Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4 Registration of Securities Issued in a 180 1.08M
Business-Combination Transaction
2: EX-3.1 Certificate of Formation 1 15K
3: EX-3.2 Limited Liability Company Agreemen 35 137K
4: EX-3.3 Articles of Incorporation 2 18K
5: EX-3.4 Acme Intermediate Finance, Inc. By-Laws 14 56K
6: EX-4.1 Indenture 148 473K
7: EX-4.2 Indenture 135 432K
9: EX-5.1-INT Exhibit 5.1-Int - Opinion Re: Legality 3 23K
8: EX-5.1-INT Intermediate Opinion 3 24K
10: EX-10.1 Stock Purchase Agreement 46 204K
19: EX-10.10 Management Agreement 14 53K
20: EX-10.11 Exhibit 10.11 - Amendment (Channel 32) 2 20K
21: EX-10.12 Exhibit 10.12 - Noncompetition Agreement for Kwbp 5 28K
22: EX-10.13 Exhibit 10.13 - Management Agreement for Station 16 50K
23: EX-10.14 Management Agreement 14 47K
24: EX-10.15 Exhibit 10.15-Wint Escrow 9 43K
25: EX-10.18 Exhibit 10.18 - Affiliation Agreement for Kwbp 21 67K
26: EX-10.19 Exhibit 10.19 - Commitment Letter From Wb 1 18K
11: EX-10.2 Exhibit 10.2 - Escrow Agreement for Kplr 14 61K
27: EX-10.20 Exhibit 10.20 - Employment Agreement With Gealy 6 33K
28: EX-10.21 Exhibit 10.21 - Employment Agreement With Allen 6 32K
29: EX-10.22 Exhibit 10.22 - Consulting Agreement With Kellner 6 30K
30: EX-10.23 Exhibit 10.23 - Commercial Building Lease for Kwbp 15 68K
31: EX-10.24 Exhibit 10.24 - Lease Agreement for Kwbp Tower 16 65K
32: EX-10.25 Exhibit 10.25 - Lease Agreement for Wbxx 22 74K
33: EX-10.26 Exhibit 10.26 - Tower Lease for Wbxx 13 38K
34: EX-10.27 Exhibit 10.27 - First Modification to Agreement 4 24K
12: EX-10.3 Exhibit 10.3 - Time Brokerage Agreement 19 69K
35: EX-10.30 Exhibit 10.30 - Studio Lease for Kplr 4 27K
36: EX-10.31 Exhibit 10.31 - Tower Lease for Kplr 26 51K
37: EX-10.32 Exhibit 10.32 - Amendment to Tower Leases for Kplr 3 22K
38: EX-10.33 Exhibit 10.33 - Koplar/Roberts - Agreement 15 69K
39: EX-10.35-INT Exhibit 10.35 - Registration Rights Agreement 34 119K
40: EX-10.36-INT Exhibit 10.36 - Membership Unitholders Agreement 31 108K
41: EX-10.37 Purchase Agreement for Intermediate 41 152K
42: EX-10.38-INT Exhibit 10.38 - Securities Pledge Agreement 21 73K
13: EX-10.4 Membership Contribution Agreement 28 102K
14: EX-10.5 Exhibit 10.5 - Asset Purchase Agreement 25 87K
15: EX-10.6 Exhibit 10.6 - Purchase Agreement for Wbxx 63 133K
16: EX-10.7 Exhibit 10.7-Asset Purchase Agreement for Kwbp 38 163K
17: EX-10.8 Exhibit 10.8 - Amendment 3 20K
18: EX-10.9 Exhibit 10.9 - Amendment (Acme) 3 18K
43: EX-21.1-INT Exhibit 21.1 - Subsidiaries 1 15K
44: EX-23.2 Consent of Experts and Counsel 1 15K
45: EX-23.3 Consents of Experts 1 15K
46: EX-23.4 Consent of Experts and Counsel 1 15K
47: EX-24.1-INT Power of Attorney - Allen 1 16K
48: EX-24.2-INT Power of Attorney - Gealy 1 16K
49: EX-24.3-INT Power of Attorney - Kellner 1 16K
50: EX-25.1-INT Exhibit 25.1-Int - Statement of Eligibility 30 106K
51: EX-27.1 Financial Data Schedule 1 19K
52: EX-99.1-INT Exhibit 99.1-Int - Letter of Transmittal 20 68K
53: EX-99.2-INT Exhibit 99.2-Int - Notice of Guaranteed Delivery 5 26K
54: EX-99.3-INT Exhibit 99.3-Int - Letter to Brokers 2 19K
55: EX-99.4-INT Exhibit 99.4-Int - Letter to Clients 2 18K
56: EX-99.5-INT Exhibit 99.5-Int - Instruction to Holder 2 19K
57: EX-99.6-INT Exhibit 99.6-Int - Guidelines for Certification 7 27K
58: EX-99.7 Consent as Member-Koplar 1 16K
59: EX-99.8 Consent as Member-Roberts 1 16K
STOCK PURCHASE AGREEMENT
BY AND AMONG
ACME TELEVISION HOLDINGS, L.L.C. ("PURCHASER"),
KOPLAR COMMUNICATIONS, INC. ("COMPANY")
AND
THE SHAREHOLDERS NAMED THEREIN ("SELLING SHAREHOLDERS")
DATED JULY 29, 1997
TABLE OF CONTENTS
Page
ARTICLE I.....................................................................1
PURCHASE AND SALE OF STOCK..............................................1
1.1 Agreement to Purchase and Sell..............................1
1.2 Delivery of Certificates....................................2
1.3 Purchase Price..............................................2
1.4 Determination of Working Capital and Other Adjustments......4
1.5 Payment of Purchase Price...................................5
ARTICLE II....................................................................6
REPRESENTATIONS AND WARRANTIES OFTHE COMPANY AND SELLING SHAREHOLDERS...6
2.1 Organization, Standing, Authority, Subsidiaries and
Authorized Shares...........................................6
2.2 Authorization and Binding Obligation........................7
2.3 Absence of Conflicting Agreements...........................8
2.4 Licenses....................................................8
2.5 Title to and Condition of Real Property.....................8
2.6 Title to and Condition of Personal Property.................9
2.7 Contracts..................................................10
2.8 Consents...................................................10
2.9 Trademarks, Trade Names and Copyrights.....................11
2.10 Audited Financial Statements...............................11
2.11 Insurance..................................................11
2.12 Reports....................................................11
2.13 Compensation and Employee Plans............................12
2.14 Labor Relations............................................13
2.15 Tax Returns and Audit......................................13
2.16 Claims and Legal Actions...................................13
2.17 Compliance with Laws.......................................14
2.18 Conduct of Business in Ordinary Course.....................14
2.19 Related Entities...........................................14
2.20 Environmental..............................................14
2.21 Broker's Fees..............................................15
2.22 Restrictions on Competition................................15
2.23 Cable Carriage.............................................15
ARTICLE III..................................................................15
REPRESENTATIONS AND WARRANTIES OF PURCHASER............................15
3.1 Organization, Standing and Authority.......................15
3.2 Authorization and Binding Obligation.......................15
3.3 Absence of Conflicting Agreements..........................15
3.4 Qualified Transferee.......................................16
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ARTICLE IV...................................................................16
COVENANTS OF THE COMPANY...............................................16
4.1 Pre-Closing Covenants......................................16
ARTICLE V....................................................................20
COVENANTS OF PURCHASER.................................................20
5.1 Notification...............................................20
5.2 No Inconsistent Action.....................................20
5.3 Purchaser's Qualifications.................................20
5.4 Schedules..................................................21
ARTICLE VI...................................................................21
SPECIAL COVENANTS AND AGREEMENTS.......................................21
6.1 FCC Consent................................................21
6.2 Antitrust Laws Compliance..................................21
6.3 Control of the Station.....................................22
6.4 Fees and Expenses..........................................22
6.5 Brokers....................................................22
6.6 Confidentiality............................................22
6.7 Public Announcements.......................................23
6.8 Cooperation................................................23
6.9 Excluded Assets and Liabilities............................23
6.10 Koplar Communications Television, L.L.C....................24
6.11 No Solicitation............................................24
6.12 Non-Competition............................................25
ARTICLE VII..................................................................25
ANCILLARY AGREEMENTS...................................................25
7.1 Investment in Purchaser....................................25
7.2 KISI Operations............................................25
7.3 Management Agreement.......................................25
7.4 Company Name...............................................25
ARTICLE VIII.................................................................25
CONDITIONS PRECEDENT TO CLOSING........................................26
8.1 Conditions for Closing.....................................26
8.2 Conditions to Obligations of Purchaser....................27
8.3 Conditions to Obligations of the Company and Selling
Shareholders...............................................29
ARTICLE IX...................................................................29
CLOSING AND CLOSING DELIVERIES.........................................29
9.1 Closing....................................................29
9.2 Deliveries by the Company and Selling Shareholders.........29
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9.3 Deliveries by Purchaser....................................30
9.4 Local Marketing Agreement..................................31
ARTICLE X....................................................................32
TERMINATION............................................................32
10.1 Termination Events.........................................32
10.2 Effect of Termination......................................33
10.3 Remedies...................................................33
ARTICLE XI...................................................................34
INDEMNIFICATION........................................................34
11.1 Indemnification by the Selling Shareholders................34
11.2 Indemnification by Purchaser...............................34
11.3 Limitations on Indemnity...................................35
11.4 Procedure for Indemnification..............................36
ARTICLE XII..................................................................37
MISCELLANEOUS..........................................................37
12.1 Notices....................................................37
12.2 Benefit and Binding Effect.................................38
12.3 Governing Law..............................................39
12.4 Headings; Construction.....................................39
12.5 Time of Essence............................................39
12.6 Entire Agreement...........................................39
12.7 Waiver of Compliance; Consents.............................39
12.8 Severability...............................................40
12.9 Counterparts...............................................40
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of the 29th day
of July, 1997, is made and entered into by and among KOPLAR COMMUNICATIONS,
INC., a Missouri corporation ("Company"), ACME TELEVISION HOLDINGS, L.L.C., a
Delaware limited liability company ("Purchaser") and the shareholders of the
Company set forth on EXHIBIT A attached hereto ("Selling Shareholders").
RECITALS:
A. The Company (through its Subsidiary, Koplar Communications Television,
L.L.C.) is the owner and operator of television station KPLR, Channel 11
("Station"), in St. Louis, Missouri.
B. The Selling Shareholders own all of the issued and outstanding shares
of : (i) the Class A Preferred Voting Stock; and (ii) the Common Non-Voting
Stock of the Company (collectively the "Stock").
C. Purchaser wishes to acquire all of the issued and outstanding Stock of
the Company from the Selling Shareholders and the Selling Shareholders desire to
sell the same to Purchaser, all in accordance with the terms and subject to the
conditions hereinafter set forth.
D. Attached hereto as the Definitions Addendum, and incorporated herein by
this reference, is a definitional listing of certain words (whose initial
letters are capitalized) used in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and the mutual
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 AGREEMENT TO PURCHASE AND SELL . At the Closing and subject to the
terms and conditions of this Agreement, each Selling Shareholder shall sell,
assign, transfer, convey and deliver to Purchaser, free and clear of all
security interests, pledges, liens, charges, claims, options, rights to acquire,
restrictions on transfer or other encumbrances of any nature, the number of
shares of each class of Stock owned by such Selling Shareholder as set forth
opposite such Selling Shareholder's name on EXHIBIT A (the "Shares") (which
Shares, collectively, shall constitute all of the issued and outstanding stock
of the Company as of the Closing) and Purchaser shall purchase all of the Shares
from the Selling Shareholders.
1.2 DELIVERY OF CERTIFICATES . At the Closing, each Selling Shareholder
shall deliver or cause to be delivered to Purchaser stock certificates
representing the issued and outstanding Shares owned by each Selling
Shareholder, duly endorsed in blank for transfer or accompanied by appropriate
stock powers duly executed in blank.
1.3 PURCHASE PRICE . The aggregate purchase price ("Purchase Price") to be
paid to the Selling Shareholders in exchange for the Shares shall be One Hundred
Forty-Six Million and No/100 Dollars ($146,000,000.00), subject to the
Adjustments and provisions set forth in Sections 1.3(b)-(d), 1.4, and 1.5 below:
(b) The following shall be the adjustments to the Purchase Price
(collectively the "Adjustments"):
(i) The Purchase Price shall be increased to the extent that
Working Capital (as of the date of Closing) is in excess of $3,000,000.00 and
shall be decreased by the amount that Working Capital (as of the date of
Closing) is less than $3,000,000.00. As used herein, "Working Capital" is
intended to mean the amount by which (x) (to the extent not Excluded Assets as
defined in Section 6.10 of this Agreement) the total of the cash, accounts
receivable, other receivables and prepaids of the Company exceeds (y) (to the
extent not Excluded Liabilities as defined in Section 6.10 of this Agreement)
the total of accounts payable, accrued expenses, and lease payables. The amount
of Working Capital, and the specific accounts which are elements of determining
Working Capital as provided for in the previous sentence, shall be determined on
a basis consistent with the Company's December 31, 1996 audited financial
statements included in the Audited Financials;
(ii) The Purchase Price shall be decreased by the amount of
the loan balance as of Closing with respect to all amounts owing to any
institutional lender (presently, the Company's institutional lender is
NationsBank, N.A.) which, unless alternative arrangements are made between
Purchaser and such bank to continue such loan, Purchaser shall cause to be paid
in full coincident with Closing and any liability of the Company incurred
outside of the ordinary course of business from December 31, 1996 to the date of
the Closing, except for those payments or liabilities specifically allowed
pursuant to this Agreement or otherwise reflected in the Working Capital of the
Company as of the Closing;
(iii) To the extent not reflected in the adjustment for
Working Capital Adjustment provided for in Section 1.3(b)(i) above, the Purchase
Price shall be decreased by all amounts payable to H. Max Lummis IV ("Lummis")
pursuant to Paragraph 2.6(e) of the Executive Employment Agreement dated as of
October 15, 1994 ("Lummis Employment Agreement"), between Lummis and the Company
on account of a Sale Transaction (as such term is defined in the Lummis
Employment Agreement) which Purchaser shall cause the Company to pay on the
later of the Closing or January 5, 1998, and which obligation, if paid after the
Closing, shall be secured by a letter of credit (at Lummis' cost) reasonably
acceptable to Lummis;
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(iv) To the extent not reflected in the adjustment for Working
Capital Adjustment provided for in Section 1.3(b)(i) above, the Purchase Price
shall be decreased by one-half of the amount of any severance liability
(excluding any amount payable to Lummis pursuant to Section 1.3(b)(iii) of this
Agreement) which arises in connection with Purchaser's termination of any of the
employees of the Company in connection with the purchase and sale of the Shares
pursuant to this Agreement immediately following Closing; PROVIDED, HOWEVER,
that such decrease in the Purchase Price pursuant to this clause (iv) shall not
exceed Three Hundred Thousand and No/100 Dollars ($300,000.00). The Purchaser
shall identify the employees to be terminated by Purchaser in connection with
the purchase and sale of the Shares no less than ten (10) days prior to Closing;
(v) The Purchase Price shall be decreased by the aggregate
amount payable as a consulting fee under the Management Agreement set forth in
Section 7.3 of this Agreement during the initial three (3) year term of the
Management Agreement;
(vi) To the extent not reflected in the adjustment for Working
Capital Adjustment provided for in Section 1.3(b)(i) above, the Purchase Price
shall be decreased by the amount payable to Warner Bros., a division of Time
Warner Entertainment Company, L.P. pursuant to that certain Promissory Note in
the original principal amount of approximately Three Million Six Hundred
Thousand and No/100 Dollars ($3,600,000.00); PROVIDED, HOWEVER, that the amount
of this Adjustment on account of such Promissory Note shall not exceed Two
Million and No/100 Dollars ($2,000,000.00) plus accrued and unpaid interest on
such amount, less any principal and interest payments made prior to Closing
towards such amount; and
(vii) To the extent not reflected in the Working Capital
Adjustment provided for in Section 1.3(b)(i) above, the Purchase Price shall be
decreased by the amount of the Selling Shareholders' costs ("Selling
Shareholders' Costs") associated or incurred in connection with the purchase and
sale of the Shares (including the fees of Communications Equity Associates
("CEA"), if any) to the extent paid or payable by the Company or Purchaser prior
to, as of or coincident with the Closing, including (a) all the legal fees of
the Selling Shareholders related to the purchase and sale of the Shares; (b) all
amounts paid to any holder of those stock options in the Company set forth on
SCHEDULE 2.1(C) for termination of such options in connection with the purchase
and sale of the Shares and (c) for one-half (1/2) of the FCC filing fees, as set
forth in Section 6.5 hereof. Purchaser shall cause all of Selling Shareholders'
Costs to be paid coincident with the Closing, except that the amount payable in
order to terminate the options described in (b) above shall be paid on the later
of the Closing or January 2, 1998, which obligation, if paid after the Closing,
shall be secured by a letter of credit (at the option holder's cost) in a form
reasonably acceptable to the respective option holders.
(c) In addition to the Adjustments provided for in Section 1.3(b)
above, the Selling Shareholders may designate employee bonuses (and all related
payroll tax expense) to be paid to those employees of the Company designated by
the Selling Shareholders and in such amounts as designated by Selling
Shareholders ("Designated Employee Bonuses"). The amount
3
of such Designated Employee Bonuses will be identified by the Selling
Shareholders on or prior to five (5) days prior to Closing. The amount of the
Designated Employee Bonuses will not be deemed a liability for purposes of the
adjustment for Working Capital provided for in Section 1.3(b)(i).
(d) At least two (2) days prior to Closing, the Company and Selling
Shareholders shall provide Purchaser with documents sufficient to verify those
Adjustments set forth in Sections 1.3(b)(ii)-(vii) hereof.
1.4 DETERMINATION OF WORKING CAPITAL AND OTHER ADJUSTMENTS .
(a) Within one hundred twenty (120) days following Closing, the
Company shall cause the Company's accounting firm, Coopers & Lybrand, L.L.P.
("CPA Firm"), to prepare a balance sheet of the Company as of the close of
business on the Closing Date, in accordance with GAAP applied on a basis
consistent with the Company's December 31, 1996 audited financial statements
included in the Audited Financials ("Closing Balance Sheet") and shall cause the
CPA Firm to compute the adjustment to the Purchase Price with respect to Working
Capital as set forth in Section 1.3(b)(i) hereof in accordance with the terms of
Section 1.3 (the amount of the Adjustments provided in Sections 1.3(b)(i) is
referred to herein as the "Adjustment Amount"). The Closing Balance Sheet,
together with copies of all relevant work papers and a certification of the
Adjustment Amount by CPA Firm, shall be delivered to Selling Shareholders and
Purchaser, and Selling Shareholders and Purchaser shall have timely access to
all other records and computations in regard to the determination of the Closing
Balance Sheet and the Adjustment Amount.
(b) If Purchaser or Selling Shareholders have any objections to the
Adjustment Amount, such party shall notify the other of such disputed amount
("Disputed Amount") in writing, such notice setting forth in reasonable detail
the basis of such party's objection, within thirty (30) days following receipt
of the Closing Balance Sheet and the Adjustment Amount by Selling Shareholders
and Purchaser (the "Objection Period").
(c) If, at the expiration of the Objection Period, neither Purchaser
nor Selling Shareholders have objected to the Adjustment Amount by giving notice
of its objections as provided for in (b) above, then the Purchase Price shall be
increased or decreased, as appropriate, by the Adjustment Amount. If the
Purchase Price is decreased by the Adjustment Amount, Selling Shareholders
shall, within twenty (20) days from the expiration of the Objection Period, pay
the Adjustment Amount to Purchaser. In the event that the Purchase Price is
increased by the Adjustment Amount, Purchaser shall, within twenty (20) days
from the expiration of the Objection Period, pay the Adjustment Amount to
Selling Shareholders. Any payments due hereunder shall be made in cash or by
wire transfer of immediately available funds.
(d) In the event a Disputed Amount arises by notice pursuant to (b)
above, Purchaser and Selling Shareholders will use reasonable efforts to resolve
the Disputed Amount. If
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the parties do not obtain a final resolution of the Disputed Amount within
fifteen (15) days after notice of such Disputed Amount is given, then a mutually
agreeable national accounting firm ("Second CPA Firm") shall resolve any
remaining objections with respect to the Adjustment Amount and make a final
determination with respect to the adjustment to the Purchase Price ("Final
Determination"). In the event the parties submit any Disputed Amount to Second
CPA Firm for a Final Determination as provided herein, the fees and expenses of
Second CPA Firm will be paid by (i) the party objecting, if (x) the Disputed
Amount is resolved in favor of the non-objecting party, (y) the CPA Firm's
Adjustment Amount is equal to the Final Determination; or (z) the difference
between the Final Determination and CPA Firm's Adjustment Amount is less than
two-tenths of one percent (.2%) of the Purchase Price; or (ii) the non-objecting
party if the difference between the Final Determination and CPA Firm's
Adjustment Amount is greater than two-tenths of one percent (.2%) of the
Purchase Price and the Adjustment is in favor of the objecting party. All books
and records necessary for Second CPA Firm to make a Final Determination will be
made available to Purchaser and Selling Shareholders. The Final Determination
made by Second CPA Firm will be conclusive and binding upon the Purchaser and
Selling Shareholders. Once a Final Determination has been made, the Purchaser
shall pay Selling Shareholders, or, as the case may be, Selling Shareholders
shall pay Purchaser, the Adjustment Amount in accordance with the Final
Determination, within five (5) days of delivery of the Final Determination to
Selling Shareholders and Purchaser.
1.5 PAYMENT OF PURCHASE PRICE .
(a) At Closing, the Purchase Price (net of all applicable
Adjustments) shall be paid to the Selling Shareholders. If the Closing takes
place on or prior to December 31, 1997, such Purchase Price (net of the
Adjustments and net ot the Potential Tax Liability which shall be paid directly
to the Escrow Agent as provided in Section 1.5(b)) shall be paid pursuant to a
promissory note in the form of EXHIBIT H ("Promissory Note"), which shall be
secured by a letter of credit ("Letter of Credit") issued by a bank reasonably
acceptable to the Selling Shareholders (and the cost of which will be paid by
Selling Shareholders) in the form of EXHIBIT H-1. At Closing, Purchaser shall
deposit with the bank issuing the Letter of Credit the amount of the Purchase
Price (less the amount placed in the Tax Escrow Fund), which shall serve as cash
collateral for the bank in the event the Letter of Credit is drawn upon by
Selling Shareholders. In the event the Closing takes place after January 1,
1998, then the Purchase Price (net of the Adjustments and net ot the Potential
Tax Liability which shall be paid directly to the Escrow Agent as provided in
Section 1.5(b)) shall be paid to the Selling Shareholders in immediately
available funds by wire transfer as directed by the Selling Shareholders, and
the Promissory Note and Letter of Credit shall not be applicable.
(b) In connection with the pending IRS examination of the Company
for the years 1993 and 1994, it is anticipated that the Company will have a
potential tax liability asserted by the IRS, which the Company will dispute.
Simultaneously with the Closing, each of the parties to this Agreement will
execute and deliver the Tax Escrow Agreement, a copy of which is attached hereto
as EXHIBIT B (the "Tax Escrow Agreement"), and the Purchaser shall deposit with
the
5
Escrow Agent (as defined in the Tax Escrow Agreement) in immediately available
funds out of the Purchase Price otherwise payable to the Selling Shareholders at
Closing (i) in the event that the amount of the Potential Tax Liability has been
asserted by the IRS at or prior to Closing, the full amount of the Potential Tax
Liability (as defined in the Tax Escrow Agreement) plus interest and penalties,
if any are asserted by the IRS (calculated through the approximate date of final
resolution of the IRS Examination (as defined in the Tax Escrow Agreement) ("IRS
Final Resolution")); or (ii) if the Potential Tax Liability has not yet been
asserted by the IRS at or prior to Closing, the amount estimated by the
Company's CPA Firm and approved by both Purchaser and Selling Shareholders,
which approval shall not be unreasonably withheld (in either case, the "Tax
Escrow Fund"). The Tax Escrow Fund shall serve as an escrow securing the
obligations of the Company with respect to the Potential Tax Liability, if any,
asserted by the IRS in connection with the IRS Examination. The Tax Escrow Fund
shall be subject to increase or decrease after the Closing in accordance with
the terms and conditions of the Tax Escrow Agreement. In the event that the
Final Tax Liability (as defined in the Tax Escrow Agreement) is greater than the
amount of the Tax Escrow Fund, inclusive of any and all accrued interest and
penalties (if any are asserted by the IRS), then the Selling Shareholders shall
pay the amount of any such shortfall to Purchaser within ten (10) days of
Selling Shareholders' receipt of notice of such shortfall and Purchaser shall be
obligated to fully satisfy the Final Tax Liability.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND SELLING SHAREHOLDERS
The Company and Selling Shareholders represent and warrant to Purchaser as
follows:
2.1 ORGANIZATION, STANDING, AUTHORITY, SUBSIDIARIES AND AUTHORIZED
SHARES .
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Missouri, and is qualified
to conduct business in the State of Missouri. The Company has all requisite
corporate power and authority: (i) to own, lease, and use its assets as
presently owned, leased and used; (ii) to conduct the business or operations of
the Station as presently conducted; and (iii) to execute and deliver this
Agreement and the documents contemplated hereby, and to perform and comply with
all of the terms, covenants and conditions to be performed and complied with by
the Company hereunder and thereunder. Each of the Selling Shareholders has all
requisite power and authority to execute and deliver this Agreement and the
documents contemplated hereby, and to perform and comply with all of the terms,
covenants and conditions to be performed and complied with by such Selling
Shareholder hereunder and thereunder.
(b) Set forth on SCHEDULE 2.1(B) hereto is a true and complete list
of all Subsidiaries of the Company stating, with respect to each Subsidiary, its
jurisdiction of incorporation, capitalization, equity ownership and
jurisdictions in which it is qualified to do
6
business. As used in this Agreement, the term "Subsidiary" shall mean any Person
in which the Company owns beneficially securities or interests representing
twenty-five percent (25%) or more of: (i) the aggregate equity or profit
interests; or (ii) the combined voting power of voting interests ordinarily
entitled to vote for management or otherwise. Each of the Subsidiaries set forth
on SCHEDULE 2.1(B) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, has all
requisite corporate or other power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and is duly
qualified to do business and is in good standing as a foreign corporation,
partnership or joint venture in each jurisdiction where such qualification is
required. All of the outstanding shares of capital stock of the corporate
Subsidiaries and all equity interests of the other Subsidiaries have been
validly authorized and issued, are fully paid and nonassessable, have not been
issued in violation of any preemptive rights or of any federal or state
securities law and, except as set forth on SCHEDULE 2.1(B) hereto, are
beneficially owned by the Company, free and clear of any security interest,
pledge, lien, charge, claim, option, right to acquire, restriction on transfer,
or encumbrance of any nature whatsoever. Except as set forth on SCHEDULE 2.1(B)
hereto, the Company does not own, directly or indirectly, any ownership, equity,
profits or voting interest in any Person, and has no agreement or commitment to
purchase any such interest. The Company has previously delivered to Purchaser
complete and correct copies of the articles of incorporation and by-laws
(including comparable governing instruments with different names), shareholder
agreements, partnership agreements and other agreements pertaining to the
Company's ownership or voting interest in each Subsidiary, as amended and
presently in effect. Except as the context otherwise requires, for purposes of
each of the representations, warranties and covenants contained in ARTICLE II
and ARTICLE IV of this Agreement, "Company" shall refer to the Company and each
of its Subsidiaries.
(c) The Company is authorized to issue 25,000 shares of $1.00 par
value Common Non-Voting Stock of which 21,206.25 shares are issued and
outstanding, and 5,000 shares of $110.00 par value Class A Preferred Voting
Stock, of which 862.875 shares are issued and outstanding. No other shares of
Stock of the Company are authorized or outstanding. Except as set forth on
SCHEDULE 2.1(C), there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to purchase
or otherwise to receive from the Company any of the shares of Stock or any other
security of the Company (except those that will be terminated coincident with
Closing as indicated on SCHEDULE 2.1(C)), and there is no outstanding security
of any kind convertible into such Stock. All of the issued and outstanding
shares of Stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. The issuance of shares in the Company to the
Selling Shareholders did not and does not require any registration under the
Securities Act of 1933 or any other federal or state securities laws. The
Selling Shareholders are and will be on the Closing Date the record and
beneficial owners and holders of all the issued and outstanding shares of Stock
of the Company free and clear of all liens and encumbrances.
2.2 AUTHORIZATION AND BINDING OBLIGATION . The execution, delivery, and
performance of this Agreement by the Company have been duly authorized by all
necessary
7
corporate actions on the part of the Company. This Agreement has been duly
executed and delivered by the Company and Selling Shareholders and constitutes
the legal, valid, and binding obligation of the Company and Selling
Shareholders, enforceable against them in accordance with its terms.
2.3 ABSENCE OF CONFLICTING AGREEMENTS . Subject to obtaining the Consents
(as defined in Section 2.8 hereof), the execution, delivery, and performance of
this Agreement by the Company and the Selling Shareholders and the documents to
be executed by such parties contemplated hereby (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 the Company; (iii) will not conflict with, result in
a breach of, or constitute a default under, any law, judgment, order, ordinance,
decree, rule, regulation or ruling of any court or governmental instrumentality,
which is applicable to the Company or the Station or the Selling Shareholders;
(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 the Company or any Selling Shareholder is a party or by which
the Company or its assets or any Selling Shareholder may be bound; or (v) will
not create any material claim, liability, mortgage, lien, pledge, condition,
charge, or encumbrance of any nature whatsoever upon the Company's assets.
2.4 LICENSES . The Company (through its Subsidiary, Koplar Communications
Television, L.L.C.) is the authorized legal holder of all the licenses, permits
and other authorizations (collectively "Licenses") required for the lawful
conduct of the business and operations of the Station in the manner they are now
conducted. SCHEDULE 2.4 contains a list of all Licenses and copies of all
Licenses issued by the FCC (subject to the Company's right to supplement such
Schedule provided the Company delivers the same to Purchaser within ten (10)
days from the execution of this Agreement). The Licenses are in full force and
effect, and the conduct of the business and operations of the Station are in
accordance with the Licenses and all statutory and regulatory requirements,
except as set forth on SCHEDULE 2.4. Except as set forth in SCHEDULE 2.4, the
Company and the Selling Shareholders have no reason to believe that the Licenses
issued by the FCC will not be renewed by the FCC for a full term without
material modification or conditions (except for those of general applicability).
2.5 TITLE TO AND CONDITION OF REAL PROPERTY . SCHEDULE 2.5 contains
descriptions of all the real property owned or leased by the Company (including
the location of all improvements thereon), which comprises all real property
interests necessary to conduct the business or operations of the Station as now
conducted (the "Real Property"). The Company has good and marketable fee simple
title to all of the fee estates listed in SCHEDULE 2.5 free and clear of all
liens, mortgages, pledges, covenants, easements, restrictions, encroachments,
leases, charges, and other claims and encumbrances except for: (i) mortgages or
security interests securing Liabilities reflected on the December 31, 1996
balance sheet included in the Audited Financials, with respect to which no
default (or event that, with notice or lapse of time or both, would constitute a
8
default) exists; (ii) liens for real estate taxes not yet due and payable; (iii)
easements, rights-of-way, restrictions of record and other items as disclosed on
SCHEDULE 2.5; (iv) mechanics' liens and other claims or encumbrances which will
be removed prior to or at Closing in accordance with Section 4.1 hereof; and (v)
minor imperfections of title which do not materially detract from the value of
the Real Property and which will not materially interfere with the use of the
Real Property in the manner presently used by the Company in the ordinary course
of its business. The improvements upon any Real Property conform in all material
respects to all lease restrictions, restrictive covenants, and zoning
ordinances. To the Company's and Selling Shareholders' respective Knowledge, no
condemnation or construction is pending or proposed which might have a
materially adverse affect on the use and value of the Real Property. The leases,
agreements and contracts for non-fee estates listed on SCHEDULE 2.5 constitute
valid and binding obligations of the Company, and to the Company's and Selling
Shareholders' respective Knowledge, of all other parties thereto and are in full
force and effect. The Company is not in material default under any of such
leases, agreements or contracts, and to the Company's and Selling Shareholders'
respective Knowledge, the other parties to such leases, agreements and contracts
are not in material default thereunder. Other than the Company and the Company's
Affiliates and except for those parties set forth on SCHEDULE 2.5, there are no
parties in possession of any portion of the Real Property, whether as lessees,
tenants at will, trespassers or otherwise. There are presently in existence
dedicated public access roads as well as telephone, electric, and water lines
(some of which are made available as the result of easements with adjacent
property owners) to or on the Real Property which are sufficient to service
adequately the current operations of each building located on the Real Property
that is used by the Company.
2.6 TITLE TO AND CONDITION OF PERSONAL PROPERTY . SCHEDULE 2.6 contains a
list of all items of personal property as of the date of SCHEDULE 2.6 which are
used or useful in and material to the operations of the Station as conducted as
of the date of this Agreement (the "Personal Property"). Except as described in
SCHEDULE 2.6, the Company owns and has good and marketable title to all Personal
Property. Except as noted in SCHEDULE 2.6, none of the Personal Property owned
by the Company is subject to any security interest, mortgage, pledge,
conditional sales agreement, or other lien or encumbrance, except for: (i) those
securing Liabilities which are reflected on the books and records of the
Company; (ii) liens for current taxes not yet due and payable; and (iii)
mechanics' liens and similar minor encumbrances, all of which shall be
discharged prior to the Closing Date in accordance with Section 4.1 hereof.
Except as shown in SCHEDULE 2.6, each item of Personal Property necessary for
the operation of the Station as conducted as of the date of this Agreement is in
good operating condition and repair (ordinary wear and tear excepted), and is
insurable at standard rates. All items of transmitting and studio equipment
included in the Personal Property and material to the operations of the Station
as now conducted are in compliance with all FCC regulations and requirements in
all material respects. The Company owns all properties necessary to conduct, in
all material respects, the business and operations of the Station as now
conducted.
9
2.7 CONTRACTS .
(a) SCHEDULES 2.5, 2.6, 2.7(A), 2.7(B), 2.11 AND 2.13(B) contain
descriptions of all the contracts with respect to the Company, including
self-dealing agreements (the "Contracts"), except for: (i) contracts with
advertisers for the sale of time or talent on the Station for cash and
substantially at rate card or at customary rates and which are not prepaid; (ii)
other contracts, the aggregate liability under which is not greater than
$20,000; and (iii) contracts or agreements terminable on not more than ninety
(90) days notice without material liability to the Company. There are no
agreements for the sale of advertising time for consideration other than cash
("Trade Agreements") except as disclosed on SCHEDULE 2.7(A). The Company has
made available to Purchaser true and correct copies of all written Contracts,
and true and complete memoranda of all oral Contracts required to be listed on
SCHEDULE 2.7(A). Except as set forth on SCHEDULE 2.7(A), each of the Contracts
constitutes a valid and binding obligation of the Company and, to the Knowledge
of the Company and Selling Shareholders, constitutes a valid and binding
obligation of the third parties thereto. Except as set forth on SCHEDULE 2.7(A),
each of the Contracts is in full force and effect and, to the Company's and
Selling Shareholders' respective Knowledge, no other party is in material breach
of the terms of any of the Contracts, and no event has occurred which with the
passage of time or notice, or both, would constitute a material breach or
default of such Contracts and the Company has materially fulfilled and performed
its obligations under each of the Contracts. Except for the Consents (as defined
in Section 2.8 hereof), the consummation of the transactions contemplated by
this Agreement will not affect the validity, enforceability and continuation or
terms of any of the Contracts listed on SCHEDULE 2.7(A). The Contracts include
all Contracts necessary to continue the operations of the Station as now
conducted and substantially consistent with recent past operations.
(b) SCHEDULE 2.7(B) describes all of the Station's programming
agreements as of the date hereof, together with the payments due by month
thereunder and the runs remaining, and describes the barter agreements to which
the Company is bound (the "Programming Agreements"). Each of the Programming
Agreements listed in SCHEDULE 2.7(B) is valid and binding and enforceable
against the other party or parties thereto in accordance with its terms. All
payments required to be paid under any Programming Agreement prior to the
Closing Date shall have been timely paid by the Company when due. Between the
date hereof and the Closing Date, the Company shall maintain film and program
usage schedules and amortization schedules substantially consistent with past
practices.
2.8 CONSENTS . Except for the FCC Consent provided for in Section 6.1, the
HSR Filing pursuant to Section 6.2 and the other consents described in SCHEDULE
2.8 (collectively the "Consents"), 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; or (ii) to enable Purchaser to conduct the
business or operations of the Station after the Closing in substantially the
same manner as such business or operations are conducted as of the date of this
Agreement.
10
2.9 TRADEMARKS, TRADE NAMES AND COPYRIGHTS . SCHEDULE 2.9 is a true and
complete list of all copyrights, trademarks, service marks, trade names,
licenses, patents, permits, jingles, privileges and other intangible property
rights and interests applied for, issued to or owned by the Company, or under
which the Company is licensed or franchised, and used in the conduct of the
business or operations of the Station (collectively the "Intellectual
Property"). Except as set forth on SCHEDULE 2.9, the Company is the sole and
exclusive owner of the Intellectual Property, free and clear of any claims,
liens, security interests, licenses, sublicenses, charges or encumbrances. The
Company and Selling Shareholders have no Knowledge that any infringement is
occurring to any of the Intellectual Property identified on SCHEDULE 2.9. The
Company and Selling Shareholders have no Knowledge that the Company is
infringing upon any trademarks, service marks, trade 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 the
Company and Selling Shareholders, threatened with respect thereto.
2.10 AUDITED FINANCIAL STATEMENTS .
(a) SCHEDULE 2.10 contains true and complete copies of the
consolidated audited financial statements of the Company as of and for the
Company's fiscal years ended December 31, 1995 and 1996 (the "Audited
Financials"). Except as set forth on SCHEDULE 2.10, the Audited Financials have
been prepared in accordance with GAAP consistently applied and present fairly
the operating income and financial condition of the Company as of their
respective dates and the results of operations for the respective periods then
ending.
(b) As of December 31, 1996, the Company did not have any
indebtedness, liability, claim or loss, whether contingent or non-contingent
("Liabilities") that, although required to be disclosed or reflected, was not
fully and adequately reflected or reserved against on the December 31, 1996
consolidated balance sheet included in the Audited Financials. Except as set
forth on SCHEDULE 2.10, the Company has not incurred any Liabilities since
December 31, 1996 except in the ordinary course of business.
2.11 INSURANCE . All of the Real Property and Personal Property is insured
against loss or damage in amounts generally customary in the broadcast industry.
Attached hereto as SCHEDULE 2.11 is a description of all liability and casualty
insurance policies maintained by the Company. All such policies are in full
force and effect as of the date of this Agreement and copies of all such
policies have been delivered to Purchaser.
2.12 REPORTS . All material ownership reports, renewal applications,
financial reports and other reports and documents required to be filed with the
FCC by or on behalf of the Company with respect to the Station have been filed
with the FCC, and all such reports, applications and other documents are true
and complete in all material respects.
11
2.13 COMPENSATION AND EMPLOYEE PLANS .
(a) SCHEDULE 2.13(A) contains a complete list of all employees of
the Company, their salaries, and basis for determination of bonuses.
(b) SCHEDULE 2.13(B) sets forth a list and description of all
"employee benefit plans" (as such term is defined in Section 3 of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA")) of the Company
(collectively the "Plans") and all bonus, incentive compensation,
profit-sharing, pension, retirement, stock purchase, stock option, deferred
compensation, hospitalization, group insurance, death benefit, disability,
union, collective bargaining, works council, severance and other compensation
and fringe benefit plans, trust agreements, arrangements and commitments of the
Company, including a summary description with respect to the funding of all such
Plans. True, correct and complete copies of all documents creating or evidencing
any such plan, agreement, arrangement or commitment have been made available to
Purchaser. There are no negotiations, demands or proposals which are pending
which concern matters now covered, or that would be covered, by such types of
plans, agreements, arrangements or commitments. Except as set forth in SCHEDULE
2.13(B), the Company is not a party to any multiemployer plan as that term is
defined by ERISA.
(c) All Plans are in compliance with the applicable provisions of
ERISA, and no "reportable event" as defined by ERISA has occurred. Each of the
Plans which is intended to meet the requirements of Section 401(a) of the
Internal Revenue Service to be "qualified" within the meaning of such sections
of the Internal Revenue Code of 1986, as amended (the "Code"), is so qualified
and there exists no fact which would adversely affect the qualified status of
such Plans.
(d) The Company has not incurred any "withdrawal liability" (within
the meaning of Section 4201(a) of ERISA) under any multiemployer plan and except
as noted on SCHEDULE 2.13(D), if the Company were to engage in a "complete
withdrawal" or a "partial withdrawal" (as such terms are defined in Subtitle E
of Title IV of ERISA) from any such plan, the Company would not incur any
"withdrawal liability" under Section 4201 of ERISA.
(e) Other than claims for benefits submitted by participants or
beneficiaries in the ordinary course, there is no request for documents,
litigation, legal action, suit, investigation, claim, counterclaim or proceeding
pending or threatened against or affecting any Plan. Neither the Company nor any
administrator or fiduciary of any Plan (or any agent of any of the foregoing)
has engaged in any transaction or acted or failed to act in a manner which could
subject the Company to any material liability for a breach of fiduciary duty
under ERISA or any other applicable law. If Section 302 of ERISA and Section 412
of the Code apply to any Plan, no "accumulated funding deficiency", as such term
is defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, exists with respect to such Plan. The Company has no liability and there
are no claims against the Company pursuant to any provision of the Code or ERISA
by reason of the relationship of the Company to any other incorporated or
unincorporated
12
trade or business in the manner described in Section 414(b), (c), (m), or (o) of
the Code or Section 302(d)(8)(C) or Section 4001(b)(1) of ERISA.
2.14 LABOR RELATIONS . The Company is not a party to or subject to any
collective bargaining agreements with respect to the Station except as described
in SCHEDULE 2.7(A) or SCHEDULE 2.13(B). The Company has no written or oral
contracts of employment with any employee of the Station, other than: (i) oral
employment agreements terminable at will or upon less than forty-five (45) days
notice without penalty or other liability except for the payment of severance
obligations consistent with recent past practices or the payment of commissions
for sales made prior to such termination by commissioned sales representatives;
or (ii) those listed in SCHEDULE 2.7(A). The Company has provided Purchaser with
true and complete copies of all such written contracts of employment and true
and accurate memoranda of any such oral contracts to the extent listed in
SCHEDULE 2.7(A). The Company is in material compliance with all applicable 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 it has not received any notice alleging that it has failed to comply
in any material respect with any such laws, rules or regulations. Except as set
forth in SCHEDULE 2.14, the Company is not experiencing any strikes, work
stoppages, or grievance proceedings. No claim of unfair labor practices is
pending or threatened and there are no other material labor controversies
pending, or to the Company's or Selling Shareholders' respective Knowledge,
threatened between the Company and any of the Company's employees.
2.15 TAX RETURNS AND AUDIT . The Company has timely (taking into account
all applicable extensions) filed all federal, state, local, foreign and other
tax returns required by law to be filed for which the due date is on or before
the Closing Date. The Company has paid in full or established adequate reserves
which are reflected in full in the Audited Financials for all taxes and other
charges due to federal, state or local, foreign or any other taxing authorities
by the Company. Except as set forth on SCHEDULE 2.15, no audit or investigation
of any of the Company's tax returns or reports is in progress, pending or
threatened, and there exists no grounds for the assertion or assessment of any
additional taxes against the Company. True and complete copies of all United
States federal income tax returns, tax examination reports and statements of
deficiencies assessed against or agreed to by the Company with respect to the
last five (5) years have been made available to Purchaser.
2.16 CLAIMS AND LEGAL ACTIONS . Except as set forth in SCHEDULE 2.16, and
except for any investigations and rule-making or other proceedings generally
affecting the broadcasting industry, there is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation, application,
complaint, or other legal, administrative or tax proceeding, nor any order,
decree or judgment, in progress or pending or, to the Knowledge of the Company
or the Selling Shareholders, threatened against or relating to the Company, or
the business or operations of the Company, the result of which might reasonably
be expected to have a Material Adverse Effect upon the Company.
13
2.17 COMPLIANCE WITH LAWS . The Company has conducted its business in
compliance with all applicable Laws, except to the extent that any
non-compliance would not have a Material Adverse Effect.
2.18 CONDUCT OF BUSINESS IN ORDINARY COURSE . Between December 31, 1996
and the date hereof, the Company has conducted the business and operations of
the Company only in the ordinary course and substantially consistent with recent
past practice and, without limiting the generality of the foregoing, has not:
(a) Suffered any Material Adverse Effect;
(b) Except in the ordinary course of business, and substantially
consistent with past practices: (i) made any material increase in compensation
payable or to become payable to any of the employees of the Company; or (ii)
made any material change in employee benefits arrangements affecting the
employees of the Company;
(c) Made any sale, assignment, lease or other transfer of any of the
Company's Personal Property, Intellectual Property or Real Property other than
in the normal and usual course of business and substantially consistent with
past practices; or
(d) Paid any dividend or made any other distribution (other than
compensation consistent with past practices) to any Selling Shareholder.
2.19 RELATED ENTITIES . Except as listed or described on SCHEDULES 2.5,
2.6, 2.9 AND 2.19, all Real Property, Personal Property, Intellectual Property
and Contracts used or intended for use in the operation of the Station are
owned, leased or held by the Company, and no Affiliate owns or leases property
or is a party to any lease or agreement affecting or relating
to the operations of the Station.
2.20 ENVIRONMENTAL . Other than those matters disclosed in the Phase 1
Environmental Report (a true and complete copy of which has previously been
delivered to Purchaser) (i) the Company has no Knowledge of its violation of any
Environmental Laws with respect to the Company's Real Property or the current
operation of the Station; (ii) the Company has no Knowledge of any condition or
event which has occurred with respect to any of the Company's Real Property or
the operations of the Station which, with the giving of notice, lapse of time,
or both, would constitute a violation of any Environmental Laws; and (iii) the
Company has not engaged in the storage, installation, manufacturing, generation,
disposal or use of any Hazardous Materials on or at any of the Real Property
used in connection with the Station in violation of any Environmental Law. The
Company has not received any notice, summons, citation, directive, letter or
other communications, written or oral, from the United States, the State of
Missouri, or any other party concerning any intentional or unintentional action
or omission on the part of the Company or any other party which resulted in the
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leeching, dumping or disposing of Hazardous
14
Materials on, above, or under any of the assets used or useful by the Company or
in the operation of the Station.
2.21 BROKER'S FEES . There are no fees or commissions payable by the
Selling Shareholders or the Company to any broker or finder with respect to the
purchase and sale of the Shares except any commissions which may be payable to
CEA referred to in Section 1.3(b)(vii) of this Agreement.
2.22 RESTRICTIONS ON COMPETITION . Except as disclosed on SCHEDULE 2.22,
there are no agreements in effect restricting the ability of the Company or its
Affiliates to compete with other television broadcasting entities in any part of
the United States, except with respect to the non-competition provision set
forth in that certain Backup Asset Purchase Agreement with Pappas Telecasting
Companies, a copy of which has been delivered to Purchaser.
2.23 CABLE CARRIAGE . To the Knowledge of the Selling Shareholders,
SCHEDULE 2.23 annexed hereto sets forth a complete list of (a) all cable
television systems which carry the Station's signal on the date hereof under the
FCC's "must carry" rules; and (b) all cable television systems which carry the
Station's signal pursuant to retransmission consent agreements, true and
complete copies of which have been delivered to Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company and Selling Shareholders
as follows:
3.1 ORGANIZATION, STANDING AND AUTHORITY . Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of its state of
incorporation and is duly qualified to conduct business in the states in which
such qualification is required. Purchaser has all requisite corporate power and
authority to execute and deliver this Agreement and the documents contemplated
hereby, and to perform and comply with all of the terms, covenants and
conditions to be performed and complied with by Purchaser hereunder and
thereunder.
3.2 AUTHORIZATION AND BINDING OBLIGATION . The execution, delivery, and
performance of this Agreement by Purchaser have been duly authorized by all
necessary corporate actions on the part of Purchaser and its shareholders. This
Agreement has been duly executed by Purchaser and constitutes the legal, valid,
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms except as the enforceability hereof may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
or by court-applied equitable remedies.
3.3 ABSENCE OF CONFLICTING AGREEMENTS . Subject to obtaining the Consents,
the execution, delivery, and performance of this Agreement and the documents
contemplated hereby
15
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party except such consent that has already been
obtained; (ii) will not conflict with the Certificate of Formation, Operating
Agreement or other applicable Organizational Documents of Purchaser; (iii) will
not conflict with, result in a breach of, or constitute a default under, any
law, judgment, order, injunction, decree, rule, regulation or ruling of any
court or governmental instrumentality, which is applicable to Purchaser; 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,
licenses, or permit to which Purchaser is a party or by which Purchaser may be
bound, such that Purchaser could not acquire or operate the Company and/or the
Station.
3.4 QUALIFIED TRANSFEREE . Purchaser has no Knowledge of any reason why it
should not be found qualified to be the transferee of the Station and, to its
Knowledge, will require no waiver of any FCC regulation or policy in order to
obtain FCC consent to Purchaser's acquisition of control of the Station.
ARTICLE IV
COVENANTS OF THE COMPANY
4.1 PRE-CLOSING COVENANTS . Except as contemplated by this Agreement, or
with the prior written consent of Purchaser, between the date hereof and the
Closing Date, the Company shall operate the Station in the ordinary course of
business in accordance with its past practices (except where such operation
would conflict with the following covenants or with the Company's other
obligations under this Agreement), and the Company shall abide by the following
negative and affirmative covenants:
(a) NEGATIVE COVENANTS. Except as otherwise expressly allowed
or contemplated by this Agreement or except with the prior written consent of
the Purchaser, the Company shall not do any of the following:
(i) COMPENSATION. Increase or agree to 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;
(ii) DISPOSITION OF ASSETS. Sell, assign, lease, or otherwise
transfer or dispose of any of the Company's assets, except for assets consumed
or disposed of in the ordinary course of business or assets which are no longer
used or useful in the business or operations of the Station;
(iii) ENCUMBRANCES. Create, assume or permit to exist any
mortgage, lien, pledge, or title encumbrance upon the Company's assets, except
for: (i) those in existence on the date of this Agreement and disclosed in
Sections 2.5 and 2.6 of this Agreement, (ii) mechanics'
16
liens and other similar liens which will be removed prior to the Closing Date,
and (iii) such items which are immaterial to the value of such assets and do not
materially interfere with the operations of the Station as currently conducted;
(iv) LICENSES. Do any act or fail to do any act which might
result in the expiration, revocation, suspension or modification of any of the
Licenses necessary for the operation of the Station, or fail to prosecute with
reasonable due diligence any applications to any governmental authority or any
other licensing authority material to the operation of the Station;
(v) RIGHTS. Waive any right relating to the Station or any of
the Company's assets which is necessary to operate the Station as currently
conducted;
(vi) DIVIDEND PAYMENTS. Make any dividend payment or other
distribution to any Selling Shareholder other than regular compensation and
accrued bonuses consistent with its budget for the 1997 fiscal year (or for any
fiscal year thereafter, consistent with its budget and employment contracts
applicable for such fiscal year);
(vii) REAL PROPERTY. Except as set forth on SCHEDULE
4.1(A)(VII), make, allow or consent to any material change in the Real Property
or in any buildings, leasehold improvements, or fixtures used or useful in the
operation of the Station except in the ordinary course of business;
(viii) INSURANCE POLICIES. Make any material change in the
insurance policies included in SCHEDULE 2.11;
(ix) CABLE CARRIAGE. Take any action or, as the case may be,
fail to take any action necessary to preserve the Station's carriage on cable
television systems identified in SCHEDULE 2.23;
(x) TIME SALES AGREEMENTS. Renew, negotiate, modify, amend or
terminate any existing Time Sales Agreements with respect to the Station except
in the ordinary course of business consistent with past practice;
(xi) PROGRAMMING AGREEMENTS. Enter into or amend any
Programming Agreement with respect to the Station unless the execution of such
Programming Agreement is in accordance with the ordinary course of business for
the Station consistent with past practice;
(xii) INDEBTEDNESS. Create, enter or assume any indebtedness
for borrowed money which will not be discharged on or prior to Closing
excluding, however, borrowings under the existing revolving credit loan with
Boatmen's Bank of St. Louis;
17
(xiii) CAPITAL EXPENDITURES. Make any capital expenditures in
excess of $1,000,000 in the aggregate for the annual period ending December 31,
1997 and $1,000,000 in the aggregate for the period thereafter through the
Closing;
(xiv) CHARTER DOCUMENTS. Amend the certificate of
incorporation or by-laws of the Company, except as set forth on SCHEDULE
4.1(A)(XIV);
(xv) ISSUANCE OF SECURITIES. Issue, grant, sell or encumber
any shares of Stock or other securities; issue, grant, sell or encumber any
security, option, warrant, put, call, subscription or other right of any kind
that calls for the acquisition, issuance, sale, pledge or other dispositions of
any Stock or other securities (except for those set forth on SCHEDULE 2.1(C)
hereof) or otherwise change its capital structure, except as the same may be
required in order for the Stock to be sold by Selling Shareholders to Purchaser
in accordance with the terms of this Agreement, except for any redemption of any
Stock by Selling Shareholders in connection with the distribution of Excluded
Assets as defined in Section 6.10 hereof; and
(xvi) NO INCONSISTENT ACTION. Take any other action which is
materially inconsistent with its obligations under this Agreement.
(b) AFFIRMATIVE COVENANTS. Selling Shareholders shall cause the
Company to do the following:
(i) ACCESS TO INFORMATION. Make available to Purchaser and its
authorized representatives (who have a reason to know based upon this Agreement
and, to the extent required by the Company, have signed appropriate
confidentiality agreements) all contracts, agreements, financial data and other
documents affecting the Company and the operations of the Station requested by
Purchaser. Notwithstanding the foregoing, without the prior written consent of
Edward J. Koplar, there shall be no on-site inspection by Purchaser or any of
its authorized agents of any of the premises used in connection with the
business operations of the Company or the Station, PROVIDED, HOWEVER, that
Purchaser shall have the right to conduct, upon reasonable advance notice to
Edward J. Koplar, a Phase 1 and, if Purchaser reasonably deems it necessary or
appropriate, a Phase 2 environmental audit of the assets of the Company. Any
material noncompliance identified by any such Phase 1 or Phase 2 which results
in a misrepresentation or breach of the representation of the Company and
Selling Shareholders set forth in Section 2.20 of this Agreement shall either be
cured prior to Closing or, to the extent such noncompliance cannot be cured
prior to Closing, shall be subject to the pre-Closing indemnification procedures
set forth in Section 8.2(d) of this Agreement;
(ii) MAINTENANCE OF ASSETS. Maintain all of the assets used in
the business operations of the Company or the Station (or replacements thereof
and improvements thereon) consistent in all material respects with the Company's
past practices. The Company shall remove, cure, correct and repair prior to the
Closing Date any deficiencies in such assets which
18
are material to the operations of the Station and any material violations which
are inconsistent with the Company's representations, warranties and covenants
contained in this Agreement;
(iii) INSURANCE. Maintain the existing insurance policies, or
comparable insurance coverage, on the Station and the assets owned or leased by
the Company;
(iv) CONSENTS. Use its reasonable best efforts to obtain the
Consents;
(v) PRESERVATION OF BUSINESS. Use its commercially reasonable
efforts to preserve the business and operations of the Station and its present
relationships with suppliers, customers and others having business relations
with it, and continue to conduct financial operations of the Station, including
its credit and collection policies, with substantially the same effort, and to
the same extent and in the same manner, as in the prior conduct of the business
of the Station;
(vi) BOOKS AND RECORDS. Maintain its books and records
substantially in accordance with past practices;
(vii) FINANCIAL INFORMATION. Furnish to Purchaser as soon as
available any audited financial statements for annual periods ending December 31
after the date of this Agreement and, within forty-five (45) days after the end
of each month between June 30, 1997 and the Closing Date, an unaudited internal
statement of income and expense and an unaudited internal balance sheet for the
month just ended, such information to be in the form normally prepared by the
Company for the Company's internal use;
(viii) CONTRACTS. Prior to the Closing Date, deliver to
Purchaser a list of all Contracts entered into between the date hereof and the
Closing Date, of the type required to be listed in SCHEDULE 2.7, together with
true and complete copies of such Contracts;
(ix) BROADCAST INTERRUPTIONS. Notify Purchaser as soon as
practicable if the Station's normal broadcast transmission is interrupted or
impaired eight (8) continuous hours or more except for routine maintenance;
(x) QUALIFICATIONS. Notify Purchaser promptly if any fact
relating to the Company which would cause the FCC to deny its consent to the
transactions contemplated by this Agreement should come to the Company's
attention and use its reasonable efforts to take such steps as may be necessary
to remove any such impediment to the transactions contemplated by this Agreement
and furnish to Purchaser, promptly upon filing, copies of all material reports
and other information filed by the Company or any Subsidiary with the FCC after
the date hereof;
(xi) LITIGATION. Notify Purchaser of any litigation,
arbitration or administrative proceeding pending, or to the Knowledge of Selling
Shareholders or the Company,
19
threatened against the Company or the Station or which challenges the
transactions contemplated by this Agreement, within five (5) days of becoming
aware of the same;
(xii) EMPLOYEES. Consistent with past employment policies and
practices, use its reasonable efforts to maintain the employment at the Station
of the employees listed on SCHEDULE 2.13, except to the extent that changes in
employment is instituted in the reasonable business judgment of the management
of the Company; and
(xiii) DISCHARGE OF CERTAIN LIENS. Discharge any mechanics'
liens and similar minor encumbrances on the Personal Property, unless otherwise
agreed by Purchaser.
(xiv) OPTIONS. On or prior to the Closing the Company shall
cause to be canceled and terminated all outstanding options to purchase stock or
other equity interests of the Company (the "Options"), which are described on
SCHEDULE 2.1(C). If prior to such cancellation all or any portion of the Options
have been exercised or otherwise converted into stock of the Company (the
"Option Stock"), the Company shall redeem such Option Stock on or prior to
Closing. Any consideration paid in consideration for cancellation of the Options
or redemption of the Option Stock shall be a reduction in the Purchase Price.
The surrender of the Options or Option Stock by the holders shall be deemed a
release by them of any and all rights they have relating to equity in the
Company (including without limitation as option holders or stockholders), and
the Company and the Selling Shareholders shall obtain written releases from such
holders to that effect as a condition to Closing.
ARTICLE V
COVENANTS OF PURCHASER
5.1 NOTIFICATION . Purchaser shall notify the Company and Selling
Shareholders of any litigation, arbitration or administrative proceeding pending
or, to its Knowledge, threatened against Purchaser which challenges the
transactions contemplated by this Agreement, within five (5) days of becoming
aware of the same. Purchaser shall deliver to the Selling Shareholders all
information and documents relating to its preparation for the Closing and
financing of the Purchase Price as is reasonably requested by the Selling
Shareholders or its legal representatives.
5.2 NO INCONSISTENT ACTION . Purchaser shall not take any other
action which is materially inconsistent with its obligations under this
Agreement.
5.3 PURCHASER'S QUALIFICATIONS . Neither Purchaser nor any of its
Affiliates shall knowingly take any action which would adversely impact
Purchaser's qualifications, including but not limited to, acquisitions or
proposed acquisitions with respect to the St. Louis SMA or anywhere else, which
would cause Purchaser's acquisition of control of the Station to be inconsistent
with the FCC's multiple ownership or other rules or policies.
20
5.4 SCHEDULES . Purchaser hereby acknowledges that the Schedules attached
to this Agreement were prepared by the Company and the Selling Shareholders as
of June 1, 1997 and are subject to modification and amendment by the Company and
Selling Shareholders within ten (10) days from the date of execution of this
Agreement, subject to the reasonable approval of Purchaser (to be determined by
the Purchaser within five (5) business days that the modifications and
amendments are delivered to the Purchaser).
ARTICLE VI
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC CONSENT . The transfer of control of the FCC Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC (the "FCC Consent"), which shall be deemed to have occurred on the
effective date of the FCC's action granting the transfer application. Purchaser
and the Company will use their commercially reasonable efforts to file with the
FCC an appropriate application for the FCC Consent within five (5) business days
after Purchaser has obtained adequate financing, fully funded, to consummate the
transactions contemplated by this Agreement. The parties shall prosecute said
application with all reasonable diligence and otherwise use commercially
reasonable efforts to obtain the grant of such application as expeditiously as
practicable. The parties will promptly provide each other with a copy of any
pleading, order or other document filed by, served on or received by such party
relating to the FCC application and any filing made by either party with the FCC
relating to the transactions contemplated herein. Each party will use
commercially reasonable efforts and otherwise cooperate with the other parties
in responding to any information requested by the FCC related to the application
or this Agreement, in making any amendment to this Agreement requested by the
FCC which does not adversely affect the party in a material manner, and in
defending against any petition, complaint, or other objection which may be filed
against the application. If the FCC Consent nonetheless imposes any condition on
any party hereto, such party shall use commercially reasonable efforts to comply
with such condition unless compliance would be unduly burdensome or would have a
material adverse effect upon it. If reconsideration or judicial review is sought
with respect to the FCC Consent, Purchaser and the Company shall oppose such
efforts for reconsideration or judicial review.
6.2 ANTITRUST LAWS COMPLIANCE . As soon as practicable (but in no event
less than fifteen (15) business days) after the execution of this Agreement,
Purchaser and the Company will each make filings as required under Title II of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Filing"). Each party will cooperate with the other in accomplishing such filings
and will keep the other party apprised of the status of any inquiries made of
such party by the Federal Trade Commission, the Antitrust Division of the U.S.
Department of Justice, or any other governmental agency with respect to this
Agreement or the transaction contemplated hereby.
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6.3 CONTROL OF THE STATION . Prior to Closing and subject to the
obligations of the Company hereunder, Purchaser 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's programs, employees, and
policies, shall, subject to the obligations of the Company hereunder, be the
sole responsibility of the Company until the Closing of the transactions
contemplated by this Agreement.
6.4 FEES AND EXPENSES . Except as otherwise provided in this Agreement and
except for the transaction costs which will be an Adjustment to the Purchase
Price as provided in Section 1.3(b), (c) and (d), each party shall pay its own
expenses in connection with the authorization, preparation, execution, and
performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and other representatives; provided, that the Selling
Shareholders (considered collectively) and the Purchaser shall each be
responsible for one-half of the FCC filing fees (and Selling Shareholders'
portion of such FCC filing fees shall be reflected as a reduction to the
Purchase Price as set forth in Section 1.3(b)(vii)).
6.5 BROKERS . Except as otherwise disclosed in this Agreement and except
for the fees to be paid by Purchaser to CEA(as defined in Section 1.3(b)(vii)),
pursuant to its agreement with Purchaser, Purchaser, on the one hand, and the
Company and the Selling Shareholders, on the other hand, each represents and
warrants that neither it nor any Person acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transaction contemplated by this Agreement. Purchaser and the Selling
Shareholders, respectively, each agree to indemnify and hold the other harmless
from and against any and all claims, losses, liabilities and expenses (including
reasonable attorneys' fees) arising out of any such agreement or arrangement
made or alleged to have been made, respectively, by Purchaser or Persons acting
on Purchaser's behalf or by the Company or the Selling Shareholders or Persons
acting on the Company's or the Selling Shareholders' behalf.
6.6 CONFIDENTIALITY . Purchaser, the Company and the Selling Shareholders
will maintain in confidence, and will cause the directors, officers, employees,
agents and advisors of Purchaser and the Company to maintain in confidence and
not disclose or utilize for any purpose whatsoever, any written, oral or other
information which is obtained from another party in connection with the
transactions contemplated by this Agreement and, except as provided in Section
6.7, not disclose the existence of this Agreement or the transactions
contemplated hereunder unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate for the consummation of the transactions
contemplated by this Agreement (including Purchaser's obtaining financing
related hereto), or (c) the furnishing of such information is required by law.
In the event this Agreement is terminated and the purchase and sale contemplated
hereby abandoned, each party will return to the other party all documents, work
papers and other written material obtained by it in connection with the
transaction contemplated by this Agreement or certify destruction of such
documents in
22
writing. All confidentiality agreements previously executed by any party shall
remain in full force and effect following the execution of this Agreement in
accordance with their terms.
6.7 PUBLIC ANNOUNCEMENTS . The parties to this Agreement will coordinate
and consult with one another before making any press release or other public
announcement concerning the transactions contemplated under this Agreement.
Purchaser acknowledges that announcements and direct or indirect communications
concerning any changes which Purchaser may plan for the future operation of the
Station could adversely affect the Company's operation of the Station prior to
the Closing Date. Accordingly, Purchaser agrees that, until the date on which
the FCC grants the FCC Consent, (a) neither it nor its present or prospective
managerial personnel shall make any formal announcements to the employees of the
Station without written approval of the Company, and (b) except in connection
with Purchaser's efforts to obtain financing, neither it nor its present or
prospective personnel will release or publicize any such planned changes without
the advance written approval of the Company, which shall be granted if necessary
or appropriate to comply with the rules, regulations, or policies of the FCC or
other governmental agencies.
6.8 COOPERATION . Any notices or certifications given under this Agreement
or any related agreement, including the Tax Escrow Agreement, shall be given in
good faith without any intention to unfairly impede or delay the other party.
Purchaser, the Company and the Selling Shareholders 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 Purchaser, the Company and Selling Shareholders 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 transactions contemplated by this Agreement and to fulfill their
respective obligations under this Agreement.
6.9 EXCLUDED ASSETS AND LIABILITIES . The following assets (hereinafter
referred to as the "Excluded Assets") and liabilities (hereinafter referred to
as the "Excluded Liabilities"), to the extent owned by or due from the Company,
shall be distributed to the Selling Shareholders immediately prior to the
Closing in partial redemption of the Selling Shareholders' Stock (and the
Selling Shareholders shall assume any liabilities or taxes associated with such
assets or their distribution):
a. The notes payable or redeemable by Edward J. Koplar to or
from the Company or any other amounts owing by or to any of the Selling
Shareholders or their Affiliates;
b. All amounts owing from and investments in Roberts Media, L.L.C.
or in connection with personal communications services ("PCS") licenses;
PROVIDED, HOWEVER, such amount shall not include any amounts owing from or
investments in Roberts Broadcasting or the incidental LMA rights and
obligations;
23
c. All life insurance policies insuring the life of Edward J.
Koplar, and all cash value associated therewith;
d. All loans payable by, or investments in or accounts receivable
from Koplar Interactive Systems International, L.L.C. ("KISI");
e. All furniture and artwork currently located in or about Edward J.
Koplar's offices at the Company;
f. All furniture and fixtures owned by the Company which are located
in the apartment leased and/or utilized by the Company located at 58 West 58th
Street in New York City, New York (the related lease for such premises shall be
terminated at Closing);
g. All automobiles currently utilized by Edward J. Koplar and his
family to the extent currently owned by the Company and all leasehold interests
in connection with such automobiles; and
h. All loans payable by, investments in or accounts receivable from
Interactive Systems, Inc. (which loans have been written off and are deemed to
be worthless).
i. All tax liabilities for periods prior to Closing (for which the
primary source of payment shall be the Tax Escrow provided for in Section
1.5(b)) except to the extent accrued as a liability as of the Closing and taken
into account for purposes of the Working Capital adjustment to the Purchase
Price as set forth in Section 1.3(b)(i) (provided, however, the Company shall
pay its tax liabilities when the same become due and payable).
j. Upon the termination or expiration of the Management Agreement,
all of the Company's rights, title and interest in and to the six (6) St. Louis
Cardinals Club Seats season tickets (including, but not limited to, all rights
of renewal) shall be transferred to Edward J. Koplar.
6.10 KOPLAR COMMUNICATIONS TELEVISION, L.L.C. Immediately prior to
Closing, Edward J. Koplar shall cause the transfer to the Company of all equity
interests of Koplar Management Co., Inc. in Koplar Communications Television,
L.L.C. so that the Company shall own one hundred percent (100%) of the equity of
Koplar Communications Television, L.L.C.
6.11 NO SOLICITATION . Unless and until such time as this Agreement is
terminated pursuant to Article 10, Selling Shareholders will not, and will cause
the Company not to, directly or indirectly, solicit, initiate or encourage any
proposals from, or discuss or negotiate with or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than those Persons
contemplated by this Agreement) relating to any transaction involving the sale
of the business or assets of the Company (other than in the ordinary course of
business) or relating to
24
any transaction involving the sale of any of the Stock of the Company, or any
merger, consolidation or other business combination.
6.12 NON-COMPETITION . The Selling Shareholders shall enter into a
Noncompetition Agreement with the Company, in substantially the form attached
hereto as EXHIBIT C.
ARTICLE VII
ANCILLARY AGREEMENTS
7.1 INVESTMENT IN PURCHASER . The Selling Shareholders shall invest Five
Million Dollars ($5,000.000.00) in the Purchaser on a basis mutually agreeable
to the Selling Shareholders and the Purchaser and in a transaction whose form is
designed to cause the amount of such investment to be made with "before tax
dollars" (i.e., so that the investing Selling Shareholders will not have paid
tax on the amount of the investment being made into the Purchaser), to the
extent such transaction is practicable and does not cause Purchaser to incur any
additional costs in connection therewith. In order to accommodate such tax
consequences, the investment may be made in Stock of the Company immediately
prior to the Closing or by way of a contribution of Stock of the Company
followed by a reverse cash-out merger, all in such other form designed to cause
the investment in the Purchaser to be made with money or other assets which are
not subject to tax by the Selling Shareholders on account of the transactions
contemplated by this Agreement (i.e., made with "before tax" dollars). The
amount of equity per dollar to be received by the investing Selling Shareholders
in the Purchaser shall be equivalent to the amount of equity per dollar received
by other outside cash investors acquiring similar equity in the Purchaser, and
the Selling Shareholders shall have all of such rights and benefits consistent
with documentation as afforded to such outside cash investors in Purchaser to
the extent of the cash investment of such outside cash investors.
7.2 KISI OPERATIONS . At the Closing, the Purchaser will enter into the
Broadcast Signal Encoding Agreement with KISI in substantially the form attached
hereto as EXHIBIT D (the "Broadcast Signal Encoding Agreement").
7.3 MANAGEMENT AGREEMENT . The Company shall enter into a Management
Agreement with Edward J. Koplar, in substantially the form attached hereto as
EXHIBIT E ("Management Agreement").
7.4 COMPANY NAME . The names "Koplar Communications, Inc.", "Koplar
Communications Television, L.L.C." and "KCI" (and any derivations thereof,
excluding the call letters "KPLR") shall be retained by the Selling Shareholders
or returned to the Selling Shareholders by the Purchaser within ninety (90) days
after the Closing, subject to a free transition license in favor of the
Purchaser to the extent such license is necessary.
25
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 CONDITIONS FOR CLOSING . The Closing of the transactions contemplated
by this Agreement is conditioned upon the following:
(a) FCC CONSENT. (i) The grant of the FCC Consent without any
imposition of material adverse conditions as defined below on Purchaser or the
Company; and (ii) compliance by the parties hereto with the conditions (if any)
imposed in the FCC Consent; provided that, for purposes of this Section 8.1(a),
a "material adverse condition" is a condition which would restrict, limit,
increase the cost or burden of or otherwise adversely affect or impair, in each
case in any material respect, the right of the Purchaser to the ownership, use,
control or operation of the Station or the proceeds therefrom, PROVIDED,
HOWEVER, that any condition which requires (i) that Purchaser or any of its
subsidiaries file reports with the FCC regarding compliance with rules and
policies of the FCC (including but not limited to reports pertaining to
affirmative action and equal opportunity employment or children's programming
commercial limitation compliance), or (ii) that the Station be operated in
accordance with conditions similar to and not more adverse than those contained
in the present FCC licenses issued for operation of the Station, shall not be a
material adverse condition.
(b) HSR FILING. The waiting period relating to the HSR Filing having
duly expired or been duly terminated by the appropriate government agencies
without the commencement or threatened commencement of any action, suit,
investigation or proceeding by any such agencies to restrain, postpone or
otherwise challenge the transaction contemplated by this Agreement;
(c) OPINION OF COUNSEL. The Purchaser receiving an opinion of
counsel to the Selling Shareholders that the trustee(s) for the trusts which are
Selling Shareholders has the power and authority to enter into and execute this
Agreement and any related agreements and to consummate the transactions
contemplated hereby and thereby;
(d) THIRD PARTY CONSENTS. The obtaining of all third party Consents
in a form reasonably satisfactory to Purchaser which are material to the
operation of the Company and required with respect to the purchase and sale of
the Shares; PROVIDED, HOWEVER, that the obtaining of such third party consents
shall not be required if, at Purchaser's option, such requirement is waived and
the Selling Shareholders agree to indemnify Purchaser in such event; and
(e) NO LOSS OR DESTRUCTION. The absence of any loss or destruction
of the assets of the Company which results in a Material Adverse Effect;
PROVIDED, HOWEVER, that the Company shall have the election to repair or replace
such assets if the Company can do so within sixty (60) days, in which case the
Closing shall occur despite such loss or destruction and shall be delayed for
such sixty (60) day period (or until such earlier time that the affected assets
are repaired or
26
replaced by the Company). In the event that such loss or destruction results in
less than a Material Adverse Effect, the Closing shall occur as scheduled and
the Purchaser shall be entitled to (i) any insurance proceeds received with
respect to such loss or destruction plus (ii) a reduction in the Purchase Price
equal to the amount of any deductible to the extent not reflected in the
computation of the Adjustment Amount or the Closing Balance Sheet as described
in Section 1.3(b)(i) and Section 1.4.
8.2 CONDITIONS TO OBLIGATIONS OF PURCHASER . All obligations of Purchaser
at the Closing hereunder are subject to the fulfillment prior to and at the
Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. As of the Closing, there is no
fact, condition or occurrence which constitutes a material misrepresentation or
breach of warranty by the Company or the Selling Shareholders pursuant to this
Agreement and which:
(i) has or is likely to have a Material Adverse Effect, taken
as a whole, upon the ability of the Purchaser to broadcast a television signal
in materially the same manner as broadcast by the Company as of the date of this
Agreement;
(ii) constitutes a Liability in excess of Twenty Million
Dollars ($20,000,000.00) (without affecting the definitions of "Material Adverse
Effect" or "material" as such terms are used in this Agreement) ; or
(iii) causes the Company to lose or become likely to lose any
of its FCC Licenses necessary to operate the Station or causes or is likely to
cause a material adverse modification of any FCC License which is necessary to
operate the Station.
It is understood that other than as set forth above, a misrepresentation
or breach of warranty by the Company or the Selling Shareholders shall not
constitute a failure of a condition for Closing by the Purchaser, and that
Purchaser's remedy for such breach shall solely be to seek indemnification
pursuant to the provisions of Article XI of this Agreement.
(b) COVENANTS AND CONDITIONS. The Company and Selling Shareholders
shall have in all material respects performed and complied with all covenants
required by this Agreement to be performed or complied with by it or them, as
the case may be, prior to or on the Closing Date; PROVIDED, HOWEVER, in the
event of an alleged breach of any such covenant, notice of such breach shall be
given to the Company and/or Selling Shareholders and the Company and/or the
Selling Shareholders shall have a reasonable period (of not more than sixty (60)
days unless otherwise extended by FCC rules, policies, or orders) to cure such
breach and the Closing shall, to the extent applicable, be delayed until the
expiration of such cure period or until the breach is cured, whichever is
earlier.
27
(c) DELIVERIES. The Company and the Selling Shareholders shall have
made or stand willing and able to make all the deliveries to Purchaser set forth
in Section 9.2 of this Agreement.
(d) CLAIMS FOR INDEMNITY OCCURRING PRIOR TO THE CLOSING. In the
event that Purchaser makes a claim for indemnification on account of an alleged
misrepresentation or breach of warranty of the Company or Selling Shareholders
prior to the Closing, such claim for indemnification shall be disposed of in the
following manner:
(i) In the event that the Selling Shareholders and the
Purchaser agree as to the existence of such misrepresentation or breach of
warranty and to the amount of indemnity to which the Purchaser would be entitled
to pursuant to Article XI of this Agreement, then the amount of such indemnity
to which the Purchaser shall be entitled shall be the amount agreed upon by
Selling Shareholders and Purchaser and shall be a reduction in the amount of the
Purchase Price payable at Closing;
(ii) In the event that Purchaser and the Selling Shareholders
agree as to the existence of a misrepresentation or breach of warranty, but the
amount of indemnity to which the Purchaser is entitled is not agreed to by and
between the parties, then the Company's CPA Firm shall estimate the amount of
indemnity to which the Purchaser would be entitled to pursuant to Article XI of
this Agreement, and such amount shall be deposited by Purchaser in escrow with
Mercantile Trust Company out of the Purchase Price otherwise payable at Closing.
Such escrow fund shall be a source of funds for indemnification once the amount
of such indemnification is finally determined pursuant to Article XI, and any
funds remaining in such escrow after the amount of indemnification to Purchaser
has been satisfied shall be paid to the Selling Shareholders.
(iii) In the event that Purchaser and the Selling Shareholders
do not agree as to the existence of a misrepresentation or breach of warranty
for which the Purchaser would be entitled to indemnification pursuant to Article
XI of this Agreement, then Purchaser's right to indemnification shall be
determined pursuant to the indemnification procedures contained in Article XI of
this Agreement, and there shall be no reduction in the Purchase Price payable to
the Selling Shareholders as of the Closing and the parties shall have all rights
with respect to such misrepresentation or breach of warranty that exist under
this Agreement, or otherwise exist in law or equity.
(iv) Except as otherwise provided in Section 8.2(a), in no
event shall a claim for indemnification or a misrepresentation or breach of
warranty be the basis for Purchaser refusing to consummate the transactions
contemplated by this Agreement, or cause any delay or hindrance with respect to
the Closing.
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8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND SELLING SHAREHOLDERS .
All obligations of the Company and Selling Shareholders at the Closing hereunder
are subject to the fulfillment prior to and at the Closing Date of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Purchaser contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
(b) COVENANTS AND CONDITIONS. Purchaser shall have in all
material respects performed and complied 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, PROVIDED, HOWEVER, in the event of an alleged
breach of any such covenant, notice of such breach shall be given to Purchaser
and Purchaser shall have a reasonable period (of not more than sixty (60) days)
to cure such breach and the Closing shall, to the extent applicable, be delayed
until the expiration of such cure period or until the breach is cured, whichever
is earlier.
(c) DELIVERIES. Purchaser shall have made or stand willing
and able to make all the deliveries set forth in Section 9.3 of this Agreement.
ARTICLE IX
CLOSING AND CLOSING DELIVERIES
9.1 CLOSING . The closing of the transactions contemplated by this
Agreement ("Closing") shall take place at 10:00 a.m. on a mutually acceptable
day within seven (7) business days after the effective date of the FCC Consent,
and the other conditions for Closing have been fulfilled or waived by the
appropriate party (the "Closing Date"), unless the parties shall mutually agree
to an alternate date, such as the end of a calendar month, in which case the
Closing shall be on such date mutually agreed upon by the parties. Closing shall
be held at the offices of Greensfelder, Hemker & Gale, P.C. in St. Louis,
Missouri, or such other place as shall be mutually agreed upon by Purchaser, the
Company and the Selling Shareholders.
9.2 DELIVERIES BY THE COMPANY AND SELLING SHAREHOLDERS . Prior to or on
the Closing Date, the Company and Selling Shareholders shall deliver to
Purchaser the following, in form and substance reasonably satisfactory to
Purchaser and its counsel:
(a) CONSENTS. The original of each Consent which is a condition
to Closing pursuant to Section 8.1(d);
(b) OPINION OF COUNSEL. An opinion of the counsel to the Company and
Selling Shareholders, dated the Closing Date, in substantially the form attached
hereto as EXHIBIT F and
29
an opinion of the FCC counsel to the Company in substantially the form attached
hereto as EXHIBIT F-1.
(c) STOCK CERTIFICATES. The delivery to Purchaser of stock
certificates representing all of the issued and outstanding stock of the
Company, duly endorsed in blank or accompanied by stock powers duly executed in
blank with guaranteed signatures.
(d) OFFICER'S CERTIFICATE. A certificate, dated as of the Closing
Date and signed by the Selling Shareholders and the Company's President or any
duly authorized Vice President, stating that the conditions set forth in Section
8.2 have been satisfied in accordance with the provisions thereof.
(e) ARTICLES OF INCORPORATION. Copies of the Company's Articles of
Incorporation certified as of a recent date (which is not prior to thirty (30)
days prior to Closing) by the Secretary of State of the State of Missouri.
(f) CERTIFICATE OF GOOD STANDING. Certificate of good standing of
the Company issued as of a recent date (which is not prior to thirty (30) days
prior to Closing) by the Secretary of State of the State of Missouri.
(g) SECRETARY'S CERTIFICATE. A certificate of the secretary or an
assistant secretary of the Company, dated as of the Closing Date, in form and
substance reasonably satisfactory to Purchaser as to (i) no amendments to the
Articles of Incorporation of the Company since a specified date; (ii) the
by-laws of the Company; (iii) the resolutions of the Board of Directors of the
Company authorizing the execution and performance of this Agreement and the
transactions contemplated hereby; and (iv) incumbency and signatures of the
officers of the Company executing this Agreement and any related agreement.
(h) ANCILLARY AGREEMENTS. Executed copies of the Management
Agreement, Broadcast Signal Encoding Agreement, Noncompetition Agreement, and
Tax Escrow Agreement.
(i) PAYOFF LETTER. A payoff letter from NationsBank, N.A. (successor
to The Boatmen's National Bank of St. Louis) and a release of the liens of
NationsBank, N.A. on the assets of the Company upon payment in full of the
related loan, as described in Section 1.3(b)(ii) hereof.
(j) RELEASES OF HOLDERS. The releases of the holders of Options
contemplated by 4.1(b)(xiv) of this Agreement, in form and substance reasonably
satisfactory to Purchaser, relating to cancellation and redemption of equity
interests.
9.3 DELIVERIES BY PURCHASER . Prior to or on the Closing Date, Purchaser
shall deliver to the Company and Selling Shareholders the following, in form and
substance reasonably satisfactory to the Company, Selling Shareholders and their
counsel:
30
(a) PURCHASE PRICE. The Purchase Price as provided in Section 1.3 of
this Agreement;
(b) OPINION OF COUNSEL. An opinion of Purchaser's counsel dated the
Closing Date, in substantially the form attached hereto as EXHIBIT G.
(c) OFFICER'S CERTIFICATE. A certificate, dated as of the Closing
Date and signed by the Purchaser's President or any duly authorized Vice
President, stating that the conditions set forth in Section 8.3 have been
satisfied in accordance with the provisions thereof.
(d) ARTICLES OF INCORPORATION. Copies of the Purchaser's Articles of
Incorporation or other Organizational Documents certified as of a recent date
(which is not prior to thirty (30) days prior to Closing) by the Secretary of
State of the state of incorporation of Purchaser.
(e) CERTIFICATE OF GOOD STANDING. Certificate of good standing of
the Purchaser issued as of a recent date (which is not prior to thirty (30) days
prior to Closing) by the Secretary of State of the state of incorporation of
Purchaser.
(f) SECRETARY'S CERTIFICATE. A certificate of the secretary or an
assistant secretary of the Purchaser, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Selling Shareholders as to (i) no
amendments to the Articles of Incorporation or other Organizational Documents of
the Purchaser since a specified date; (ii) if applicable, the by-laws of the
Purchaser; (iii) the resolutions of the Board of Directors of the Purchaser
authorizing the execution and performance of this Agreement and the transactions
contemplated hereby; and (iv) incumbency and signatures of the officers of the
Purchaser executing this Agreement and any related agreement.
(g) ANCILLARY AGREEMENTS. Executed copies of the Management
Agreement, Broadcast Signal Encoding Agreement; Noncompetition Agreement,
Promissory Note, if applicable; Letter of Credit, if applicable; and Tax Escrow
Agreement.
9.4 LOCAL MARKETING AGREEMENT . In the event the parties cannot close
because the FCC Consent is not secured prior to October 1, 1997 and all other
conditions for Closing have been fulfilled or waived, the parties shall
negotiate in good faith and execute a local marketing agreement ("Local
Marketing Agreement") for a term ending upon the Closing (which shall occur
within five (5) days of the effective date of the FCC Consent). Upon the
execution of the Local Marketing Agreement, the Purchase Price payable to
Selling Shareholders hereunder shall be paid in escrow pending the Closing
pursuant to a mutually agreeable escrow agreement.
31
ARTICLE X
TERMINATION
10.1 TERMINATION EVENTS . This Agreement may be terminated by any of
Purchaser, the Company or any Selling Shareholder, if the terminating party is
not the cause of a failure of a condition for the Closing, by written notice to
the other party, upon the occurrence of any of the following:
(a) on the Closing Date: (i) any of the conditions precedent to the
obligations of the terminating party set forth in Article VIII of this Agreement
shall not have been satisfied; and (ii) satisfaction of such condition shall not
have been waived by the terminating party; provided that, the Company and/or
Selling Shareholders shall have thirty (30) days following any notice of failure
of satisfaction of any such condition to effect a cure of such failure (and the
Closing shall be postponed to accommodate any such thirty (30) day cure period);
(b) the FCC denies or designates for hearing the application
referenced in Section 6.1 of this Agreement and such designation is not reversed
upon pleadings of the parties;
(c) the Station's normal broadcast transmission is continuously
interrupted for a period of not less than five (5) consecutive days and the
cause of such interruption is not or cannot be cured on or before sixty (60)
days from the date that the Closing would otherwise occur or, if cured, would
have after the Closing a Material Adverse effect on the operation of the Station
as to materially and adversely alter the normal operation of the Station as
presently conducted;
(d) the parties shall mutually agree to terminate this Agreement;
(e) the Closing shall not have occurred (other than through the
failure of any party seeking to terminate this Agreement to comply fully with
its obligations under this Agreement) on or before June 30, 1998, or such later
date upon which the parties may agree. Notwithstanding this Section 10.1(e), in
the event the FCC Consent has not been granted on or before June 30, 1998, and
provided that Purchaser is not in material breach of its obligations under this
Agreement and has timely filed an appropriate application for the FCC Consent
and has diligently used best practices to obtain the grant of said application
as expeditiously as practicable, the Closing Date shall be extended to a date
not later than September 30, 1998 (or such later date upon which the parties may
agree); or
(f) Purchaser does not have adequate financing fully funded on or
before September 30, 1997 in order to pay the entire Purchase Price pursuant to
this Agreement.
10.2 EFFECT OF TERMINATION . The right of each party to terminate this
Agreement under Section 10.1 is in addition to any other rights such party may
have under this Agreement or
32
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 10.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Sections 6.4, 6.5, 6.6, and 6.7 will survive; PROVIDED, HOWEVER,
that if this Agreement is terminated by a party because of the breach of the
Agreement by another party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10.3 REMEDIES .
(a) SELLING SHAREHOLDERS' REMEDIES. If the parties hereto shall fail
to consummate this Agreement on the Closing Date due to Purchaser's material
breach of any representation, warranty, covenant or condition which is a
condition for Closing hereunder, and the Selling Shareholders are not at that
time in breach of any material representation, warranty, covenant or condition
which is a condition for Closing hereunder, then Selling Shareholders shall be
entitled to institute any action in law or equity to recover any damages or
other compensatory relief which may be warranted, including an action for
specific performance of the terms of this Agreement and of the Purchaser's
obligation to consummate the transaction contemplated hereby. In the event
Selling Shareholders and/or the Company file a lawsuit or other formal legal
action seeking specific performance of this Agreement, the Purchaser shall waive
the defense that Selling Shareholders and/or the Company have an adequate remedy
at law.
(b) PURCHASER'S REMEDIES. If the parties hereto shall fail to
consummate this Agreement on the Closing Date due to Selling Shareholders'
material breach of any representation, warranty, covenant or condition which is
a condition for Closing hereunder, and the Purchaser is not at that time in
breach of any material representation, warranty, covenant or condition which is
a condition for Closing hereunder, then Purchaser shall be entitled to institute
any action in law or equity to recover any damages or other compensatory relief
which may be warranted, including an action for specific performance of the
terms of this Agreement and of the Selling Shareholders' obligation to
consummate the transaction contemplated hereby. In the event Purchaser files a
lawsuit or other formal legal action seeking specific performance of this
Agreement, the Selling Shareholders and the Company shall waive the defense that
Purchaser has an adequate remedy at law.
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION BY THE SELLING SHAREHOLDERS . Subsequent to the
Closing and subject to the limitations contained in Section 11.3, Selling
Shareholders shall, jointly and
33
severally, indemnify and hold Purchaser harmless against any loss, expense or
liability associated with or arising out of the following matters:
(a) A breach of any representation, warranty or covenant of the
Selling Shareholders or the Company contained in this Agreement or any related
agreement or in any certificate, document or instrument required to be delivered
to Purchaser hereunder or thereunder, regardless of whether such breach is known
to Purchaser prior to Closing (provided Purchaser has notified Selling
Shareholders in writing of its knowledge of and the nature of such breach
promptly after discovering such breach and Purchaser has not waived the same);
(b) Any and all liabilities, costs or expenses (including all
interest and penalties) incurred by the Company (i) for all tax years ended
prior to the Closing in excess of the amount accrued as of December 31, 1996 to
the extent that such liabilities, costs or expenses are not reserved for in the
Tax Escrow Fund referred to in Section 1.5(b) of this Agreement and (ii) with
respect to any taxable year or period beginning before and ending after the
Closing Date, for the portion of such taxable year or period ending on and
including the Closing Date in excess of the amount accrued and set forth in the
Closing Balance Sheet, to the extent not paid as the result of the Tax Escrow
Fund referred to in Section 1.5(b) of this Agreement. In the event that the
Company or Purchaser receive a subsequent tax benefit with respect to any tax
matter for which indemnification was made pursuant to this Paragraph (e.g., a
matter which was previously deducted by the Company is capitalized and
depreciated or amortized for tax purposes during periods occurring after the
Closing), the amount of such tax benefit (not in excess of the tax
indemnification amount received) shall be paid to the Selling Shareholders as
and when such tax benefit is realized by the Company or Purchaser.
(c) 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
reasonably attempting to avoid the same or to oppose the imposition thereof, or
in enforcing this indemnity.
(d) Any Excluded Asset or Excluded Liability.
11.2 INDEMNIFICATION BY PURCHASER . Purchaser shall indemnify and hold the
Selling Shareholders harmless against and with respect to, and shall reimburse
the Selling Shareholders for:
(a) Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or nonfulfillment of any covenant by
Purchaser contained herein or in any certificate, document or instrument
delivered by Purchaser to the Selling Shareholders hereunder regardless of
whether such breach is known to any Selling Shareholder prior to Closing
(provided any such Selling Shareholder has notified Purchaser in writing of its
knowledge of and the nature of such breach promptly after discovering such
breach and Selling Shareholders have not waived the same); and
34
(b) 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
reasonably attempting to avoid the same or to oppose the imposition thereof, or
in enforcing this indemnity.
11.3 LIMITATIONS ON INDEMNITY .
(a) No claim for indemnification may be made by Purchaser pursuant
to Section 11.1(a), or (c), unless and until the aggregate amount of damages or
loss claimed for indemnification by Purchaser exceeds Four Hundred Thousand
Dollars ($400,000.00), which amount shall be a one-time deduction in the amount
of the obligation of the Selling Shareholders to indemnify the Purchaser
pursuant to this Agreement. Such limitation shall expressly not apply to (i) any
claim for indemnification with respect to taxes pursuant to Section 11.1(b) of
this Agreement, (ii) any claim arising out of any Excluded Asset or Excluded
Liability pursuant to Section 11.1(d), (iii) any claim relating to payments to
H. Max Lummis IV under the Lummis Employment Agreement pursuant to Section
1.3(b)(iii) hereof to the extent that such claim is not a reduction Adjustment
in the Purchase Price or is not reflected in the adjustment for Working Capital,
or (iv) any claim based upon any forfeiture, sanction or monetary penalty
imposed on the Company by the FCC in conjunction with the renewal of the
Station's license for the term commencing February 1, 1998.
(b) No claim for indemnification shall be made by Purchaser:
(i) After three (3) years for any breach of any representation
or warranty or covenant (except with respect to those covenants which, by their
terms, extend beyond such three (3) year period) by the Company or the Selling
Shareholders, except for any breach of a representation or warranty relating to
the ownership of the Stock of the Company or any assignment of such Stock to
Purchaser pursuant to this Agreement, and except as otherwise expressly provided
in this Agreement;
(ii) After two (2) years with respect to any claim for
indemnification relating to any breach of the representation or warranty
contained in Section 2.10 of this Agreement; or
(iii) After the expiration of the applicable statutes of
limitation with respect to any claim for indemnification with respect to claims
made pursuant to Section 11.1(b) hereof.
(c) The representations, warranties, covenants and obligations of
the Company shall terminate on the Closing Date. Subsequent to the Closing Date,
none of the parties hereto shall have any right or obligation to seek
indemnification or contribution from the Company.
(d) All damages and loss payable as indemnification by the Selling
Shareholders pursuant to this Agreement shall be net of all insurance proceeds
to which the
35
Purchaser or the Company is entitled to receive and net of the tax benefits
actually received by Purchaser or the Company.
11.4 PROCEDURE FOR INDEMNIFICATION . The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from whom indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying: (i) the factual basis for such claim; and (ii) the
amount of 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 (5) business days after written notice of such action, suit or proceeding
was given to Claimant. Claimant's failure to give the Indemnifying Party such
notice shall not preclude Claimant from obtaining indemnification from the
Indemnifying Party unless Claimant's failure has materially prejudiced the
Indemnifying Party's ability to defend the claim or litigation, and then the
Indemnifying Party's obligation shall be reduced to the extent of such
prejudice.
(b) Following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have thirty (30) 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 said thirty (30) 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 said period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which the
Claimant asserts it is entitled to indemnification hereunder, the Indemnifying
Party shall have the right, at its own expense, to participate in or at its
election to assume control of the defense of such claim, with counsel reasonably
satisfactory to Claimant, subject to reimbursement for actual out-of-pocket
expenses incurred by Claimant as the result of request by the Indemnifying
Party, PROVIDED, HOWEVER, that the Claimant may retain separate co-counsel at
its sole cost and expense and participate in the defense of any such claim by a
third party and, PROVIDED, FURTHER, that the Indemnifying Party shall conduct
the defense of the third party claim actively and diligently thereafter. If the
Indemnifying Party elects to assume control of the defense of any third party
claim, the Indemnifying Party may nevertheless reserve the right to dispute the
amount of indemnification claimed or dispute Claimant's right to be indemnified
with respect to all or any portion of the claim. Except with the written consent
of the Claimant, Indemnifying Party shall not, in defending any claim or any
litigation resulting therefrom, consent to entry of any judgment or enter into
any settlement which does not release the Claimant from all liability in respect
of such claim or litigation. In the event the Claimant fails to consent to any
settlement or
36
compromise which results in damages in excess of the amount for which consent
was requested, the limitation of the Indemnifying Party's obligations to
indemnify the Claimant with respect to the subject matter of the claim shall be
the amount of the proposed settlement or compromise rejected by Claimant and the
Claimant shall be responsible for, and shall hold harmless the Indemnifying
Party from, all damages (including, without limitation, attorney's fees, court
costs and other costs of litigation or settlement) in excess of the amount of
the proposed settlement or compromise rejected by Claimant.
(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) In the event an indemnification amount is finally determined to
be due and payable to Purchaser pursuant to the provisions hereof prior to the
time that the Promissory Note is payable, then the amount of such finally
determined indemnification amount shall be applied against the amount payable
pursuant to the Promissory Note and against the amount payable to the Selling
Shareholders as the result of the Letter of Credit.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICES . All notices, demands, and requests required or permitted to
be given under the provisions of this Agreement shall be: (i) in writing; (ii)
delivered by personal delivery, sent by commercial delivery service or
registered or certified mail, return receipt requested or sent by facsimile (so
long as there is confirmation that such facsimile was received); (iii) deemed to
have been given on the date of personal delivery or the next day following
delivery to the commercial delivery service or registered or certified mail or
the day of the facsimile transmission, confirmation received; and (iv) addressed
as follows:
If to the Company: Koplar Communications, Inc.
4935 Lindell Boulevard
St. Louis, MO 63108
Attention: Edward J. Koplar
Facsimile: (314) 454-6445
with a copy Joseph D. Lehrer, Esq.
(which shall Greensfelder, Hemker & Gale, P.C.
not constitute 10 South Broadway, Suite 2000
notice) to: St. Louis, MO 63102
Facsimile: (314) 241-8624
37
If to a Selling Shareholder: Edward J. Koplar
500 South Warson Road
Ladue, MO 63124
Facsimile: (314) 993-9337
with a copy Joseph D. Lehrer, Esq.
(which shall Greensfelder, Hemker & Gale, P.C.
not constitute 10 South Broadway, Suite 2000
notice) to: St. Louis, MO 63102
Facsimile: (314) 241-8624
If to Purchaser: Douglas Gealy
Acme Television Holdings, L.L.C.
7125 Bluffstream Court
Columbus, OH 43235
Facsimile: (614) 436-5119
with a copy Lewis J. Paper, Esq.
(which shall Dickstein, Shapiro, Morin &
not constitute Oshinsky, L.L.P.
notice) to: 2101 L Street, N.W.
Washington, D.C. 20037-1525
Facsimile: (202) 887-0689
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
12.1.
12.2 BENEFIT AND BINDING EFFECT . None of the parties to this Agreement
may assign this Agreement without the prior written consent of the other party
hereto, except that Purchaser may designate Acme Television Licenses of
Missouri, Inc., a wholly-owned subsidiary of Purchaser (or any other
wholly-owned subsidiary of Purchaser) to take title to the Stock of the
Company, so long as Purchaser remains obligated pursuant to all provisions of
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
12.3 GOVERNING LAW . This Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Missouri without regard to
that state's conflict of law provisions.
12.4 HEADINGS; CONSTRUCTION . The headings herein are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement. All 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. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
38
12.5 TIME OF ESSENCE . With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
12.6 ENTIRE AGREEMENT . This Agreement, all schedules hereto, and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Purchaser,
the Company and Selling Shareholders with respect to the subject matter hereof,
except as otherwise provided in this Agreement. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Purchaser, the Company and the Selling Shareholders, and
all letters of intent, letters of agreement and other writings relating to such
negotiations, and cannot be amended, supplemented or modified except by an
agreement in writing which makes specific reference to this Agreement or an
agreement delivered pursuant hereto, as the case may be, and which is signed by
the party against which enforcement of any such amendment, supplement or
modification is sought; PROVIDED, HOWEVER, that all prior agreements regarding
the obligations of a party to keep confidential and not use certain information
shall continue to be binding upon the parties.
12.7 WAIVER OF COMPLIANCE; CONSENTS . Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 12.7.
39
12.8 SEVERABILITY . If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
12.9 COUNTERPARTS . This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each such counterpart
were upon the same instrument.
40
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
PURCHASER: SELLING SHAREHOLDERS:
ACME TELEVISION HOLDINGS, L.L.C..
a Delaware limited liability company /s Edward J. Koplar
_______________________________________
Edward J. Koplar
By: /s/ Douglas E. Gealy
__________________________________
Name: Douglas E. Gealy
Title: Presient and Chief Operating
Officer
TRUSTEES OF THE HAROLD KOPLAR
IRREVOCABLE TRUST, FOR THE BENEFIT OF
THE CHILDREN OF EDWARD J. KOPLAR
/s/ Edward J. Koplar
_______________________________________
Edward J. Koplar, Trustee
/s/ Joseph D. Lehrer
_______________________________________
Joseph D. Lehrer, Trustee
COMPANY:
KOPLAR COMMUNICATIONS, INC., a
Missouri corporation
By:/s/ Edward J. Koplar
____________________________________
Edward J. Koplar, President
41
The following pages contain a list of Addendum, Exhibits and Schedules
which have been intentionally omitted by the Registrants.
A copy of any omitted Addendum, Exhibits or Schedules will be provided to
the Securities and Exchange Commission upon request.
DEFINITIONS ADDENDUM
SCHEDULES
Schedule 2.1(b) Subsidiaries and Other Ownership
Schedule 2.1(c) Agreements with Respect to Stock
Schedule 2.4 Licenses
Schedule 2.5 Real Property
Schedule 2.6 Personal Property
Schedule 2.7(a) Contracts
Schedule 2.7(b) Programming Agreements
Schedule 2.8 Consents
Schedule 2.9 Intellectual Property
Schedule 2.10 Audited Financial Statements
Schedule 2.11 Insurance
Schedule 2.13(a) Employees
Schedule 2.13(b) Employee Benefit Plans
Schedule 2.13(d) Withdrawal Liability
Schedule 2.14 Strikes, Work Stoppages or Grievance Proceedings
Schedule 2.15 Tax Returns and Audits
Schedule 2.16 Claims and Legal Actions
Schedule 2.19 Related Entities
Schedule 2.22 Restrictions on Competition
Schedule 2.23 Cable Carriage
Schedule 4.1(a)(vii) Changes to Real Property
Schedule 4.1(a)(xiv) Charter Documents
EXHIBITS
Exhibit A Selling Shareholders
Exhibit B Tax Escrow Agreement
Exhibit C Non-Competition
Exhibit D Broadcast Signal Encoding Agreement
Exhibit E Management Agreement
Exhibit F Form of Opinion of Counsel to Company and
Selling Shareholders
Exhibit F-1 Form of Opinion of FCC Counsel to Company
Exhibit G Form of Opinion of Counsel to Purchaser
Exhibit H Form of Secured Promissory Note
Exhibit H-1 Form of Letter of Credit
Dates Referenced Herein and Documents Incorporated by Reference
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