PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇ BROADCASTING OF DALLAS, INC.
AND
HISPANIC TELEVISION NETWORK, INC.
FOR THE SALE OF
KLDT-TV, CHANNEL ▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
TABLE OF CONTENTS
1. Definitions............................................................1
1.1. Defined Terms.................................................1
1.2. Accounting Terms..............................................7
1.3. Other Definition Provisions...................................7
2. Purchase of Broadcasting Assets, Purchase Price and
Method of Payment .....................................................8
2.1. Purchase of Broadcasting Assets, Purchase Price
and Method of Payment.........................................8
2.2. Consideration; Proration; Allocation of
Purchase Price................................................8
2.2.1. Purchase Price.....................................8
2.2.2. Prorations.........................................8
2.2.3. Manner of Determining Prorations...................9
2.2.4. Payment of Purchase Price.........................11
2.2.5. Allocation of Purchase Price......................11
2.3. Assumption of Obligations....................................12
2.3.1. Limitation on Assumption of Obligations...........12
2.3.2. Assumed Obligations Relating to the
Station...........................................12
2.3.3. Substitution Where Not Transferable...............13
3. FCC Consent...........................................................13
3.1. Application and Request......................................13
3.2. Final Order..................................................14
4. Representations and Warranties of Seller..............................14
4.1. Organization and Standing....................................14
4.2. Authorization and Binding Obligations........................15
4.3. No Contravention.............................................15
4.4. Title to Assets..............................................16
4.4.1. Real Property.....................................16
4.4.2. Personal Property.................................16
4.4.3. Assets Sufficient.................................16
4.5. Licenses and Authorizations..................................17
4.5.1. Licenses..........................................17
4.5.2. Authorizations....................................17
4.6. Contracts....................................................17
4.7. Financial Statements.........................................18
4.8. Franchises, Trademarks and Trade Names.......................18
4.9. Litigation; Violations.......................................19
4.9.1. Litigation........................................19
4.9.2 Violations........................................19
4.10. Complaints...................................................19
4.11. Reports .....................................................20
4.12. Environmental Matters........................................20
4.13. Employees and Compensation...................................20
4.14. Cable Carriage...............................................21
4.15. Insurance....................................................21
Access to Information; Investment Experience.................21
5. Representations and Warranties of Buyer...............................21
5.1. Organization and Standing....................................21
5.2. Authorization and Binding Obligations........................22
5.3. No Contravention.............................................22
5.4. Litigation...................................................23
5.5. Qualifications as a Broadcast Licensee.......................23
5.7. Capitalization of Buyer; Buyer's Common Stock................23
5.8. Buyer Reports and Financial Statements.......................24
5.9. Absence of Certain Changes...................................25
6. Access and Information................................................25
6.1. By Seller to Buyer...........................................25
7. Conduct of Business to Closing........................................26
7.1. By Seller ...................................................26
7.1.1. Conduct of Business...............................26
7.1.2. Organization, Etc.................................26
7.1.4. Transfer of Broadcasting Assets...................27
7.1.5. Encumbrances......................................27
7.1.6. Litigation........................................27
7.1.7. Agreements........................................27
7.1.8. Consents and Approvals............................27
7.1.9. Licenses..........................................28
7.1.10. Offers to Purchase................................28
7.1.11. No Breach of Representations and
Warranties........................................28
7.1.12. Compliance with Laws..............................28
7.2. By Buyer ....................................................28
7.2.1. Conduct of Business...............................28
7.2.2. Litigation........................................29
7.2.3. No Breach of Representations and
Warranties........................................29
7.2.4. Confidentiality...................................29
7.2.5. Inclusion of Information About Seller
in Buyer Registration Statement...................30
8. Conditions Precedent to the Obligations of the Parties................30
8.1. Conditions Precedent to the Obligation of Buyer..............30
8.2. FCC Consent..................................................31
8.3. Accuracy of Representations and Warranties...................31
8.4. Compliance with Agreement....................................31
8.5. No Obstructive Proceeding....................................31
8.5.1. No Litigation........................................31
8.5.2. No Governmental Intervention.........................31
8.5.3. No Order.............................................32
8.6. Adverse Change...............................................32
8.7. Consents ..................................................32
8.8. Authorization................................................32
8.9. Officer's Certificate........................................33
8.10. HSRA Waiting Period..........................................33
8.11. Copies of Documents..........................................33
8.12. Satisfaction of Funded Debt; Removal of Encumbrances.........33
8.12.1.......................................................33
8.12.2.......................................................33
8.13. Delivery of Instruments of Conveyance and
Transfer.....................................................33
8.14. Conditions to Obligations of Seller..........................33
8.14.1. FCC Consent.......................................33
8.14.2. Accuracy of Representations and
Warranties........................................34
8.14.3. Compliance with Agreement.........................34
8.14.4. Delivery of Instruments of Assumption.............34
8.14.5. No Obstructive Proceeding.........................34
8.14.6. No Order..........................................35
8.14.7. Proceedings.......................................35
8.14.8. HSRA Waiting Period...............................35
8.14.9. Authorizations....................................35
8.14.10. Registration Rights Agreement.......................35
9. Instruments of Conveyance and Transfer................................36
9.1. Instruments of Conveyance and Transfer of
Personal Property............................................36
9.1.1. Assignments of Leases.............................36
9.1.2. Bills of Sale.....................................36
9.1.3. Assignments of Licenses...........................36
9.1.4. Assignments of Contracts..........................36
9.1.5. Other Documents...................................36
10. Employees.............................................................37
10.1. Seller's Termination.........................................37
10.2. Buyer's Right to Hire; Prorations............................37
10.2.1. Right to Hire.....................................37
10.2.2. Cooperation.......................................37
10.2.3. Accrued Compensation..............................37
10.3. No Liability for Employee Plans..............................37
11. Risk of Loss; Casualty or Condemnation................................37
11.1. Risk of Loss.................................................37
11.2. Casualty.....................................................37
11.2.1.......................................................38
11.2.2.......................................................38
11.3. Repair Parameters............................................38
11.4. Failure of Broadcast Transmission............................39
12. Books and Records ....................................................39
12.1. Taxes........................................................39
13. Possession and Control of the Station.................................39
14. Brokers .............................................................40
15. Survival; Indemnification.............................................40
15.1. Survival.....................................................40
15.2. Seller's Indemnification -Breaches...........................40
15.3. Seller's Indemnification - Liabilities.......................40
15.4. Buyer's Indemnification......................................41
15.4.1. Breach............................................41
15.4.2. Liabilities.......................................41
15.5. Seller's Obligation..........................................42
15.6. Indemnification Claim........................................42
15.7. Notice of Claim..............................................42
15.8. Date of Notice of Claim......................................44
15.9. Waiver of Non-Compensatory Damages...........................44
15.10. Mitigation Obligation........................................44
15.11. Exclusive Remedy; Waiver and Release.........................44
16. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings.............................................45
17. Termination...........................................................45
17.1. Buyer........................................................45
17.2. Seller.......................................................45
17.3. Mutual Consent...............................................45
17.4. By Seller Upon Breach........................................45
17.5. By Buyer Upon Breach.........................................45
17.7. Default Grace Period.........................................45
18. Deposits .............................................................46
18.1. Initial......................................................46
Seller's Election............................................46
18.2. Subsequent Deposit...........................................47
19. Subsequent Deposit; Extension.........................................47
19.1. Deposit......................................................47
19.2. First Extension..............................................47
19.3. Second Extension.............................................47
Recourse; Return of Deposit..................................47
20. Miscellaneous.........................................................47
20.1. Costs, Expenses, Etc.........................................47
20.2. Further Assurances...........................................48
20.3. Notice of Proceedings........................................48
20.4. Bulk Sales Law...............................................48
20.5. Notices......................................................49
20.6. Headings and Entire Agreement; Amendment.....................50
20.7. Waiver.......................................................50
20.8. Binding Effect and Assignment................................50
20.9. Counterparts.................................................50
20.10. Exhibits, Schedules and Attachments..........................50
20.11. Rights Cumulative............................................51
20.12. Governing Law................................................51
20.13. Severability.................................................51
20.14. Third Party Rights...........................................51
20.15. Press Releases...............................................51
20.16. Specific Performance.........................................51
20.17. Non-Reliance.................................................51
SCHEDULES
Schedule 1(a) Real Property and Lease Hold Interest
Schedule 1(b) Equipment
Schedule 1(c) Contracts
Schedule 1(d) Station Licenses
Schedule 1(f) Trademarks and Copyrights
Schedule 4.9.1 Litigation
Schedule 4.13 Employees and Compensation
Schedule 4.14 Cable Carriage
Schedule 4.15 Insurance
EXHIBITS
Exhibit A Form of Registration Rights Agreement
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement is made and entered into this __ day of
April, 2000, by and between ▇▇▇▇▇▇▇ BROADCASTING OF DALLAS, INC., a Texas
corporation, (hereinafter "Seller"), and HISPANIC TELEVISION NETWORK, INC., a
Delaware corporation (hereinafter "Buyer").
WITNESSETH:
WHEREAS, Seller owns and operates pursuant to certain licenses,
construction permits, authorizations and approvals from the Federal
Communications Commission (the "FCC"), television station KLDT, Channel ▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ and its auxiliary facilities ("Station"), including all the
Broadcasting Assets (as hereinafter defined);
WHEREAS, Buyer desires to purchase all of the Broadcasting Assets from
Seller and to obtain from Seller assignment of all the Station Licenses (as
hereinafter defined), and Seller desires to sell all of the Broadcasting Assets
and to assign to Buyer all the Station Licenses, all in accordance with the
terms and conditions herein set forth; and
NOW, THEREFORE, in consideration of the premises contained herein and for
the other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
As used herein, the following terms shall have the following meanings:
1.1. Defined Terms.
"Accounts Receivable" means billed trade accounts receivable of Station as
of midnight preceding the Closing Date for services rendered or products
delivered or used on or prior to that time for the benefit of the Station and
listed on a Schedule to be delivered by Seller to Buyer on the Closing Date.
"Agreement" means this Purchase and Sale Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Assumed Obligations" has the meaning set forth in Section 2.3.2 hereof.
"Broadcasting Assets" means all real, personal and mixed assets, both
tangible and intangible (including the business of the Station as a "going
concern"), of every kind, nature and description of the Station or Seller, as
set forth below, other than the Excluded Assets (as hereinafter defined):
(a) all real property, leasehold interests, estates and improvements
of every kind and description, together with all buildings, structures and
improvements of every nature located thereon, owned or held and used by or
useful to Seller in connection with the business and operations of the Station,
as set forth in Schedule 1(a) hereto);
(b) all broadcasting and other equipment, office furniture,
fixtures, tapes, machinery, office materials and supplies, spare parts, tubes
and other tangible personal property, as set forth in Schedule 1(b) hereto;
(c) all Contracts (as herein defined), agreements and commitments
relating to the business and operations of the Station; as set forth on
Schedules 1(a) (Owned and Leased Real Property of the Station), 1(b) (Owned and
Leased Tangible Personal Property of the Station) and 1(c) (Contracts of the
Station) hereto (which Schedules shall also specify those contracts the
assignment of which requires third-party consent), together with all contracts,
agreements and commitments, that have been entered into between the date hereof
and the Closing Date as expressly permitted by this Agreement;
(d) (i) all the Station Licenses and (ii) any other permits,
licenses and authorizations issued or granted by any Governmental Authority
owned or held and used by or useful to Seller in connection with the business
and operations of the Station as of the date hereof and any applications
therefor, as set forth in Schedule 1(d) hereto, and any additions, renewals and
extensions thereto between the date hereof and the Closing Date;
(e) the books and records of the Station;
(f) all franchises, trademarks, patents, tradenames, service marks,
promotional materials, slogans, intellectual property rights and interests, call
letters, copyrights in literary property of any kind, know-how, jingles and
privileges, if any, owned or held and used by or useful to the Seller in
connection with the business and operations of the Station as of the date
hereof, including, as set forth in Schedule 1(f) hereto;
(g) all of Seller's goodwill in and going concern value of the
Station;
(h) all of the Seller's prepaid expenses, to the extent paid
for by Buyer, useful by Buyer in the operation of the Station after the
Closing Date; and
(i) All of Seller's Accounts Receivables.
"Buyer" has the meaning set forth in the recitals hereto.
"Buyer Common Stock" has the meaning set forth in Section 5.7 hereof.
"Buyer Reports" has the meaning set forth in Section 5.7 hereof.
"Closing" means the consummation of the purchase, assignment and sale of
the Broadcasting Assets as contemplated hereby.
"Closing Date" means a time and business date to be selected by Buyer,
which date shall not be later than (i) two (2) calendar days after the FCC
order(s) approving the Assignment Applications contemplated by this Agreement
have become Final Order(s), unless waived by Buyer pursuant to Section 3.2
hereof, or (ii) September 30, 2000, unless extended pursuant to the provisions
of Section 19 hereof.
"Closing Place" means the offices of ▇▇▇▇▇▇▇▇▇ & Belendiuk, P.C. ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ or such other place as the
Buyer and Seller may agree.
"Communications Act" means the Communications Act of 1934, as amended, and
the rules, regulations and policies promulgated thereunder, as in effect from
time to time.
"Contracts" has the meaning set forth in Section 4.8 hereof.
"Date of Notice of Claim" has the meaning set forth in Section 15.8
hereof.
"Deposits" has the meaning set forth in Sections 18 and 19 hereof.
"Employee Plan" means any employee benefit plan, as defined in section
3(3) of ERISA (including, without limitation, defined benefit pension plans,
defined contribution pension plans, and medical and other welfare plans), and
any retirement, deferred compensation, medical, dental, cafeteria, stock
purchase, stock option, savings, severance, bonus, incentive, vacation, or other
benefit plan, agreement, program, or arrangement, whether or not subject to
ERISA, whether maintained for current employees, former employees, or retirees,
and whether currently in effect or terminated or frozen.
"Encumbrances" means any option, pledge, security interest, lien, charge,
mortgage, claim, debt, liability, obligation, encumbrance or restriction
(whether on voting, sale, transfer or disposition), whether imposed by
agreement, understanding, law, rule or regulation.
"Environment" means flora, fauna, soil, surface water, groundwater,
drinking water, subsurface strata, or ambient air.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder, as in effect from time to
time.
"Estimated Purchase Price" has the meaning set forth in Section 2.2.4
hereof.
"Exchange Act" has the meaning set forth in Section 5.7 hereof.
"Excluded Assets " means cash, cash equivalents, deposits under any
contracts that are not assumed contracts, Seller's tax returns on any business
records which might reasonably be required by Seller in preparation of its tax
returns, provided that Buyer shall be provided copies thereof or given
reasonable access thereto, any and all rights to tax refunds and credits, any
other assets specifically excluded from the Broadcasting Assets by the
provisions of this Agreement.
"FCC" has the meaning set forth in the recitals hereto.
"FCC Applications" has the meaning set forth in Section 3.1 hereto.
"Final Order" means an order of the FCC granting its consent to the
applications referred to in Section 3.1 below, which order has become final. For
purposes of this Agreement, "final" shall mean action by the FCC: (a) which has
not been vacated, reversed, stayed, set aside, annulled or suspended; (b) with
respect to which no timely appeal, request for stay, or petition for rehearing,
reconsideration or review by any Person or Governmental Authority or by the FCC
on its motion, is pending; and (c) as to which the time for filing any such
appeal, request, petition, or similar document or for the reconsideration or
review by the FCC on its own motion, has expired.
"GAAP" means generally accepted accounting principles in effect in the
United States of America at the time of determination, and which are
consistently applied.
"Governmental Authority" means any court or federal, state, municipal or
other governmental or quasi-governmental authority, department, commission,
board, agency or instrumentality, or any employee or agent thereof.
"Hazardous Substance" means substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws as "hazardous substances,"
"hazardous materials," "hazardous wastes" or "toxic substances," or any other
formulation of any applicable environmental law intended to define, list or
classify substances by reason of deleterious properties such as ignitibility,
corrosivity, reactivity, radioactivity, carcinogenicity, reproductive toxicity
or "EP toxicity," and petroleum and drilling fluids, produced waters and other
wastes associated with the exploration, development, or production of crude oil,
natural gas or geothermal energy.
"HSRA" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder, as in effect from time to time.
"Indemnified Party" has the meaning set forth in Section 15.6 hereof.
"Indemnifying Party" has the meaning set forth in Section 15.6 hereof.
"Initial Deposit" has the meaning set forth in Section 18.1 hereof.
"Knowledge" means actual knowledge after reasonable investigation
including due inquiry.
"Liabilities" means all obligations, indebtedness, commitments, and other
items constituting "liabilities" under GAAP, whether direct or indirect,
absolute, accrued, contingent, or otherwise, or due or to become due, asserted
or unasserted, matured or unmatured, including without limitation trade accounts
payable, accrued liabilities for payroll and related expenses, film contract
rights, obligations for borrowed money or for the deferred purchase price of
property or services, obligations secured by any Encumbrance on or with respect
to any property or assets owned by a Person or acquired by a Person subject
thereto (whether or not the obligation secured thereby shall have been assumed),
obligations under direct or indirect guarantees, and other obligations
(contingent or otherwise) to purchase, to provide funds for payment or otherwise
acquire property or to assure a creditor against loss, obligations to reimburse
the issuer with respect to letters of credit, liabilities in respect of unfunded
accrued vested benefits under any Employee Plan, capitalized lease obligations
and any other known or unknown obligations or liabilities.
"Notice of Claim" has the meaning set forth in Section 15.6 hereof.
"Permitted Encumbrances" means Encumbrances expressly identified as
Permitted Encumbrances herein.
"Person" shall mean any natural person, corporation, partnership, limited
liability company, firm, joint venture, joint-stock company, trust, association,
unincorporated entity of any kind, trust, governmental or regulatory body or
other entity.
"Pre-Closing Incurred Obligations" has the meaning set forth in Section
2.2.3(a) hereof.
"Pre-Closing Paid Obligations" has the meaning set forth in Section
2.2.3(a) hereof.
"Prorated Obligations" has the meaning set forth in Section 2.2.3(a)
hereof.
"Proration Statement" has the meaning set forth in Section 2.2.3(a)
hereof.
"Purchase Price" has the meaning set forth in Section 2.2.1 hereof.
"Repair Cost" has the meaning set forth in Section 11.2.1 hereof.
"Retained Liabilities" means all Liabilities and other obligations of the
Seller which are not Assumed Obligations, including but not limited to: (i) any
intercompany or intracompany debt obligations; (ii) federal, state, local and
other Taxes; (iii) amounts payable for business (including casualty, liability,
business interruption and the like) or group insurance premiums; (iv)
Liabilities or other obligations under any Employee Plan, collective bargaining
agreement or other plan of the Seller; (v) any funded indebtedness or other
obligations or Liability relating to borrowed money; (vi) trade or other
accounts payable, accrued payroll, and employee sales commissions; (vii) credit
balances for deferred income Taxes; (viii) any claims or pending litigation or
proceeding relating to the business of operation of the Station; and (ix) any
Liability or other obligation which is otherwise specifically retained by the
Seller.
"SEC" has the meaning set forth in Section 5.8 hereof.
"Securities Act" has the meaning set forth in Section 5.7 hereof.
"Seller" has the meaning set forth in the recitals hereto.
"the Station" has the meaning set forth in the recitals hereto.
"the Station Licenses" means all licenses, permits and authorizations
issued or granted by the FCC for the ownership and operation of the Station and
all applications therefor, all of which are listed in Exhibit 1(d) hereto,
together with any renewals, extensions or modifications thereof and additions
thereto between the date hereof and the Closing Date.
"Tax" or "Taxes" means all federal, state, local, foreign and other taxes,
franchise, including income, estimated income, gross receipts, employment,
license, payroll, excise, stamp, social security, unemployment, real property,
personal property, sales, use, transfer and withholding taxes, including
interest, penalties and additions in connection therewith, whether disputed or
not.
1.2. Accounting Terms. All terms of an accounting nature not
specifically defined herein shall have the respective meanings given to them
under GAAP.
1.3. Other Definition Provisions. The masculine form of words
includes the feminine and the neuter and vice versa, and, unless the context
otherwise requires, the singular form of words includes the plural and vice
versa. The words "herein," "hereof," "hereunder" and other words of similar
import when used in this Agreement refer to this Agreement as a whole, and not
to any particular section or subsection.
2. Purchase of Broadcasting Assets, Purchase Price and Method of
Payment.
2.1. Purchase of Broadcasting Assets, Purchase Price and Method of
Payment. In accordance with the terms and upon satisfaction of the conditions
contained in this Agreement, at the Closing: (a) Seller shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller the
Broadcasting Assets; (b) Seller shall assign and deliver to Buyer, and Buyer
shall accept assignment from Seller the Station Licenses; and (c) Seller shall
transfer and deliver to Buyer, and Buyer shall assume, the Assumed Obligations
(as hereinafter defined).
2.2. Consideration; Proration; Allocation of Purchase Price.
2.2.1. Purchase Price. The Purchase Price for the
Broadcasting Assets, as adjusted pursuant to Sections 2.2.2 and 2.2.3 below,
shall be Thirty-five Million Dollars ($35,000,000).
2.2.2. Prorations. The Purchase Price shall be
increased or decreased as required to effectuate the proration of expenses. All
expenses arising from the operations of the Station and incurred by the Station,
including tower rental, business and license fees, utility charges, real and
personal property taxes and assessments levied against the Broadcasting Assets,
property and equipment rentals, applicable copyright or other fees, sales and
service charges, taxes (except for taxes arising from the transfer of the
Broadcasting Assets under this Agreement), employee compensation (including
wages and salaries, accrued sick leave, severance pay, and earned vacation time)
and similar prepaid and deferred items, shall be prorated between Buyer and
Seller in accordance with the principle that Seller shall be responsible for all
expenses, costs and liabilities allocable to the operations of the Station for
the period on or prior to and including the Closing Date, and Buyer shall be
responsible for all expenses, costs and obligations allocable to the operations
of the Station for the period after the Closing Date as determined in accordance
with Section 2.2.3 below, subject to the following:
There shall be no adjustment for, and Seller shall remain solely liable
with respect to, Liabilities and obligations not being assumed by Buyer in
accordance with Section 2.3.
Payments due under film or programming license agreements for the month in
which the Closing occurs shall be prorated based on the number of days in such
month on or before and including the Closing Date and the number of days in such
month after the Closing Date.
2.2.3. Manner of Determining Prorations. The Purchase
Price, taking into account the adjustments and prorations outlined in Section
2.2.2, shall be determined in accordance with the following procedures:
(a) Prorated Obligations. Seller shall, no later
than five (5) business days prior to the Closing Date, prepare a document (the
"Proration Statement"), a copy of the form of which is attached as Exhibit A,
listing by item, (i) all of the expenses, costs, obligations and other
Liabilities of the Station of the type identified in Section 2.2.2 that are
attributable solely to the operations of the Station, either in whole or in
part, during the period after the Closing Date ("Prorated Obligations") but
either payable in advance prior to the Closing Date or in arrears after the
Closing Date. For each Prorated Obligation, there shall be listed (i) the
estimated aggregate amount thereof remaining to be paid after the Closing Date,
(ii) the amount of such Prorated Obligation incurred by the Seller or
attributable to operations of the Station, on or prior to Closing Date
("Pre-Closing Incurred Obligations") and (iii) the actual amount paid by Seller
with respect to such Prorated Obligation on or prior to Closing Date
("Pre-Closing Paid Obligations").
(b) Closing Adjustment. The Purchase Price paid to
the Seller shall be adjusted on an estimated basis at Closing (with a final
adjustment to be completed in accordance with Section 2.2.3(c) below): (i)
upward dollar-for-dollar by the amount, if any, by which Pre-Closing Paid
Obligations exceed Pre-Closing Incurred Obligations; or (ii) downward
dollar-for-dollar by the amount, if any, by which, Pre-Closing Incurred
Obligations exceed Pre-Closing Paid Obligations.
(c) Post-Closing Adjustment.
(i) As promptly as possible after the
Closing, but in any event not later than thirty (30) days after the
Closing Date, Buyer shall deliver to Seller a statement setting forth
Buyer's determination of the Purchase Price and the calculation thereof
pursuant to Section 2.2.3(b). Buyer's statement shall contain all
information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.2.3(b), and such other information as may
be reasonably requested by Seller. If Seller disputes the amount of the
Purchase Price determined by Buyer, Seller shall deliver to Buyer within
thirty (30) days after its receipt of Buyer's statement a statement
setting forth Seller's determination of the amount of the Purchase Price.
(ii) Buyer and Seller shall use good faith
efforts to resolve any dispute involving the determination of the Purchase
Price. If the parties are unable to resolve the dispute within thirty (30)
Buyer and Seller shall jointly designate an independent public accounting
firm of national stature that has not been employed by any party hereto
for the two years preceding the date of such designation, who shall be
knowledgeable and experienced in the operation of television broadcasting
stations, to resolve the dispute. The accounting firm's resolution of the
dispute shall be final and binding on the parties, and a judgment may be
entered thereon in any court of competent jurisdiction. Any fees of this
firm shall be split equally between Buyer and Seller.
2.2.4. Payment of Purchase Price. The Purchase Price
shall be paid by Buyer to Seller as follows:
(a) Payment of Estimated Purchase Price and
at Closing. The Purchase Price, adjusted by the estimated Closing adjustments
pursuant to Section 2.2.3(b), is referred to as the "Estimated Purchase Price."
The Estimated Purchase Price shall be paid to Seller at Closing (i) Thirty-Five
Million Dollars ($35,000,000), by wire transfer, in immediately available funds,
less (ii) the aggregate of all Deposits theretofore made by Buyer to Seller.
(b) Payments to Reflect Post-Closing
Adjustments.
(i) If the Purchase Price as finally
determined pursuant to Section 2.2.3(c) exceeds the Estimated Purchase
Price, Buyer shall pay to Seller in immediately available funds within
five business days after the date on which the Purchase Price is
determined the difference between the Purchase Price and the Estimated
Purchase Price.
(ii) If the Purchase Price as finally
determined pursuant to Section 2.2.3(c) is less than the Estimated
Purchase Price, Seller shall pay to Buyer, in immediately available funds
within five business days after the date on which the Purchase Price is
determined the difference between the Purchase Price and the Estimated
Purchase Price.
2.2.5. Allocation of Purchase Price. Buyer and Seller
agree that for the purpose of allocating the Purchase Price among the
Broadcasting Assets, the fair market value of the Broadcasting Assets shall be
used. Buyer and Seller shall determine the allocation of the Purchase Price
prior to the Closing Date, by mutual agreement, and shall report the allocations
consistently, to the extent permitted by law to the Internal Revenue Service on
a timely basis; provided, that determination of the allocation of the Purchase
Price shall not be a condition to closing of this Agreement. If the Buyer and
Seller cannot agree on an allocation of the Purchase Price among the
Broadcasting Assets they shall cause an appraisal (the "Appraisal") of the
Broadcasting Assets to be performed and completed by a firm of Seller's choosing
subject to Buyer's reasonable consent and at the expense of the Buyer, no later
than twenty (20) days prior to the Closing Date. Buyer and Seller hereby agree
that they will allocate the Purchase Price among the Broadcasting Assets in a
manner that is consistent with the Appraisal.
2.3. Assumption of Obligations.
2.3.1. Limitation on Assumption of Obligations. Except as
set forth in Section 2.3.2 below, Buyer expressly does not, and shall not,
assume or be deemed to have assumed under this Agreement or by reason of any
transactions contemplated hereunder any Liabilities or obligations of Seller of
any nature whatsoever.
2.3.2. Assumed Obligations Relating to the Station. Subject
to the provisions of Section 2.3.3 below, at the Closing, Buyer shall assume and
timely pay or perform the following obligations (collectively, the "Assumed
Obligations"): (a) the obligations of the Seller arising subsequent to, and
relating solely to, the operations of the Station after the Closing Date, under,
(i) all Contracts, agreements, commitments and leases of the Seller included in
the Broadcasting Assets and set forth on Schedules 1(a), 1(b) and 1(c) in effect
as of the date hereof, and (ii) all Contracts, agreements, commitments, leases
and amendments, renewals and other modifications thereof that are entered into
by Seller in connection with the Station between the date hereof and the Closing
Date as expressly permitted by and subject to the terms of this Agreement; and
(b) any other Prorated Obligations. It is understood and agreed that, Assumed
Obligations shall not include trade or other accounts payable which are not
Prorated Obligations, accrued payroll, payroll taxes, unemployment taxes,
obligations relating to any funded or other indebtedness or under Employee
Plans, collective bargaining agreements, or any other Retained Liabilities.
2.3.3. Substitution Where Not Transferable. If Seller shall
be unable, on or prior to the Closing, to obtain a consent necessary for the
assignment of Seller's title to, interest in and rights under any Contract to be
assigned hereunder, then Seller and Buyer will cooperate to enter into a
reasonable arrangement designed to enable Seller to perform its obligations
thereunder, and to provide for the assumption by Buyer of the benefits, risks
and burdens of, any such Contract, including enforcement at the cost and for the
account of Buyer of any and all rights of Seller against the other party thereto
arising out of the future cancellation thereof after the Closing Date by such
other party; provided that, Buyer shall not be required to enter into, or to
accept as a substitute for performance by the Seller hereunder, any arrangement
which would impose any additional cost, expense or Liability on Buyer, or would
deprive Buyer of any benefits or profits contemplated under such Contract. As
and when after the Closing Date, title to, interest in and rights under any such
Contract become transferable, the assignment to Buyer by Seller of any title to,
interest in and rights under such Contract shall be deemed effective at the time
such consent or approval is effective, without any further action by Buyer or
the Seller.
3. FCC Consent.
3.1. Application and Request. Upon the execution of this Agreement,
Buyer and Seller shall proceed as expeditiously as practicable to file with the
FCC complete and accurate applications requesting the consent of the FCC to the
assignment of the Station Licenses from Seller to Buyer (the "FCC
Applications"). Buyer and Seller shall each pay one half of all FCC filing fees
in connection with the FCC Applications. Buyer and Seller shall, with respect to
the Station, diligently take, or cooperate in the taking of, all necessary,
desirable and proper actions, provide any additional information reasonably
required or requested by the FCC, and otherwise use commercially reasonable
efforts to obtain promptly the requested approval of the FCC Applications by the
FCC. Buyer and Seller shall oppose any petitions to deny or other objections
filed with respect to the FCC Applications; provided, however, that neither
Buyer nor the Seller shall have any obligation to participate in an evidentiary
hearing on the FCC Applications. Buyer and Seller shall appeal or otherwise seek
review of any action of the FCC denying the FCC Applications, by filing an
appropriate request for appeal or review with the FCC or a court of competent
jurisdiction, as the case may be.
3.2. Final Order. The consummation of the transactions contemplated
by this Agreement is conditioned upon: (a) the issuance by the FCC (including,
for purposes hereof, the FCC staff acting under delegated authority) of an order
approving the FCC Applications and consenting to the assignment of the Station
Licenses from Seller to Buyer and compliance by the parties hereto with the
conditions imposed in said order (provided that neither Buyer nor Seller shall
be required to accept or comply with any condition which would be unreasonably
burdensome or which would have a materially adverse affect upon it); and (b)
said order having become a Final Order; provided, however, that Buyer may waive
the condition that said order become a Final Order. If either Seller or Buyer
are required by the FCC to participate in an evidentiary hearing on the
assignment application, such party, at its option, by written notice of
termination to the other parties, may terminate this Agreement without liability
on the part of such party other than liability for indemnification pursuant to
Section 15 hereof; provided, however, that the terminating party may not so
terminate this Agreement if it is in material default under any provision of
this Agreement, or if the conditions described in this Section 3.2 have been met
prior to the delivery of written notice of termination.
4. Representations and Warranties of Seller. Seller represents,
warrants and covenants to Buyer that, as of the date hereof:
4.1. Organization and Standing. Seller: (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Texas; (b) has full corporate power and authority to own, lease and
use its properties and to conduct its business and operations as now being
conducted and proposed to be conducted under existing agreements and to
perform the obligations required to be performed by it hereunder and to
consummate the transactions contemplated hereby; (c) is duly qualified to do
business in every jurisdiction in which the nature of the business conducted
by the Station requires such qualification, except where the failure to so
qualify would not materially adversely affect the Station, or the
Broadcasting Assets.
4.2. Authorization and Binding Obligations. The execution, delivery
and performance by Seller of this Agreement and the agreements, exhibits and
other documents to be executed and delivered by Seller pursuant hereto or in
connection herewith have been duly and validly authorized and, upon execution
thereof, will be duly executed and delivered by Seller, and constitute valid and
binding agreements of Seller enforceable in accordance with its terms, except as
such enforceability may be limited by (i) court orders, or (ii) bankruptcy,
insolvency, moratorium, court orders or other laws relating to or affecting
creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles. The individual signing on behalf
of Seller has the legal power, authority and capacity to bind Seller.
4.3. No Contravention. The execution, delivery and performance of
this Agreement and the other documents to be executed in connection herewith,
the consummation of the transactions contemplated hereby and thereby and the
compliance with the provisions hereof and thereof by the Seller do not and will
not, after the giving of notice, or the lapse of time, or otherwise: (i)
conflict with or violate any provisions of the Articles of Incorporation or
bylaws of Seller; (ii) result in the material breach of any of the terms of,
constitute a material default under, result in, or constitute grounds for, the
termination or alteration of any agreement, or other instrument to which Seller
is a party or by which the property of Seller is bound or affected; (iii)
violate, result in the breach of, or conflict with, any laws, regulations,
orders, writs, ordinances, injunctions, decrees, rules, or judgments applicable
to the Seller. Other than receipt of a Final Order, compliance with the HSRA and
receipt of consents from third parties to Contracts identified on Schedule 4.3
as requiring a third party consent, to the best of Seller's knowledge, no
consent, waiver, authorization, or approval from, or filing of any notice or
report with, any governmental authority or other person is necessary in
connection with the execution, delivery or performance by the Seller of this
Agreement or any of the documents or transactions contemplated hereby (with or
without the giving of notice, the lapse of time or both).
4.4. Title to Assets.
4.4.1. Real Property. Schedule 1(a) sets forth and
accurately describes: (i) all real estate owned and leased by the Seller which
relates to or is used in the operations of the Station; and (ii) the nature of
the right, title or interest Seller has in such real estate.
4.4.2. Personal Property. Seller has good and
marketable title to all the tangible personal property included in the
Broadcasting Assets, in each case free and clear of all Encumbrances, except for
and subject only to: (i) liens for taxes not yet due or payable; and (ii) the
leases set forth in Schedule 1(c)
4.4.3. Assets Sufficient. The Broadcasting Assets
include all assets that are used in, and/or necessary to conduct the business
and operations of the Station as presently conducted and as contemplated to be
conducted on the Closing Date. The Broadcasting Assets are in good operating
condition and repair, ordinary wear and tear excepted, are suitable for the uses
and purposes for which they are being used or intended, and are in material
compliance with all applicable federal, state and local laws, ordinances, and
regulations.
4.5. Licenses and Authorizations.
4.5.1. Licenses. Schedule 1(d) hereto contains a true
and complete list of all the Station Licenses and all other licenses, permits
and authorizations required to carry on the operation of the business conducted
by the Station. Seller is the authorized and legal holder of all of the
foregoing.
4.5.2. Authorizations. The Station Licenses are in
full force and effect, and have been complied with in all material respects. No
investigation, notice of investigation, violation, order, complaint, action or
other proceeding is pending or, to the knowledge of the Seller, threatened
before the FCC or any other Governmental Authority to revoke, refuse to renew or
modify such FCC licenses or which could in any manner threaten or adversely
affect the Station Licenses or the Station's operations as presently conducted.
No event has occurred that permits, or after notice or lapse of time would
permit, the revocation or termination of the Station Licenses or the imposition
of any restriction thereon of such a nature as may materially limit the business
or operations of the Station as now conducted. Seller has no reason to believe
that the Station Licenses will not be renewed in the ordinary course.
4.6. Contracts. Schedules 1(a), 1(b), and 1(c) hereto, contain a
true and complete list of all contracts, leases, national and local advertising
representation agreements, and other agreements and commitments of every nature
as of the date hereof, written or otherwise, constituting part of the
Broadcasting Assets or the Assumed Obligations or otherwise relating to Seller
(collectively the "Contracts"). Seller is not now, or shall be as of the
Closing, in default under any of the Contracts, and no event, occurrence or
condition exists which with the giving of notice, lapse of time, or both, or the
happening of any further event or condition, would become a default thereunder.
Seller has not released or waived (by action or inaction) any of its rights
under any of the Contracts. All such Contracts, are in full force and effect and
valid and binding and enforceable against the parties thereto in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws relating to or affecting creditors' rights
generally. True and complete copies of all Contracts and all amendments and
modifications thereto have been delivered or made available to Buyer. Except for
the need to obtain the consents, Seller has full legal power and authority to
assign its rights under the Contracts included in the Broadcasting Assets to
Buyer in accordance with this Agreement, and such assignment will not affect the
validity, enforceability or continuation of any of the Contracts included in the
Broadcasting Assets.
4.7. Financial Statements. The unaudited financial statements of
Seller (collectively, the "Financial Statements") as of and for the fiscal years
ended December 31, 1997, 1998, and 1999 will be delivered to Buyer prior to
April 30, 2000. The Financial Statements were prepared in accordance with GAAP
using the Seller's accounting methods for revenue recognition, recording film
contract rights assets and liabilities, and program amortization and were
prepared from the books and records of Seller, consistent with past practice.
The Financial Statements are to the best of Seller's knowledge true and correct
in all material respects and fairly and accurately present the financial
condition and results of Seller as of the dates and for the periods indicated.
4.8. Franchises, Trademarks and Trade Names. All franchises,
trademarks, patents, tradenames, intellectual property rights and interests,
service marks, know-how, call letters, telephone numbers, copyrights in literary
property of any kind, jingles and privileges held by Seller with respect to the
Station are set forth on Schedule 1(f) hereto (including a description thereof),
are owned by Seller or licensed for its use and are valid and in full force and
effect. To the knowledge of Seller, the ownership and operation of Station and
the other assets utilized in connection with its other businesses and
operations, as presently owned and operated, do not infringe upon or conflict in
any respect with any franchise, patent, trademark, tradename, rights or
interests of any other intellectual property rights or interests of any other
person and no other person is infringing upon any such rights of Seller.
4.9. Litigation; Violations.
4.9.1. Litigation. Except for administrative
rulemaking or other proceedings of general applicability to the broadcast
industry and except as set forth in Schedule 4.9.1: (a) there is no civil,
criminal, or administrative action, suit, demand, claim, hearing, litigation,
action, arbitration, proceeding or investigation of any nature pending or, to
the best of Seller's knowledge, threatened against or relating to the Seller,
the Station, the Broadcasting Assets or the transactions contemplated hereby or
affecting the same; and (b) no writ, injunction, judgment, award, order or
decree has been rendered or is pending against or, to the best of the Seller's
knowledge, affecting the Seller, the Station, the Broadcasting Assets or the
transactions contemplated hereby.
4.9.2. Violations. Seller has not received written
notice of, and to the best of Seller's knowledge, Seller has not violated and is
not in, default under any order, law, rule, regulation, ordinance, policy,
judgment, writ or decree of the FCC or any court or other Governmental Authority
in any respect which might adversely affect the business, operations, prospects
or condition, financial or otherwise, of Seller, the Station, any of the Station
Licenses or the Broadcasting Assets.
4.10. Complaints. There is not any FCC investigation, notice of
violation, notice of apparent liability or order of forfeiture pending or
outstanding against the Station respecting any violation, or allegation thereof,
of any provision of the Communications Act or, to the best of Seller's
knowledge, any complaint before the FCC as a result of which an investigation,
notice of violation, notice of apparent liability or order of forfeiture may
issue from the FCC relating to the Station. No event has occurred which permits,
or after notice or lapse of time or both would permit, the revocation or
termination of any of the Station Licenses, or the imposition of any restriction
thereon.
4.11. Reports. To the best of Seller's knowledge, all returns,
notices, reports, statements or other filings currently required to be filed by
the Seller with the FCC or any other federal, state, or local Governmental
Authority have been filed and complied with and shall continue to be filed and
be in compliance on a current basis until the Closing Date. All such reports,
returns, and statements are complete and accurate to the best of Seller's
knowledge.
4.12. Environmental Matters. (i) Seller has not, in connection with
its business or assets, generated, used, transported, treated, stored, released
or disposed of, or to its knowledge, has suffered or permitted anyone else to
generate, use transport, treat, store, release or dispose of any Hazardous
Substance (as defined below) in violation of any applicable environmental law;
(ii) there has not been any generation, use, transportation, treatment, storage,
release or disposal of any Hazardous Substance in connection with the conduct of
Seller's business which has created or might reasonably be expected to create
any material liability under any applicable environmental law or which would
require reporting to or notification of any governmental entity; (iii) to the
knowledge of Seller no asbestos or polychlorinated biphenyl or underground
storage tank is contained in or located at any facility used in connection with
its business; and (iv) any Hazardous Substance handled or dealt with in any way
in connection with Seller's business has been and is being handled or dealt with
in all material respects in compliance with all applicable environmental laws.
4.13. Employees and Compensation. Schedule 4. 13 contains a
true, correct and complete list of all employees of the Seller currently
engaged in the business and operations of the Station and a description of
all compensation arrangements affecting them.
4.14. Cable Carriage. Except as set forth in Schedule 4. 14
the signal of Station KLDT is being carried on all cable television systems
located within the Dallas, Texas DMA (Designated Market Area) which are
required to carry the Station in accordance with the FCC must carry rules.
4.15. Insurance. Schedule 4. 15 is a true and complete list
as of the date of this Agreement of all insurance policies of Seller that
insure any part of the Broadcasting Assets or the business or operation of
the Station. All policies of insurance listed in Schedule 4.15 are in full
force and effect and no notice of cancellation has been received with respect
to any such policy.
4.16. Access to Information; Investment Experience. Seller has
received or has had full access to all the information it considers necessary or
appropriate to make an informed decision with respect to the Buyer Common Stock
to be acquired by Seller pursuant to this Agreement. Seller has had an
opportunity to ask questions and receive answers from Buyer regarding the Buyer
Common Stock. Seller understands that the purchase of the Buyer Common Stock
involves substantial risk. Seller (a) has experience as an investor in
securities of companies similar to the Buyer and acknowledges that Seller is
able to fend for itself, can bear the economic risk of acquisition and ownership
of the Buyer Common Stock and has such knowledge and experience in financial or
business matters such that Seller is capable of evaluating the merits and risks
of acquisition of the Buyer Common Stock and protecting its own interests in
connection with such acquisition.
5. Representations and Warranties of Buyer. Buyer represents,
warrants and covenants to Seller that:
5.1. Organization and Standing. Buyer: (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; (b) has full corporate power and authority to own its
properties and to transact the business in which it is currently engaged and
to perform the obligations required to be performed by it hereunder and to
consummate the transactions contemplated hereby; and (c) is duly qualified to
do business and in good standing as a foreign corporation in every
jurisdiction in which the nature of the business to be conducted by it
requires such qualification, except where the failure to so qualify would not
have a material adverse effect on the financial condition, results of
operation or business of the Buyer.
5.2. Authorization and Binding Obligations. The execution, delivery
and performance of this Agreement, the Registration Rights Agreement, and the
other agreements, exhibits and other documents to be executed and delivered by
Buyer pursuant hereto have been duly and validly authorized and, upon execution
thereof, will be duly executed and delivered by Buyer and constitute valid and
binding agreements of Buyer enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium, court
orders, or other laws relating to or affecting creditors' rights generally, and
the exercise of judicial discretion in accordance with general equitable
principles.
5.3. No Contravention. The execution, delivery and performance of
this Agreement and the other documents to be executed in connection herewith,
the consummation of the transactions contemplated hereby and thereby and the
compliance with the provisions hereof and thereof by Buyer do not and will not,
after the giving of notice, or the lapse of time, or otherwise: (a) conflict
with or violate any provisions of the Certificate of Incorporation or Bylaws of
Buyer; (b) result in the breach of, conflict with, or constitute a default
under, the provisions of any agreement or other instrument to which Buyer is a
party or by which the property of Buyer is bound or affected; or (c) violate or
conflict with any laws, regulations, orders, writs, decrees, injunctions or
judgments applicable to Buyer. Other than receipt of a Final Order and
compliance with the HSRA, and other than filings under applicable federal and
state securities laws and with The Nasdaq Stock Market, to the best of Buyer's
knowledge no consent, waiver, authorization or approval from, or filing of any
notice or report with, any governmental authority or other person is necessary
in connection with the execution, delivery or performance by the Buyer of this
Agreement or any of the documents or transactions contemplated hereby (with or
without the giving of notice, the lapse of time or both).
5.4. Litigation. As of the date hereof, except for administrative
rulemaking or other proceedings of general applicability to the broadcast
industry, there is no civil, criminal or administrative action, suit, demand,
claim, litigation, action, proceeding or investigation of any nature pending or,
to the best of Buyer's knowledge, threatened against or affecting Buyer that
would adversely affect its ability to consummate the transactions contemplated
in this Agreement. As of the date hereof, except as disclosed in the Buyer
Reports, there are no actions, suits, investigations or proceedings pending or,
to the knowledge of Buyer, threatened against Buyer that, if adversely
determined, could result in any claims against or obligations or liabilities of
Buyer, except for such obligations and liabilities as, in the aggregate, would
not have a material adverse effect on the financial condition, properties,
business or results of operations of Buyer.
5.5. Qualifications as a Broadcast Licensee. Buyer knows of
no fact that would as of the Closing Date, disqualify Buyer as owner,
operator and licensee of the Station.
5.6. Capitalization of Buyer; Buyer's Common Stock. The authorized
capital stock of Buyer consists of 200,000,000 shares of common stock, $.01 per
share (the"Buyer Common Stock"), and 10,000,000 shares of preferred stock, par
value $1.00 per share. As of December 31, 1999, there were 78,101,596 shares of
Buyer Common Stock issued and outstanding Stock held in treasury and 43,427
shares of Buyer's preferred stock had been issued. All of the outstanding shares
of Buyer Common Stock have been duly authorized, validly issued and are fully
paid and nonassessable and were issued in compliance with all applicable federal
and state securities laws, and no holder thereof is entitled to preemptive or
similar rights. As of the date hereof, there are outstanding options to purchase
9,000,000 shares of Buyer Common Stock. The Buyer Common Stock is registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), and since December 31, 1997 Buyer has filed all reports
required to filed by the Exchange Act. The Buyer Common Stock is authorized for
trading in the Over the Counter Bulletin Board of The Nasdaq Stock Market. The
Buyer has made application for inclusion of the Buyer Common Stock in The Nasdaq
Stock Market National Market System. The offer and sale of the shares of Buyer
Common Stock to Seller pursuant to this agreement is not required to be
registered under the Securities Act of 1933, as amended ("Securities Act") or
any state securities law. The shares of Buyer Common Stock to be delivered to
the Seller pursuant to this Agreement have been duly authorized and will be,
upon delivery to Seller, validly issued, fully paid and nonassessable and
authorized for trading on The Nasdaq Stock Market National Market System.
5.7. Buyer Reports and Financial Statements. Buyer has delivered to
Seller true and correct copies of (i) Buyer's Annual Reports on Form 10-KSB for
the fiscal years ended December 31, 1999 and 1998, and all amendments thereto,
(ii) each registration statement, Current Report on Form 8-KSB, proxy statement
or information statement filed or issued by it since December 31, 1997, and all
amendments thereto, and (iii) each Quarterly Report on Form 10-QSB for each of
the quarterly periods during the two years ended December 31, 1999, each in the
form (including exhibits) filed with the Securities and Exchange Commission (the
"SEC ") (collectively, the "Buyer Reports"). Each Buyer Report was prepared and
filed in accordance with all applicable rules and regulations of the SEC and at
the time of its filing was otherwise in compliance with such rules and
regulations in all material respects. As of their respective dates, the Buyer
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements made therein not misleading, except as the same was corrected or
superseded in a subsequent report or statement filed with the SEC prior to the
date hereof, which subsequent report or statement has been delivered to Seller.
Each of the consolidated balance sheets included in the Buyer Reports (including
the related notes and schedules) presents fairly the consolidated financial
position of Buyer as of its date and each of the consolidated statements of
operations and cash flows included in the Buyer Reports (including any related
notes and schedules) presents fairly the results of operations and cash flows of
Buyer for the periods set forth therein (subject, in the case of unaudited
statements, to the omission of certain notes not ordinarily accompanying
unaudited financial statements, and to normal year-end audit adjustments which
were not material to Buyer in amount or effect), in each case in accordance with
GAAP consistently applied during the periods involved, except as may be noted
therein.
5.8. Absence of Certain Changes. Except as disclosed in the Buyer
Reports, since December 31, 1999 (i) Buyer has conducted its business only in
the ordinary and usual course and (ii) Buyer has not undergone or suffered any
change in its financial condition, properties, business or results of operations
that has been, individually or in the aggregate, materially adverse to Buyer.
5.9. Financial Qualifications. Buyer will have available on the
Closing Date funds sufficient to consummate the transactions contemplated
hereby.
6. Access and Information.
6.1. By Seller to Buyer. Seller shall give Buyer and its counsel,
accountants, investment bankers, potential lenders and other authorized
representatives reasonable access during normal business hours throughout the
period prior to the Closing Date, to all of the Station's and such Seller's (to
the extent relevant to the transactions contemplated hereby) books, records
(including all employee files), agreements, reports, and other documents and all
of the Broadcasting Assets to be acquired hereunder and shall furnish Buyer, its
counsel, accountants, engineers, investment bankers, potential lenders and other
authorized representatives during such period with all information concerning
the affairs of such Seller and the Station as they may reasonably request in
order to enable Buyer to make such examinations and investigations thereof as it
shall deem necessary, and Seller will make appropriate officers, employees,
attorneys, agents and accountants available to discuss with Buyer and its
representatives such aspects of the business and operations of the Station and
Seller as Buyer may reasonably require.
7. Conduct of Business to Closing.
7.1. By Seller. Seller covenants and agrees with Buyer that,
from the date hereof through the Closing Date:
7.1.1. Conduct of Business. Subject to the
provisions of this Agreement, from the date hereof through the Closing Date,
Seller shall maintain its corporate existence in good standing; conduct the
business and operations of the Station in the normal and ordinary course of
business in substantially the same manner as heretofore conducted and in
compliance with all material obligations and duties imposed by all laws, rules
and regulations applicable to Seller, its business and the Broadcasting Assets;
maintain all its books and records, including all financial statements, in
accordance with the accounting principles and practices consistent with those
used in the Financial Statements; and shall use all commercially reasonable
efforts to preserve and promote such business and to avoid any act which might
have a material adverse effect upon Seller or upon the Broadcasting Assets.
7.1.2. Organization, Etc. Consistent with normal
business practices, Seller shall use its best efforts to: (a) maintain the
present quality of the operations of the Station; (b) preserve the value of the
Station as a going concern; and (c) preserve intact the business organization of
the Station.
7.1.3. Insurance. Seller shall cause to be
maintained in effect until the Closing adequate property damage, Liability and
other insurance with respect to the Broadcasting Assets and the Station, the
list of the policies governing which are set forth on Schedule 4.15.
7.1.4. Transfer of Broadcasting Assets. The Seller
shall not sell, assign, lease or otherwise transfer or dispose of any of the
Broadcasting Assets, except where such disposition is in the ordinary course of
business and the assets involved are either: (a) no longer used or useful; or
(b) replaced with a substantially equivalent asset of substantially equivalent
kind, condition and value.
7.1.5. Encumbrances. The Seller, other than in the
ordinary course of business shall not create, assume or permit to exist any
Encumbrance affecting any of the Broadcasting Assets (or their replacements)
other than those expressly permitted by this Agreement.
7.1.6. Litigation. Seller shall notify Buyer: (a)
of any litigation pending or, to its knowledge, threatened against or affecting
the Station or the Seller or which challenges or seeks any damages or other
payments in connection with the transactions contemplated hereby; and (b) of any
material damage to or destruction of the Broadcasting Assets or the business or
prospects of the Station.
7.1.7. Agreements. Seller shall perform all
obligations (including, without limitation, all payment obligations) required to
be performed by it under all Contracts, and shall not amend or terminate the
same (or waive any material right thereunder) or enter into any new agreements
or arrangements, which might be binding on or affect Buyer.
7.1.8. Consents and Approvals. Seller will, prior
to the Closing Date, use its best efforts to obtain or cause to be obtained: (a)
consents to the assignment to Buyer of all Contracts (without any change in the
terms and conditions of any such Contracts that could have a material adverse
affect on Buyer or the operations of the Station) which require the consent of
any Person by reason of the transactions provided for or contemplated in this
Agreement; and (b) any other consents, approvals, waivers, authorizations
(without any conditions attached that could have an adverse affect on Buyer or
the operations of the Station). Each party shall cooperate with the other to
obtain any such consents or approvals.
7.1.9. Licenses. The Seller shall not, by any act
or omission to act within its reasonable knowledge and power, surrender, modify,
adversely affect or forfeit any of the Station Licenses or cause the FCC to
institute any proceedings for the cancellation, non-renewal or modification of
any of the Station Licenses.
7.1.10. Offers to Purchase. Neither Seller, nor any
of its officers, directors, employees, agents or representatives shall, either
directly or indirectly, entertain or conduct discussions or negotiations with
any person with respect to any offer or proposal for the purchase or sale of any
portion of the assets or any interests of Seller or the Station, or with respect
to any financing, merger, acquisition, combination, consolidation or similar
transaction involving Seller the Station or any significant assets or business
of any of them, or enter into any agreement or transaction relating to any of
the foregoing.
7.1.11. No Breach of Representations and
Warranties. The Seller shall not take any action or pursue any other course of
conduct, or fail to take any action, that would cause any of the representations
and warranties made by the Seller in this Agreement (or any document delivered
in connection herewith) to be untrue, incorrect or inaccurate in any material
respect.
7.1.12. Compliance with Laws. Seller shall comply
with all laws, rules and regulations applicable or relating to the Seller, the
business and operations of the Station and the Broadcasting Assets.
7.2. By Buyer. Buyer covenants and agrees with Seller as
follows:
7.2.1. Conduct of Business. Subject to the
provisions of this Agreement, from the date hereof through the Closing Date
Buyer shall maintain its corporate existence in good standing; conduct its
business and operations in the normal and ordinary course of business in
substantially the same manner as heretofore conducted and in compliance with all
material obligations and duties imposed by all laws, rules and regulations
applicable to Buyer, its business and its properties; maintain all its books and
records, including all financial statements, in accordance with the accounting
principles and practices consistent with those used in the Buyer Reports and in
accordance with GAAP; and shall use all commercially reasonable efforts to
preserve and promote such business and to avoid any act which might have a
material adverse effect upon the Buyer.
7.2.2. Litigation. From the date hereof through
the Closing Date, Buyer shall notify Seller of any litigation pending or, to its
knowledge threatened, against Buyer which might have a material adverse effect
on the financial condition, results of operation or business of Buyer, or which
seeks to prevent the consummation of the transactions contemplated hereby.
7.2.3. No Breach of Representations and
Warranties. From the date hereof through the Closing Date, the Buyer shall not
take any action or pursue any other course of conduct, or fail to take any
action, that would cause any of the representations and warranties made by the
Buyer in this Agreement (or any document delivered in connection herewith) to be
untrue, incorrect or inaccurate in any material respect.
7.2.4. Confidentiality. Buyer will hold in
confidence all nonpublic documents and information concerning Seller, the
Broadcast Assets, the Station and the operation thereof furnished to Buyer and
its representatives in connection with the transactions contemplated by this
Agreement, and will not release or disclose such information to any other
person, except upon the prior written consent of Seller. In the event that Buyer
or its representatives receive a request pursuant to judicial or regulatory
process to disclose such confidential information, Buyer will promptly notify
Seller of such request and will cooperate with Seller to obtain a protective
order or other reliable assurance that confidential treatment will be accorded
to such confidential information. If the transactions contemplated by this
Agreement shall not be consummated, such confidential treatment shall be
maintained and such information shall not be used in competition with Seller
and, upon request, all such documents, copies thereof, extracts therefrom and
notes and other documents containing information based on such confidential
information shall immediately thereafter be returned to Seller or, with Seller's
consent, destroyed.
7.2.5. Inclusion of Information About Seller in
Buyer Registration Statement. If for any reason Buyer requests, or is required,
to include any information about Seller in any registration statement filed by
Buyer between the time of the signing of this agreement and the Closing, Seller
agrees to cooperate with Buyer to provide such information; provided, however,
that Buyer hereby agrees that (i) Buyer shall be solely responsible for all
costs and expense associated with preparing such information for inclusion in
the Buyer Registration Statement, (ii) as between Seller and Buyer, Buyer shall
be solely responsible to any purchaser of securities under the Buyer
Registration Statement for any such information, and Buyer shall indemnify and
hold Seller (and any person who controls Seller within the meaning of the
Securities Act or the Exchange Act) harmless from and against any liability
under federal or state securities laws or otherwise which arises out of or is
related to the inclusion of such information in the Buyer Registration
Statement.
8. Conditions Precedent to the Obligations of the Parties.
8.1. Conditions Precedent to the Obligation of Buyer. The
obligations of the Buyer under this Agreement are subject, at the Buyer's
option, to the satisfaction on or prior to the Closing Date of each of the
following express conditions precedent:
8.2. FCC Consent. It shall be a condition to the obligation of Buyer
under this Agreement that the conditions specified in Section 3.2 hereof shall
have been met.
8.3. Accuracy of Representations and Warranties. All representations
and warranties of Seller contained in this Agreement (and in any document
delivered in connection herewith) shall be true and correct in all material
respects when made and at and as of the Closing Date as though made at and as of
that time, and Buyer shall have received a certificate, executed by Seller,
repeating, as of the Closing Date, all such representations and warranties.
8.4. Compliance with Agreement. Seller shall have performed
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
8.5. No Obstructive Proceeding.
8.5.1. No Litigation. No action, suit, investigation,
or proceeding shall have been instituted or be pending against or affecting any
of the parties to this Agreement before any court or any other Governmental
Authority to restrain or prohibit, or to obtain substantial damages in respect
of, this Agreement or the consummation of the transactions contemplated hereby,
which may reasonably be expected to result in a preliminary or permanent
injunction against consummating the transactions contemplated hereby or, if the
transactions contemplated hereby were consummated, an order to nullify or render
ineffective this Agreement or such transactions, or the recovery against Buyer
of substantial damages or otherwise have a material adverse effect on Buyer, the
business or operations of the Station or the Broadcasting Assets;
8.5.2. No Governmental Intervention. None of the
parties to this Agreement shall have received written notice from any
Governmental Authority of: (i) its intention to institute any action or
proceeding to restrain or enjoin or nullify or render ineffective this Agreement
or the transactions contemplated hereby if consummated, or commence any
investigation into the consummation of this Agreement or the transactions
contemplated hereby; or (ii) the actual commencement of such an investigation;
8.5.3. No Order. No order, decree or judgment of
any Governmental Authority shall be subsisting against any of the parties which
would render it unlawful or materially restrain or limit Buyer's ability, as of
the Closing Date, to effect the transactions contemplated hereunder in
accordance with the terms hereof or to operate the Station as presently being
conducted.
8.6. Adverse Change. No loss, destruction, impairment, confiscation
or condemnation of any of the Broadcasting Assets shall have occurred by reason
of fire, explosion, disaster, flood, accident, riot, insurrection, war, act of
God or other occurrence which individually or in the aggregate has a materially
adverse effect on the business, operations, prospects or condition, financial or
otherwise, of the Station.
8.7. Consents. Seller shall have obtained and delivered to Buyer all
consents, approvals, and permits necessary for the consummation of transactions
contemplated hereby, including but not limited to, those required to assign and
transfer to Buyer the Contracts and all other Broadcasting Assets hereunder,
with no adverse condition attached (including any adverse change in the terms
and conditions of any Contract included in the Assumed Obligations) and no
material expense imposed upon Buyer.
8.8. Authorization. Buyer shall have received certified
copies of all the respective actions taken by Seller authorizing and
approving the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereunder.
8.9. Officer's Certificate. Buyer shall have received a
Certificate executed by Seller stating that all representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects when made and at and as of the Closing.
8.10. HSRA Waiting Period. The applicable waiting period(s)
under HSRA with respect to the transactions contemplated by this Agreement
shall have expired.
8.11. Copies of Documents. Seller shall have delivered to
Buyer copies of all documents required to be delivered pursuant to the
Agreement.
8.12. Satisfaction of Funded Debt; Removal of Encumbrances.
8.12.1. Seller shall have paid off or otherwise
satisfied or provided for, fully and completely, any and all of the Liabilities
and other obligations of Seller (relating to the Station), the Station or the
Broadcasting Assets; and
8.12.2. All Encumbrances of any kind and nature
shall have been removed from the Broadcasting Assets and the Station Licenses
other than Permitted Encumbrances.
8.13. Delivery of Instruments of Conveyance and Transfer.
Buyer shall have received the instruments and other documents (in form and
substance reasonably satisfactory to its counsel) required to be delivered to
it pursuant to Section 9 hereof.
8.14. Conditions to Obligations of Seller. The obligations of
Seller at Closing are subject, at Seller's option, to the fulfillment prior
to or at the Closing Date of each of the following conditions:
8.14.1. FCC Consent. The conditions specified in
Section 3.2 hereof shall have been met.
8.14.2. Accuracy of Representations and Warranties.
All representations and warranties of Buyer or its permitted assignee contained
in this Agreement (and any document delivered in connection herewith) shall be
true and complete in all material respects at and as of the Closing Date as
though made at and as of that time and Seller shall have received a certificate,
executed on behalf of Buyer or its permitted assignee by an officer thereof, to
that effect.
8.14.3. Compliance with Agreement. Buyer shall have
performed and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
8.14.4. Delivery of Instruments of Assumption.
Buyer shall have delivered to Seller, in accordance with Section 2.3 hereof (in
form and substance reasonably satisfactory to Seller's counsel), instruments
whereby Buyer assumes and agrees to perform the Assumed Obligations.
8.14.5. No Obstructive Proceeding.
8.14.5.1. No Litigation. No action,
suit, investigation, or proceeding shall be pending against any of the parties
to this Agreement before any court or any other Governmental Authority to
restrain or prohibit, or to obtain substantial damages in respect of, this
Agreement or the consummation of the transactions contemplated hereby, which may
reasonably be expected to result in a preliminary or permanent injunction
against consummating the transactions contemplated hereby or, if the
transactions contemplated hereby were consummated, an order to nullify or render
ineffective this Agreement or such transactions, or the recovery against Seller
of substantial damages or otherwise have a material adverse effect on Seller,
taken as a whole.
8.14.5.2. No Governmental Intervention.
None of the parties to this Agreement shall have received written notice from
any Governmental Authority of: (i) its intention to institute any action or
proceeding to restrain or enjoin or nullify or render ineffective this Agreement
or the transactions contemplated hereby if consummated, or commence any
investigation into the consummation of this Agreement and the transactions
contemplated hereby; or (ii) the actual commencement of such an investigation.
8.14.6. No Order. No order, decree or judgment of
any Governmental Authority shall be subsisting against any of the parties which
would render it unlawful or materially restrain or limit Seller's ability, as of
the Closing Date, to effect the transactions contemplated hereunder in
accordance with the terms hereof.
8.14.7. Proceedings. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement, and all documents incident thereto, shall be reasonably satisfactory
in form and substance to Seller and its counsel, and Seller and its counsel
shall have received copies of such documents as Seller or its counsel, as the
case may be, may reasonably request in connection with said transactions.
8.14.8. HSRA Waiting Period. The applicable waiting
period(s) under HSRA with respect to the transactions contemplated by this
Agreement shall have expired.
8.14.9. Authorizations. Seller shall have received
certified copies of all of the actions taken by Buyer authorizing and approving
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder.
8.14.10. Registration Rights Agreement. Buyer and
Seller shall have executed and delivered the form of Registration Rights
Agreement attached hereto as Exhibit A.
9. Instruments of Conveyance and Transfer.
9.1. Instruments of Conveyance and Transfer of Personal Property. At
the Closing, to effect the transfers, conveyances and assignments of the
personal property included in the Broadcasting Assets from Seller to Buyer or
its assignee as herein provided, Seller shall deliver to Buyer the following
bills of sale, certificates, assignments and other instruments of transfer
assigning, transferring and conveying to Buyer or its permitted assignee good
and marketable title to all of the personal property to be transferred
hereunder, free and clear of all Encumbrances of any kind other than Permitted
Encumbrances, all in form reasonably satisfactory to counsel for Buyer, and
dated the Closing Date:
9.1.1. Assignments of Leases. Assignments of all
leases and leasehold interests in personal property included in the Broadcasting
Assets, including all rights under the lease agreements referred to in Schedule
1(b) hereto;
9.1.2. Bills of Sale. Bills of sale for all tangible
personal property included in the Broadcasting Assets;
9.1.3. Assignments of Licenses. Assignments of the
Station Licenses and all other authorizations for the Station;
9.1.4. Assignments of Contracts. Assignments of all
Contracts and other intangible assets included in the Broadcasting Assets to
be transferred pursuant to this Agreement; and
9.1.5. Other Documents. Such other instruments or
documents as Buyer may reasonably request in connection with the transfer to it
of the personal property to be transferred, not inconsistent with the
obligations of Seller under this Agreement.
10. Employees.
10.1. Seller's Termination. Seller shall terminate the
employment of all of the employees engaged in the Business or operations of
the Station, effective as of the Closing.
10.2. Buyer's Right to Hire; Prorations.
10.2.1. Right to Hire. On the Closing Date, Buyer
shall have the right but not the obligation to offer employment to all persons
who are then (or were prior to the date thereof) engaged in the operations of
the Station, with such benefits as Buyer shall determine; provided, that nothing
herein shall require Buyer to hire or continue the employment of any such person
for any period of time.
10.2.2. Cooperation. Seller shall cooperate with
Buyer's attempts to obtain information relating to Seller's employees, including
making available to Buyer the employees personnel files and performance
evaluations. Seller will make all reasonable efforts to assist Buyer in making a
smooth transition after Closing.
10.2.3. Accrued Compensation. All personal days,
vacation and bonuses, of the employees of Seller or the Station hired by Buyer
on the Closing Date that are accrued but unpaid at the Closing Date shall be
deemed Prorated Obligations for purpose of Section 2.2 above.
10.3. No Liability for Employee Plans. Buyer shall not be
required to assume any Employee Plan or any Liabilities with respect thereto.
11. Risk of Loss; Casualty or Condemnation.
11.1. Risk of Loss. The risk of any loss, damage or impairment,
confiscation or condemnation of the Broadcasting Assets or any part thereof from
fire or any other casualty or cause shall be borne by Seller at all times prior
to the Closing.
11.2. Casualty.
11.2.1. If the Broadcasting Assets are damaged or
destroyed by fire or other casualty or cause between the date hereof and the
Closing Date and the repair cost, individually or in the aggregate (the "Repair
Cost"), will exceed $250,000, Buyer shall have the option either: (i) to accept
the Broadcasting Assets in their damaged or destroyed condition and reduce the
Purchase Price by the Repair Cost; (ii) to accept the Broadcasting Assets in
their damaged or destroyed condition without a reduction in the Purchase Price
but with Seller assigning or delivering to Buyer all of Seller's rights to any
insurance proceeds for such damage or destruction; or (iii) to cancel this
Agreement by giving written notice to Seller not later than fifteen (15) days
after the Repair Cost is determined. Seller shall promptly notify Buyer in
writing of any fire or other casualty occurring with respect to the Broadcasting
Assets. Seller shall provide Buyer and its agents and contractors with access to
any damaged Broadcasting Assets following any fire or other casualty so that
Buyer can obtain an estimate of the Repair Cost within thirty (30) days after
Seller notifies Buyer of the fire or other casualty.
11.2.2. If any of the Broadcasting Assets are
damaged or destroyed by fire or other casualty or cause between the date hereof
and the Closing Date and the Repair Cost is equal to or less than $250,000,
Buyer shall have the option either (i) to accept the Broadcasting Assets in
their damaged or destroyed condition and reduce the Purchase Price by the Repair
Cost, or (ii) to accept the Broadcasting Assets in their damaged or destroyed
condition without a reduction in the Purchase Price but with Seller assigning or
delivering to Buyer all of Seller's rights to any insurance proceeds for such
damage or destruction.
11.3. Repair Parameters. If any of the Broadcasting Assets are
damaged or destroyed by fire or other casualty or cause between the date hereof
and the Closing Date and Buyer elects to have Seller repair such damage, all
repairs shall be: (i) completed at least fifteen (15) days prior to the Closing
Date; (ii) completed in a good and workmanlike manner, using materials, labors
and finishes resulting in the completed repairs being of the same or better
quality than immediately prior to the damage; and (iii) subject to the
reasonably approval of Buyer's engineers or contractors.
11.4. Failure of Broadcast Transmission. Notwithstanding any
provision of this Agreement to the contrary, in the event the Station shall
cease full power broadcast transmission for a period of five consecutive days
Buyer shall have the right, by written notice to Seller, to terminate this
Agreement without further obligation to Seller hereunder.
12. Books and Records. Buyer shall be entitled to all records, including
but not limited to, books of account, technical information and engineering
data, programming information, employment records, customer lists and files,
advertising records, FCC logs, asset history files, and other files, documents
and correspondence of Seller relating to the operation of the Station prior to
the Closing Date as shall be reasonably necessary to the maintenance of the
business affairs of the Station after the Closing Date; provided, however, that
for a period of six (6) years Buyer shall retain and make available for
inspection by Seller and its representatives for any reasonable purpose all such
records, books of account, files, documents and correspondence, and Buyer shall
not dispose of, alter or destroy any such materials without giving sixty (60)
days' prior written notice to Seller so that Seller may, at its expense,
examine, make copies of, or take possession of such materials.
12.1. Taxes. Seller, on the one hand, and Buyer, on the other hand,
agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance (including access to
books and records) relating to the Broadcasting Assets as is reasonably
necessary for the preparation of any return of Taxes, claim for refund or audit,
and the prosecution or defense of any claim, suit or proceeding relating to any
proposed adjustment.
13. Possession and Control of the Station. Notwithstanding any other
provision of this Agreement, between the date of this Agreement and the Closing
Date, Seller shall retain ultimate control over the management and operations of
the Station. Neither title to the Broadcasting Assets, nor right to possession
at the Station shall pass to Buyer until the Closing Date.
14. Brokers. Each party agrees to indemnify and hold the other parties
harmless from any and all loss, cost, Liability, damage and expense (including
legal and other expenses incident thereto) in respect of any claim for a broker,
finder or consultant's fee or commission or similar payment by virtue of any
alleged agreements, arrangements or understandings with the indemnifying party.
Notwithstanding any other provision of this Agreement, the representations,
warranties and covenants contained in this Section 14 shall survive the Closing
Date for four (4) years.
15. Survival; Indemnification.
15.1. Survival. The several representations and warranties of the
parties contained in this Agreement (or in any document delivered in connection
herewith) shall be deemed to have been made on the date of this Agreement and on
the Closing Date, shall survive the Closing Date and shall remain operative and
in full force and effect for two (2) years after the Closing Date.
15.2. Seller's Indemnification -Breaches. Seller agrees to
indemnify, defend and hold Buyer harmless from and against any and all loss,
cost, Liability, damage and expenses (including reasonable legal and other
expenses incident thereto) resulting from breach of the Seller's
representations, warranties, covenants and agreements contained in this
Agreement; provided, however, that any claim for a breach of a representation or
warranty shall have been made prior to the expiration date thereof, if any, set
forth in Section 15.1 above.
15.3. Seller's Indemnification - Liabilities. Seller agrees to
indemnify, defend and hold Buyer harmless from and against: (a) any and all
Liabilities (other than the Assumed Obligations), including any and all Retained
Liabilities, and any known or unknown, actions, suits, proceedings, demands,
assessments, judgments, costs and expenses (including reasonable legal and other
expenses incident thereto), resulting from causes of action or claims of any
kind (excluding any and all claims and Liabilities arising or resulting from a
breach of any of Buyer's agreements or warranties or from an inaccuracy in any
of Buyer's representations hereunder) arising with respect to the routine
operations of the Station on or prior to the Closing Date including any
Liabilities arising from any labor or employment actions or claims, where the
events giving rise to such actions or claims arose, on or prior to the Closing;
(b) all Taxes that are attributable to periods ending on or prior to the Closing
Date (or to so much of any period as ends on the Closing Date); and (c) any
other Taxes of the Station or Seller not expressly assumed by Buyer under this
Agreement. Any Tax resulting from the Seller's sale of the Broadcasting Assets
shall be deemed to be a Tax solely attributable to a pre-Closing period.
15.4. Buyer's Indemnification. Buyer agrees to indemnify,
defend and hold Seller harmless from and after the Closing Date from and
against:
15.4.1. Breach. Any and all loss, cost, Liability,
damage and expense (including reasonable legal and other expenses incident
thereto) resulting from Buyer's breach of any of its representations,
warranties, covenants and agreements under this Agreement; provided, however,
that any such claim, for breach of a representation or warranty shall have been
made prior to the expiration date thereof, if any, set forth in Section 15.1
above; and
15.4.2. Liabilities. Any Assumed Obligations and
any and all actions, suits, proceedings, demands, assessments, judgments, costs,
and expenses (including reasonable legal and other expenses incident thereto),
resulting from causes of action or claims of any kind asserted by unrelated
third parties arising with respect to the operations of the Station after the
Closing Date (excluding any and all such Liabilities arising or resulting from a
breach of any of Seller's agreements or warranties or an inaccuracy of any of
Seller's representations hereunder).
15.5. Seller's Obligation. Notwithstanding anything to the contrary
in Section 15.2 or 15.3 above, Seller shall not be obligated to make any
payments under Section 15.2 or 15.3 above with respect to a breach of a
representation or warranty unless the aggregate amounts of all claims made
thereunder equals or exceeds $200,000, and then only for damages in excess of
such amount. In addition to the foregoing, the maximum amount of damages the
Buyer may recover hereunder shall be $2,000,000 in the aggregate.
15.6. Indemnification Claim. Upon obtaining knowledge of any claim
or demand which has given rise to, or could reasonably give rise to, a claim for
indemnification hereunder, the party seeking indemnification ("Indemnified
Party") shall promptly give written notice ("Notice of Claim") of such claim or
demand to the party or parties it is seeking indemnification from ("Indemnifying
Party"). Indemnified Party shall furnish to the Indemnifying Party in reasonable
detail such information as Indemnified Party may have with respect to such
indemnification claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same). Subject to
the limitations set forth in Section 15.1 hereof, no failure or delay by
Indemnified Party in the performance of the foregoing shall reduce or otherwise
affect the obligation of Indemnifying Party to indemnify and hold Indemnified
Party harmless, except to the extent that such failure or delay shall have
adversely affected Indemnifying Party's ability to defend against, settle or
satisfy any Liability, damage, loss, claim or demand for which Indemnified Party
is entitled to indemnification hereunder.
15.7. Notice of Claim. If the claim or demand set forth in the
Notice of Claim given by Indemnified Party pursuant to Section 15.7 hereof is a
claim or demand asserted by a third party, Indemnifying Party shall have fifteen
(15) days after the Date of Notice of Claim to notify Indemnified Party in
writing of its election to defend such third party claim or demand on behalf of
the Indemnified Party. If Indemnifying Party elects to defend such third party
claim or demand, Indemnified Party shall make available to Indemnifying Party
and its agents and representatives all records and other materials which are
reasonably required in the defense of such third party claim or demand and shall
otherwise cooperate with, and assist Indemnifying Party in the defense of, such
third party claim or demand, and so long as Indemnifying Party is defending such
third party claim in good faith, Indemnified Party shall not pay, settle or
compromise such third party claim or demand. If Indemnifying Party elects to
defend such third party claim or demand, Indemnified Party shall have the right
to participate in the defense of such third party claim or demand, at
Indemnified Party's own expense. In the event, however, that Indemnified Party
reasonably determines that representation by counsel to Indemnifying Party of
both Indemnifying Party and Indemnified Party may present such counsel with a
conflict of interest, or where non-monetary relief is being sought against
Indemnified Party by a third party, then such Indemnified Party may employ
separate counsel to represent or defend it in any such action or proceeding and
Indemnifying Party will pay the fees and disbursements of such counsel;
provided, however, that Indemnifying Party shall not be required to pay the fees
and disbursements of more than one separate law firm for all Indemnified Parties
in any jurisdiction in any single action or proceeding. If Indemnifying Party
does not elect to defend such third party claim or demand or does not defend
such third party claim or demand in good faith, Indemnified Party shall have the
right, in addition to any other right or remedy it may have hereunder at
Indemnifying Party's expense, to defend such third party claim or demand;
provided, however, that (i) Indemnified Party shall not have any obligation to
participate in the defense of, or defend, any such third party claim or demand;
and (ii) Indemnified Party's defense of or its participation in the defense of
any such third party claim or demand shall not in any way diminish or lessen the
obligations of Indemnifying Party under the agreements of indemnification set
forth in this Section 15.
15.8. Date of Notice of Claim. The term "Date of Notice of
Claim" shall mean the date the Notice of Claim is effective pursuant to
Section 20.5 of this Agreement.
15.9. Waiver of Non-Compensatory Damages. No Indemnified Party shall
be entitled to recover from an Indemnifying Party for any losses, costs,
expenses, or damages as to which indemnification is provided under this
Agreement any amount in excess of the actual compensatory damages, court costs
and reasonable attorney fees, suffered by such party; and Buyer and Seller waive
any right to recover punitive, incidental, indirect, special, exemplary and
consequential damages resulting from any cause whatsoever, whether arising in
contract, warranty, tort (including negligence), strict liability, indemnity or
otherwise. It is expressly agreed that no failure by any party to this Agreement
to fulfill any condition hereof shall constitute a failure of essential purpose
entitling any party to seek consequential, incidental, indirect, punitive,
exemplary or special damages.
15.10. Mitigation Obligation. Each person entitled to
indemnification hereunder shall take all reasonable steps to mitigate all
losses, costs, expenses and damages after becoming aware of any event which
could reasonably be expected to give rise to any losses, costs, expenses and
damages that are indemnifiable or recoverable hereunder or in connection
herewith.
15.11. Exclusive Remedy; Waiver and Release. The indemnifications
under this Section 15.11 and enforcement of the various agreements and
instruments executed pursuant hereto at the Closing, shall be Buyer's and
Seller's sole and exclusive remedies, each against the other, with respect to
matters arising under this Agreement, of any kind or nature, or relating to the
ownership, operation, management, use or control of the Purchased Assets. Buyer
and Seller hereby waive and release any other rights, remedies, causes of action
or claims that they have or that may arise against the other with respect to
matters arising under this Agreement, of any kind or nature, or relating to the
ownership, operation, management, use or control of the Broadcast Assets.
16. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings. Each party has made or caused to be made
any and all filings which are required under HSRA with respect to the
transactions contemplated by this Agreement, the filing fees for which shall be
borne by the Buyer, and shall cooperate in the taking of all steps that are
necessary, proper or desirable to expedite the preparation and filing of such
notification and the furnishing of all information required in connection
therewith.
17. Termination. This Agreement may be terminated:
17.1. Buyer. By Buyer if the Closing shall not have occurred
on or prior to the Closing Date (other than as a result of the failure by
Buyer to fully comply with its obligations under this Agreement);
17.2. Seller. Subject to Section 19 below, by Seller if the
Closing shall not have occurred on or prior to the Closing Date (other than
as a result of the failure by the Seller to fully comply with its obligations
under this Agreement);
17.3. Mutual Consent. By mutual consent of Buyer and Seller,
which consent may be withheld at the absolute discretion of each party;
17.4. By Seller Upon Breach. By Seller if: (i) Buyer is in
material breach of this Agreement; and (ii) Seller is not then in material
breach of this Agreement; or
17.5. By Buyer Upon Breach. By Buyer: if (i) Seller is in
material breach of this Agreement; and (ii) Buyer is not then in material
breach of this Agreement.
17.6. Default Grace Period. Notwithstanding any other provision of
this Agreement, if a default by any party hereto can be cured, or a condition
satisfied within fifteen (15) business days, after the time initially fixed for
Closing as set forth herein, then the Closing Date shall be extended for a
period not to exceed fifteen (15) business days required for such party to make
such cure or satisfaction. If such cure or satisfaction cannot be, or is not,
completed within fifteen (15) business days after such initial time, then the
rights of the parties shall be governed by the applicable provisions of this
Agreement.
18. Deposits.
18.1. Initial. On or before the date hereof, Buyer has deposited
with Seller a security deposit of $2,150,000 consisting of $1,000,000 in cash
and, within five (5) business days of the date hereof, shall deposit with Seller
$1,150,000 in shares of the common stock of Buyer valued at not more than $10.00
per share (the "Initial Deposit"), receipt of which is hereby acknowledged by
Seller. Until the Closing Date the shares of Buyer's stock shall maintain a
value of at least $1,150,000; in the event that the closing sales price of the
common stock of Buyer on the Nasdaq Stock Market is less than $10.00 per share
for a period of five (5) or more consecutive trading days prior to the Closing
Date, Buyer shall pay to Seller as an additional Deposit the amount of cash
necessary to maintain the value of Buyer's stock, as supplemented by the
additional Deposit, at a minimum of $1,150,000, such payment by Buyer to occur
within ten (10) business days. Any appreciation in the value of the shares of
the stock up to the Closing Date shall be solely for the benefit of Seller.
18.2. Seller's Election. Seller may elect to receive $1,150,000 in
cash as part of the Purchase Price by surrendering the shares of common stock of
Buyer originally deposited with Seller as the Initial Deposit. Seller shall give
Buyer at least ten (10) business days notice prior to the Closing Date of its
election to receive cash in lieu of shares of common stock of Buyer. Seller
shall deliver the shares of common stock of Buyer comprising the Initial Deposit
upon the Closing.
18.3. Subsequent Deposit. Buyer may, make additional deposits
pursuant to Section 19 hereof (the "Subsequent Deposits" and together with
the Initial Deposits, the "Deposits").
19. Subsequent Deposit; Extension.
19.1. Deposit. Concurrently with the execution of this
Agreement, Buyer has deposited with Seller a security deposit of $2,150,000
consisting of $1,000,000 in cash and $1,150,000 in shares of Buyer's common
stock.
19.2. First Extension. Buyer shall have the right to extend
the Closing Date until October 31, 2000 upon a payment of $1,000,000 in cash
to Seller as an additional deposit (making the total deposit$3,150,000).
19.3. Second Extension. Buyer shall have the right to extend
the Closing Date until December 31, 2000 upon payment of an additional
deposit of $1,000,000 in cash (making the total deposit$4,150,000).
19.4. Recourse; Return of Deposit. In the event that this Agreement
is terminated other than pursuant to Section 17.3 or 17.5 hereof, Seller shall
be entitled to retain the Deposits, as liquidated damages, which shall be
Seller's sole and exclusive remedy under this Agreement for such termination and
any breach by Buyer of any representation, warranty, termination or condition of
this Agreement, provided however, that for the purposes of Section 4.2, a court
order which prevents closing or for the purposes of Section 3.2, a petition
filed in opposition to the transactions contemplated by this Agreement by
▇▇▇▇▇▇▇▇ Broadcasting or its affiliates which has the effect of delaying
issuance of an order from the FCC prior to December 31, 2000, shall entitle the
Buyer to a refund of the Deposits.
20. Miscellaneous.
20.1. Costs, Expenses, Etc. Except as provided elsewhere herein each
of the parties hereto shall bear all costs and expenses incurred by it in
connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein. The payment of all sales, use, transfer or
similar Taxes, documentation stamps, or other charges imposed by any and all
Governmental Authorities (including any income or gain Taxes) with respect to
the transfer of title to the Broadcasting Assets hereunder and the other
transactions anticipated hereby shall be borne by Seller. All recording costs
and fees incurred in connection with the clearing and removing any liens and
Encumbrances not assumed by Buyer to which the Broadcasting Assets may be
subject, so as to permit Seller to convey good and marketable title to the
Broadcasting Assets free and clear of all Encumbrances other than the Permitted
Encumbrances, shall be the responsibility of Seller.
20.2. Further Assurances. Each party shall, from time to time, upon
the request of another party, execute, acknowledge and deliver to the other
party such other documents or instruments, and take any and all actions as are
reasonably necessary for the implementation and consummation of the transactions
contemplated by this Agreement.
20.3. Notice of Proceedings. Buyer or Seller, as the case may be,
will promptly and in any case within five (5) business days notify the other in
writing upon becoming aware of any order or decree or any complaint praying for
an order or decree restraining or enjoining the consummation of this Agreement
or the transactions contemplated hereunder, or upon receiving any notice from
any Governmental Authority of its intention to institute an investigation into,
or institute a suit or proceeding to restrain or enjoin the consummation of this
Agreement or such transactions, or to nullify or render ineffective this
Agreement or such transactions if consummated.
20.4. Bulk Sales Law. Buyer waives compliance by Seller with the
provisions of bulk sales and similar laws applicable to this transaction, if
any; provided, however, that any loss, liability, obligation or cost suffered by
Buyer as a result of the failure by the Seller to comply therewith shall be
borne by Seller and that Seller shall indemnify Buyer and hold Buyer harmless
therefrom.
20.5. Notices. Any notice, request, demand or consent required or
permitted to be given under this Agreement shall be in writing (including
telexes, telecopies, facsimile transmissions and similar writings) and shall be
effective when transmitted and confirmation of receipt is obtained for telexes,
telecopies, facsimile transmissions and similar writings; when delivered
personally; one day after sent by recognized overnight courier; and five days
after sent by mail, first class, postage prepaid, registered mail, return
receipt requested; in each case to the following address or telephone number, as
applicable:
If to Seller to: ▇▇▇▇▇▇▇ Broadcasting of
Dallas, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇▇▇ and Belendiuk, P.C.
(which shall not ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇
constitute notice) ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer to: Hispanic Television Network, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn:
Telephone:
Telecopier:
with copies to: Akin, Gump, Strauss, ▇▇▇▇▇ &
(which shall not ▇▇▇▇, L.L.P.
constitute notice) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party shall specify by notice to the other.
20.6. Headings and Entire Agreement; Amendment. The section and
subsection headings do not constitute any part of this Agreement and are
inserted herein for convenience of reference only. This Agreement embodies the
entire agreement between the parties with respect to the subject matter hereof.
This Agreement may not be amended, modified or changed orally, but only in
writing signed by the party against whom enforcement of any amendment,
modification, change, waiver, extension or discharge is sought.
20.7. Waiver. No waiver of a breach of, or default under, any
provision of this Agreement shall be deemed a waiver of such provision or of
any subsequent breach or default of the same or similar nature or of any
other provision or condition of this Agreement.
20.8. Binding Effect and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their successors
and permitted assigns. Neither this Agreement nor any obligation hereunder shall
be assignable except with the prior written consent of the other party which may
be withheld for any reason.
20.9. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but which taken
together shall constitute one agreement.
20.10. Exhibits, Schedules and Attachments. The Exhibits, Schedules
and attachments attached to this Agreement are incorporated herein and shall be
considered a part of this Agreement for the purposes stated herein, except that
in the event of any conflict between any of the provisions of such exhibits and
the provisions of this Agreement, the provisions in this Agreement shall
control.
20.11. Rights Cumulative. Except as set forth herein, all
rights, powers and remedies herein given to Buyer and Seller are cumulative
and not alternative, and are in addition to all statutes or rules of law.
20.12. Governing Law. This Agreement, and the rights and
obligations of Buyer and Seller hereunder, shall be governed by and construed
in accordance with the laws of the state of Texas applicable to contracts
made and to be performed therein.
20.13. Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance, is held invalid, such
invalidity shall not affect any other provision which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable.
20.14. Third Party Rights. Nothing in this Agreement (including the
Schedules, Exhibits and other attachments hereto, or any other attachment
hereto, or any ancillary agreement, instrument or document contemplated hereby
or relating hereto) shall be deemed to create any right with respect to any
Person or property not a party to this Agreement.
20.15. Press Releases. Except as otherwise required by law, Buyer
and Seller shall prior to its issuance of any press release relating to the
transactions contemplated by this Agreement, submit to the other party, and
obtain the approval thereof, which approval shall not be unreasonably withheld.
20.16. Specific Performance. Seller hereby agrees that Buyer shall
be entitled, in addition to any other remedies or damages available to Buyer in
the event of any breach of this Agreement by the Seller, to specific performance
of the obligations of Seller under this Agreement.
20.17. Non-Reliance. Each Party to this Agreement expressly warrants
and represents that no promise or agreement, not expressed herein or in the
attachments to this Agreement, has been made to it by any other Party to this
Agreement, or any Party's respective affiliates, counsel, or any other
interested party with respect to the terms set forth in this Agreement or in the
attachments to this Agreement, and that such Party is not relying upon any
statement or representation of any agent of any other Party to this Agreement or
any Party's respective affiliates, counsel, or any other interested party. Each
Party hereto is relying on its own judgment and has been represented by legal
counsel in this matter.
IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed and delivered in its name and on its behalf, all as of the date and
year first above written.
▇▇▇▇▇▇▇ BROADCASTING OF DALLAS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
HISPANIC TELEVISON NETWORK, INC.
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer