOMPETITION AGREEMENT (this "Agreement") is made as of this ______
day of __________, 1997 by _______________________, ("Covenantor").
W I T N E S S E T H:
--------------------
WHEREAS, Channel 21, L.P., a Nevada limited partnership ("Seller"), and
KUPN, Inc., a Maryland corporation ("Buyer"), have entered into an Asset
Purchase Agreement, dated as of January 24, 1997 (the "Purchase Agreement")
pursuant to which Seller has agreed to sell and Buyer has agreed to purchase,
substantially all of the assets of Television Station KUPN-TV, Las Vegas, Nevada
(the "Station") on the terms set forth in the Purchase Agreement;
WHEREAS, Section 8.2(k) of the Purchase Agreement provides for the
execution and delivery of this Agreement by Covenantor, and Covenantor realizes
and acknowledges a benefit to [him] [her] as a result of the consummation of the
transactions contemplated by the Purchase Agreement; and
WHEREAS, capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed to them in the Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth and as set forth in the Asset
Purchase Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Covenantor hereto covenants
and agrees as follows:
-40-
1. Covenant Not to Compete. Covenantor agrees that for a period of
two (2) years following the date hereof in the case of Clause (A) and one (1)
year in the case of Clause (B)(the "Restricted Period"), he will not, without
the express prior written consent of the Buyer (which consent may be given or
withheld in the sole discretion of Buyer), directly or indirectly, or otherwise
through any Affiliates: (A) either become or act as, a proprietor, partner,
officer, director, employee, stockholder (other than as a holder of not more
than five percent (5%) of any class of securities of any corporation or
partnership, which securities have been registered under Section 12 of the
Securities Exchange Act of 1934, as amended) of, joint venturer or investor in,
or agent for, or consultant to (whether for compensation or without
compensation), or otherwise render any services for any television station whose
principal broadcasting tower is located within a radius of 100 miles from the
main post office of the City of Las Vegas, (the "Geographic Area") or (B) hire
or solicit away, interfere with, attempt to engage in any of the foregoing or
assist any other person or entity in engaging or attempting to engage in any of
the foregoing with respect to, any employee of the Station or any Person who was
an employee of the Station as of the date hereof; provided that the restriction
in this Clause (B) shall only apply to those employees to whom Buyer offered
employment and shall not apply to any employee so long as Buyer consents
thereto, such consent not to be unreasonably withheld. The applicable Restricted
Period referred to in this Section 1 shall be tolled on a day-for-day basis for
each day during which Covenantor participates in any activity in violation of
this Section 1 so that Covenantor is restricted from engaging in the conduct
referred to in the Section 1 for the full applicable Restricted Period.
2. Consideration. In consideration of Covenantor's obligations under
this Agreement, Buyer shall pay Covenantor a fee of One Hundred Dollars
($100.00).
3. Reasonableness. Covenantor acknowledges that the restrictions set
forth in this Agreement are reasonably necessary to prevent the use and
disclosure of confidential
-41-
information, and to otherwise protect the legitimate business interests of the
Station. Covenantor further acknowledges that the Station actively conducts
business in the Geographic Area and that all of the restrictions in this
Agreement are reasonable in all respects, including duration, geographic
territory and scope of activity restricted.
4. Injunctive Relief. Covenantor acknowledges that the breach, or
threatened breach, by Covenantor of the provisions of this Agreement shall cause
irreparable harm to the Buyer, which harm cannot be reasonably, adequately or
fully redressed by the payment of damages. Accordingly, Buyer shall be entitled,
in addition to any other right or remedy it may have at law or in equity, to an
injunction enjoining or restraining Covenantor from any breach or threatened
breach of this Agreement. Covenantor hereby waives the defense in any equitable
proceeding that there is an adequate remedy at law for any such breach. In the
event of any legal action between the parties arising out of or in relation to
this agreement, the prevailing party in such litigation shall be entitled to
recover, in addition to any other legal remedies, all of its costs and expenses,
including, without limitation, reasonable attorney's fees, from the
nonprevailing party regardless of whether such legal action is prosecuted to
completion.
5. Benefit and Assignment. No person or entity other than the Buyer and
its permitted assigns is or shall be entitled to bring any action to enforce any
provision of this Agreement against the Covenantor, and the covenants and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall be enforceable only by, Covenantor and Buyer and its permitted assigns.
None of the rights hereunder shall be assignable without prior written consent
of Covenantor, except that Buyer shall be permitted to assign its rights
hereunder to any acquiror of all or substantially all of the assets of the
Station.
6. Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all agreements and
-42-
understandings, both written and oral, with respect to the subject matter
hereof.
7. Amendment. This Agreement may not be amended except by an instrument
in writing signed by or on behalf of the Covenantor and the Buyer.
8. Severability. If any part or any provision of this Agreement shall
be invalid or unenforceable under applicable law, said part or provisions shall
be ineffective to the extent of such invalidity or unenforceablity only, without
in any way affecting the remaining parts of such provisions or the remaining
provisions of this Agreement. The parties hereto agree that, if a court of
competent jurisdiction adjudges any provision of this Agreement to be invalid or
unenforceable, such court shall modify such provision so that it is enforceable
to the full extent permitted by applicable law.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY
THE LAWS OF THE STATE OF NEVADA (BUT NOT THE PROVISIONS THEREOF RELATING TO
CONFLICTS OF LAW) AS TO ALL MATTERS INCLUDING BUT NOT LIMITED TO MATTERS OF
VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.
10. No Waiver. No delay or omission by Buyer or Seller in exercising
any right under this Agreement will operate as a waiver of that or any other
right. A waiver or consent given by Buyer or Seller on any one occasion is
effective only in that instance and will not be construed as a bar to or waiver
of any right on any other occasion. Any waiver must be in writing and signed by
the party granting the waiver.
11. Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be a part of or affect the
meaning or interpretation of this Agreement.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
-43-
IN WITNESS WHEREOF, Covenantor has executed this Agreement as of the
day and year first above written.
[COVENANTOR]
_____________________________
Exhibit 8.3 (e)
---------------
[Closing Date]
Channel 21, L.P.
1999 Avenue of the Stars, Suite 500
Los Angeles, California 90067
Re: Asset Purchase Agreement, dated as of January
____, 1997, by and between Channel 21, L.P. and
KUPN, Inc.
Ladies and Gentlemen:
We have acted as counsel to KUPN, Inc., a Maryland corporation (the
"Buyer"), in connection with the transactions contemplated by that certain Asset
Purchase Agreement, dated as of January ____, 1997 (the "Asset Purchase
Agreement"), by and between Channel 21, L.P., a Nevada limited partnership (the
"Seller"), and Buyer. This opinion is being delivered to you pursuant to Section
8.3(e) of the Asset Purchase Agreement. All capitalized terms used herein but
not otherwise defined in this opinion shall have the meanings ascribed thereto
in the Asset Purchase Agreement.
In rendering this opinion, we have reviewed:
1. the Asset Purchase Agreement;
2. the Assignment and Assumption Agreement and the Indemnification Fund
Agreement (collectively, the "Related Agreements");
3. the Certificate of Incorporation and By-Laws of Buyer; and
4. the records of certain proceedings and actions of Buyer and its
shareholders, in the forms certified to us by an officer of the Buyer as being
true, correct and complete and to
-44-
Channel 21, L.P.
[Closing Date]
Page 46
be in effect (without rescission, modification or amendment) on the date of this
opinion. We have not reviewed the records of any court.
In our examination of documents and records, we have assumed, without
investigation, (i) the genuineness of all signatures, (ii) the legal capacity of
natural persons, (iii) the authenticity of all documents submitted to us as
originals, and (iv) the conformity with originals of all documents submitted to
us as telecopied, certified, photostatic or reproduced copies and the
authenticity of all such documents. We have also assumed, but not independently
verified, that the Asset Purchase Agreement, the Related Agreements and all
other documents executed by a party other than Buyer or any of its subsidiaries
were duly and validly authorized, executed and delivered by such party, that
such party has the requisite power and authority to execute, deliver and perform
such agreements and other documents, and that such agreements and other
documents are legal, valid and binding obligations of such party and are
enforceable against such party in accordance with their respective terms.
With respect to questions of fact, we have relied, without independent
inquiry or verification by us, solely upon (a) the representations and
warranties set forth in the Asset Purchase Agreement, (b) written and oral
representations of officers of Buyer, and (c) certificates of public officials,
and we do not opine in any respect as to the accuracy of any such facts. We have
conducted no independent investigation whatsoever of any factual matter. Certain
of the opinions given herein are qualified by the phrases "best of our
knowledge," "to our knowledge," "known to us" or similar phrases. In each such
case, such knowledge refers only to the actual existing knowledge of attorneys
in our firm involved in representing Buyer in the preparation of this opinion
with only such investigation as is specifically referred to in this opinion,
without any further investigation or inquiry. Such terms do not include any
knowledge of other attorneys within our firm or any constructive or imputed
notice of any matters or items of
-45-
Channel 21, L.P.
[Closing Date]
Page 47
information. When a statement in this opinion is made "to our knowledge," it
means that none of the attorneys in our firm involved in representing the Buyer
in the preparation of this opinion has actual existing knowledge that the
statement is false; it does not mean that any of such attorneys necessarily has
actual existing knowledge of facts that would suggest the statement as true.
This opinion is limited to the laws of the State of Maryland and the
federal law of the United States of America (collectively, "Applicable Law"),
except that Applicable Law includes only laws and regulations that a lawyer
exercising customary professional diligence would reasonably recognize as being
directly applicable to the transactions contemplated by the Asset Purchase
Agreement and the Related Agreements and excludes those set forth in Section 19
of the Legal Opinion Accord of the American Bar Association Section of Business
Law (1991). We express no opinion as to choice of law or conflicts of law rules
or the laws of any states or jurisdictions other than as specified above.
Statements in this opinion as to the legality, validity, binding effect and
enforceability of the Asset Purchase Agreement and the Related Agreements are
subject to limitations imposed by bankruptcy, insolvency, reorganization,
moratorium or similar laws and related court decisions of general applicability
relating to or affecting creditors' rights generally and to the application of
general equitable principles.
In addition, without limitation of any of the foregoing, we express no
opinion herein as to (i) any provision of the Asset Purchase Agreement that
provides for indemnification to the extent such provision may be limited by
applicable law, (ii) any consents of third parties that may be required in
connection with the transfer and assignment of any of the Assets or the effects
of the failure to have obtained any such consents that may be required, (iii)
federal or state securities or "Blue Sky" laws and bulk transfer or sales laws,
(iv) matters arising under
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the Communications Act of 1934, as amended, or the laws, rules, regulations or
policies of the Federal Communications Commission, or (v) antitrust laws.
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, we are of the opinion that:
1. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland. Buyer has the requisite
corporate power and authority to execute, deliver and perform the Asset Purchase
Agreement.
2. The execution, delivery and performance by Buyer of the Asset Purchase
Agreement and the Related Agreements and the consummation by Buyer of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action on the part of the Buyer.
3. The Asset Purchase Agreement and the Related Agreements have been duly
and validly executed and delivered by Buyer and each of the Asset Purchase
Agreement and each Related Agreement constitutes a legal, valid and binding
agreement of Buyer enforceable against Buyer in accordance with its terms.
We express no opinion as to the effect of the violation of any law or
regulation that may be applicable to the Buyer as a result of the involvement of
parties other than the Buyer in the transactions contemplated by the Asset
Purchase Agreement because of the legal or regulatory status of such other
parties or because of any other facts specifically pertaining to any of them.
The information set forth herein is as of the date hereof. We assume no
obligation to advise you of changes that may thereafter be brought to our
attention. Our opinions are based on statutory provisions and judicial decisions
in effect at the date hereof, and we do not opine with respect to any law,
regulation, rule or governmental policy that may be enacted or
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adopted after the date hereof nor assume any responsibility to advise you of
future changes in our opinions.
This letter is solely for your information in connection with the
consummation of the transactions contemplated by the Asset Purchase Agreement
and is not to be reproduced, quoted, in whole or in part, or otherwise referred
to in any of your financial statements or public releases, nor is it to be filed
with any governmental agency or relied upon by any other person or for any
purposes whatsoever without the prior written consent of a member of this firm.
Very truly yours,
THOMAS & LIBOWITZ, P.A.
By:_____________________________
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