Document/Exhibit Description Pages Size
1: 10-Q Paxson Communications Corporation Form 10-Q 23 151K
2: EX-4.2 Fourth Amend. to Amended & Restated Credit Agrmt. 9 29K
3: EX-4.3 Credit Agreement 343 1.08M
4: EX-10.181 Asset Purchase Agreement 42 168K
5: EX-10.182 Stock Purchase Agreement 127 410K
6: EX-10.183 Stock Purchase Agreement 139 439K
7: EX-10.184 Asset Purchase Agreement 42 173K
8: EX-10.185 Asset Purchase Agreement 103 442K
9: EX-27 Financial Data Schedule 1 7K
EXHIBIT 10.184
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS CORPORATION
AND
CHANNEL 49 ACQUISITION CORPORATION
FOR
TELEVISION STATION WJCB-TV
NORFOLK, VIRGINIA
* * *
OCTOBER 16, 1997
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS....................................................................................... 1
"Accounts Receivable"................................................................................ 1
"Assets"............................................................................................. 1
"Assumed Contracts".................................................................................. 1
"Closing"............................................................................................ 1
"Closing Date"....................................................................................... 2
"Consents"........................................................................................... 2
"Contracts".......................................................................................... 2
"Escrow Agent"....................................................................................... 2
"Escrow Agreement"................................................................................... 2
"FCC"................................................................................................ 2
"FCC Consent"........................................................................................ 2
"FCC Licenses"....................................................................................... 2
"Final Order"........................................................................................ 2
"Intangibles"........................................................................................ 2
"Licenses"........................................................................................... 3
"Modification Application"........................................................................... 3
"New WHRO Tower"..................................................................................... 3
"Purchase Price"..................................................................................... 3
"Real Property"...................................................................................... 3
"Tangible Personal Property"......................................................................... 3
"To the best of Seller's knowledge".................................................................. 3
SECTION 2. PURCHASE AND SALE OF ASSETS....................................................................... 3
2.1 Agreement to Sell and Buy................................................................... 3
2.2 Excluded Assets............................................................................. 4
2.3 Purchase Price.............................................................................. 5
2.4 Payment of Purchase Price................................................................... 6
2.5 Assumption of Liabilities and Obligations................................................... 6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.......................................................... 7
3.1 Organization, Standing, and Authority....................................................... 7
3.2 Authorization and Binding Obligation........................................................ 7
3.3 Absence of Conflicting Agreements........................................................... 7
3.4 Governmental Licenses....................................................................... 7
3.5 Title to and Condition of Real Property..................................................... 8
3.6 Title to and Condition of Tangible Personal Property........................................ 8
3.7 Contracts................................................................................... 9
3.8 Consents.................................................................................... 9
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3.9 Intangibles.................................................................................... 9
3.10 Financial Statements........................................................................... 10
3.11 Insurance...................................................................................... 10
3.12 Reports........................................................................................ 10
3.13 Personnel...................................................................................... 11
3.14 Taxes.......................................................................................... 13
3.15 Claims and Legal Actions....................................................................... 13
3.16 Environmental Matters.......................................................................... 13
3.17 Compliance with Laws........................................................................... 15
3.18 Conduct of Business in Ordinary Course......................................................... 15
3.19 Transactions with Affiliates................................................................... 16
3.20 Broker......................................................................................... 16
3.21 Full Disclosure................................................................................ 16
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................. 16
4.1 Organization, Standing, and Authority.......................................................... 16
4.2 Authorization and Binding Obligation........................................................... 16
4.3 Absence of Conflicting Agreements.............................................................. 16
4.4 Broker......................................................................................... 17
4.5 Full Disclosure................................................................................ 17
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING........................................................... 17
5.1 Generally...................................................................................... 17
5.2 Compensation................................................................................... 18
5.3 Contracts...................................................................................... 18
5.4 Disposition of Assets.......................................................................... 18
5.5 Encumbrances................................................................................... 18
5.6 Licenses....................................................................................... 18
5.7 Rights......................................................................................... 18
5.8 No Inconsistent Action......................................................................... 18
5.9 Access to Information.......................................................................... 19
5.10 Maintenance of Assets.......................................................................... 19
5.11 Insurance...................................................................................... 19
5.12 Consents....................................................................................... 19
5.13 Books and Records.............................................................................. 20
5.14 Notification................................................................................... 20
5.15 Financial Information.......................................................................... 20
5.16 Compliance with Laws........................................................................... 20
5.17 Preservation of Business....................................................................... 20
5.18 Personnel Recommendations...................................................................... 20
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SECTION 6. SPECIAL COVENANTS AND AGREEMENTS..................................................................... 20
6.1 FCC Consent.................................................................................... 20
6.2 Control of the Station......................................................................... 21
6.3 Risk of Loss................................................................................... 21
6.4 Confidentiality................................................................................ 22
6.5 Environmental Audit............................................................................ 22
6.6 Engineering Study.............................................................................. 22
6.7 Cooperation.................................................................................... 22
6.8 Bulk Sales Law................................................................................. 22
6.9 Sales Tax Filings.............................................................................. 22
6.10 Access to Books and Records.................................................................... 23
6.11 Appraisal...................................................................................... 23
6.12 Noncompetition Agreement....................................................................... 23
6.13 Section 1031 Exchange.......................................................................... 23
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING..................................................................................... 24
7.1 Conditions to Obligations of Buyer............................................................. 24
7.2 Conditions to Obligations of Seller............................................................ 25
SECTION 8. CLOSING AND CLOSING DELIVERIES....................................................................... 25
8.1 Closing........................................................................................ 25
8.2 Deliveries by Seller........................................................................... 26
8.3 Deliveries by Buyer............................................................................ 27
SECTION 9. TERMINATION.......................................................................................... 27
9.1 Termination by Seller.......................................................................... 27
9.2 Termination by Buyer........................................................................... 28
9.3 Rights on Termination.......................................................................... 29
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES............................................................ 30
10.1 Representations and Warranties................................................................. 30
10.2 Indemnification by Seller...................................................................... 30
10.3 Indemnification by Buyer....................................................................... 31
10.4 Procedure for Indemnification.................................................................. 31
10.5 Specific Performance........................................................................... 32
10.6 Attorneys' Fees................................................................................ 32
10.7 Limitations.................................................................................... 32
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SECTION 11. MISCELLANEOUS....................................................................................... 33
11.1 Fees and Expenses.............................................................................. 33
11.2 Arbitration.................................................................................... 33
11.3 Notices........................................................................................ 33
11.4 Benefit and Binding Effect..................................................................... 34
11.5 Further Assurances............................................................................. 34
11.6 Governing Law.................................................................................. 35
11.7 Headings....................................................................................... 35
11.8 Gender and Number.............................................................................. 35
11.9 Entire Agreement............................................................................... 35
11.10 Waiver of Compliance; Consents................................................................. 35
11.11 Press Release.................................................................................. 35
11.12 Counterparts................................................................................... 36
11.14 Time Brokerage Agreement....................................................................... 36
LIST OF SCHEDULES
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Schedule 2.2 -- Excluded Assets
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses and Cable Carriage
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Contracts
Schedule 3.9 -- Intangibles
Schedule 3.10 -- Financial Statements
Schedule 3.11 -- Insurance
Schedule 3.13 -- Personnel
Schedule 3.19 -- Transactions with Affiliates
Schedule 6.12 -- Noncompetition Agreement
Schedule 8.2(i) -- Opinion of Seller's Counsel
Schedule 8.3(d) -- Opinion of Buyer's Counsel
Schedule 9.4 -- Escrow Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 16th day of October,
1997, by and between Paxson Communications Corporation, a Delaware corporation
("Buyer"), and Channel 49 Acquisition Corporation, a Virginia corporation
("Seller").
R E C I T A L S
A. Seller is the licensee of and owns and operates television station
WJCB-TV, Norfolk, Virginia (the "Station") pursuant to licenses issued by the
Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer desires to buy, substantially all
the assets that are used or useful in the business or operations of the Station,
for the price and on the terms and conditions set forth in this Agreement.
A G R E E M E N T S
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising time run on the Station by Seller prior to the Closing Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 that
are specifically designated on Schedule 3.7 as Contracts that are to be assumed
by Buyer upon its purchase of the Station, (ii) any Contracts entered into by
Seller between the date of this Agreement and the Closing Date that Buyer agrees
in writing to assume, and (iii) time sales contracts entered into by Seller in
compliance with Section 5.3.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
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"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets 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) to which Seller is a party or which are binding upon Seller and which
relate to or affect the Assets or the business or operations of the Station, and
(i) which are in effect on the date of this Agreement or (ii) which are entered
into by Seller between the date of this Agreement and the Closing Date.
"Escrow Agent" means First Union National Bank.
"Escrow Agreement" means the Escrow Agreement dated as of the date
hereof among Buyer, Seller and the Escrow Agent.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by Seller
or under which Seller is licensed or franchised and which 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.
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"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local governmental authorities to Seller 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.
"Modification Application" means the construction permit application
filed by Seller with the FCC on June 27, 1996 (FCC File No. BPCT-960627KK) and
amended on June 9, 1997 seeking authority to change the Station's ERP, HAAT, and
transmitter location.
"New WHRO Tower" means the television transmission tower located at the
site specified in the Modification Application.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, and other real property interests which are used or
useful in the business or operations of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other tangible personal property which 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.
"To the best of Seller's knowledge" means to the actual knowledge of
James L. Lockwood, Jr., Pamela Lawson and Dave Hanna.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, and deliver to
Buyer on the Closing Date, and Buyer agrees to purchase from Seller, all of 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 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 (except for liens for current taxes not
yet due and payable), including the following:
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(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) Except as provided in Section 2.2(e), all choses in action
of Seller relating to the Station; and
(h) All books and records relating 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, provided,
however, that Buyer shall provide Seller with reasonable access to such books
and records for a period of seven (7) years after the Closing Date as requested
by Seller in connection with tax or other government or regulatory matters.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Seller's cash on hand as of the Closing and all other cash
in any of Seller's bank or savings accounts; any insurance policies, letters of
credit, or other similar items and cash surrender value in regard thereto; and
any stocks, bonds, certificates of deposit and similar investments;
(b) All books and records that Seller is required by law to
retain;
(c) Any pension, profit-sharing, or employee benefit plans,
and any collective bargaining agreements;
(d) Seller's articles of incorporation, bylaws, minutes,
resolutions, stock ledger, and other corporate records;
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(e) Any and all claims which Seller may have against Tidewater
Christian Communications Corporation ("TCCC") or any principal or representative
thereof; and any rights of Seller pursuant to that certain Asset Purchase
Agreement between Seller and TCCC dated as of March 4, 1997, or any agreement,
document, or instrument delivered pursuant to said Asset Purchase Agreement,
including without limitation that certain Escrow Agreement among Lockwood
Broadcasting, Inc., TCCC, and First Union National Bank of Virginia dated as of
April 2, 1997;
(f) Any and all Assets disposed of or consumed between the
date of this Agreement and the Closing in accordance with the terms of Section
5.4 hereof;
(g) Any claims of Seller against any officer, director,
principal, or shareholder of Seller;
(h) Sales, income and other tax refunds, and claims therefor,
relating to the period prior to the Closing;
(i) All records pertaining to Seller's financial relationship
with lenders or investors;
(j) Accounts Receivable; and
(k) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the covenants
of Seller set forth in the Noncompetition Agreement referred to in Section 6.12
shall be Fourteen Million Seven Hundred Fifty Thousand Dollars ($14,750,000)
adjusted as provided below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the operation of the Station, including 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), FCC annual regulatory fees and similar prepaid
and deferred items, shall be prorated between Buyer and Seller in accordance
with the principle that Seller shall be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Closing Date, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
on and after the Closing Date. Notwithstanding the preceding sentence, there
shall be no adjustment for, and Seller shall remain solely liable with respect
to, any Contracts not included in the Assumed Contracts and any other obligation
or liability not being assumed by Buyer in accordance with Section 2.5.
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(b) Manner of Determining Adjustments. Any adjustments will,
insofar as feasible, be determined and paid on the Closing Date, with final
settlement and payment by the appropriate party occurring no later than ninety
(90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) days before the Closing Date a preliminary settlement statement which
shall set forth Seller's good faith estimate of the adjustments to the Purchase
Price under Section 2.3(a). The preliminary settlement statement (i) shall
contain all information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(a), to the extent such adjustments can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and (ii)
shall be certified by Seller to be true and complete in all material respects as
of the date thereof.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted, shall
be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer, at
least two (2) days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge, and perform all obligations
and liabilities of Seller under the Licenses and the Assumed Contracts insofar
as they relate to the time on and after the Closing Date, and arise out of
events related to Buyer's ownership of the Assets or its operation of the
Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or proceedings
relating to the operation of the Station prior to the Closing, (iv) any
obligations or liabilities arising under capitalized leases or other financing
agreements, (v) any obligations or liabilities arising under agreements entered
into other than in the ordinary course of business, (vi) any obligations or
liabilities of Seller under any employee pension, retirement, health and welfare
or other benefit plans or collective bargaining agreements, (vii) any obligation
to any employee of the Station for severance benefits, vacation time, or sick
leave accrued prior to the Closing Date, or (viii) any obligations or
liabilities caused by, arising out of, or resulting from any action or omission
of Seller prior to the Closing, and all such obligations and liabilities shall
remain and be the obligations and liabilities solely of Seller. Notwithstanding
the foregoing, or any other provision in this Agreement to the contrary, Buyer
shall assume, effective as of the Closing Date, any and all liabilities of
Seller under Contracts entered into by Seller between the date of this Agreement
and the Closing Date at the direction or request of Buyer in Buyer's capacity as
Programmer under that certain Time Brokerage Agreement between Buyer and Seller
(the "TBA").
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Virginia. Seller has all requisite power and authority (i) to own, lease, and
use the Assets as now owned, leased, and used, (ii) to conduct the business and
operations of the Station as now conducted, and (iii) to execute and deliver
this Agreement, the Escrow Agreement and the documents contemplated hereby and
thereby, and to perform and comply with all of the terms, covenants, and
conditions to be performed and complied with by Seller hereunder and thereunder.
Seller is not a participant in any joint venture or partnership with any other
person or entity with respect to any part of the operations of the Station or
any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement and the Escrow Agreement by Seller have been duly
authorized by all necessary actions on the part of Seller and its shareholder.
This Agreement and the Escrow Agreement have been duly executed and delivered by
Seller and constitute the legal, valid, and binding obligations of Seller,
enforceable against it in accordance with their respective terms except as the
enforceability of this Agreement and the Escrow Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the Escrow Agreement and the documents contemplated hereby
and thereby (with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of any third party; (ii) will not conflict with
any provision of the Articles of Incorporation or Bylaws of Seller; (iii) will
not conflict with, result in a breach of, or constitute a default under, any
law, judgment, order, ordinance, injunction, decree, rule, regulation, or ruling
of any court or governmental instrumentality; (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to which
Seller is a party or by which Seller may be bound; and (v) will not create any
claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the Licenses. Seller has delivered to Buyer true and complete copies of
the Licenses (including any amendments and other modifications thereto). To the
best of Seller's knowledge, the Licenses have been validly issued. Seller is the
authorized legal holder of all Licenses. The Licenses listed on Schedule 3.4
comprise all of the licenses, permits, and other authorizations
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required from any governmental or regulatory authority for the lawful conduct of
the business and operations of the Station in the manner and to the full extent
they are now conducted, and none of the Licenses is subject to any restriction
or condition that would limit the full operation of the Station as now operated.
The Licenses are in full force and effect and the conduct of the business and
operations of the Station is in accordance therewith. Seller has no reason to
believe that any of the Licenses issued by the FCC would not be renewed by the
FCC in the ordinary course. The Station's city of license, as determined by the
FCC, is located within the Norfolk-Portsmouth-Newport News-Hampton, Virginia
Area of Dominant Influence as defined by the 1991-1992 Area of Dominant
Influence Market Guide published by The Arbitron Co. and the
Norfolk-Portsmouth-Newport News, Virginia Designated Market Area as defined by
the 1996 United States Television Household Estimates published by Nielsen Media
Research. With respect to the period commencing on April 2, 1997 and, to the
best of Seller's knowledge, with respect to the period prior to April 2, 1997,
no cable system has advised Seller of any signal quality or copyright indemnity
or other prerequisite to cable carriage of the Station's signal, and no cable
system has declined or threatened to decline such carriage or failed to respond
to a request for carriage or sought any form of relief from carriage from the
FCC. Schedule 3.4 lists the cable systems carrying the Station.
3.5 Title to and Condition of Real Property. Seller owns no Real
Property. All Real Property consists of leasehold interests only. Schedule 3.5
contains a complete and accurate description of all Real Property and Seller's
interests therein (including street address, legal description, owner, and use
and the location of all improvements thereon). The Real Property listed on
Schedule 3.5 comprises all real property interests necessary to conduct the
business and operations of the Station as now conducted. With respect to each
leasehold or subleasehold interest included in the Real Property being conveyed
under this Agreement so long as Seller fulfills its obligations under the lease
therefor, Seller has enforceable rights to nondisturbance and quiet enjoyment,
and to the best of Seller's knowledge, no third party holds any interest in the
leased premises with the right to foreclose upon Seller's leasehold or
subleasehold interest. All towers, guy anchors, and buildings and other
improvements included in the Assets are located entirely on the Real Property
listed in Schedule 3.5. All Real Property (including the improvements thereon)
(i) is in good condition and repair consistent with its present use, (ii) is
available for immediate use in the conduct of the business and operations of the
Station, and (iii) complies in all material respects with all applicable
building or zoning codes and the regulations of any governmental authority
having jurisdiction. Seller has full legal and practical access to the Real
Property.
3.6 Title to and Condition of Tangible Personal Property. Schedule 3.6
lists all material items of Tangible Personal Property. The Tangible Personal
Property listed on Schedule 3.6 comprises all material items of tangible
personal property currently used by Seller to conduct the business and
operations of the Station as now conducted. Except as described in Schedule 3.6,
Seller owns and has good title to each item of Tangible Personal
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Property, and none of the Tangible Personal Property owned by Seller is subject
to any security interest, mortgage, pledge, conditional sales agreement, or
other lien or encumbrance, except for liens for current taxes not yet due and
payable. Each item of Tangible Personal Property will be conveyed by Seller to
Buyer at Closing "as is/where is," and Seller makes no representations or
warranties regarding the condition of the Tangible Personal Property.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Contracts except contracts with advertisers for the sale of advertising time on
the Station for cash at prevailing rates and which have not been prepaid and
which may be canceled by the Station without penalty on not more than thirty
days' notice. Seller has delivered to Buyer true and complete copies of all
written Contracts, true and complete memoranda of all oral Contracts (including
any amendments and other modifications to such Contracts), and a schedule
summarizing Seller's obligations under trade and barter agreements relating to
the Station. Other than the Contracts listed on Schedule 3.7 and cash
programming contracts, Seller requires no contract, lease, or other agreement to
enable it to carry on its business as now conducted. All of the Assumed
Contracts are in full force and effect, and are valid, binding, and enforceable
in accordance with their terms. There is not under any Assumed Contract any
default by Seller or, to the best of Seller's knowledge, any other party
thereto. Seller is not aware of any intention by any party to any Assumed
Contract (i) to terminate such contract or amend the terms thereof, (ii) to
refuse to renew the Assumed Contract upon expiration of its term, or (iii) to
renew the Assumed Contract upon expiration only on terms and conditions which
are more onerous than those now existing. Except for the need to obtain the
Consents listed in Schedule 3.3, Seller has full legal power and authority to
assign its rights under the Assumed Contracts to Buyer in accordance with this
Agreement, and such assignment will not affect the validity, enforceability, or
continuation of any of the Assumed Contracts. Buyer shall assume no programming
contracts. Seller is not a party to any capital or financing lease with respect
to any of the Assets.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents described in Schedule 3.3, no consent, approval, permit,
or authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and to the best of Seller's knowledge, uncontested. Seller
has delivered to Buyer copies of all documents establishing or evidencing all
Intangibles. To the best of Seller's knowledge, Seller is not infringing upon or
otherwise acting adversely to any trademarks, trade names,
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service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action pending, or to the knowledge of Seller threatened, with
respect thereto. The Intangibles listed on Schedule 3.9 comprise all intangible
property interests necessary to conduct the business and operations of the
Station as now conducted.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of financial statements including balance sheets, statements of
operations and a statement of operating cash flow for the period ending August
31, 1997 (collectively, the "Financial Statements"). The Financial Statements
have been prepared from the books and records of Seller, accurately reflect, in
all material respects, the books, records, and accounts of the Station (which
books, records, and accounts are complete and correct), are complete and correct
in all material respects, and present fairly the financial condition of the
Station as at their respective dates and the results of operations for the
periods then ended. None of the Financial Statements materially understates the
true costs and expenses of conducting the business or operations of the Station,
fails to disclose any material contingent liabilities, or materially overstates
the revenues of the Station.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.11 are in full
force and effect. The insurance policies listed in Schedule 3.11 are adequate in
amount with respect to, and for the full value (subject to customary
deductibles) of, the Assets, and insure the Assets and the business of the
Station against all customary and foreseeable risks. During the period
commencing on April 2, 1997, no insurance policy of Seller on the Assets or the
Station has been canceled by the insurer and no application of Seller for
insurance has been rejected by any insurer.
3.12 Reports. With respect to the period commencing on April 2, 1997
and, to the best of Seller's knowledge, with respect to the period prior to
April 2, 1997, all reports and statements that the Station is currently required
to file with the FCC have been filed, and all reporting requirements of the FCC
have been complied with. With respect to the period commencing on April 2, 1997
and, to the best of Seller's knowledge, with respect to the period prior to
April 2, 1997, all of such reports and statements are substantially complete and
correct as filed. Seller has timely paid to the FCC all annual regulatory fees
payable with respect to the FCC Licenses for the fiscal year 1997 (commencing
October 1, 1996 and ending September 30, 1997).
3.13 Personnel.
(a) All of Seller's Employee Plans and Compensation
Arrangements are listed in Schedule 3.13, and complete and accurate copies of
any such written Employee Plans and Compensation Arrangements (or related
insurance policies) have been furnished to
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Buyer, along with copies of any employee handbooks or similar documents
describing such Employee Plans and Compensation Arrangements. Descriptions of
any unwritten Employee Plans or Compensation Arrangements also are provided in
Schedule 3.13. Schedule 3.13 also contains a true and complete list of all
employees of the Station, their job description, date of hire, salary and amount
and date of last salary increase.
(b) Each Employee Plan and Compensation Arrangement has been
administered in compliance with its own terms and in material compliance with
the provisions of ERISA, the Code, the Age Discrimination in Employment Act and
any other applicable Federal or state laws. Seller is not aware of the existence
of any governmental audit or examination of any Employee Plan or Compensation
Arrangement or of any facts which would lead it 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 or
Compensation Arrangement pending or, to the best of Seller's knowledge,
threatened against any of such plans or arrangements, and Seller possesses no
knowledge of any facts which could give rise to any such action, suit or claim.
(c) Seller does not contribute to and is not required to
contribute to any Multi-employer Plan with respect to the employees of the
Station, and neither Seller nor any other trade or business under common control
with Seller (within the meaning of Sections 414(b), (c), (m) or (o) of the Code)
has incurred or reasonably expects to incur any "withdrawal liability," as
defined under Section 4201 et seq. of ERISA.
(d) Except as described in Schedule 3.13, neither Seller nor
any other trade or business under common control with Seller (within the meaning
of Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or
contributes to any Employee Plan or Compensation Arrangement that provides
retiree medical or retiree life insurance coverage to former employees of Seller
at the Station.
(e) Except as described in Schedule 3.13, with respect to each
Employee Plan and, to the extent applicable, each Compensation Arrangement: (i)
each Employee Plan that is intended to be tax-qualified, and each amendment
thereto, is the subject of a favorable determination letter, and no plan
amendment that is not the subject of a favorable determination letter would
affect the validity of an Employee Plan's letter; (ii) no prohibited
transaction, within the definition of section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject Seller to any liability; and (iii)
all contributions, premiums or payments accrued, in whole or in part, under each
Employee Plan or Compensation Arrangement or with respect thereto as of the
Closing will be paid by the Seller prior to the Closing, including, but not
limited to, contributions thereto with respect to the plan year ending
immediately prior to the Closing.
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(f) For purposes of this Agreement, the following terms shall
have the meaning indicated: (i) "Employee Plan" shall mean any pension,
profit-sharing, deferred compensation, vacation, bonus, incentive, medical,
vision, dental, disability, life insurance or any other employee benefit plan as
defined in Section 3(3) of ERISA to which Seller or any entity related to Seller
(under the terms of Section 414(b), (c), (m) or (o) of the Code) contributes or
to which Seller or any entity related to Seller (under the terms of Sections
414(b), (c), (m) or (o) of the Code) sponsors, maintains or otherwise is bound
which provides benefits to persons employed or previously employed at the
Station; (ii) "Code" shall mean the Internal Revenue Code of 1986, as amended,
any successor thereto and any regulations promulgated thereunder; (iii)
"Compensation Arrangement" shall mean any plan or compensation arrangement other
than an Employee Plan, whether written or unwritten, which provides to
employees, former employees, officers, directors and shareholders of Seller or
any entity related to Seller (under the terms of Section 414(b), (c), (m) or (o)
of the Code) employed or previously employed at the Station any compensation or
other benefits, whether deferred or not, in excess of base salary or wages,
including, but not limited to, any bonus or incentive plan, stock rights plan,
deferred compensation arrangement, life insurance, stock purchase plan,
severance pay plan and any other employee fringe benefit plan; (iv) "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended, any
successor thereto and any regulations promulgated thereunder; and (v)
"Multi-employer Plan" means a plan, as defined in ERISA Section 3(37), to which
Seller or any entity related to Seller (under the terms of Section 414(b) or (c)
of the Code) contributes or is required to contribute.
(g) Seller is not a party to or subject to any collective
bargaining agreements with respect to the Station. Seller has no written or oral
contracts of employment with any employee of the Station, other than those
listed in Schedule 3.7. Seller has complied in all material respects with all
laws, rules, and regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and Seller has not received any notice alleging that it has failed to
comply in any material respect with any such laws, rules, or regulations. No
controversies, disputes, or proceedings are pending or, to the best of Seller's
knowledge, threatened, between Seller and any employee (singly or collectively)
of the Station. No labor union or other collective bargaining unit represents or
claims to represent any of the employees of the Station. To the best of Seller's
knowledge, there is no union campaign being conducted to represent any employees
of the Station or to solicit cards from employees to authorize a union to
request a National Labor Relations Board certification election with respect to
any employees at the Station.
3.14 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on those returns or on any tax assessment
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received by it to the extent that such taxes have become due, or has set aside
on its books adequate reserves (segregated to the extent required by generally
accepted accounting principles) with respect thereto. There are no governmental
investigations or other legal, administrative, or tax proceedings pursuant to
which Seller is or could be made liable for any taxes, penalties, interest, or
other charges, the liability for which could extend to Buyer as transferee of
the business of the Station, and no event has occurred that could impose on
Buyer any transferee liability for any taxes, penalties, or interest due or to
become due from Seller.
3.15 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation 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 or relating to Seller with respect to its ownership or operation of the
Station or otherwise relating to the Assets or the business or operations of the
Station, nor does Seller know or have reason to be aware of any basis for the
same. In particular, but without limiting the generality of the foregoing, there
are no applications, complaints or proceedings pending or, to the best of
Seller's knowledge, threatened (i) before the FCC relating to the business or
operations of the Station other than rule making proceedings which affect the
television industry generally, (ii) before any federal or state agency relating
to the business or operations of the Station involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Station involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
3.16 Environmental Matters.
(a) Seller has complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Station
alleging any failure to comply with any such law, rule, or regulation.
(b) To the best of Seller's knowledge, Seller has no liability
relating to its operation of the Station (and there is no basis related to the
present operations, properties, or facilities of Seller for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against Seller giving rise to any such liability) under any
law, rule, or regulation of any federal, state, or local government (or agency
thereof) concerning release or threatened release of hazardous substances,
public health and safety, or pollution or protection of the environment.
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(c) To the best of Seller's knowledge, Seller has no liability
relating to its operation of the Station (and Seller has not handled or disposed
of any substance, arranged for the disposal of any substance, or owned or
operated any property or facility in any manner that could form the basis for
any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand (under the common law or pursuant to any
statute) against Seller giving rise to any such liability) for damage to any
site, location, or body of water (surface of subsurface) or for illness or
personal injury.
(d) To the best of Seller's knowledge, Seller has no liability
relating to its operation of the Station (and there is no basis for any present
or future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against Seller giving rise to any such liability) under any
law, rule, or regulation of any federal, state, or local government (or agency
thereof) concerning employee health and safety.
(e) To the best of Seller's knowledge, Seller has no liability
relating to its operation of the Station (and Seller has not exposed any
employee to any substance or condition that could form the basis for any present
or future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand (under the common law or pursuant to statute) against Seller
giving rise to any such liability) for any illness or personal injury to any
employee.
(f) In connection with its ownership or operation of the
Station, Seller has obtained, and been in compliance in all material respects
with all of the terms and conditions of, all permits, licenses, and other
authorizations which are required under, and has in all material respects
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all federal, state, and local laws, rules, and regulations
(including all codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety,
worker health and safety, and pollution or protection of the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
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(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in violation
of any federal, state, or local law, rule or regulation in connection with its
operation of the Station or, to the best of Seller's knowledge, by any other
party on any Real Property.
3.17 Compliance with Laws. Seller has complied in all material respects
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. With respect to the period commencing on April 2, 1997 and, to the best
of Seller's knowledge, with respect to the period prior to April 2, 1997,
neither the ownership or use of the properties of the Station nor the conduct of
the business or operations of the Station conflicts with the rights of any other
person or entity.
3.18 Conduct of Business in Ordinary Course. Seller has conducted the
business and operations of the Station only in the ordinary course and has not:
(a) Suffered any material adverse change in the business,
assets, or properties of the Station, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business of the
Station;
(b) Made any material increase in compensation payable or to
become payable to any of the employees of the Station, or any bonus payment made
or promised to any employee of the Station, or any material change in personnel
policies, employee benefits, or other compensation arrangements affecting the
employees of the Station;
(c) Made any sale, assignment, lease, or other transfer of any
of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(d) Canceled any debts owed to or claims held by Seller with
respect to the Station, except in the normal and usual course of business;
(e) Suffered any material write-down of the value of any
Assets or any material write-off as uncollectible of any accounts receivable of
the Station; or
(f) Transferred or granted any right under, or entered into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to the Station.
3.19 Transactions with Affiliates. Except as set forth in Schedule
3.19, Seller has not been involved in any business arrangement or relationship
relating to the Station with any
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affiliate of Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the business of the Station. As used in
this paragraph, "affiliate" has the meaning set forth in Rule 12b-2 promulgated
under the Securities and Exchange Act of 1934.
3.20 Broker. Neither Seller nor any person acting on Seller's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
3.21 Full Disclosure. No representation or warranty made by Seller in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and, upon the comment of the TBA, will be duly qualified to conduct
business as a foreign corporation in the State of Virginia. Buyer has all
requisite power and authority to execute and deliver this Agreement and the
Escrow Agreement and the documents contemplated hereby and thereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement and the Escrow Agreement by Buyer have been duly
authorized by all necessary actions on the part of Buyer. This Agreement and the
Escrow Agreement have been duly executed and delivered by Buyer and constitute
the legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms except as the enforceability of this
Agreement and the Escrow Agreement 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. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby (with
or without the giving of notice, the lapse of time, or both): (i) do not require
the consent of any third party; (ii) will not conflict with the Certificate of
Incorporation or Bylaws of Buyer; (iii) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, injunction,
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decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license, or permit to which Buyer is a party or by which
Buyer may be bound, such that Buyer could not acquire or operate the Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Buyer pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
4.6 Qualification as FCC Licensee. Buyer knows of no fact or
circumstance which could, under the Communications Act of 1934, as amended, or
the rules, regulations, and policies of the FCC, reasonably be expected to
disqualify or preclude Buyer from assuming the FCC Licenses. To Buyer's
knowledge, there are no proceedings, complaints, notices of forfeiture, claims
or investigations pending or threatened against Buyer or any principal, officer,
or director, of Buyer that could reasonably be expected to prevent Buyer from
assuming the FCC Licenses.
4.7. Litigation. There are no actions, suits, or proceedings against
Buyer, including, without limitation arbitration proceedings, whether or not the
defense thereof or liabilities in respect thereof are covered by insurance,
pending, or to Buyer's knowledge threatened, which could reasonably be expected
to prevent the consummation of the transactions contemplated by this Agreement,
or which could reasonably be expected to, in any material respect, interfere
with Buyer's performance of its obligations under this Agreement, and Buyer
knows of no basis for any such action or proceeding.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this Agreement
and the Closing Date, and subject to the provisions of the TBA, Seller shall
operate the Station diligently in the ordinary course of business in accordance
with its past practices (except where such conduct would conflict with the
following covenants or with Seller's other obligations under this Agreement),
and in accordance with the other covenants in this Section 5.
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5.2 Compensation. Seller shall not increase the compensation, bonuses,
or other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Station, except in
accordance with past practices, provided, however, that Seller shall have the
right to pay bonuses and/or severance payments to its employees payable at
Closing.
5.3 Contracts. Seller will not enter into any contract or commitment
relating to the Station or the Assets, or amend or terminate any Contract (or
waive any material right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness) that will be binding on Buyer after Closing, except for cash time
sales agreements made in the ordinary course of business, and except Contracts
entered into by Seller at Buyer's direction in accordance with the TBA. Prior to
the Closing Date, Seller shall deliver to Buyer a list of all Contracts entered
into between the date of this Agreement and the Closing Date, together with
copies of such Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except where no longer used
or useful in the business or operations of the Station or in connection with the
acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) liens disclosed on
Schedule 3.5 and Schedule 3.6, which shall be removed prior to the Closing Date,
(ii) liens for current taxes not yet due and payable, and (iii) mechanics' liens
and other similar liens, which shall be removed prior to the Closing Date.
5.6 Licenses. Seller shall not cause or permit, by any act or failure
to act, any of the Licenses to expire or to be revoked, suspended, or modified,
or take any action that could cause the FCC or any other governmental authority
to institute proceedings for the suspension, revocation, or adverse modification
of any of the Licenses. Seller shall not fail to prosecute with due diligence
any applications to any governmental authority in connection with the operation
of the Station.
5.7 Rights. Seller shall not waive any right relating to the Station or
any of the Assets. Seller shall not cause, by any act or failure to act, any
cable system located within the Station's Area of Dominant Influence to refuse
to carry the Station's signal.
5.8 No Inconsistent Action. Seller shall not take any action that is
inconsistent with its obligations under this Agreement or that could materially
hinder or delay the consummation of the transactions contemplated by this
Agreement.
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5.9 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to the Assets and to all other properties, equipment, books, records, Contracts,
and documents relating to the Station for the purpose of audit and inspection,
including inspections incident to the environmental study described in Section
6.5 and the engineering study described in Section 6.6, and will furnish or
cause to be furnished to Buyer or its authorized representatives all information
with respect to the affairs and business of the Station that Buyer may
reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Station). Without
limiting the generality of the foregoing, Seller shall give Buyer and its
counsel, accountants and other authorized representatives reasonable access to
Seller's financial records and Seller's employees, counsel, accountants and
other representatives for the purpose of preparing and auditing such financial
statements as Buyer determines, in its sole judgment, are required or advisable
to comply with federal or state securities laws and the rules and regulations of
securities markets as a result of the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
5.10 Maintenance of Assets. Seller shall use its best efforts and take
all reasonable actions to maintain all of the Assets in good condition (ordinary
wear and tear excepted), and use, operate, and maintain all of the Assets in a
reasonable manner and in accordance with the terms of the FCC Licenses, all
rules and regulations of the FCC and generally accepted standards of good
engineering practice. Seller shall maintain inventories of spare parts and
expendable supplies at levels consistent with past practices. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Assets
occurs, Seller shall repair, replace, or restore the Assets to their prior
condition as represented in this Agreement as soon thereafter as possible, and
Seller shall use the proceeds of any claim under any insurance policy solely to
repair, replace, or restore any of the Assets that are lost, damaged, impaired,
or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance policies
on the Station and the Assets.
5.12 Consents. Seller shall diligently and in good faith seek to obtain
the Consents and the estoppel certificates described in Section 8.2(b), without
any change in the terms or conditions of any Contract or License that could be
less advantageous to the Station than those pertaining under the Contract or
License as in effect on the date of this Agreement. Seller shall promptly advise
Buyer of any difficulties experienced in obtaining any of the Consents and of
any conditions proposed, considered, or requested for any of the Consents. Upon
Buyer's request, Seller shall cooperate with Buyer and use it best efforts to
obtain from the lessors under each Real Property lease such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's senior lenders may request.
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5.13 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing of any
unusual or material developments with respect to the business or operations of
the Station, and of any material change in any of the information contained in
Seller's representations and warranties contained in Section 3 of this
Agreement.
5.15 Financial Information. Seller shall furnish to Buyer within twenty
days after the end of each month ending between the date of this Agreement and
the Closing Date a statement of income and expense and a statement of operating
cash flow for the month just ended and such other financial information
(including information on payables and receivables) as Buyer may reasonably
request. All financial information delivered by Seller to Buyer pursuant to this
Section shall be prepared from the books and records of Seller in accordance
with generally accepted accounting principles consistently applied, shall
accurately reflect, in all material respects, the books, records, and accounts
of the Station, shall be complete and correct in all material respects, and
shall, in all material respects, present fairly the financial condition of the
Station as at their respective dates and the results of operations for the
periods then ended.
5.16 Compliance with Laws. Seller shall comply in all material respects
with all laws, rules, and regulations applicable or relating to the ownership
and operation of the Station.
5.17 Preservation of Business. Except to the extent delegated to Buyer
pursuant to the TBA, Seller shall use its best efforts to preserve the business
and organization of the Station and use its best efforts to keep available to
the Station its present employees and to preserve the audience of the Station
and the Station's present relationships with suppliers, advertisers, and others
having business relations with it, to the end that the business, operations, and
prospects of the Station shall be unimpaired at the Closing Date.
5.18 Personnel Recommendations. Seller shall promptly notify Buyer as
personnel vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
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(b) Seller and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with the FCC
within five (5) business days of the execution of this Agreement. The parties
shall prosecute the application with all reasonable diligence and otherwise use
their best efforts to obtain a grant of the application as expeditiously as
practicable. 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 (1) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach by the party of any of its
representations, warranties, or covenants under this Agreement, and (2)
compliance with the condition would have a material adverse effect upon it.
Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent. 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 the FCC Consent. No extension of
the FCC Consent shall limit the exercise by either party of its rights under
Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not, directly
or indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Station; such operations, including complete
control and supervision of all of the Station programs, employees, and policies,
shall be the sole responsibility of Seller until the Closing, provided, however,
that the parties acknowledge that certain programming rights have been granted
by Seller to Buyer pursuant to the TBA.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any other
event occurs which (i) causes the Station to cease broadcasting operations for a
period of ten or more days or (ii) prevents in any material respect signal
transmission by the Station in the normal and usual manner and Seller fails to
restore or replace the Assets so that normal and usual transmission is resumed
within ten days of the damage, destruction or other event, Buyer, in its sole
discretion, may (x) terminate this Agreement forthwith without any further
obligations hereunder upon written notice to Seller, in which event all funds
held by the Escrow Agent pursuant to the Escrow Agreement, including all
interest and other proceeds from the investment of such funds, shall be
immediately returned to Buyer, or (y) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
the Assets after the Closing Date, in which event Seller shall deliver to Buyer
all insurance proceeds received in connection with such damage, destruction or
other event.
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6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense, retain
an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Seller as
soon as practicable.
6.6 Engineering Study. Buyer may, at its option and expense, retain an
engineering firm to conduct a proof of performance study of the Station and to
prepare a report on the Station's compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards. If the survey discloses any material deficiencies in the
operations or equipment of the Station, Buyer shall so notify Seller as soon as
practicable.
6.7 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 and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
6.8 Bulk Sales Law. Buyer hereby waives compliance by Seller with the
provisions of any applicable bulk sales laws. Seller shall indemnify and hold
harmless Buyer from and against any and all losses, costs, damages, and expenses
(including without limitation reasonable attorney's fees actually incurred)
pertaining to Seller's noncompliance with any applicable bulk sales laws.
6.9 Sales Tax Filings. Seller shall continue to file Virginia sales tax
returns with respect to the Station in accordance with Seller's past practices
and shall concurrently deliver copies of all such returns to Buyer.
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6.10 Access to Books and Records. Seller shall provide Buyer access and
the right to copy for a period of three years from the Closing Date any books
and records relating to the Assets that are not included in the Assets. Except
where a longer period of time has been agreed to elsewhere in the Agreement,
Buyer shall provide Seller access and the right to copy for a period of three
years from the Closing Date any books and records relating to the Assets.
6.11 Appraisal. Buyer and Seller agree to allocate the Purchase Price
for tax and recording purposes in accordance with an appraisal to be conducted
by Bond and Pecaro and the fee of such firm shall be paid for one-half by Buyer
and one-half by Seller.
6.12 Noncompetition Agreement. At Closing, Buyer and Seller shall enter
into a Noncompetition Agreement in the form of Schedule 6.12 and $295,000 of the
Purchase Price shall be allocated to the covenants of Seller set forth therein.
6.13 Section 1031 Exchange.
(a) Buyer and Seller shall cooperate in good faith to enable
Seller to effectuate the sale of the Assets as part of a like-kind exchange
pursuant to Section 1031 of the Internal Revenue Code, as amended, including
without limitation the assignment of Seller's rights under this Agreement to a
qualified intermediary, provided that such tax-free exchange does not impose any
material additional expenses upon Buyer. Buyer shall have no liability to Seller
based on any failure of this transaction to qualify for treatment under Section
1031. Without limiting the foregoing, Buyer agrees that Seller may assign its
rights under this Agreement to a qualified intermediary ("Seller's Qualified
Intermediary") with whom Seller may enter into an exchange agreement providing
for, inter alia, Seller's Qualified Intermediary's receipt of the Purchase
Price. Notwithstanding any such assignment by Seller to Seller's Qualified
Intermediary: (i) all representations, warranties, covenants, and agreements
made in this Agreement by Buyer for the benefit of Seller shall remain for the
benefit of, and shall be enforceable by, Seller; (ii) Buyer shall remain liable
to Seller for all of Buyer's obligations under this Agreement; (iii) such
assignment shall not deprive Buyer of rights or benefits, or relieve Seller of
any obligations or liabilities, under this agreement; (iv) Buyer shall not be
obligated to expend funds or incur obligations or liabilities in connection
therewith; (v) Seller shall indemnify and hold harmless Buyer from and against
any and all lost, liability, cost and expense arising and resulting from any
such transaction.
(b) Buyer and Seller shall cooperate in good faith to enable
Buyer to effectuate the purchase of the Assets as part of a like-kind exchange
pursuant to Section 1031 of the Internal Revenue Code, as amended, including
without limitation the assignment of Buyer's rights under this Agreement to a
qualified intermediary, provided that such tax-free exchange does not impose any
material additional expenses upon Seller. Seller shall have no liability to
Buyer based on any failure of this transaction to qualify for treatment under
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Section 1031. Without limiting the foregoing, Seller agrees that Buyer may
assign its rights under this Agreement to a qualified intermediary ("Buyer's
Qualified Intermediary") with whom Buyer may enter into an exchange agreement
providing for, inter alia, Buyer's Qualified Intermediary's disbursement of the
Purchase Price. Notwithstanding any such assignment by Buyer to Buyer's
Qualified Intermediary: (i) all representations, warranties, covenants, and
agreements made in this Agreement by Seller for the benefit of Buyer shall
remain for the benefit of, and shall be enforceable by, Buyer; (ii) Seller shall
remain liable to Buyer for all of Seller's obligations under this Agreement;
(iii) such assignment shall not deprive Seller of rights or benefits, or relieve
Buyer of any obligations or liabilities, under this agreement; (iv) Seller shall
not be obligated to expend funds or incur obligations or liabilities in
connection therewith; (v) Buyer shall indemnify and hold harmless Seller from
and against any and all lost, liability, cost and expense arising and resulting
from any such transaction.
6.14 Payment of FCC Regulatory Fees. Seller shall provide evidence,
reasonably satisfactory to Buyer, that all regulatory fees related to the FCC
Licenses have been paid and are current, or Seller shall make such payments
prior to Closing.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing 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. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Seller 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) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied with
by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
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(e) Governmental Authorizations. Seller shall be the holder of
all Licenses and there shall not have been any modification of any License that
could have a material adverse effect on the Station or the conduct of its
business and operations. No proceeding shall be pending or threatened the effect
of which could be to revoke, cancel, fail to renew, suspend, or modify adversely
any License.
(f) Deliveries. Seller shall have made or stand willing to
make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement and the
Closing Date, there shall have been no material adverse change in the business,
assets, or properties of the Station, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business of the
Station.
(h) Modification Application. Buyer shall have a reasonable
expectation that the Modification Application will be granted without conditions
unacceptable to Buyer.
(i) Tower Lease. Seller shall have entered into a tower lease
agreement with Hampton Roads Educational Telecommunications Corporation
("HRETC") for space on a tower to be constructed by HRETC for television station
WHRO (the "New WHRO Tower"), subject to and in accordance with the following:
(A) Buyer shall be solely responsible for negotiating the terms and provisions
of said lease agreement directly with HRETC and for preparing the documentation
of said lease agreement; (B) Buyer shall keep Seller informed of such
negotiations and shall permit Seller to be present at such negotiations; (C)
said lease agreement shall expressly provide that it is assignable by Seller to
Buyer and that upon such an assignment, HRETC shall release Seller from any and
all further obligations and liabilities arising thereunder; (D) Seller hereby
covenants to Buyer that at the Closing Seller shall assign said lease agreement
to Buyer; and (E) Buyer hereby covenants to Seller that at Closing Buyer shall
assume said lease agreement from Seller; and (F) said lease agreement shall
expressly provide that if the transactions contemplated by this Agreement are
not consummated, Seller, in its sole discretion, shall have the option to
terminate said lease agreement without penalty.
7.2 Conditions to Obligations of Seller. All obligations of Seller at
the Closing 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. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
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(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) Deliveries. Buyer shall have made or stand willing to make
all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00 a.m.
on a date, to be set by Buyer on at least five days' written notice to Seller,
that is (1) not earlier than the fifth business day after the FCC Consent is
granted, and (2) not later than ten business days following the date upon which
the FCC Consent has become a Final Order, subject to satisfaction or waiver of
all other conditions precedent to the holding of the Closing; provided, however,
that in no event shall the Closing take place earlier than January 2, 1998. If
Buyer fails to specify the date for Closing prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the offices of
Dow, Lohnes & Albertson, 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, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of sale,
deeds, motor vehicle titles, assignments, and other transfer documents which
shall be sufficient to vest good and marketable title to the Assets in the name
of Buyer, free and clear of all claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances, except for liens
for current taxes not yet due and payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of
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contracting parties to those Assumed Contracts listed in Schedule 3.7 that are
designated to indicate that estoppel certificates are required under this
paragraph;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Seller by an officer of Seller, certifying
(1) that the representations and warranties of Seller contained in this
Agreement are true and complete in all material respects as of the Closing Date
as though made on and as of that date; and (2) that Seller has in all material
respects performed and complied with all of its obligations, covenants, and
agreements set forth in this Agreement to be performed and complied with on or
prior to the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, engineering records, and all files and records used by Seller in
connection with its operations;
(f) Opinion of Counsel. An Opinion of Seller's counsel dated
as of the Closing Date, substantially in the form of Schedule 8.2(i) hereto;
(g) Noncompetition Agreement. The Noncompetition Agreement in
the form as Schedule 6.12, duly executed on behalf of Seller; and
(h) Lenders Certificates. Such certificates and confirmations
to Buyer's senior lenders as Buyer may reasonably request in connection with
obtaining financing for the performance of its payment obligations hereunder.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section
2.3;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts insofar as they relate to
the time on and after the Closing Date and arise out of events related to
Buyer's ownership of the Assets or its operation of the Station on or after the
Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by an officer of Buyer, certifying (1)
that the representations
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and warranties of Buyer contained in this Agreement are true and complete in all
material respects as of the Closing Date as though made on and as of that date,
and (2) that Buyer has in all material respects performed and complied with all
of its obligations, covenants, and agreements set forth in this Agreement to be
performed and complied with on or prior to the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel dated as
of the Closing Date, substantially in the form of Schedule 8.3(d) hereto.
(e) Noncompetition Agreement. The Noncompetition Agreement in
the form of Schedule 6.12 duly executed by Buyer and the payment of $295,000 to
Seller thereunder.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not the
in material default, upon written notice to Buyer, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Seller set
forth in this Agreement have not been satisfied or waived in writing by Seller.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
[insert date that is one year after the date of this Agreement].
(d) Breach. Without limiting Seller's rights under the other
provisions of this Section 9.1, if Buyer has failed to cure any material breach
of any of its representations, warranties or covenants under this Agreement
within fifteen days after Buyer received written notice of such breach from
Seller.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied or waived in writing by Buyer.
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(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
[insert date that is one year after the date of this Agreement].
(d) Interruption of Service. If any event shall have occurred
that prevented signal transmission of the Station in the normal and usual manner
for a continuous period of ten days.
(e) Environmental Hazards. Buyer shall have notified Seller of
material environmental hazards or the material possibility of environmental
damages or clean-up costs, as indicated in the environmental study described in
Section 6.5, within 30 days prior to the Closing Date, and the cause thereof
shall not have been remedied prior to the Closing Date.
(f) Technical Deficiencies. Buyer shall have notified Seller
of material deficiencies in the operations or equipment of the Station, as
indicated in the engineering study described in Section 6.6, within 30 days
prior to the Closing Date, and the cause thereof shall not have been remedied
prior to the Closing Date.
(g) Breach. Without limiting Buyer's rights under the other
provisions of this Section 9.2, if Seller has failed to cure any material breach
of any of its representations, warranties or covenants under this Agreement
within fifteen days after Seller received written notice of such breach from
Buyer.
9.3 Rights on Termination. If this Agreement is terminated pursuant to
Section 9.1 or Section 9.2 and neither party is in material breach of this
Agreement, the parties hereto shall not have any further liability to each other
with respect to the purchase and sale of the Assets. If this Agreement is
terminated by Seller due to Buyer's material breach of this Agreement, then the
payment to Seller of $700,000 pursuant to Section 9.4 below shall be liquidated
damages and shall constitute full payment and the exclusive remedy for any
damages suffered by Seller by reason of Buyer's material breach of this
Agreement. Seller and Buyer agree in advance that actual damages would be
difficult to ascertain and that the amount of $700,000 is a fair and equitable
amount to reimburse Seller for damages sustained due to Buyer's material breach
of this Agreement. If this Agreement is terminated by Buyer due to Seller's
material breach of this Agreement, Buyer shall have all rights and remedies
available at law or equity.
9.4 Escrow Deposit. Buyer has deposited with the Escrow Agent the sum
of $700,000 in accordance with the Escrow Agreement in the form of Schedule 9.4
hereof. All
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such funds deposited with the Escrow Agent shall be held and disbursed in
accordance with the terms of the Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section 9.1 or
9.2 and Buyer is not in material breach of this Agreement, all amounts held by
the Escrow Agent pursuant to the Escrow Agreement, including any interest or
other proceeds from the investment of funds held by the Escrow Agent, shall be
disbursed to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to Buyer's
material breach of this Agreement, then $700,000 of the amount held by the
Escrow Agent pursuant to the Escrow Agreement shall be disbursed to or at the
direction of Seller as liquidated damages under Section 9.3 above and any
interest or other proceeds from the investment of funds held by the Escrow Agent
shall be disbursed by the Escrow Agent to or at the direction of Buyer.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing for a period of eighteen months. Any
investigations by or on behalf of any party hereto shall not constitute a waiver
as to enforcement of any representation, warranty, or covenant contained in this
Agreement. No notice or information delivered by Seller shall affect Buyer's
right to rely on any representation or warranty made by Seller or relieve Seller
of any obligations under this Agreement as the result of a breach of any of its
representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Seller hereby agrees to indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any covenant
by Seller contained in this Agreement or in any certificate, document, or
instrument delivered to Buyer under this Agreement.
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(b) Any and all obligations of Seller not assumed by Buyer
pursuant to this Agreement, including any liabilities arising at any time under
any Contract not included in the Assumed Contracts.
(c) Any loss, liability, obligation, or cost resulting from
the failure of the parties to comply with the provisions of any bulk sales law
applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Station prior to the Closing, including any
liabilities arising under the Licenses or the Assumed Contracts which relate to
events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any covenant
by Buyer contained in this Agreement or in any certificate, document, or
instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
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(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. 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 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/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration provisions
of this Agreement, as applicable.
(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, it shall be bound by the results obtained by the Claimant with
respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, employees, and
representatives 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 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary
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damages alone would not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to any other remedies that may be
available, including money damages, to obtain specific performance of the terms
of this Agreement. If any action is brought by Buyer to enforce this Agreement,
Seller shall waive the defense that there is an adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party which
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.
10.7 Limitations. Notwithstanding any provision to the contrary in
Section 10 of this Agreement, or any provision to the contrary elsewhere in this
Agreement:
(a) An Indemnifying Party shall have no indemnification
obligation under Section 10 of this Agreement for the first Fifty Thousand
Dollars ($50,000) claimed by Claimant.
(b) Under no circumstances shall any party hereto have an
indemnification obligation under this Section 10 in an amount which, in the
aggregate, exceeds the Purchase Price.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or transfer
tax arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by Seller. Buyer and Seller shall each
pay one-half of any fees payable to the Escrow Agent and all filing fees
required by the FCC in connection with the FCC Consent. 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, including all fees and expenses of counsel, accountants, agents,
and representatives. Each party shall be responsible for all fees or commissions
payable to any other finder, broker, advisor, or similar person retained by or
on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary below,
any dispute arising out of or related to this Agreement that Seller and Buyer
are unable to resolve by themselves shall be settled by arbitration by a panel
of three (3) neutral arbitrators who shall be selected in accordance with the
procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers shall
be acceptable. Before undertaking to resolve the dispute, each arbitrator shall
be duly sworn faithfully and fairly to hear and
- 34 -
examine the matters in controversy and to make a just award according to the
best of his or her understanding. The arbitration hearing shall be conducted in
accordance with the commercial arbitration rules of the American Arbitration
Association in Washington, D.C. The written decision of a majority of the
arbitrators shall be final and binding on Seller and Buyer. The costs and
expenses of the arbitration proceeding shall be assessed between Seller and
Buyer in a manner to be decided by a majority of the arbitrators, and the
assessment shall be set forth in the decision and award of the arbitrators.
Judgment on the award, if it is not paid within thirty days, may be entered in
any court having jurisdiction over the matter. No action at law or suit in
equity based upon any claim arising out of or related to this Agreement shall be
instituted in any court by Seller or Buyer against the other except (i) an
action to compel arbitration pursuant to this Section, (ii) an action to enforce
the award of the arbitration panel rendered in accordance with this Section, or
(iii) a suit for specific performance pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, (c) deemed to have been
given on 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:
If to Seller: James L. Lockwood, Jr., CEO
Channel 49 Acquisition Corporation
220 Salters Creek Road
Hampton, Virginia 23661
With a copy to: Mark J. Prak, Esq.
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.
First Union Capitol Center, Suite 1600
Raleigh, North Carolina 27601
If to Buyer: Lowell W. Paxson, Chairman
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
- 35 -
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 11.3.
11.4 Benefit and Binding Effect. Except as otherwise expressly provided
herein, neither party hereto may assign this Agreement without the prior written
consent of the other party hereto; provided, however, that Buyer may assign its
rights and obligations under this Agreement, in whole or in part, to one or more
subsidiaries or commonly controlled affiliates of Buyer without seeking or
obtaining Seller's prior approval in which event Buyer shall have no further
obligation hereunder and Buyer may collaterally assign its rights and interests
hereunder to its senior lenders without seeking or obtaining Seller's prior
approval. Upon any permitted assignment by Buyer or Seller in accordance with
this Section 11.4, all references to"Buyer" herein shall be deemed to be
references to Buyer's assignee and all references to "Seller" herein shall be
deemed to be references to Seller's assignee, as the case may be. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and execute
any other documents that may be necessary or desirable to the implementation and
consummation of this Agreement, including, in the case of Seller, any additional
bills of sale, deeds, or other transfer documents that, in the reasonable
opinion of Buyer, may be necessary to ensure, complete, and evidence the full
and effective transfer of the Assets to Buyer pursuant to this Agreement.
11.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender, masculine, feminine, or neuter, and any other number, singular
or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing
- 36 -
that makes specific reference to this Agreement and which is signed by the party
against which enforcement of any such amendment, supplement, or modification is
sought.
11.10 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 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.13 Severability. If any provision of this Agreement is held by a
court or arbitrator of competent jurisdiction to be invalid, void, or
unenforceable, in whole or in part, the remainder of this Agreement shall
nevertheless remain in full force and effect.
11.14 Time Brokerage Agreement. The TBA provides, inter alia, that
Buyer shall provide programming for the Station, shall be responsible for the
employment of all personnel involved in the broadcast of such programming, shall
retain all revenues received form network and program suppliers and from the
sale of advertising within such programming, and shall have other rights and
obligations as are set forth in the TBA. Buyer and Seller hereby agree that
Seller shall not be in breach of or default under any representation, warranty,
covenant, obligation, or provision under this Agreement, nor shall Seller be
deemed to have failed to satisfy any condition of Closing under this Agreement,
to the extent that any such breach or default is a result of actions taken by
Buyer pursuant to the TBA.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell W. Paxson
-------------------------------
Name: LOWELL W. PAXSON
Title: CHAIRMAN
CHANNEL 49 ACQUISITION CORPORATION
By:
-------------------------------
Name:
Title:
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10-Q’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 1/2/98 | | 31 |
| | 11/19/97 |
| Filed on: | | 11/14/97 |
| | 10/16/97 | | 1 |
| For Period End: | | 9/30/97 | | 15 |
| | 8/31/97 | | 15 |
| | 6/9/97 | | 8 |
| | 4/2/97 | | 10 | | 20 |
| | 3/4/97 | | 10 |
| | 10/1/96 | | 15 | | | | | 424B1 |
| | 6/27/96 | | 8 |
| List all Filings |
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